NEWS,14. AND 15.08.2013

China probe could target oil firms, banks

China's powerful price regulator could target the petroleum, telecommunications, banking and auto sectors next in its investigations into violations of the country's anti-trust laws, state media quoted a senior official as saying.
The National Development and Reform Commission (NDRC) would look at industries that have an impact on the lives of ordinary Chinese, China Central Television (CCTV) quoted Xu Kunlin, head of the anti-monopoly bureau at the NDRC, as saying on one of its programmes.
The NDRC has launched nearly 20 pricing-related probes into domestic and foreign firms in the last three years, according to official media reports and research published by law firms.
But the scope of its investigations in the world's second-biggest economy have gathered pace in recent months and coincide with criticism in official media about the price of goods such as milk powder, medicine, luxury cars and jewellery.
"When you look at activities around the world, regulators tend to investigate sectors where their investigations can have a direct impact on consumers and that will look good," said Sebastien Evrard, Beijing-based partner at law firm Jones Day, which specialises in anti-trust law.
Last week the NDRC fined six milk powder firms for anti-competitive behaviour. It is also investigating 60 foreign and local pharmaceutical companies over pricing and costs.
Companies in the petroleum, telecommunications, banking and auto sectors were on the NDRC's radar for future investigations, CCTV's official blog quoted Xu as saying.
Xu gave a hypothetical example, saying that if banks fixed deposit or lending rates if and when China liberalised its interest rate regime, such behaviour could prompt an investigation.
CCTV gave no other details and NDRC officials could not be reached for comment.
China has been taking incremental steps towards liberalising interest rates. Last month the central bank removed controls on bank lending rates, giving commercial banks the freedom to compete for borrowers.
Evrard said that while telecoms companies and fuel prices were often the target of regulators around the world, they would not be obvious choices in China because of the involvement of state-owned companies.
State-owned majors PetroChina , Sinopec Corp and CNOOC Ltd dominate China's oil and gas industry, both upstream and downstream.
Domestic fuel prices are also set by the NDRC.
The country's three biggest telecom firms  China Unicom Ltd , China Mobile Ltd and China Telecom Corp Ltd are state-owned.
Similarly, the top four banks are controlled by the state.
The China Automobile Dealers Association told earlier this week that its officials were collecting data on the price of all foreign cars sold in the country for the NDRC.
The State Administration for Industry and Commerce (SAIC), a regulator in charge of market supervision, kicked off a separate three-month investigation into bribery in the pharmaceutical and medical services sector on Thursday.
Foreign executives and bankers in China say the various investigations are a hot topic of discussion but many are still puzzled by the motivation behind the probes and whether they will impact their business.

Europe online sales seen doubling - poll

Online retail sales in Europe are seen doubling by 2018 to €323bn  ($428.51bn) with Amazon.com expected to grow even faster than that, market research firm Mintel said.
In a survey of 19 markets in Europe made exclusively available, Mintel predicted that online sales would grow to €188bn in 2013 from €166bn in 2012.
Mintel said Germany, Britain and France would remain by far the biggest markets for online retail by 2018, although the Netherlands, Spain and Poland should grow at a faster rate and Norway and Sweden have the highest online per-capita spend.
"There is a big North-South divide in e-commerce in Europe," said Mintel European retail analyst John Mercer, noting French participation levels lag Britain and Germany by five years and Spain, Greece, Portugal and Italy are even further behind.
Mintel said Amazon is extending its lead on the continent, growing market share to 9.8% in 2012 from 9.2% in 2011, while Germany's Otto, its next closest rival, saw its share slip to 3.3% from 3.9%.
Mintel predicted Amazon could double its Europe-wide market share in the next three to four years despite negative publicity in Britain over its low tax bills and in Germany prompted by strikes at its distribution centres.
Mercer said Amazon was performing strongly despite having only five dedicated country websites in Europe - in Britain, Germany, France, Spain and Italy.
"Italy is a tiny market. Perhaps it would be more worthwhile to have launched dedicated sites for the Nordics," he said. "In terms of spend per capita, the Nordics are much higher."
Mintel said it would still be 2021 before Amazon overtook Germany's Schwarz group, owner of Lidl discount stores, as Europe's biggest retailer, assuming current trends continue.
Amazon last month forecast disappointing income and revenue as it grapples with a weaker international market, overshadowing improving profitability and economic conditions in the United States.
British grocers are also well represented in Mintel's European top 10, with Tesco holding its market share steady at 2.3% and Walmart-owned Asda and Sainsbury on 1.1% and 0.9% respectively, reflecting the popularity of online grocery shopping in Britain.
"In mainland Europe, online shopping is largely non-grocery," Mercer said. "That is not going to change fast."
The Mintel report said Britain and France have the strongest demand for buying online and collecting in-store, a trend yet to take off for Germans, who prefer their goods to be delivered.

Solar tax angers Spaniards

Two weeks after Spain's government slapped a series of levies on green energy, Inaki Alonso hired two workmen to remove the solar panels he had put on his roof only six months earlier.
Alonso, an architect who specialises in ecological projects, calculated the cost of generating his own power under a new energy law and decided the numbers no longer added up.
Neither was it possible to leave the panels on his Madrid home without connecting them to the electricity grid; that would have risked an astronomical fine of between €6m and €30m ($8m to $40m).
"The new law makes it unviable to produce my own clean energy," Alonso said.
Spain's conservative government announced a reform of the energy system last month, including the "support levy" on solar power in a country blessed with abundant sunlight.
Imposed by decree, the reform aims to raise money for tackling a €26bn debt to power producers which the state has built up over the years in regulating energy costs and prices. The solar levy was fixed at 6 euro cents per kilowatt-hour.
Under the constitution, the government can impose emergency measures by decree and has done so repeatedly since it came into office in late 2011.
With Spain in economic crisis, power consumption is falling but the energy debt will continue growing by €4bn to €5bn a year unless the government takes action.
Utilities such as Iberdrola, Endesa and Gas Natural have attacked other revenue-raising measures in the reform.
However, Spaniards who have generated power independently for their own homes under a system known as "autoconsumo" are among the hardest hit by policies which they say punish, rather than encourage, energy efficiency.
Industry Minister Jose Manuel Soria accepts the measures are painful but says they are needed to plug the energy deficit.
"I support 'autoconsumo' ... but the power system has infrastructure, grids that the rest of us Spaniards who are in the system have to pay for. And we pay for it through our electricity bill," said Soria.
As a decree law, the measures are unlikely to undergo much scrutiny in parliament where the ruling People's Party has an outright majority, meaning the opposition cannot force a debate.
Green savings crack-down
Spain imports over 80% of its energy needs, spending more than €40bn - or about 4.5% of gross domestic product - a year.
Supporters of solar power says the government ought to be supporting the industry to cut this bill and achieve renewable energy targets set by the European Union.
Soria announced the measures just as home-produced solar power had become increasingly attractive compared with electricity supplied over the grid by traditional utilities.
In the past, the high cost of solar panels discouraged many consumers from taking the plunge, but prices have more than halved in the last three years.
A 240-watt solar panel kit, enough to power household appliances, is now available on the Internet for as little as 500 euros.
Under the old regime, Spanish consumers could recover a typical €1 600 to €2 100 investment in solar panels through savings on their utility bills in about five years.
According to FENIE, an association for solar panel installations, this will jump to 17 years when the levies are imposed under the new law.
Moreover, the law does not allow homeowners to sell electricity they do not need back to the grid, a common practice in other countries such as Germany.
Spain's climate offers huge potential for solar power. In Germany, a four-person household can cut its consumption of power from the grid by 30% by using panels.
In Spain, which has among the highest electricity prices in Europe, the figure is three times that - offering big savings for consumers hit by the recession and 26% unemployment.
Solar rebels
In the end, Alonso moved his solar panels to a friend's house deep in the Spanish countryside. This was far enough from the nearest mains supply to be exempt from the stipulation that panels must be hitched up to the grid.
Apart from people in isolated communities, Spaniards must connect their panels to the grid within two months. This allows their solar power production to be metered remotely - and taxed.
However, some panel owners plan to rebel by ignoring the government's deadline, confident the courts would hesitate to uphold the huge fines. These were laid down in an old 1997 energy law and, while possibly appropriate for a large corporation, no private individual could ever pay them.
"If I spend €600 to install solar panels and get fined €6m, let the judge decide," said Sergio Pomar, chief executive of energy-efficient installation firm INEL.
Courts already expect a series of legal challenges to other elements of the reforms, which investors in renewable energy says renege on the terms of their investment.
Teresa Ribera, senior adviser to the Paris-based Institute for Sustainable Development and International Relations (IDDRI), said the law could provoke civil disobedience.
"This law is illogical in terms of energy efficiency and costs ... and is a serious invitation by the government for citizens to become anti-system," she said.
She dismissed the idea that independent solar power producers should pay for costs such as running the grid and subsidising other energy forms. "It's like asking cyclists to pay a levy to keep open the petrol stations they don't use," said Ribera, who served as secretary of state for the environment under the former Socialist administration.
Backtracking on renewables
Ribera said the law is a setback for Spain in the competitive renewable energy industry, where it was once a frontrunner.
It also threatens to prevent Spain from meeting an EU goal of producing 20% of its energy from renewable sources by 2020.
"If we continue burning more coal and stop installing renewables capacity, the targets are at risk," said renewable energy advocate Mario Sanchez.
Javier Garcia Breva, chairman of Spain's renewable energy foundation, said the country had to cut its energy import bill. "Failing to support energy efficiency will only make these costs go up," he said.

China targets many sectors in price probe

China's powerful price regulator could target the petroleum, telecommunications, banking and auto sectors next in its investigations into violations of the country's anti-trust laws, state media quoted a senior official as saying.
The National Development and Reform Commission (NDRC) would look at industries that have an impact on the lives of ordinary Chinese, China Central Television (CCTV) quoted Xu Kunlin, head of the anti-monopoly bureau at the NDRC, as saying on one of its programmes.
The NDRC has launched nearly 20 pricing-related probes into domestic and foreign firms in the last three years, according to official media reports and research published by law firms.
But the scope of its investigations in the world's second biggest economy have gathered pace in recent months and coincide with criticism in official media about the price of goods such as milk powder, medicine, luxury cars and jewellery.
"When you look at activities around the world, regulators tend to investigate sectors where their investigations can have a direct impact on consumers, and that will look good," said Sebastien Evrard, Beijing-based partner at law firm Jones Day, which specialises in anti-trust law.
Last week the NDRC fined six milk powder firms for anti-competitive behaviour. It is also investigating 60 foreign and local pharmaceutical companies over pricing and costs.
Companies in the petroleum, telecommunications, banking and auto sectors were on the NDRC's radar for future investigations, CCTV's official blog quoted Xu as saying.
Xu gave a hypothetical example, saying that if banks fixed deposit or lending rates if and when China liberalised its interest rate regime, such behaviour could prompt an investigation.
CCTV gave no other details and NDRC officials could not be reached for comment.
China has been taking incremental steps towards liberalising interest rates. Last month the central bank removed controls on bank lending rates, giving commercial banks the freedom to compete for borrowers.
Evrard said that while telecoms companies and fuel prices were often the target of regulators around the world, they would not be obvious choices in China because of the involvement of state-owned companies.
The country's three biggest telecom firms China Unicom Ltd , China Mobile and China Telecom  are state owned.
Similarly, the top four banks are controlled by the state. And the price of oil in China is set by the government.
The China Automobile Dealers Association told earlier this week that its officials were collecting data on the price of all foreign cars sold in the country for the NDRC.
The State Administration for Industry and Commerce (SAIC), a regulator in charge of market supervision, kicked off a separate three-month investigation into bribery in the pharmaceutical and medical services sector on Thursday.
Foreign executives and bankers in China say the various investigations are a hot topic of discussion but many are still puzzled by the motivation behind the probes and whether they will impact their business.

Smartphones top mobile sales - poll

Smartphones took a majority of mobile phone sales worldwide for the first time in the April-June quarter, a survey showed on Wednesday.
The report by the research firm Gartner found smartphone sales totaled 225 million in the second quarter, or 51.8% of all mobile phones sold in the period.
It was the first time smartphone sales exceeded those of feature phones, which are more basic phones with limited or no access to the Internet and applications.
The survey found Samsung remained the leading vendor of smartphones and all mobile phones, and that the Google Android system solidified its position with a 79% share of smartphones sold.
Gartner said Windows Phone, the mobile operating system from Microsoft, moved into third place with a 3.3% share, ahead of troubled BlackBerry, whose share slid to 2.7%.
"While Microsoft has managed to increase share and volume in the quarter, Microsoft should continue to focus on growing interest from app developers to help grow its appeal among users," said Anshul Gupta, a Gartner analyst.
Apple's iOS, the operating system for the iPhone, remained second with a 14.2% share, down from 18.8% a year earlier.
Gartner said Apple's average prices dropped because many of its phones sold were older, discounted models of the iPhone. This "demonstrates the need for a new flagship model," Gupta said, but added that "it is risky for Apple to introduce a new lower-priced model too."
Gartner's data showed Samsung sold 71.3 million smartphones in the quarter, representing a market share of 31.7%.
Apple was second with 31.9 million, followed by South Korea's LG, with 11.4 million and a share of 5.1%, and China's Lenovo and ZTE.
Samsung was also the top seller of all mobile phones, with a total of 107 million in the period, or 24.7%. Finland-based Nokia was second with a market share of 14% and 60.9 million phones sold, Gartner said.

UK flirts with a new house price bubble

Britain is flirting with another runaway rise in house prices, according to a poll of economists, with a firm majority putting the chances at 50-50 or higher over the next five years.
Despite those concerns, there was a clear consensus that the recent improvement in data heralds a sustainable economic recovery for the UK, which has struggled over the last three years to escape recession.
A clear pick-up in Britain's housing market, accelerated by the government's "Help to Buy" programme introduced in this year's Budget and other measures to boost lending, is a sign of rising confidence in the economy.
But with the last housing boom of 1997-2007 still fresh in the mind, there are concerns that Britain is falling back into the same mentality that led to a tripling of the average house price in 10 years.
Only nine out of 29 economists surveyed since Friday said the prospect of another house price bubble - whereby prices rise so fast they would be vulnerable to a sharp correction - is small. The other 20 were split between seven describing the risk as even, 11 as likely, and two as very likely.
The sample comprises economists working for major banks, and research institutions and consultancies.
Danny Gabay, economist at Fathom Financial Consulting, said media talk of a new housing bubble wasn't very helpful, and that rising house prices are not intrinsically a bad thing.
"We're not concerned about a new housing bubble, we're concerned about the fact we never worked off the last one before they began to re-inflate it," he said.
"We've stopped any attempt at any of the repair work that is essential for this economy to be able to heal properly."
Sustainable economic recovery
A July survey from the Royal Institution of Chartered Surveyors showed the fastest growth in house prices since 2006. Official data showed house prices in London, which typically lead the rest of the country, jumped 8.1% in June compared with the same month a year ago.
Despite declining sharply in 2008 and 2009 after Britain and other advanced economies plunged into severe recession, UK house prices have remained overvalued compared to economic fundamentals, according to every quarterly UK housing market poll since then.
Gabay argues that not only have the government and the Bank of England stopped the process of deleveraging, they're now encouraging homebuyers to take on more debt.
British Finance Minister George Osborne said last month that the "Help to Buy" programme - which provides government-backed equity loans to first-time buyers and people moving to new-build houses worth up to £600 000 pounds ($927 700) - was a targeted response to a malfunctioning mortgage market. He dismissed concerns property prices had become a one-way bet.
"I don't think in the current environment a house price bubble is going to emerge in 18 months or three years," Osborne told parliament.
Bank of England Governor Mark Carney, asked last week at a press conference about the prospect of another housing bubble, did not address whether or not that was a risk for the economy. He said the market should be put into context: mortgage applications are still well below historic averages.
Rising house prices would support economic recovery as they make homeowners feel wealthier and more likely to spend.
The poll showed the UK economy is likely to improve further from here over the next 18 months at least.
The vast majority of respondents, 30 of 35, said upbeat purchasing managers indexes, burgeoning consumer confidence and an improving retail outlook all pointed to the battered economy getting back on track.
Britain's economy is expected to grow by between 0.4 and 0.5% per quarter from here through to the end of next year, with the consensus barely changed from last month's poll, although the outlook is not without risks.
"Though sustainable, the prospective recovery is likely to face headwinds from the euro zone, a weak UK credit system and the economy's structural problems - over-reliance on finance, lack of skills," said Stephen Lewis, chief economist of Monument Securities.

NEWS,07.08.2013

BoE looks forward to help UK recovery

The Bank of England overhauled its policy strategy on Wednesday, saying it planned to keep interest rates at a record low until unemployment falls to 7% or below, something unlikely for another three years.
Barely a month after Canadian Mark Carney took over as governor, the central bank said it would keep interest rates at 0.5 percent unless inflation threatened to get out of control or there was a danger to financial stability.
Carney said a recovery in Britain's fragile economy was underway and it appeared to be broadening but he warned that it had a long way to go before it was on solid ground.
"This remains the slowest recovery in output on record," he told his first news conference since taking over at the Bank. "We're not at escape velocity right now."
The pound rallied after an initial fall on the announcement and British government bond prices were lower as the BoE's commitment on interest rates fell short of some expectations of a more aggressive plan to revive growth.
"It looks like rates are not going to rise in the next three years, though they could, as Carney has stressed they are not pre-committed, so again this is a rather valueless bit of 'forward guidance' as is the case with the ECB," said Mark Ostwald at Monument Securities.
The Bank of England followed the US Federal Reserve's approach by setting an unemployment target rather than committing to keeping rates low for a set period of time but included get-out clauses.
BoE policymakers said they stood ready to buy more government bonds if additional stimulus was needed and would not reverse existing purchases while unemployment was too high.
The central bank said inflation was forecast to stay above its 2% target until the second half of 2015 based on market rate expectations.
"Attempting to return inflation to the target too quickly risks prolonging the period over which the nation's resources are underutilised," it said.
A growing number of major central banks are providing so-called forward guidance to help nurse their economies back to health after the damage of the financial crisis.
For the BoE, the challenge is to hold off a premature rise in British borrowing costs at a time when signs of economic recovery at home and the US Federal Reserve's decision to phase out stimulus are pushing up market interest rates.
Last month its Monetary Policy Committee took a step towards guidance by saying that a rise in British market rates was not justified by economic fundamentals, and it reiterated that point on Wednesday.
Markets already did not expect the BoE to start to raise interest rates until late 2015 at the earliest.
Three years' grace?
The BoE said Britain's economy had strengthened over the past three months. But output still remains more than 3 percent below its pre-crisis peak, a much weaker recovery than in the United States or Germany.
It now forecasts the economy will grow 0.6% during the current quarter  the same as between April and June, and that growth will reach an annual rate of 2.6% in two years' time, compared with 2.2% forecast three months ago, assuming interest rates stay on hold.
Unemployment is forecast to fall only slowly from its current level of 7.8% of the workforce, with the central bank expecting it to average 7.1% in the third quarter of 2016, the end of its forecast horizon.
This implies that the BoE expects to keep interest rates unchanged until at least that time, unless one of three conditions is breached before then.
The BoE will consider raising interest rates if their low level poses a threat to financial stability, if the public's medium-term inflation expectations rise dangerously high or if it forecasts that inflation in 18-24 months will be at 2.5% or higher.
It said that if those thresholds or the 7% unemployment rate are reached, the MPC would consider the case for interest rate rises on a month-by-month basis.
"There is therefore no presumption that breaching any of these knockouts would lead to an immediate increase in Bank Rate or sale of assets," it said.
Inflation is forecast to average 2.9% in the last three months of this year  close to its current level and a lower peak than previously thought  and then to fall roughly as predicted three months ago.
Finance minister George Osborne named Carney in November to succeed King, impressed by the Canadian's reputation for innovative thinking and applying forward guidance while he led Canada's central bank.
Osborne welcomed the plan and said it was consistent with the government's "absolute commitment" to Britain's 2% inflation target.
Carney has previously stressed the importance of reassuring ordinary people and businesses that their debt costs are not going to rise any time soon in order to give them more confidence about spending which would help the economy.
The new governor also signalled he was not concerned about signs of a fast recovery in the housing market in some parts of Britain, especially London.
"The housing market is starting to recover and actually the overall level of housing activity relative to GDP is a couple of percentage points lower than where it was prior to the crisis," Carney said at the news conference.

China fines baby formula makers $110m

China fined six companies including Mead Johnson Nutrition, Danone  and New Zealand dairy giant Fonterra a total of $110m following an investigation into price fixing and anti-competitive practices by foreign baby formula makers.

The other three penalised were Abbott Laboratories, Dutch dairy cooperative FrieslandCampina and Hong Kong-listed Biostime International Holdings, the National Development and Reform Commission (NDRC) said on Wednesday.

The fines, announced just over a month after the NDRC said it was conducting the antitrust review, coincide with separate pricing investigations into foreign and local pharmaceutical firms as well as companies involved in gold trading. Those probes have yet to conclude.

The official Xinhua news agency said the fines were a record for China, although it did not elaborate.

Foreign infant formula is coveted in China, where public trust was damaged by a 2008 scandal in which six infants died and thousands of others were sickened after drinking milk tainted with the toxic industrial compound melamine. 

Foreign brands account for about half of total sales and can sell for more than double the price of local formula. The infant milk market in the world's second biggest economy is set to grow to $25bn by 2017.

The NDRC said in a statement the fines were for restricting competition, setting curbs on minimum prices for distributors and for using a variety of methods to disrupt market order. 

Swiss giant Nestle, Japan's Meiji Holdings  and Zhejiang Beingmate Scientific Technology Industry and Trade Co were not punished because "they cooperated with the investigation, provided important evidence and carried out active self-rectification", Xinhua said, citing the NDRC.

The commission fined Mead Johnson 203.8m yuan ($33.29m); Danone 172m yuan; Biostime 162.9m yuan; Abbott 77m yuan; FrieslandCampina 48m yuan and Fonterra m yuan.

Mead Johnson, Biostime, Abbott and Fonterra said they would not contest the penalties. Officials at French food group Danone and FrieslandCampina were not immediately available to comment. 

After the NDRC probe was announced, a number of companies including Mead Johnson, Danone and Nestle cut prices on their baby formula in China by up to 20%.

Analysts said the probe was possibly part of a broader Chinese plan to boost consumption of local infant milk products.

But they said the fines were unlikely to damage the reputation of the affected companies. If anything, foreign infant formula makers might increase their market share because of the price cuts.

"It will have an impact on domestic brands over the long term as the prices of high-end premium brands come down. Customers will tend to buy the foreign brands as the price gap between domestic and foreign brands narrows," said Jacqueline Ko, an analyst at Maybank Kim Eng Research.

Fonterra, the world's biggest dairy exporter, said it would give additional training to sales staff and review its distributor contracts in the wake of its fine. 

"We believe the investigation leaves us with a much clearer understanding of expectations around implementing pricing policies," Kelvin Wickham, president of Fonterra Greater China and India, said in a statement.

Fonterra is embroiled in a separate milk powder contamination scare that has led to product recalls in China, Hong Kong and elsewhere in Asia. 

    

Powerful commission

A source with direct knowledge of the China investigation said the NDRC was concerned with manufacturers suggesting retail prices to distributors and then offering incentives if these were met, believing this was tantamount to dictating retail prices.

The agency also told the firms they had inhibited fair competition by setting up regional distributors and discouraging them from selling outside their territories, said the source, who spoke on condition of anonymity because he was not allowed to speak to the media.

The commission is one of China's most powerful government bodies, with a role in overseeing prices as well as broad economic policies.

The milk sector is still relatively young in China, with consumption of dairy products growing at an annual compound rate of 20%, a contrast to US and European markets where demand has been shrinking in the past decade.

Some analysts also said the pricing investigation could result in tougher rules governing imports.

Indeed, the China Food and Drug Administration is proposing tightening conditions for the granting of licences for milk powder production, including requiring producers to have their own controlled milk sources and research and development capabilities. 

In a statement late on Tuesday, the regulator said it was seeking public comment on the proposals, which also include requirements for license holders to strengthen hygiene practices and management standards.

Mead Johnson said its fine would reduce its full-year earnings by about 12 cents per share, but it reiterated its 2013 earnings forecast for profit, excluding one-time items, of $3.22 to $3.30 per share. 

Shares of Biostime, which has a market value of $3.3bn, were up 5.3% at midday, beating a 0.3% drop in the benchmark index. It shares resumed trading after being suspended the day before. 

Obama cancels Putin meeting over Snowden

US President Barack Obama is cancelling a meeting with Russian President Vladimir Putin scheduled for next month in Moscow, the White House said on Wednesday.
The Obama administration has repeatedly expressed disappointment after Moscow granted temporary asylum to former US spy agency contractor Edward Snowden, rejecting US pleas to hand him over to face criminal charges including espionage.
The White House, in a statement, said it valued "achievements made" between Russia and the United States, but cited a "lack of progress" on a host of other issues "such as missile defence and arms control, trade and commercial relations, global security issues, and human rights and civil society."
"Russia's disappointing decision to grant Edward Snowden temporary asylum was also a factor that we considered in assessing the current state of our bilateral relationship," the statements said.
Obama plans to add a stop in Sweden as part of this travels to the G20 summit in early September, a White House official said.
On Tuesday, Obama confirmed that he would go to Russia this autumn for a G20 summit in St Petersburg, Russia, but said he was "disappointed" with Moscow's decision on Snowden.
Senator Charles Schumer praised Obama's decision to cancel the bilateral summit with Putin.
"The President clearly made the right decision. President Putin is acting like a school-yard bully and doesn't deserve the respect a bilateral summit would have accorded him," the New York Democrat said in a statement.

NKorea lifts ban on joint factory ops

North Korea said Wednesday it is lifting a ban on operations at a jointly run factory park shuttered since Pyongyang pulled out its 53,000 workers in April amid tensions with South Korea, and the rivals agreed to meet next week for talks meant to restart the complex.
The agreement revives hope for the resumption of production at the Kaesong complex, the last remaining symbol of inter-Korean cooperation from an earlier period of detente.
The industrial park combined South Korean initiative, capital and technology with cheap North Korean labour.
It was also a rare source of hard currency for North Korea, though the economically depressed country chafed at suggestions that it needed the money Kaesong generated.
North Korea said it will lift its ban on operations at the complex, including restrictions on the entry of South Korean managers.
But the two countries must reach a formal accord on their differences before production can resume, and six past meetings on the park's fate remained deadlocked.
The statement by the North's Committee for the Peaceful Reunification of Korea, which is responsible for dealings with Seoul, appeared to accept a demand that South Korean negotiators had made in the deadlocked sessions: That North Korea won't unilaterally close the industrial complex, just north of the heavily armed border, should tensions between the rivals rise again.
The fate of Kaesong
Ahead of Wednesday's statement, which North Korea described as "bold and magnanimous", there was unease in Seoul about the fate of Kaesong. The statement came after 10 days of silence from Pyongyang on a South Korean demand for "final talks."
It also came about an hour after Seoul said it would begin insurance payments to 109 South Korean businesses shut out of Kaesong, which some saw as a step toward closing the park.
South Korea's Unification Ministry, which handles relations with North Korea, accepted the North's proposal for talks on 14 August, a day before a holiday in both Koreas that celebrates independence from Japan's 1910-1945 colonial rule.
Seoul expressed hope the meeting would resolve differences on Kaesong.
South Korean businesses with operations at Kaesong welcomed the development. The park had survived previous periods of tension between the rivals, including attacks blamed on Pyongyang that killed 50 South Koreans in 2010, and the shutdown of other big cooperation projects.
North Korea banned South Korean managers from crossing the border to their jobs in Kaesong and then withdrew its workers from the park during a torrent of warlike threats it made in March and April, including vows of nuclear strikes on Washington and Seoul.
Military drills
Pyongyang said it was angry over annual US-South Korean military drills and UN sanctions over North Korea's February nuclear test - the country's third such test since 2006.
There have been recent attempts at tentative diplomacy by the Koreas, but tensions could rise again this month as South Korea and the United States are scheduled to begin a joint military exercise on 19 August.
Starting on Thursday, South Korean companies that had signed up for insurance were to receive payments to help cover investments in constructing production lines and buildings at Kaesong.
Both countries should ensure that operations at the complex continue normally regardless of external matters, the North's statement said.
North Korea also said it will guarantee the safety of the South Korean managers and property at Kaesong, and start sending North Korean workers to the park once South Korean businesses are ready to resume operations.
After breaking ground in 2003, earlier South Korean governments paved roads and erected buildings at Kaesong, which lies in a guarded, gated complex on the outskirts of North Korea's third-largest city.
By the end of 2012, South Korean companies had produced a total $2bn worth of goods during the previous eight years.
Pyongyang needs to reach out to Seoul and resume operations at Kaesong to resolve its huge economic problems, said Yoo Ho-yeol, a North Korea studies professor at Korea University in Seoul.
North Korea is estimated to have received $80m in workers' salaries in 2012, an average of $127 a month per person, paid in US dollars, according to the Unification Ministry.
For South Korea, Asia's fourth-largest economy, the complex was more than a business opportunity and a source of cheap labour it was a symbol representing the possibility of eventual unification.
Before April, the Kaesong industrial complex was the only place for South Korean entrepreneurs to collaborate with North Korean workers.

Talks will fail, say most Israeli Jews

Israel's Jewish population is overwhelmingly of the opinion that negotiations with the Palestinians will fail to achieve peace, according to a poll published on Wednesday.

About 80% of Israeli Jews said the chances of success of US-brokered talks, which resumed on 29 July after a three-year hiatus, were "low", against only 18% who said they were "high".

The survey, conducted by Tel Aviv University, interviewed 602 Israelis between 28 and 30 July and has an error margin of 4.5%.

Most of those interviewed  64%  believed Palestinian leaders were not genuine in wanting to resume talks, but 63% believed the Israeli government did want peace.

They were mostly unwilling, however, for the government to concede on issues deemed crucial to achieving an agreement.

Almost 63% opposed a return to the 1967 lines that existed before Israel occupied the West Bank - a key Palestinian demand  and 58% opposed the evacuation of Jewish settlements in the Palestinian territory, even if the largest settlements were allowed to remain.

Arab population more optimistic

The previous round of talks in September 2010 collapsed when Israeli refused to stop its settlement building.

About 77% on those interviewed also opposed the right of return for Palestinian refugees exiled after the Jewish state's creation in 1948 and the 1967 Six Day War.

And half the Jewish respondents opposed the partition of Jerusalem, which the Palestinians want as capital of their future state.

Israel's Arab population were more optimistic about the chances of peace.

Around 47% of Israeli Arabs thought talks were likely to achieve a peace agreement, against 41% who said the chances were low.

A vast majority 85%  believed the Palestinians genuinely wanted talks to succeed.

NEWS,04.04.2013

EU-IMF experts resume Greek audit

Greece's finance minister met on Thursday with EU-IMF auditors who have resumed an audit in Athens that was interrupted last month, and said details would be available once a comprehensive agreement had been reached.
"Nothing will be sealed until everything is sealed," Finance Minister Yannis Stournaras said after speaking with representatives from the European Union, International Monetary Fund and European Central Bank, a group of creditors known as the troika.
Stournaras told journalists that the atmosphere in the meeting, which lasted more than three hours, was "good" and that further meetings were scheduled on a daily basis.
"There is still work to be done," Stournaras was reported by the Athens News Agency to have added.
The inspection of Greek reforms was initially suspended to give the Greek government time to work on outstanding matters, and attention then turned to the banking crisis in Cyprus.
Pending issues reportedly include the thorny issues of civil service job cuts and a revised property tax.
The auditors' report is required to release a €2.8bn ($3.6bn) rescue loan that has been delayed since March.
Another loan payment of €6.0bn, originally scheduled for the first quarter of 2013, will have to be postponed until at least mid-April.
According to the terms of its bailout deal, Greece has to cut the number of public sector workers by 25 000 this year and by 150 000 by the end of 2015.
The heavily-indebted country, which has been relying on international aid to avoid bankruptcy and is in its sixth year of recession, must also recapitalise its banks and speed up privatisation plans.
"Our goal is for 2013 to be the final year of recession," conservative Prime Minister Antonis Samaras said on Thursday.
Samaras is under pressure from his two coalition government partners, the socialists and moderate leftists, to ease the tax burden as the country suffers through a fourth year of austerity.

We can't replace government action - ECB

The European Central Bank cannot step into the breach left by a lack of action by eurozone governments to solve the region's debt crisis, but is ready to do whatever it can to play its part, ECB chief Mario Draghi said on Thursday.
"We cannot replace lack of capital in the banking system or the lack of actions by governments," Draghi told a news conference after the ECB left its interest rates unchanged for the ninth month in a row.
"The most stimulative measure is to pay the arrears. The ECB cannot replace governments on that front, or on structural reforms," he said.
Nevertheless, the ECB was willing and ready to act and looking at all policy options, both standard and non-standard, to help resolve the crisis, Draghi insisted.
"We are ready to act within our mandate," he said.
With regard to non-standard or anti-crisis measures, "we discussed a variety of measures. We have to be aware of what we can do and what we cannot do," Draghi said.
The ECB was also open to taking on board the experiences of other countries in trying to solve the eurozone's problems, he said.
"We will certainly look at other countries' experiences, what is feasible, institutionally acceptable and effective," he said. "We are thinking 360 degrees on non-standard measures," Draghi said.
Throughout the seemingly never-ending crisis - which appeared to have abated recently until political gridlock in Italy and the crisis in Cyprus sent shockwaves through financial markets once again - the ECB has never hesitated to act as firefighter.
It has slashed its key interest rates, pumped more than €1.0 trillion ($1.3 trillion) into the banking system to avert a credit crunch and sought to tame borrowing costs in worst-hit countries by buying up their sovereign bonds.
The multi-faceted approach appeared to pay off, allowing the markets to enjoy an extended period of calm.
But calls have arisen for the ECB to come to the rescue once again as tensions re-emerged after elections in Italy ended in a political stalemate and Cyprus's parliament rejected the terms of a tough bailout deal with its international creditors.
Finding a solution was not easy, and would require the participation of all actors, Draghi insisted.

Bank of England keeps rates at record low

The Bank of England on Thursday voted to leave its main lending rate at a record-low level of 0.50% and refrained from pumping out more new cash to help stimulate Britain's recession-threatened economy.
"The Bank of England's Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%," the BoE said in a brief statement at the conclusion of a regular monthly meeting, whose minutes will be published on April 17.
Thursday's outcome had been widely predicted by markets, which expected the BoE to wait for official data later this month to see whether Britain's economy has re-entered a period of recession.
With Britain struggling to sustain economic recovery following the 2008 global financial crisis, the BoE's main lending rate has stood at 0.50% for more than four years.
The central bank has meanwhile pumped out £375bn of new money under its quantitative easing (QE) stimulus programme since March 2009.
"Although the Monetary Policy Committee (MPC) left policy on hold again today, we suspect that the decision was still a close one," said Samuel Tombs at the Capital Economics research group.
BoE governor Mervyn King, who shortly steps down to be replaced by Canadian central bank chief Mark Carney in July, has in recent months unsuccessfully called for an additional £25bn of stimulus along with two other of the MPC's nine members.
"It is likely that BoE governor King, along with Paul Fisher and David Miles voted to expand QE by a further £25bn" at Thursday's meeting, said ING Bank analyst James Knightley.
Recent official data revealed that British gross domestic product (GDP) shrank 0.3% in the fourth quarter of 2012 compared with the previous three months.
Another contraction in the first quarter of 2013 would place Britain in its third recession in under four years.

Cypriot bank staff boycotts bailout

Hundreds of Cypriot bank workers marched peacefully toward parliament on Thursday over fears that their jobs and pensions are at risk under an international bailout deal.

Bank employees earlier staged a two-hour walk-out, with unions saying that pension deposits at the now defunct Laiki bank totaling €27m ($34.7m) will be wiped out, while another €15m at the Bank of Cyprus will face losses of up to 60%.
Two of the country's banks are to be restructured in exchange for a €10bn ($12.8bn) bailout from the European Commission, European Central Bank and International Monetary Fund.
With one of the banks being wound down, retrenchments are expected, while the pension fund for more than 11 000 banking sector workers is also seen to be at risk.
Banks have been operating under strict capital controls since they reopened a week ago.
European Central Bank chief Mario Draghi conceded on Thursday that a failed attempt last month to tax small depositors in Cyprus as part of a bailout was "not smart".
Asked if it had been a mistake for the ECB to agree to the levy after Nicosia proposed it in negotiations, Draghi told reporters: "It was not a smart move and it was corrected the day after."
He insisted that the proposed levy on deposits under €100 000, which caused outrage in Cyprus and spooked financial markets, had never been part of the original ECB bailout proposals.

Pension fears grips Cyprus bank staff

Bank workers were to hold a work stoppage on Thursday over fears that pensions may be at risk under Cyprus's bailout, as the island looked set to top the agenda at a European Central Bank policy meeting.
Bank employees' union ETYK called the two-hour stoppage over concerns that pension funds at Laiki and Bank of Cyprus are not being protected under the island's €10bn ($12.8bn) bailout deal with the International Monetary Fund, European Commission and ECB.
The strike comes despite reassurances last week from President Nicos Anastasiades that every effort would be made to preserve pension funds at the two banks.
There has been no labour unrest in Cyprus so far, but the terms of the bailout will force the island to make painful reforms, raising taxes, downsizing the public-sector workforce, privatising some state-owned firms and drastically reducing the size of its bloated banking sector.
The country's new Finance Minister Haris Georgiades vowed on Wednesday to implement the bailout terms in full.
"We... shall do whatever it takes to fix our public finances and put our economy back on track for growth," he said after swearing in to his new post.
Georgiades, a British-educated economist who had been serving as labour minister, took over from Michalis Sarris, who announced on Tuesday he was resigning to cooperate with a judicial probe into the causes of the crisis.
Sarris had been chairperson last year of failed bank Laiki, the collapse of which was a major contributor to the crisis.
Cyprus is already in recession, with unemployment at around 15% and expected to grow sharply this year and next. Forecasts before the deal was agreed saw GDP contracting by 3.5% this year.
Banks have been operating under stringent capital controls since they reopened last Thursday, after a near two-week lockdown prompted by fears of a run on deposits.
The central bank has been progressively easing these restrictions, and has now raised the limit on business transactions from €5 000 to €25 000 and allowed people to write cheques of up to €9 000.
But under the terms of the deal, those with savings larger than €100 000 in Bank of Cyprus, the country's largest, face losing up to 60% of their deposits over that amount.
Those in second lender Laiki will have to wait years to see any of their money over €100 000 as the bank is shuttered.
Cyprus was expected to top the agenda at the European Central Bank's policy meeting in Frankfurt on Thursday.
Markets panicked when Eurogroup chief Jeroen Dijsselbloem appeared to suggest that the Cyprus deal which rattled world markets might be used as a template for future eurozone bailouts.
The consequences of the Cyprus bailout for the eurozone were expected to be the main focus of ECB chief Mario Draghi's's monthly post-meeting news conference.
On the political front, Turkish President Abdullah Gul said on Wednesday the crisis was a chance to work towards a peace deal on the island, divided since Turkish troops invaded its northern third in 1974 after a Greek Cypriot coup.
"The economic crisis should also be an important lesson to all of us because at the end of the day if the island were united then there would be a greater economic potential," he said.

Clinton to pen her views on the US

Hillary Clinton, whose every move is being scrutinised for signs that she might make a 2016 presidential run, announced on Thursday she's penning a book outlining her views on the United States' role in the world.

The ex-secretary of state's first book since leaving office will be published by Simon & Schuster in the summer of 2014, midway through President Barack Obama's final term, the publisher said.
"This will be the ultimate book for people who are interested in world affairs and America's place in the world today," said Jonathan Karp, publisher of Simon & Schuster Publishing Group, and who is set to edit the work himself.
No title was announced, nor details of how much former president Bill Clinton's wife would be paid.
The publisher's CEO Carolyn Reidy said Hillary Clinton would "bring readers worldwide her unique insights into the most dramatic events and critically important issues of our time."
Topics covered will include the killing of Osama bin Laden, the US pullouts from Iraq and Afghanistan, the Arab Spring revolts, and the rise of China.
Broad issues including the role of women and girls, climate change, and human rights will also be addressed, the publisher said in a statement.
"And she will share her views as to what it takes for the United States to secure and sustain prosperity and global leadership. Throughout, Secretary Clinton will offer vivid personal anecdotes and memories of her collaboration with President Obama and his National Security team, as well as her engagement with leaders around the world," the statement said.
Clinton has stayed coy about her plans in 2016, but she is seen as a clear frontrunner this time, having lost the Democratic nomination in 2008 to Obama, who went on to become America's first black president.
Polls show that Clinton, who would be 69 in 2016, has strong support among Democrats should she bid to become the first woman elected to the White House.

Kerry returning to Middle East

US Secretary of State John Kerry is headed back to the Middle East for his third trip in a month, foraging for signs that Israel and the Palestinians are ready to make tough sacrifices for peace.

In a surprise move, the State Department announced on Wednesday that Kerry will return to Jerusalem and the Palestinian territories early next week to build on a series of talks last month between American and regional leaders.

Expectations are growing that the US administration is ready to resume some kind of shuttle diplomacy to rekindle the moribund peace process, which has stalled since late 2010 amid bitter recriminations on both sides.

But State Department spokesperson Victoria Nuland cautioned: "I would not expect the secretary to be putting down a plan."

President Barack Obama visited Israel and the West Bank in mid March, with Kerry then staying behind in the region to meet separately with both Israeli Prime Minister Benjamin Netanyahu and Palestinian president Mahmoud Abbas.

"They've had some time to reflect on the visit," Nuland said. "So this a chance for the secretary to go back and to listen again and to hear what they think is possible."

Apology to Turkey

"But he'll also be making clear that the parties themselves have to want to get back to the table, that this is a choice that they have to make, and that they've also got to recognise, both parties, that compromise and sacrifices are going to have to be made if we're going to be able to help."

Kerry will start his trip with a visit to Istanbul this weekend, with the 2-year-old conflict in Syria that has cost more than 70 000 lives set to top the agenda of talks with senior Turkish officials.

Nuland would not go into details about the talks on Sunday, but many of the top Syrian opposition leaders are based in Istanbul and he may seek to carve out some time to meet them.

Kerry's latest trip to Turkey also comes after Israel apologised to Ankara in late March for the deaths of nine Turkish activists in a botched raid by Israeli commandos on a Gaza-bound aid ship.

The breakthrough brokered by Obama ended a nearly three-year rift between Israel and Ankara - both key regional US allies.

Kerry will head to Israel and the Palestinian territories on Monday and Tuesday for separate talks with Netanyahu and Abbas, Nuland said.

Stage set

The stops have been added to a previously announced trip during which Kerry will also travel to London for a meeting of G8 foreign ministers before heading to Asia for the first time as America's new top diplomat.

On his first overseas trip since taking up the post on 1 February, Kerry visited Egypt in early March for talks with President Mohammed Morsi.

Kerry has stressed he would like to find a path forward in the peace process which has bogged down for decades.

"I think the stage has been set for the possibilities that the parties can hopefully find a way to negotiations," Kerry said in Baghdad after meeting Netanyahu and Abbas.

Direct peace talks broke down just weeks after Obama made a failed bid to bring the sides together in September 2010 in a bitter row over Israel's settlement building.

Since then, the Palestinians have refused to return to the table without a settlement freeze while Israel has agreed to resume talks only if there are no preconditions.

Freeing of prisoners

Nuland refused to speculate on Wednesday on whether Kerry would try to lay out any confidence-building measures to kickstart the talks in his next round of talks.

But Abbas said on Wednesday that the freeing of prisoners held by Israel was a "priority" for the leadership in the West Bank.

"We cannot be silent about their staying behind bars... [we] have demanded the freeing of all prisoners, especially those arrested before the Oslo accords, and sick, child and women prisoners," he told his Fatah party.

Clashes broke out in the West Bank earlier in the day between Israeli soldiers and Palestinians protesting the death of a Palestinian prisoner serving a life sentence in an Israeli jail.

A 16-year-old Palestinian was killed by Israeli soldiers and two others were wounded in the unrest.

Isolated South Koreans tough it out

Fear and anxiety are spreading among hundreds of South Korean workers sitting 10km inside North Korea and trying to ride out a growing military crisis that is edging ever closer.

The Kaesong joint industrial area, the last remaining symbol of inter-Korean co-operation, has become a pawn in an increasingly dangerous, high-stakes game of brinkmanship between Pyongyang, Seoul and Washington.

A day after it blocked South Koreans from accessing the complex, Pyongyang on Thursday threatened to pull out the 53 000 North Korean workers who keep the South Korean factories in Kaesong running, and to shut it down entirely.

Although allowed to leave Kaesong, about 800 South Korean managers and staff have opted to stick it out for now, as dire threats of nuclear war and retaliation fly back and forth over their heads.

"The anxiety is really ramping up," said Kwon Sook-Mi, who decided to leave the mobile phone plant in Kaesong where she works and cross back into South Korea on Thursday morning.

"There's a lot of uncertainty and some people are finding it mentally very tough," Kwon, aged 37, said.

Supplies running low

By contrast, Kwon said she had seen "no particular change" in the attitude of the North Korean workers at her plant since the crisis began.

Kim Won-Soo, the manager of a footwear plant, said his company was running out of supplies, both for the assembly lines and employees.

"We'll have to stop operating soon as we're almost out of raw materials," said Kim, who crossed back to the South with another group in the afternoon.

"Food supplies are also low, and stocks in the local supermarkets are way down. It's going to be noodles from tomorrow," he added.

On the South Korean side of the border crossing near Paju city, around 100 people and 40 trucks turned up early in the hope of the access ban being lifted on Thursday.

Drivers, managers and workers huddled in small groups, discussing the situation, with much of the talk focused on how long the 123 South Korean companies in Kaesong can keep going.

Political games

"Time is going to run out very fast," said Ryu Koon-Sung, who works for a female underwear company, Young Inner Foam, in Kaesong.

"If I can't get the material packed in this truck over, then we're going to have to stop production in a few days," Ryu said.

At 08:30, the expected announcement was broadcast over loudspeakers: "Entry into Kaesong is impossible today". The trucks began turning away, although some drove straight to an adjacent car park to try again on Friday.

"Kaesong should not become a scapegoat for political games," Ryu said, shaking his head.

South Koreans in general have grown accustomed to the North's threats and provocations over the years.

Even now, there is some anxiety but little panic - in contrast to 1994, when a North Korean negotiator threatened to turn Seoul into "a sea of fire" and people stripped store shelves and bunkered down.

These days Seoulites, especially the young, largely shrug off such threats and the bars and clubs of the upscale Gangnam district remain as popular as ever.

Haven of co-operation in danger

The stock market is also remarkably resilient, down barely 1% since the war rhetoric intensified two weeks ago.

In the Customs, Immigration and Quarantine hall of the Paju border crossing, a slightly desperate Han Jae-Kwon, head of the association that represents the companies in Kaesong, urged an end to the impasse.

"Operations in the complex are in serious trouble because of North Korea's ban... and there is fear and apprehension that the complex could be shut down permanently," Han said.

Han spoke in front of a banner reading: "We appeal for normalisation of passage to Kaesong" - a simple, plaintive message compared to the bellicose rhetoric emanating from Pyongyang.

Han said production had already ceased at a few smaller plants and others would run out of food within a week, as well as gas for heating and cooking.

Kim Deok-Chul, who was trying to cross into Kaesong to reach his textile company, said the complex risked losing its special status as a haven of co-operation that has always weathered political storms.

"Kaesong is a place where people from both side communicate," Kim said. "Both sides should make concessions and keep this area as it is."