BP, Progress Energy up as energy stocks retreat

By Steve Gelsi, MarketWatch

Reuters: Fire boat response crews battle the blazing remnants of the offshore oil rig Deepwater Horizon off Louisiana in this April 21, 2010 handout file photo. The federal government may seek $25 billion from BP.

NEW YORK (MarketWatch) — Sliding oil prices and a late-day sell-off in the broad equities market pushed down energy stocks on Monday, while Progress Energy and BP PLC held on to gains from earlier in the session.

Exxon Mobil Corp. gave up 0.7% while Chevron Corp. declined by 0.9%. The two oil majors are components of the Dow Jones Industrial Average, which fell 143 points.

Also setting a somber tone for energy stocks, crude oil futures dropped below $83 a barrel.   

Bucking the trend, U.S.-listed shares of BP PLC rose 0.5%.  Federal regulators are seeking a settlement of $15 billion to $25 billion from the oil major for the 2010 oil spill in the Gulf of Mexico from the ruptured Macondo well, according to report by the Financial Times over the weekend.

Analysts at Tudor Pickering Holt said the $25 billion figure is above what they have assumed BP’s liability would be under the Clean Water Act.

“It is encouraging that a dialogue with the U.S. government appears to be open/ongoing and removal of the threat of criminal prosecution would be helpful to BP shares,” analysts said.

Progress Energy rose 2.5%. The company said its purchase by Duke Energy is expected to close on time by July 1 after a favorable ruling from the Federal Energy Regulatory Commission. The federal regulatory body approved the deal with some conditions. Progress Energy said the ruling marked a “major milestone” for the merger.

Among the major benchmarks in the energy sector, the NYSE Arca Oil Index  dipped 1.1%, the NYSE Arca Natural Gas Index dropped 1.9% and the Philadelphia Oil Service Index dipped 1.9%.

Energy stocks in the S&P 500 fell 2%, on average, at the closing bell.

Weighing on the sector, Alpha Natural Resources moved down 9%; Newfield Exploration Co. lost 5.6% and Peabody Energy lost about 4.7%.

On the plus side, Scana Corp. rose 0.8%, Phillips 66 moved up by 1.5% and Valero Energy Corp. advanced by 2.7%. 

Steve Gelsi is a reporter for MarketWatch in New York.

Surging Spanish bond yields push Europe lower

Spain bond yields take out last autumn’s highs

 By Barbara Kollmeyer and Sara Sjolin, MarketWatch

LONDON (MarketWatch) — A sudden late-day surge in Spanish bond yields to all-time highs put sovereign fear and contagion risks back on center stage for the euro zone Tuesday, as Italian yields also climbed and stocks erased earlier gains.

The Stoxx Europe 600 index slipped 0.2% to 241.33, after trading as high as 243.29. 

Stocks changed direction in late action as the yield on 10-year Spanish government bonds surged to an all-time high, up 27 basis points to 6.80%, according to electronic trading platform Tradeweb.

The IBEX 35 index erased earlier gains and lost 1% to 6,451.40.

Spanish stocks on Monday led a volatile session with the main index shedding all of what at one point was a nearly 6% gain as investors expressed disappointment over a plan for the European Union to loan as much as €100 billion ($125 billion) to the troubled banking sector.

“This solution is still some way off,” analysts at Credit Suisse said in a note. “Spanish GDP could end up falling another 5% on account of fiscal tightening, private sector leveraging, bank deleveraging and falling wages. This will have a negative impact on the fiscal arithmetic and credit quality.” 

“We think Europe is only half way through resolving the crisis,” the analysts added. “In particular, we believe that we will need an ECB [European Central Bank] deposit guarantee or a €2 trillion 5-year LTRO [long-term refinancing operation]. 

Banks in Spain were also lower. Bankinter SA dropped 4.8%, Banco Popular Español SA lost 4.7% and Bankia SA fell 2.2%.

Italian banks were also lower: Banca Monte dei Paschi di Siena SpA lost 5.8%, Intesa Sanpaolo SpA gave up 4.7%, while UniCredit SpA dropped 5.2%. 

The FTSE MIB index slipped 2.1% to 12,803.45, as yields on 10-year Italian government bonds surged 16 basis points to 6.19%.

“Markets are concerned that it’s not clear how the intervention for Spain will be financed, so they are afraid there will not be anything left for Italy if it needs help,” McLean from SVM Asset Management said. “The pool of potential contributors to the rescue funds narrows each time a new country runs into problems and now Spain is asking for money. We’re left with Germany and to some extend France to contribute.”

“There’s belief that at some stage we’ll get a big intervention and the ECB will start printing money. There will be a recognition of the seriousness of the problems and that there’s a need for quantitative easing,” he added.

Movers

Defensives, such as food and beverage stocks, provided support for the main Stoxx 600. Nestle SA was up 0.9%.

Julius Baer Gruppe AG  rose 1.8%, after UBS lifted shares of the private bank to buy from neutral.

Amlin PLC rose 1.1% after the insurance and reinsurance group was upgraded to buy from hold at Deutsche Bank.

Among other indexes, the FTSE 100 index added 0.1% to 5,440.53, also helped by defensive stocks such as British American Tobacco PLC, 0.9% higher.

Miners such as BHP Billiton PLC  supported London, up 0.8%, while Anglo American PLC gained 1%.

Data for the U.K. showed the seasonally adjusted index of production stayed unchanged for April on a monthly basis, although the index dropped for a 14th consecutive month year on year.

The French CAC 40 index fell 0.4% to 3,029.96, with banks Credit Agricole SA  off 3.2% and Société Générale SA down 1%.

Cement maker Lafarge SA added 1.1% as it announced a plan to reduce costs by €1.3 billion over the 2012-2015 period.

The German DAX 30 index lost 0.3% to 6,121.5. It was led by 2.3% loss for Infineon Technologies and Commerzbank AG  down 1.8%.

E.ON AG rose 1.4% after the utility was upgraded to buy from neutral at UBS.

TomTom NV shares leapt 14% as the Dutch provider of navigation technology announced a mapping-data deal with Apple Inc. 

Barbara Kollmeyer is an editor for MarketWatch in Madrid. Sara Sjolin is a MarketWatch reporter, based in London.

Kenya's CFC Stanbic starts South Sudan operations

NAIROBI, June 12 (Reuters) - Kenya's CFC Stanbic Bank, the main business of Kenya-listed CFC Holdings, said on Tuesday it had started operations in South Sudan to tap into an increasingly attractive new market.
Ranked among the largest banks in the east African nation, CFC Stanbic is controlled by South Africa's Standard Bank through CFC Holdings, which also runs a financial services firm.
"Our entry into South Sudan is in line with our strategic plan to diversify into other markets in the region," Chris Newson, the chief executive officer for Standard Bank Africa, said in a statement.
South Sudan has become more attractive to banks seeking to expand regionally after it officially gained independence from Sudan in July 2011, and moved to rebuild a country ravaged by a two-decade war.
The country accounted for 42 percent of the 2.3 billion shillings ($27 million) profit that Kenyan banks made from their regional subsidiaries last year, the central bank said in an annual report.
CFC Stanbic becomes the third Kenyan bank to venture into the new African nation, after Kenya Commercial Bank, the biggest bank by assets, and Equity Bank, the Kenyan bank with the most customers.
CFC Stanbic has 20 outlets, all in Kenya. It also said it plans to raise funds for its expansion programme through a rights issue. ($1 = 84.7000 Kenyan shillings)

(Reporting by Kevin Mwanza; Editing by David Clarke and Hans-Juergen Peters)

Kenya leaves benchmark interest rate at 18 percent

Tue Jun 5, 2012 2:35pm GMT

                                     
NAIROBI (Reuters) - Kenya's central bank left its benchmark interest rate unchanged at 18 percent for a sixth month in a row on Tuesday, saying potential risks to inflation and the stability of the shilling remained.
Eight out of 10 analysts polled by Reuters had expected the bank's Monetary Policy Committee (MPC) to leave its Central Bank Rate on hold, while two called for a cut.
The central bank said there was still excess liquidity in the market, which also posed a risk to demand driven inflation pressure and exchange rate stability.
"Given the above considerations, the Committee observed that there is need to expand the monetary policy instruments in use to address both the inflationary pressures and exchange rate dynamics," the MPC said in statement.
"These instruments should help bring inflation towards the government short-term target of 9 percent, restore exchange rate stability, and address the threat posed by the excess liquidity in the market," it said.
"The Committee therefore decided to retain the Central Bank Rate at 18.0 percent while introducing longer tenor Term Auction Deposits as an additional instrument for liquidity management."

Chesapeake selling 504,000 DJ acres, production

(Reuters) - Chesapeake Energy Corp has put 504,000 acres in the DJ Basin in Wyoming and Colorado up for sale, as the U.S. energy company scrambles to raise cash to close a $9 billion to $10 billion funding shortfall.
The deal includes oil and gas production from 29 wells that the company operates and Chesapeake's interest in 24 nonoperated wells, according to a prospectus on the deal.
Chesapeake, the nation's second-largest gas producer behind Exxon Mobil Corp and for years one the most active gas drillers, sold off a third of its holdings in the region - then around 800,000 acres - to China's CNOOC Ltd for nearly $1.3 billion in 2011.
The company faces a 2012 funding shortfall as natural gas prices are the lowest in a decade.
It has already announced that it is looking to sell its 1.5 million acres of lease holdings in the oil-rich Permian basin as well as find a joint venture partner in another liquids-rich region, the Mississippi Lime basin, in order to raise cash.
Analysts and investors have also called for change at the company after Reuters reported that Chief Executive Officer Aubrey McClendon had taken out more than $1 billion in loans using his interest in thousands of company wells as collateral.
Chesapeake shares were down 1.8 percent at $14.82 on Thursday afternoon on the New York Stock Exchange.
(Reporting by Anna Driver in Houston and Michael Erman in New York; Editing by Lisa Von Ahn and Matthew Lewis)

Kenya's Equity could consider overseas listing -CEO

ADDIS ABABA | Wed May 9, 2012 11:22am EDT
 

May 9 (Reuters) - Kenya's Equity Bank could consider an overseas listing as rapid expansion puts it in danger of outgrowing its home stock market, its chief executive said on Wednesday.
With operations in five east African countries and a knack for rolling out banking services targeted at the lower end of the market, Equity has become one of Nairobi's most actively traded stocks and a darling of foreign investors.

"When Equity raises more money, that will be a major issue that has to be dealt with: Is the market still big enough for any additional capitalisation?" Chief Executive James Mwangi told Reuters on the sidelines of an event ahead of the World Economic Forum on Africa, which runs this week in Ethiopia.
"That would be the time to think about London, South Africa or New York," he said.
Africa's small but fast-growing companies are increasingly looking to do dual listings, particularly in London, to raise their profile among foreign investors.
They are also keen to escape the constraints of their home markets. Despite the surging economic growth, stock markets across frontier Africa remain relatively illiquid.
Equity Bank and the region's biggest telecoms firm Safaricom are typically the most traded stocks on the Nairobi Stock Exchange and can account for the vast majority of volume in some sessions.
In what some analysts have said will be a watershed moment for African equities, Nigerian cement giant Dangote Cement has said it plans to list its global depositary receipts in London.

(Reporting by David Dolan; additional reporting by Duncan Miriri in Nairobi; editing by David Clarke)

Jamie Dimon’s Ahab meets his Moby Dick

By Antony Currie

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

JPMorgan’s Ahab has met his Moby Dick. Chief Executive Jamie Dimon has toiled at length to build a bank strong enough to withstand the greatest of storms. The $2 billion hedging hit the bank disclosed late on Thursday will put JPMorgan to the test. Its capital buffers may be safe for now, but the ramifications are apt to be broader.
The losses come from the bank’s chief investment office. That’s part of the core treasury function at JPMorgan, responsible for managing the entire firm’s balance sheet. That it was being “poorly monitored,” as Dimon conceded, is even more worrying than the discovery of a random rogue trader.
The CIO has made news of late because of reports that one of its overseas traders, Bruno Iksil, was taking such large positions in a credit index to hedge JPMorgan’s risk that he was distorting the market. Rivals labeled him the London whale. Dimon declined to discuss specifics.
But just last month, on the bank’s first-quarter earnings call, executives defended the CIO. Finance chief Doug Braunstein said the bank was “very comfortable” with its positions. Now, Dimon admits a revised hedging strategy was “flawed,” there was “sloppiness” and that “egregious mistakes” were made.
Investors have come to expect such disarming honesty from Dimon. But the mess is reminiscent of similar failings at JPMorgan before his time. In fall 2001, the bank was adamant that its overall exposure to Enron was around $900 million, before later revealing the amount was almost triple that figure. A year later, executives hosted an emergency call with investors – like the one hastily assembled on Thursday afternoon – to announce that all its trading desks had lost money even though all had remained within their risk limits.
This latest mishap is a timely reminder that even a driven banking captain can be hobbled by a trading whale. JPMorgan could suffer still more losses. The amount at risk is nearly twice original estimates and the portfolio is more volatile than JPMorgan expected. What’s becoming increasingly evident is that even a single-minded obsession for risk and balance sheet management isn’t enough to contain a financial whale.

By Antony Currie
May 10, 202