Stock index futures up as "cliff" talks go on

By Ryan Vlastelica and Blaise Robinson

Mon Dec 31, 2012 3:54am EST

n">(Reuters) - U.S. stock index futures signaled a slightly higher open on Wall Street on Monday, with stocks set to snap a five-session losing streak as talks continued in Washington over resolving the "fiscal cliff".

Futures for the S&P 500 were up 0.43 percent, Dow Jones futures up 0.23 percent and Nasdaq 100 futures up 0.09 percent at 0825 GMT.

European markets were slightly down on Monday morning, although trading was muted as markets in Germany, Switzerland, Italy, Denmark, Norway, and Sweden were closed while UK, French, Dutch and Spanish markets were only open for half a session. .EU

Negotiations were set to continue on Monday between lawmakers and the White House on how to deal with the $600 billion in automatic tax hikes and spending cuts that kick in at the start of January and could drag the economy in recession.

The Senate reconvenes on Monday after the open of equity trading with only hours to find some sort of stop-gap deal that would also have to be passed by the House of Representatives.

Despite the slight gains indicated by futures, stocks still could end up falling on Monday when the cash markets open if there is no sign lawmakers are making progress.

While hope has largely evaporated for any sort of broad deal, the lack of panic on markets shows that investors still expect officials to find a solution to the budget problems early in the New Year. The measures that kick in on January 1 will also only have a gradual impact.

"There is always a chance for a massive stalemate, and we could see a lot more volatility if we get to a point where there's no more hope. Right now there's still hope," said Adam Sarhan, chief executive of Sarhan Capital in New York.

Midnight on Monday marks the deadline for a deal, though the government can pass legislation in 2013 that retroactively prevents going over the cliff, an option that is viewed as politically easier.

"At some point, someone will have to blink, or Congress will just come in early in 2013 and vote for a tax cut," Sarhan said. "Something will be done to resolve this."

Stocks dropped on Friday, with significant losses in the last minutes of trading, as prospects for a deal worsened at the beginning of the weekend.

The rise in the futures market on Monday does not necessarily suggest a rally in the making. The cash market and futures markets closed with a wide gulf on Friday, by virtue of the extra 15 minutes of trading in futures.

The S&P 500 closed at 1,402.43 at 4 p.m. ET on Friday, down 1.1 percent, but futures continued to fall before closing 15 minutes later with a loss of 1.9 percent. S&P futures and the S&P cash index don't match point-by-point, but that kind of disparity points to a weak opening in stocks on Monday.

One hour before they had hoped to present a plan on Sunday, Democratic and Republican Senate leaders said they were still unable to reach a compromise.

Earlier in the day, President Barack Obama, appearing on NBC's "Meet the Press," said investors could begin to show greater concerns in the new year.

"If people start seeing that on January 1st this problem still hasn't been solved ... then obviously that's going to have an adverse reaction in the markets," he said.

Investors have remained relatively sanguine about the process, believing that it will eventually be solved. In the past two months markets have not shown the kind of volatility that was present during the fight to raise the debt ceiling in 2011.

The Dow industrials and the S&P 500 each lost 1.9 percent last week, after stocks fell for five straight sessions, which marked the S&P 500's longest losing streak in three months. Equities have largely performed well in the last two months despite constant chatter about the fiscal cliff, but the last few days shows a bit of increased worry.

The CBOE Volatility Index .VIX rose to its highest level since June on Friday, closing at 22.72.

(Additional reporting by David Gaffen; editing by Patrick Graham)

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Egypt PM sees IMF talks resuming in January

CAIRO | Sun Dec 30, 2012 5:12am EST

He was speaking during a news conference to announce a "national economic initiative" which he said aimed to build consensus around the government's economic program.

"We hope that there will not be any fundamental changes in our plan with the IMF because we will summon them in January so we resume discussions to go forward in the matter of the loan," Kandil said.

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"Fiscal cliff" talks turn sour, Obama threatens veto

1 of 2. U.S. President Barack Obama speaks about the fiscal cliff to members of the media in the White House Briefing Room December 19, 2012.

Credit: Reuters/Kevin Lamarque

By Matt Spetalnick and Mark Felsenthal

WASHINGTON | Thu Dec 20, 2012 1:23am EST

WASHINGTON (Reuters) - Talks to avoid a U.S. fiscal crisis stalled on Wednesday as President Barack Obama accused opponents of holding a personal grudge against him while the top Republican negotiator called the president "irrational."

As a year-end deadline nears, Obama and House of Representatives Speaker John Boehner are locked in intense bargaining over a possible deal to avoid the so-called fiscal cliff of harsh tax hikes and automatic spending cuts that could badly damage an already weak economy.

Obama said he was puzzled over what was holding up the talks and told Boehner's Republicans to stop worrying about scoring "a point against the president" or forcing him into concessions "just for the heck of it."

"It is very hard for them to say yes to me," he told a news conference in the White House. "At some point, you know, they've got to take me out of it."

The rise in tensions threatens to unravel significant progress made over the last week.

Boehner and Obama have each offered substantial concessions that have made a deal look within reach. Obama has agreed to cuts in benefits for seniors, while Boehner has conceded to Obama's demand that taxes rise for the richest Americans.

However, the climate of goodwill has evaporated since Republicans announced plans on Tuesday to put an alternative tax plan to a vote in the House this week that would largely disregard the progress made so far in negotiations.

On Wednesday, Obama threatened to veto the Republican measure, known as "Plan B," if Congress approved it.

Boehner's office slammed Obama for opposing their plan, which would raise taxes on households making more than $1 million a year and is a concession from longstanding Republican opposition to increasing any tax rates.

"The White House's opposition to a backup plan ... is growing more bizarre and irrational by the day," Boehner said through his spokesman, Brendan Buck.

Boehner expressed confidence the House would pass the legislation on Thursday. He urged Obama to "get serious" about a balanced deficit reduction plan.

Wall Street is on edge over the fiscal cliff talks although investors still expect a deal. The S&P 500 stock index slipped 0.76 percent on Wednesday.

Business leaders have descended on Washington to lobby for a deal to avoid going over the cliff while putting public finances on a more sustainable path. Without an agreement to narrow deficits over the long run, the United States could eventually lose investors' trust, triggering a debt crisis.

An acrimonious presidential campaign that culminated in Obama's re-election on November 6 has added to the bad blood in Washington between Obama and congressional Republicans.

The two sides also clashed bitterly last year over the government's limit on borrowing - known as the debt ceiling - an episode that nearly led the nation to default on its debt.

On Wednesday, Obama said the fiscal cliff must not get bogged down with negotiations over the debt ceiling, an issue that must be dealt with again early next year.

But Boehner's offer to raise the debt ceiling enough for another year of borrowing is facing opposition from a large group of Republicans, a House Republican aide said.

LITMUS TEST

Any fiscal cliff agreement by Obama and the Republican leadership would need the support of their parties' rank and file in Congress, and Thursday's vote on Plan B will be a test of Boehner's ability to deliver votes on any eventual deal.

Boehner faces opposition from Republican Tea Party conservatives over his concession to raise tax rates. But in a sign some conservatives are coming around to Boehner's position, anti-tax activist Grover Norquist gave his blessing to the bill.

Other conservative groups, including the influential Club for Growth, are urging Republicans to vote against Plan B.

Obama and Boehner appear to have bridged their biggest ideological differences but remain hung up on the mix of tax hikes and spending cuts meant to narrow the budget gap.

"What separates us is probably a few hundred billion dollars," Obama said.

The White House wants taxes to rise on household incomes above $400,000 a year, a concession from Obama's opening proposal for a $250,000 income threshold.

If a deal is not reached soon, some $600 billion in tax hikes and spending cuts are set to begin next month.

Senior administration officials described negotiations as at a standstill and Obama warned he would ask everyone involved in the talks, "what it is that's holding it up?"

Still, the top Republican in the Senate said a resolution to the stalemate could come by the end of the week.

"There's still enough time for us to finish all of our work before this weekend, if we're all willing to stay late and work hard," said Senate Republican leader Mitch McConnell.

Many Democrats dislike the president's offer to reduce benefits to seniors, although some political allies of Obama have given signs they feel they could swallow this concession.

"I don't like these particular changes," said Democratic Representative Chris Van Hollen, a member of the House leadership from Maryland. But he added: "What people are seeing is the president willing to compromise in order to get things done."

(Additional reporting by Roberta Rampton, Thomas Ferraro and Vicki Allen; Kim Dixon and Richard Cowan; Writing by Jason Lange; Editing by Alistair Bell and Eric Beech)

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IntercontinentalExchange in talks to buy NYSE: source

By Lauren Tara LaCapra and John McCrank

Wed Dec 19, 2012 10:57pm EST

n">(Reuters) - IntercontinentalExchange Inc is in talks to buy NYSE Euronext, the operator of the New York Stock Exchange, according to a source familiar with the situation on Wednesday, in a multibillion dollar deal that could help the commodities exchange take on arch rival CME Group Inc.

A deal could be announced as early as Thursday, the source said, declining to be named because the discussions are private.

ICE has proposed a deal that would value NYSE at $33 per share, a 37 percent premium to its closing price on Wednesday, and would be funded one-third by cash and the rest in stock, CNBC said. The Wall Street Journal first reported news of talks.

At the close of trading on Wednesday, NYSE was worth about $5.8 billion, indicating that ICE may be willing to pay roughly $8 billion for the Big Board operator.

Shares of NYSE jumped 12 percent in after-hours trading to $26.96. ICE shares rose 3.1 percent to $132.32.

Representatives for NYSE and ICE declined to comment on the reports.

The move by ICE comes nearly two years after it had jointly bid with Nasdaq OMX Group Inc to purchase NYSE for about $11 billion, then break it up into parts that each of them would acquire. That bid competed with a plan by German exchange operator Deutsche Boerse AG to acquire NYSE in a $9.3 billion deal.

But neither deal was successful, as both attempts separately ran into problems with regulators in the United States and Europe. Questions have lingered about NYSE's future as the U.S. exchange seeks to boost profits in a tough time for financial firms that rely on trading.

NYSE's biggest revenue source is U.S. stock trading, where margins have been under pressure for years. As trading volumes have declined in recent quarters, it has been even harder to boost profits.

ICE, established in 2000 by a group of banks and energy companies, is a fast-growing, profitable exchange operator that has long wanted to expand its derivatives offerings.

In NYSE's Liffe business, ICE CEO Jeff Sprecher would get an interest-rate derivatives business that eluded him when his bid for the Chicago Board of Trade failed a few years ago.

UBS analyst Alex Kramm wrote in research note that the timing of the deal made sense, with regulatory changes driving more over-the-counter contracts toward clearing houses and futures markets. NYSE is trying to build a clearing house in Europe, while ICE already owns one, he wrote.

ICE's plan to buy the NYSE on its own may not face the same challenges it faced when it teamed up with Nasdaq. That bid ran into trouble as U.S. antitrust regulators worried the deal would bring all U.S. stock listings under one roof.

ICE could now still look to divest some of the NYSE businesses, such as stocks and options exchanges, which a Big Board rival such as Nasdaq may still want.

"We struggle to see any business overlap that would result in antitrust issues for the combination," Kramm wrote. "While there is limited information on the potential deal structure, we could envision several scenarios, including one where ICE spins out NYX's non-Liffe businesses to maximize returns."

(Reporting by Lauren Tara LaCapra; additional reporting by Paritosh Bansal; Editing by Gary Hill, Jan Paschal, Phil Berlowitz and Chris Gallagher)

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Republicans put squeeze on Obama in "fiscal cliff" talks

1 of 3. U.S. House Speaker John Boehner (R-OH) speaks at a news conference after a Republican caucus meeting on Capitol Hill in Washington on December 18, 2012.

Credit: Reuters/Joshua Roberts

By Thomas Ferraro and Richard Cowan

WASHINGTON | Wed Dec 19, 2012 1:34am EST

WASHINGTON (Reuters) - Frustrated by their inability to wring more "fiscal cliff" concessions out of President Barack Obama, Republicans in the U.S. House of Representatives announced Tuesday night that they expect to pass their own tax bill as a backup plan to avert the tax hikes and automatic budget cuts set to occur in January.

No one expects the bill, which would extend low tax rates except on income of $1 million and above, to pass the Democratic-controlled Senate. President Barack Obama's latest position puts the threshold for income tax hikes at $400,000.

While the move, called "Plan B" by Republicans, may not prompt Obama to give further ground in his negotiations with House Speaker John Boehner, it could allow Republicans to argue they did what they could to stop tax hikes and the full impact of the "fiscal cliff," which the Congressional Budget Office and economists have said could trigger another recession.

"Why not put on the floor something that's what most Americans think the president is talking about, which is protecting from tax increases everybody but truly millionaires and billionaires?," said Republican Representative Pat Tiberi of Ohio.

When it dies in the Senate, he said, "that's not our problem. We can't be held responsible for what the Senate does."

Polls have consistently suggested that the public is likely to blame Republicans for failure to reach a deal ahead of the December 31 deadline for action.

After important concessions in recent days from both Obama and Boehner, Republicans expressed frustration that the president had not moved further.

The White House seemed unconcerned by the Republican tactic, and stressed Obama's willingness to compromise further.

"The president has demonstrated an obvious willingness to compromise and move more than halfway toward the Republicans," White House spokesman Jay Carney told reporters, adding that Obama is making a "good faith" effort to reach a compromise.

Still, the mood on Capitol Hill was guardedly optimistic.

Global stocks advanced to their highest levels since September. Investors shifted funds to stocks and the euro and pulled away from safe-harbor assets such as bonds, gold and the U.S. dollar.

"They've still got a long way to go, but you can't help but say that the odds are better today than they were on Friday that we'll get some sort of agreement," said Oklahoma Republican Representative Tom Cole.

Hopes of an accord rose Monday night after Obama made a concession with his offer to limit tax increases to incomes exceeding $400,000 per household. That is a higher threshold than the $250,000 that the president had sought earlier.

Boehner, the top Republican in Congress, had earlier conceded on Obama's insistence that tax rates rise on the wealthiest Americans, but the two have been unable to agree on what income levels should be included in that category.

Analysts said Obama and Boehner may strike a compromise at $500,000 or close to that, though time was running short.

One House Republican aide, asked about prospects for "Plan B" on the House floor, said: "It wouldn't be surprising ... if a lot of conservatives balk at something like that." The House's second ranking Republican, Eric Cantor, said he was confident his party members in the House would back the bill.

'WE CAN DO BETTER'

Even as he presented the measure, Boehner said he would continue to negotiate with Obama on a broader agreement.

"Plan B is Plan B for a reason. It's a less-than-ideal outcome. I've always believed we can do better," Boehner said.

The expiration of low tax rates enacted under former President George W. Bush is a key component of the "fiscal cliff" that lawmakers are trying to prevent from taking hold next month, along with deep automatic government spending cuts.

Often challenged by the conservative wing of his caucus, Boehner held Republican lawmakers together in support of his efforts to forge a deal with Obama. The speaker emerged largely unscathed from a potentially tough meeting with his fellow House Republicans on Tuesday morning.

Representative Darrell Issa, a key committee chairman, said his fellow House Republicans "were supportive of the speaker. ... I saw no one there get up and say, 'I can't support the speaker.'"

With opinion polls showing broad support in the United States for raising taxes on the wealthiest Americans and Obama still buoyed by his re-election last month, the Republicans' traditional opposition to tax hikes has waned somewhat.

The Obama-Boehner talks have largely overcome stark ideological differences and are focused increasingly on narrower disagreements over numbers.

COST-OF-LIVING INCREASES

Obama also may face unrest from within his party. Liberal Democrats were likely to oppose a key compromise he has offered to permit shrinking cost-of-living increases for all but the most vulnerable beneficiaries of the Social Security retirement program. His proposal calls for using a different formula, known as "chained Consumer Price Index," to determine the regular cost-of-living increases, essentially reducing benefits.

"I am committed to standing against any benefit cuts to programs Americans rely on, and tying Social Security benefits to chained CPI is a benefit cut," Democratic Representative Keith Ellison said in a statement.

Obama also moved closer to Boehner on the proportion of a 10-year deficit reduction package that should come from increased revenue, as opposed to cuts in government spending. Obama is now willing to accept a revenue figure of $1.2 trillion, down from his previous $1.4 trillion proposal.

Boehner's latest proposal calls for $1 trillion in new tax revenue from higher tax rates and the curbing of some tax deductions taken by high-income Americans.

Missing from Obama's latest offer was any extension of the so-called "payroll tax holiday" that ends on January 1, bringing an immediate tax increase on wage earners.

Possible plans to produce cuts in spending for Medicare and Medicaid, the government health insurance programs for seniors and low-income Americans respectively, remained to be discussed.

Boehner and Obama have made headway on the politically explosive question of the president's ability to avoid constant battles over raising the nation's debt ceiling, which controls the level of borrowing by the government. Boehner is ready to give Obama a year of relative immunity from conservative strife over the debt ceiling, while Obama is pushing for two years.

(Additional reporting by Thomas Ferraro, Rachelle Younglai, David Lawder, Richard Cowan, Matt Spetalnick, Roberta Rampton, Jeff Mason and Fred Barbash; Writing by Kevin Drawbaugh; Editing by Alistair Bell, Will Dunham and Paul Simao)

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U.S. slaps duties on China wind towers as high-level talks begin

A worker wearing a gas mask walks past wind turbines outside the assembly workshop of the Guodian United Power Technology Company, at the city of Baoding, Hebei Province June 20, 2011.

Credit: Reuters/David Gray

WASHINGTON | Tue Dec 18, 2012 4:54pm EST

WASHINGTON (Reuters) - The United States on Tuesday pressed forward with plans to slap steep punitive duties on wind turbine towers from China, keeping up friction on the clean energy front as it welcomed a high-level Chinese delegation for trade and economic talks.

The U.S. Commerce Department set final anti-dumping duties ranging from 44.99 to 70.63 percent on utility-scale towers manufactured in China to offset what it said was unfairly low pricing and additional countervailing duties of 21.86 to 34.81 percent to combat Chinese government subsidies.

The department also slapped final anti-dumping duties of 51.40 to 58.49 percent on wind towers from Vietnam.

A U.S. trade panel has final approval over the duties and is expected to vote on the case in late January.

The action came as a Chinese delegation led by Vice Premier Wang Qishan was in Washington for the U.S.-China Joint Commission on Commerce and Trade meeting, a high-level bilateral forum to address barriers to trade and investment.

Wang will attend a dinner on Tuesday evening hosted by U.S. Trade Representative Ron Kirk and Acting Commerce Secretary Rebecca Blank and is expected to meet with U.S. Treasury Secretary Timothy Geithner on Thursday morning.

The main meeting on Wednesday takes place against the backdrop of high-stakes negotiations between President Barack Obama and House of Representatives Speaker John Boehner on a deal to avert the so-called "fiscal cliff" of automatic tax increases and spending cuts that begin early next year.

The White House is also pushing for an increase in the nation's $16.4 trillion statutory debt cap as part of any deal. The U.S. Treasury expects to reach the debt ceiling by year-end and will likely run out of options to free up more borrowing capacity by sometime in February, risking a potential default.

China is the United States' largest creditor, giving it a deep interest in Washington's budget debate.

U.S. companies are not expecting sweeping new commitments from China from Wednesday's meeting, but are hoping for action on longstanding concerns ranging from Chinese barriers to U.S. farm products to policies that pressure U.S. companies to transfer valuable technology to China to do business there.

(Reporting by Doug Palmer; Editing by Dan Grebler)

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Republicans seek to squeeze more from Obama in "fiscal cliff" talks

1 of 3. U.S. House Speaker John Boehner (R-OH) speaks at a news conference after a Republican caucus meeting on Capitol Hill in Washington on December 18, 2012.

Credit: Reuters/Joshua Roberts

By Richard Cowan and Kim Dixon

WASHINGTON | Tue Dec 18, 2012 4:50pm EST

WASHINGTON (Reuters) - Republicans tried to squeeze more concessions from the White House on taxes on Tuesday in political maneuvering for a deal that would prevent the U.S. economy from going over the "fiscal cliff" in the new year.

With an agreement between President Barack Obama and House of Representatives Speaker John Boehner looking more likely, the Republicans pressed for Democrats to agree to raising taxes only on people making incomes exceeding $1 million a year.

The Republican proposal, known as Plan B, was part of a political dance by both parties to try to spin the narrative in their favor even as they edged closer to agreement.

The White House rejected the offer but remained confident of an agreement after both sides made compromises in recent days.

"The president has demonstrated an obvious willingness to compromise and move more than halfway toward the Republicans," White House spokesman Jay Carney told reporters, adding that Obama is making a "good faith" effort to reach a compromise.

While a bipartisan bargain could still fall apart, hopes of an accord rose on Monday night after Obama made a concession to Republicans by offering to limit tax increases to incomes exceeding $400,000 per household. That is a higher threshold than the $250,000 he had sought earlier.

Boehner, the top Republican in Congress, said he planned to move a "Plan B" bill to the House floor, possibly this week, in a move that could spur forward his talks with Obama. The House in controlled by Republicans and the Senate by Democrats.

The expiration of low tax rates enacted under former President George W. Bush is a key component of the "fiscal cliff" that lawmakers are trying to prevent from taking hold next month, along with deep automatic government spending cuts. Left unchecked, these changes could trigger another recession, economists have warned.

Analysts said Obama and Boehner may strike a tax compromise at $500,000 or close to that.

'SUPPORTIVE OF THE SPEAKER'

Often challenged by the conservative wing of his caucus, Boehner held Republican lawmakers together in support of his efforts to forge a deal with Obama. The speaker emerged largely unscathed from a potentially tough meeting with his fellow House Republicans on Tuesday morning.

Representative Darrell Issa, a key committee chairman, said his fellow House Republicans "were supportive of the speaker. ... I saw no one there get up and say, 'I can't support the speaker.'"

With opinion polls showing broad support in the United States for raising taxes on the wealthiest Americans and Obama still buoyed by his re-election last month, the Republicans' traditional opposition to tax hikes has waned somewhat.

The Obama-Boehner talks have largely overcome stark ideological differences and are focused increasingly on narrower disagreements over numbers, which has soothed nervous financial markets.

Optimism about improved chances for an agreement helped lift the Dow Jones industrial average of 30 industrial stocks up less than 1 percent to nearly a two-month high at midday. The gain followed a steep rally on Monday.

Obama could face unrest from rank-and-file fellow Democrats. Liberals were likely to oppose a key compromise he has offered to permit shrinking cost-of-living increases for all but the most vulnerable beneficiaries of the Social Security retirement program. His proposal calls for using a different formula, known as "chained Consumer Price Index," to determine the regular cost-of-living increases, essentially reducing benefits.

"I am committed to standing against any benefit cuts to programs Americans rely on, and tying Social Security benefits to chained CPI is a benefit cut," Democratic Representative Keith Ellison said in a statement.

Before Obama's concession on Monday to set the tax-rate increase floor at $400,000 per household, Boehner had earlier conceded that the Bush-era tax rates could be allowed to expire for the wealthiest Americans. He had opposed this for months.

Obama also moved closer to Boehner on the proportion of a 10-year deficit reduction package that should come from increased revenue, as opposed to cuts in government spending. Obama is now willing to accept a revenue figure of $1.2 trillion, down from his previous $1.4 trillion proposal.

Boehner's latest proposal calls for $1 trillion in new tax revenue from higher tax rates and the curbing of some tax deductions taken by high-income Americans.

Missing from Obama's latest offer was any extension of the so-called "payroll tax holiday" that ends on January 1, bringing an immediate tax increase on wage earners.

Possible plans to produce cuts in spending for Medicare and Medicaid, the government health insurance programs for seniors and low-income Americans respectively, remained to be discussed.

Boehner and Obama have made headway on the politically explosive question of the president's ability to avoid constant battles over raising the nation's debt ceiling, which controls the level of borrowing by the government. Boehner is ready to give Obama a year of relative immunity from conservative strife over the debt ceiling, while Obama is pushing for two years.

(Additional reporting by Thomas Ferraro, Rachelle Younglai, David Lawder, Richard Cowan, Matt Spetalnick, Roberta Rampton, Jeff Mason and Fred Barbash; Writing by Kevin Drawbaugh; Editing by Alistair Bell and Will Dunham)

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