NATO attack was blatant aggression - Pakistan army

(Reuters) – A senior Pakistani army official has said a NATO cross-border air attack that killed 24 soldiers was a deliberate, blatant act of aggression, hardening Pakistan’s stance on an incident which could hurt efforts to stabilise Afghanistan.

In a briefing to editors carried in local newspapers on Wednesday, Major-General Ishfaq Nadeem, director general of military operations, also said NATO forces were alerted they were attacking Pakistani posts, but helicopters kept firing.

“Detailed information of the posts was already with ISAF International Security Assistance Force), including map references, and it was impossible that they did not know these to be our posts,” The News quoted Nadeem as saying in the briefing held at army headquarters on Tuesday.

The NATO attack early Saturday shifted attention away from Pakistan’s widely questioned performance against militants who cross its border to attack U.S.-led NATO forces in Afghanistan, and has given the military a chance to reassert itself.

On Tuesday, Pakistan pulled out of an international conference on Afghanistan, an angry riposte after the attack by NATO plunged the region deeper into crisis.

Islamabad’s decision to boycott next week’s meeting in Bonn, Germany, will deprive the talks of a key player that could nudge Taliban militants into a peace process as NATO combat troops prepare to leave Afghanistan in 2014.

U.S. Secretary of State Hillary Clinton said on Wednesday she regretted Pakistan’s decision to boycott next week’s international conference on Afghanistan but hoped to secure Islamabad’s cooperation in future.

“Nothing will be gained by turning our backs on mutually beneficial cooperation. Frankly it is regrettable that Pakistan has decided not to attend the conference in Bonn,” Clinton told a news conference in South Korea.

The army, which has ruled the country for more than half of its history and sets security and foreign policy, faced strong criticism from both the Pakistani public and its ally, the United States, after the secret U.S. raid that killed Osama bin Laden.

The al Qaeda leader had apparently been living in a Pakistani garrison town for years before U.S. special forces found and killed him in a unilateral operation.

Pakistanis criticised the military for failing to protect their sovereignty, and angry U.S. officials wondered whether some members of military intelligence had sheltered him.

The army seems to have regained its confidence, and anti-NATO protests suggest it has won the support of the public in a country where anti-American sentiment runs high even on rare occasions when relations with Washington are healthy.

Exactly what happened at the Pakistani posts along an unruly and poorly defined border is still unclear. NATO has promised to investigate.

A Western official and an Afghan security official who requested anonymity said NATO troops were responding to fire from across the border. Pakistan said earlier the attack was unprovoked.

Both the Western and Pakistani explanations are possibly correct: that a retaliatory attack by NATO troops took a tragic, mistaken turn in harsh terrain where differentiating friend from foe can be difficult.

Nadeem was adamant that all communications channels had informed NATO that it was attacking Pakistani positions.

“They continued regardless, with impunity,” The News quoted him as saying.

(Writing by Michael Georgy; Editing by Sugita Katyal)

Samsung scores Australia win vs Apple in patent battle

(Reuters) – An Australian court on Wednesday reversed a ban on the sale of Samsung Electronics Co Ltd’s (005930.KS) Galaxy tablet computers in the country, handing it a rare victory against rival Apple Inc (AAPL.O) in the firms’ intensifying global patent war.

Samsung welcomed the decision, but the ruling does not mean it can immediately resume sales because the court granted Apple a stay on lifting the Australian sales ban until Friday afternoon.

“It’s hard to expect the ruling to have a major positive impact on Samsung’s tablet business or legal cases in other countries as Apple could appeal against the ruling and sales won’t be restored anytime soon,” said Song Myung-sub, an analyst at HI Investment & Securities in Seoul.

“Apple will continue to dominate the tablet market as Amazon appears to be the only viable real threat at the moment and other vendors including Samsung continue to struggle.”

Lawyers for Apple declined to comment to reporters after the ruling, but the request for a stay on lifting the temporary sales ban could give time for an appeal to be launched.

Still, the Federal Court’s decision to support Samsung’s appeal is a boost for the South Korean technology company ahead of the busy pre-Christmas shopping season. While the Australian market is not large, it is a key launch market for Apple products outside the United States.

Apple was granted an injunction against Samsung in October, temporarily preventing Australian sales of the Galaxy 10.1 tab, the hottest competitor to Apple’s iPad, which dominates global tablet sales.

“We believe the ruling clearly affirms that Apple’s legal claims lack merit,” Samsung Electronics Australia said in a statement. The company said it would soon make an announcement on the market availability of the Galaxy Tab 10.1 in Australia.

Justice Lindsay Foster told the court the interlocutory injunction granted by Justice Annabelle Bennett last month should be immediately discharged. But he also said he would grant a stay on orders until Friday 4 p.m. (0500 GMT) and said Apple would have to go to the High Court if it wanted this extended.

BATTLE IN 10 COUNTRIES

Apple and Samsung have been locked in an acrimonious battle in 10 countries involving smartphones and tablets since April, with the Australian dispute centring on touch-screen technology used in Samsung’s new tablet.

Apple successfully moved to block Samsung from selling its tablets in Germany and a case in the Netherlands has forced Samsung to modify some smartphone models.

Apple also filed a preliminary injunction request in Germany on Monday to ban sales of Samsung’s Galaxy Tab 10.1N, a redesigned version of 10.1-inch galaxy tab model, whose sales are banned in the country.

The quarrel between Samsung and Apple had triggered expectations some of the pair’s $5 billion-plus relationship may be up for grabs. Samsung counts Apple as its biggest customer and makes parts central to Apple’s mobile devices.

The legal battle in Australia doesn’t stop at tablet computers. Samsung has sought to block sales of Apple’s latest iPhone 4S, which went on sale in early October, by filing preliminary sales injunction requests in four countries, including Australia.

An Australian court has agreed to hear that case in March and April of 2012, with sales allowed to continue as normal ahead of the hearing on alleged patent infringements.

Shares in Samsung, valued at around $140 billion, were up 0.1 percent in a Seoul market .KS11 down 0.8 percent.

(Additional reporting by Miyoung Kim in Seoul; Editing by Lincoln Feast, Ed Davies and Matt Driskill)

Europe ramps up rescue fund, may turn to IMF

(Reuters) – Euro zone ministers agreed to ramp up the firepower of their rescue fund and may turn to the IMF for more help as a stunning leap in Italy’s borrowing costs pushed the region closer to financial disaster.

Two years into Europe’s sovereign debt crisis, investors are fleeing the euro zone bond market, European banks are dumping government debt, south European banks are bleeding deposits and a recession looms, fuelling doubts about the survival of the single currency.

“The situation in Europe and the world has significantly worsened over the past few weeks. Market stress has intensified,” said Christian Noyer, France’s central bank governor and a governing council member of the European Central Bank.

“We are now looking at a true financial crisis — that is a broad-based disruption in financial markets,” he said at a conference in Singapore.

The Eurogroup, which brings together finance ministers from the 17 euro zone members, agreed on a detailed plan to insure the first 20-30 percent of new bond issues for countries having funding difficulties and to create co-investment funds to attract foreign investors to buy euro zone government bonds.

Both schemes would be operational by January with about 250 billion euros from the euro zone’s EFSF bailout fund available to leverage after funding a second rescue programme for Greece, Eurogroup chairman Jean-Claude Juncker said.

The aim was for the International Monetary Fund to match and support the new firepower of the European Financial Stability Facility, Juncker told a news conference.

“We also agreed to rapidly explore an increase of the resources of the IMF through bilateral loans, following the mandate from the G20 Cannes summit, so that the IMF could adequately match the new firepower of the EFSF and cooperate even more closely,” he said.

But with China and other major sovereign funds cautious about investing more in euro zone debt, EFSF chief Klaus Regling said he did not expect investors to commit major amounts to the leveraging options in the next days or weeks.

He said he couldn’t put a figure on the final size of the leveraged fund.

“It is really not possible to give one number for leveraging because it is a process. We will not give out a hundred billion next month, we will need money as we go along,” he said.

Most analysts agree the euro zone needs to adopt profound measures to combat a crisis that is sucking in some of the bloc’s biggest economies.

Italy, the euro zone’s third-biggest economy, had to offer a 7.89 percent yield to sell 3-year bonds, a euro lifetime high and a staggering jump from 4.93 percent paid in October. Yields on 10-year debt rose to 7.56 percent from 6.06 percent.

The European Commission’s top economic official, Olli Rehn, said Prime Minister Mario Monti’s new government would have to take extra deficit cutting measures beyond an austerity plan already adopted to meet its balance budget promise in 2013.

The Italian yields were above the levels at which Greece, Ireland and Portugal were forced to apply for international bailouts. But global stocks and the euro held firm on relief at strong demand for the Italian debt, with the maximum 7.5 billion euros sold.

LOOKING TO IMF IF EFSF FALLS SHORT

The Eurogroup ministers agreed to release their portion of an 8 billion euro aid payment to Greece, the 6th instalment of 110 billion euros of EU/IMF loans agreed last year and necessary to help Athens stave off the immediate threat of default.

Juncker said the money would be released by mid-December, once the IMF signs off on its portion early next month.

With Regling unable to put a single figure on the scaled up EFSF, which EU leaders had hoped would reach 1 trillion euros, finance ministers said the IMF may have to provide more help, possibly bolstered with European money.

“We will have to look at the IMF which can also make available additional funds for the emergency fund. I think countries in Europe and outside of Europe should be prepared to give more money to the IMF,” Dutch Finance Minister Jan Kees de Jager told reporters.

“We have talked about leverage though private money, but it would be two or two and a half times an increase so not sufficient and we have to look for other solutions to compliment the EFSF and that in my mind will be the IMF,” he said.

With Germany opposed to the idea of the European Central Bank providing liquidity to the EFSF or acting as a lender of last resort, the euro zone needs a way of calming markets.

The ECB shows no sign yet of responding to widespread calls to massively increase its bond-buying.

EU sources said one option being explored is for euro system central banks to lend to the IMF so it can in turn lend to Italy and Spain while applying IMF borrowing conditions.

“We will discuss with the ECB. The ECB is an independent institution, so we will put on the table some proposals and after that it is for the ECB to take the decision,” Belgian Finance Minister Didier Reynders told reporters.

The ECB failed for the first time since May to fully offset 203.5 billion euros in euro zone government bond purchases, adding to fears that the debt crisis is ratcheting up stress on the bloc’s banking sector.

A Reuters poll of economists showed a 40 percent chance of the ECB stepping up bond-buying with freshly created money within six months, something it has opposed.

The poll forecast a 60 percent chance of an ECB rate cut to 1.0 percent next week and a big majority of economists said they expect the central bank to announce new long-term liquidity tenders to help keep banks afloat at its next meeting on Dec 8.

“It is essential to stabilise European bond markets,” Noyer said in Singapore. “We have to recognise that the necessary degree of fiscal adjustment is heavily dependent on the level of market confidence.”

MONTI TO UNVEIL HIS PLANS

Monti outlined his fiscal and economic reform plans to the euro zone ministers amid reports, officially denied in Rome and Washington, that Italy has held preliminary discussions with the IMF on financial support.

Italy has debts of 1.9 trillion euros – equivalent to 120 percent of national output – and needs to refinance some 340 billion euros of maturing debt next year with big redemptions starting in late January.

Most analysts say the ECB will have to intervene more decisively on bond markets and the euro zone will have to agree eventually to issue common bonds, but Germany opposes both.

Berlin has pinned its efforts on a drive for closer fiscal integration among euro zone members.

Chancellor Angela Merkel told lawmakers she would not make a deal at a December 9 European Union summit to drop resistance to joint euro zone bonds in exchange for progress on strengthening fiscal rules, MPs quoted her as saying.

She told a closed-door meeting Europe was “a long way from euro bonds”, suggesting they may not be ruled out forever.

For now, Germany and France are pressing for coercive powers to reject euro zone members’ budgets that breach EU rules, alarming some smaller nations who fear the plans by-pass mechanisms for ensuring equal treatment.

Berlin and Paris aim to outline proposals for a fiscal union before the EU summit that is increasingly seen by investors as a last chance to avert a breakdown of the single currency area.

(Additional reporting by Marius Zaharia in London, Erik Kirschbaum in Berlin, Robin Emmott and John O’Donnell in Brussels, Saeed Azhar and Kevin Lim in Singapore; Writing by Paul Taylor/Mike Peacock; Editing by Neil Fullick)

Key facts on India's retail sector

REUTERS – In one of the most eagerly anticipated economic reforms of Prime Minister Manmohan Singh’s tenure, India has approved foreign direct investment in supermarkets, paving the way in for foreign retailers such as Wal-Mart Stores Inc.

After years of delay due to political opposition, Singh’s cabinet on November 24 approved 51 percent foreign ownership in multi-brand retail, with conditions, and full ownership in single-brand retail.

Following are some facts on India’s retail sector:

* The retail sector in the nation of 1.2 billion people is estimated to have annual sales of $500 billion, with nearly 90 percent of the market controlled by tiny family-run shops.

* Organised retail, or large chains, makes up less than 10 percent of the market, but is expanding at 20 percent a year. This is driven by the emergence of shopping centres and malls, and a middle class of close to 300 million people that is growing at nearly 2 percent a year.

* India also allows FDI in cash-and-carry, or wholesale, ventures. Restrictions on foreign investment in retail existed because of opposition from millions of small shopkeepers who are valuable vote banks during elections.

* Previously, India allowed 51 percent FDI in single-brand retail and 100 percent in wholesale operations, but no ownership in multi-brand retail.

LOCAL COMPANIES

* Pantaloon Retail (PART.NS), India’s largest listed retailer and part of the Future Group, runs stores under its lifestyle brands Pantaloon and Central. Future also operates the Big Bazaar hypermarket chain and supermarket brand Food Bazaar, under the unlisted Future Value Retail.

The group has 500 stores across formats, and occupies a total retail space of 15 million square feet in India.

Future has for long been linked to France’s Carrefour (CARR.PA) for a partnership in hypermarkets. Pantaloon’s net profit increased 69 percent to 1.42 billion rupees in the year to end-June, on net sales of 122.1 billion rupees.

* Second-ranked Reliance Retail is part of Reliance Industries (RELI.NS), India’s largest listed group headed by Mukesh Ambani, who tops the Forbes India rich list. Reliance Retail operates 1,050 stores across neighbourhood stores, supermarkets and hypermarkets.

In the year to end-March, it posted a net loss of 4.46 billion rupees on sales of $1.1 billion, a tiny share of the group’s total revenue of $53 billion. It has said it doesn’t plan to partner with any global retailer.

* Shoppers Stop (SHOP.NS), part of the K Raheja Group which operates in real estate, has around 644 stores across brands and formats and 12 Hypercity hypermarkets.

It operates 3.93 million square feet of retail space and its loss-making Hypercity is open to partnerships with foreign groups. It posted a net loss of 15.1 million rupees on sales of 5.81 billion rupees in the year to end-March.

* Trent (TREN.NS), part of the salt-to-steel Tata Group, operates 72 stores across formats and runs the Westside range of apparel stores, and hypermarkets under Star Bazaar. It signed a franchisee agreement with Tesco Plc (TSCO.L) under which Star Bazaar shops use the British firm’s supply chains and infrastructure.

Trent made a net profit of 74.9 million rupees on net sales of 15.2 billion rupees during fiscal 2011.

* Aditya Birla Retail is the unlisted retail arm of India’s telecoms-to-cement conglomerate Aditya Birla Group headed by Kumar Mangalam Birla, who ranks 97th on the Forbes global rich list.

The company operates around 580 supermarket and hypermarket stores under the More brand. The loss-making retail unit expects to be profitable after tax by 2015. It has said it will evaluate partnerships with global firms.

MAJOR FOREIGN COMPANIES

* Wal-Mart Stores Inc (WMT.N) has a cash-and-carry operation with Indian partner Bharti Enterprises, the parent of leading mobile provider Bharti Airtel (BRTI.NS), and will add up to 10 new cash-and-carry stores this year to its 6 existing stores.

* Tesco, Britain’s largest retailer, has a tie-up with Trent’s Star Bazaar hypermarket chain. Tesco is also looking to enter the wholesale market through the tie-up.

* Germany’s Metro AG (MEOG.DE) operates 6 wholesale stores in India and will add up to 4 new stores this year.

* Carrefour has 2 cash-and-carry stores in New Delhi. The world’s No. 2 retailer has been seeking a local partner to enter the hyper or supermarket sectors.

(Compiled by Nandita Bose)

Pakistan PM: No more 'business as usual' with U.S.

(Reuters) – Pakistan’s prime minister ruled out “business as usual” with the United States on Monday after a NATO attack killed 24 Pakistani soldiers and the army threatened to curtail cooperation over the war in Afghanistan.

Saturday’s incident on Pakistan’s border with Afghanistan has complicated U.S. attempts to ease a crisis in relations with Islamabad and stabilize the region before foreign combat troops leave Afghanistan.

“Business as usual will not be there,” Prime Minister Yusuf Raza Gilani told CNN when asked if ties with the United States would continue. “We have to have something bigger so as to satisfy my nation.”

While the NATO strike has shifted attention from what critics say is Islamabad’s failure to go after militants, Gilani’s comments reflect the fury of Pakistan’s government and military – and the pressure they face from their own people.

“You cannot win any war without the support of the masses,” Gilani said. “We need the people with us.”

The relationship, he said, would continue only if based on “mutual respect and mutual interest.” Asked if Pakistan was receiving that respect, Gilani replied: “At the moment, not.”

Gilani’s comments cap a day of growing pressure from the Pakistani military, which threatened to reduce cooperation on peace efforts in Afghanistan.

“This could have serious consequences in the level and extent of our cooperation,” military spokesman Major General Athar Abbas told Reuters.

Pakistan has a long history of ties to militant groups in Afghanistan so it is uniquely positioned to help bring about a peace settlement, a top foreign policy and security goal for the Obama administration.

Washington believes Islamabad can play a critical role in efforts to pacify Afghanistan before all NATO combat troops pull out in 2014 and it cannot afford to alienate its ally.

U.S. national security officials met at the White House on Monday to discuss Pakistan following the weekend incident, which prompted Pakistan to shut down NATO supply routes into Afghanistan in retaliation and which was the worst of its kind since Islamabad allied itself with Washington in 2001.

“We have been here before. But this time it’s much more serious,” said Farzana Sheikh, associate fellow of the Asia program at Chatham House in London.

“The government has taken a very stern view. It’s not quite clear at this stage what more Pakistani authorities can do, apart from suspending supplies to NATO forces in Afghanistan.”

The weekend attack was the latest perceived provocation by the United States, which infuriated and embarrassed Pakistan’s powerful military in May with a unilateral special forces raid that killed al Qaeda leader Osama bin Laden.

CHINA AND RUSSIA VOICE CONCERN

Adding a new element to tensions and giving a diplomatic boost to Islamabad, China said it was “deeply shocked” by the incident and expressed “strong concern for the victims and profound condolences for Pakistan.”

Russia, seeking warmer relations with Pakistan as worry grows over the NATO troop pullout in Afghanistan, said it was “unacceptable” to violate the sovereignty of states even when hunting “terrorists.”

U.S. State Department spokesman Mark Toner said Pakistan was rethinking whether to attend next week’s conference on Afghanistan in Bonn, Germany, although Washington had not yet received any definitive decision from the Pakistanis.

“We understand that they are reconsidering,” Toner told reporters. “We hope that they do in fact attend this conference because this is a conference about … building a more stable and prosperous and peaceful Afghanistan and so that is very much in the interests of Pakistan.”

On Saturday, NATO helicopters and fighter jets attacked two military outposts in northwest Pakistan, killing the 24 soldiers and wounding 13, the army said.

NATO described the killings as a “tragic, unintended incident.” U.S. officials say a NATO investigation and a separate American one will seek to determine what happened. The U.S. investigation will provide initial findings by Dec. 23, military officials said.

“It is very much in America’s national security interest to maintain a cooperative relationship with Pakistan because we have shared interests in the fight against terrorism, and so we will continue to work on that relationship,” White House spokesman Jay Carney told reporters.

A Western official and an Afghan security official who requested anonymity said NATO troops were responding to fire from across the border at the time of the incident.

Pakistan’s military denied NATO forces had come under fire before launching the attack, saying the strike was unprovoked and reserving the right to retaliate.

Abbas, the military spokesman, said the attack lasted two hours despite warnings from Pakistani border posts.

“They were contacted through the local hotline and also there had been contacts through the director-general of military operations. But despite that, this continued,” he said.

After a string of deadly incidents in the largely lawless and confusing border region, NATO and Pakistan set up the hotline that should allow them to communicate in case of confusion over targets and avoid “friendly fire.”

Both the Western and Pakistani explanations are possibly correct: that a retaliatory attack by NATO troops took a tragic, mistaken turn in harsh terrain where differentiating friend from foe can be difficult.

An Afghan Taliban commander, Mullah Samiullah Rahmani, said the group had not been engaged in any fighting with NATO or Afghan forces in the area when the incident took place. But he added that Taliban fighters control several Afghan villages near the border with Pakistan.

A similar cross-border incident on Sept. 30, 2010, which killed two Pakistani service personnel, led to the closure of one of NATO’s supply routes through Pakistan for 10 days.

OBAMA EFFIGY BURNED

The main Pakistani association that delivers fuel to NATO forces in Afghanistan said it would not resume supplies soon in protest against the NATO strike.

In the Mohmand region, where the attack took place, hundreds of angry tribesmen yelled “Death to America.” About 200 lawyers protested in Peshawar city, some burning an effigy of U.S. President Barack Obama.

Pakistani editorials were strident. “We have to send a clear and unequivocal message to NATO and America that our patience has run out. If even a single bullet of foreign forces crosses into our border, then two fires will be shot in retaliation,” said one mass-circulation Urdu language paper.

Pakistan joined the U.S.-led war on militancy launched after al Qaeda’s attacks on the United States on Sept. 11, 2001, and has won billions of dollars in aid in return.

But the unstable, nuclear-armed country has often been described as an unreliable ally and the United States has resorted to controversial drone aircraft strikes against militants on Pakistani territory to pursue its aims.

U.S. Senator John McCain, a leading voice of Republicans on military issues, echoed frustration in Washington when he said the loss of life was “tragic” but that Pakistani intelligence still supported militants fueling violence in Afghanistan.

“Certain facts in Pakistan continue to complicate significantly the ability of coalition and Afghan forces to succeed in Afghanistan,” he said.

(Additional reporting by Zeeshan Haider and Rebecca Conway in ISLAMABAD, Izaz Mohmand, Jibran Ahmad and Faris Ali in PESHAWAR, William Maclean in LONDON and Missy Ryan, Caren Bohan, Susan Cornwell and Arshad Mohammed in WASHINGTON; Writing by Michael Georgy; Editing by Eric Walsh)

India weakens retail reform as opposition grows

(Reuters) – The government appeared to be backtracking on Monday over a move to allow foreign supermarket giants such as Wal-Mart to enter Asia’s third-largest economy, as political opposition grew over one of the most far-reaching economic reforms in years.

Powerful chief ministers of several government-allied states and some legislators within the ruling Congress party are pressing the government to reverse the decision, which was announced only late last week.

Parliament was adjourned for a fifth day amid uproar from legislators, and the Press Trust of India reported that Sonia Gandhi, Congress party head and India’s most powerful politician, discussed how to end a standoff which threatens some key bills.

The government, with a parliamentary majority of around 18 seats, may call a meeting of the main political parties on Tuesday.

“There has to be some kind of rollback,” said one government minister, who declined to be named.

In a statement, the government said foreign retailers would have to source 30 percent of their goods from small Indian industries, after previously saying these purchases could come from any small industries globally.

VOTE OF CONFIDENCE?

The uproar could force a vote on one of the government’s biggest reforms in years, one that would allow global chains like Wal-Mart Stores Inc and Carrefour up to a 51 percent stake in retail ventures.

Losing that vote could, in theory, spark a wider vote of no-confidence in the Congress party-led ruling coalition.

The DMK and the Trinamool Congress, two of the government’s crucial parliamentary allies, oppose the reform, and the Bharatiya Janata Party (BJP), said it will push for a vote, known as an “adjournment motion”, over the new retail regulations.

The reform briefly breathed new life into the government of Prime Minister Manmohan Singh, who ushered in free market reforms 20 years ago, but who has since been bogged down by corruption scandals and increasingly has been seen as a lame duck leader.

The reform was always seen as a politically risky move, coming ahead of major state elections next year that could redraw the political map ahead of 2014 general elections.

The opposition claims the retail move will cost millions of small shopkeepers’ jobs. Supporters say it will draw in much-needed investment to a sputtering economy, with more spending on cold storage and warehousing that will ease supply-side pressures that have driven inflation close to double digits.

“The government has lost its mind. Does it not know what its impact on the U.P. elections will be?” a Congress lawmaker said, referring to elections next year in Uttar Pradesh.

(Additional reporting by Nigam Prusty; Writing by Alistair Scrutton; Editing by John Chalmers and Ian Geoghegan)

Facebook gearing up for 2012 IPO - source

REUTERS – Facebook, the world’s largest Internet social network, is preparing for a initial public stock offering next year, according to a source familiar with the matter.

Facebook is exploring raising $10 billion, the Wall Street Journal said on Monday. It hopes the offering will value the company at more than $100 billion, according to WSJ, which first reported the story.

Facebook’s Chief Financial Officer, David Ebersman, had discussed a public float with Silicon Valley bankers but founder and Chief Executive Officer Mark Zuckerberg had not decided on any terms and his plans could change, the Journal said.

The social network, which now claims more than 800 million members after seven years of explosive growth, has not selected bankers to manage what would be a very closely watched IPO. But it had drafted an internal prospectus and was ready at any moment to pull the IPO trigger, the Journal cited people familiar with the matter as saying.

At $100 billion valuation, the company started by Zuckerberg in a Harvard dorm room would have double the valuation of Hewlett-Packard, the Journal said.

A formal S-1 filing could come before the end of the year, though nothing was decided, the newspaper added.

A Facebook representative declined to comment.

Silicon Valley start-ups have this year begun to test investor appetite for a new wave of dotcoms. If it does debut in 2012, Facebook’s IPO would dwarf that of any other dotcom waiting to go public.

“Farmville” creator Zynga has filed for an IPO of up to $1 billion. In November, daily deals service Groupon debuted with much fanfare, only to plunge below its IPO price within weeks.

LinkedIn and Pandora are now also trading significantly below the levels their stocks reached during their public debuts earlier this year.

Facebook has become one of the world’s most popular Web destinations, challenging established companies such as Google Inc and Yahoo Inc for consumers’ online time and for advertising dollars.

Facebook does not disclose its financial results, but a source familiar with the situation told Reuters earlier this year that the company’s revenue in the first six months of 2011 doubled year-on-year to $1.6 billion.

Eric Feng, a former partner at venture capital firm Kleiner Perkins Caufield & Byers who now runs social-networking site Erly.com, said that the cash Facebook will get in an IPO would allow them to make more acquisitions and refine or work on new projects, such as a rumored-Facebook phone or a netbook.

Having tradeable stock will also allow Facebook to attract more engineering talent who might have been more attracted to the company in earlier days when it was growing faster but now perhaps might be attracted to other companies. “It’ll be a powerful bullet for them,” said Feng.

Investors have been increasingly eager to buy shares of Facebook and other fast-growing but privately-held Internet social networking companies on special, secondary-market exchanges.

Facebook said in January that it will exceed 500 shareholders this year, and that in accordance with SEC regulations, it will file public financial reports no later than April 30, 2012.

(Reporting by Alexei Oreskovic in San Francisco, with additional reporting by Sarah McBride and Vidya Loganathan; editing by Carol Bishopric)

Euro split scenarios risk becoming self-fulfilling

(Reuters) – Mobilising an army takes on such a momentum of its own that a point of no return is eventually reached. So it may be with the euro zone crisis: before long, the slide towards break-up of the single currency might prove impossible to reverse.

Even as global markets rallied on Monday on talk that a grand plan to save the euro was finally taking shape, more and more researchers are squarely broaching the alternative outcome of the currency’s disintegration.

Jean Pisani-Ferry, director of Bruegel, a respected Brussels think tank, noted that market participants and real businesses were increasingly pricing in such a break-up scenario.

“It is still hard to think the unthinkable, let alone to work out the details of it, but any rational player has to consider the possibility of it. If disaster expectations build up and a growing number of players start positioning themselves to protect themselves from it, the consequences could become overwhelming,” he said in a report.

German banks and exporters would lose out massively from a collapse in the euro, Pisani-Ferry argued.

To head off that risk, he said Germany should offer its euro-area partners a mutual guarantee over part of the bloc’s public debt in return for strict debt limits and veto authority for the euro area over a member’s draft budget.

“Only boldness will deliver,” he wrote.

EXIT GERMANY?

Simon Derrick, head of currency research at Bank of New York Mellon in London, agreed that the final stage of the drama that has consumed Europe over the past two years had arrived.

But he saw a different ending, with Berlin voluntarily quitting the euro in order to protect the credibility of its own sovereign debt. Berlin’s failure to find enough buyers at a 6 billion euro bond auction last week drove home the message that the crisis of confidence in the euro had spread to Germany.

A revived German mark would surge, creating fierce headwinds for German exporters. But Derrick, in a note to clients, argued that manufacturers had coped with a strong currency in the past.

As for the hit that German banks would take as the value of their euro-denominated assets slumped, Berlin might find it more cost-effective to rescue its domestic lenders than to bail out the rest of the euro zone, he said.

Back in the first half of 2010, Derrick had concluded that a German exit from the euro was a highly improbable outcome.

“As we approach the end of 2011 and find the same crisis now starting to spiral out of control, it is starting to sound like a rather more credible solution (at least for Germany and its neighbours).

“Maybe the real significance of the fact that European politicians have effectively admitted that it is possible to leave the single currency is that it allows us to ask which nation would be best heading for the door first,” he said.

Ansgar Belke, a professor of macroeconomics at the University of Duisburg-Essen in Germany, said scenarios considered inconceivable just months ago may not appear so far-fetched before long, particularly if peripheral countries’ economies continue to stagnate.

“As if this were not bad enough, anti-euro bets are today an everyday phenomenon, steadily increasing the probability of breakup,” Belke wrote in a report entitled “Doomsday for the euro area”.

FIELD OF RUINS

The economic costs of a doomsday break-up of economic and monetary union (EMU) could be high and extremely damaging, especially if a weak country were to secede from the 17-country bloc, while the political costs were too great to be quantified in financial terms, Belke said.

“Nevertheless, the time may come in which only a little additional shock is sufficient to shift the whole EMU project to a new trajectory, forcing its collapse,” he wrote.

David Marsh, the author of books on the euro and the Bundesbank, said Europe appeared to be heading for a re-run of 1992, when French President Francois Mitterrand leaned on German Chancellor Helmut Kohl to get the Bundesbank to put aside its misgivings and defend the French franc.

“If the Bundesbank had its way in remaining on the sidelines while the markets sold down the franc, Mitterrand told Kohl, the Bundesbank would be ‘the last one standing on a field of ruins’,” Marsh said in a commentary for The Official Monetary and Financial Institutions Forum (OMFIF), which he co-chairs.

In the run-up to the next European Union summit on Dec. 9, a similar confrontation was likely between their successors, President Nicolas Sarkozy and Chancellor Angela Merkel, he said.

Marsh said Monday’s market rally was based on optimism that a package of measures on economic surveillance, European treaty changes, steps to fiscal union and International Monetary Fund aid for Italy would encourage the European Central Bank to loosen its purse strings.

This was likely to take the form of quantitative easing along the lines of the asset purchases made by the U.S. Federal Reserve and the Bank of England.

“In this case, the ECB would purchase government bonds across monetary union in proportion to member countries’ GDP — meaning that German and French buying would prevail over Italian.

“That might bring some respite to monetary union’s weeks of turmoil — but no one knows whether it would be sufficient to steer Europe towards a solution,” Marsh said.

(Reporting by Alan Wheatley; editing by Ron Askew)

Petrol prices may be cut by about one rupee - source

(Reuters) – The state refiners could cut petrol prices by about one rupee a litre or 1.5 percent as softening Singapore spot gasoline prices have offset the impact of a declining rupee, an industry source said on Monday.

The companies cut petrol prices by about 3.2 percent earlier this month, the first reduction in retail prices in nearly three years and the first since prices were decontrolled in June 2010.

“As per current calculations, there is scope to cut the basic price of petrol by about 0.85 rupees a litre, including taxes it should be about one rupee. We have to see price movements in the next two days also before deciding the final impact,” the official said on condition of anonymity.

Refiners discuss prices every two weeks and so far in this fortnight, spot FOB gasoline prices in Singapore have averaged $108.76 a barrel compared with $114.13 in the previous fortnight, according to Reuters calculations.

Oil companies had earlier this month cut petrol prices considering the rupee average at 49.30 to a dollar, an Indian Oil Corp press release said. Since then, Reuters data shows the rupee has declined to an average 51.78.

India’s three state fuel retailing giants, IOC, Hindustan Petroleum Corp and Bharat Petroleum Corp tend to move their prices in tandem.

Gasoline is nowhere near as widely used as diesel in India — accounting for around 10 percent of fuel demand compared with about 40 percent for diesel — but it is high-profile because it powers many of the cars owned by the growing middle class.

Gasoline has a 1.09 percent weighting in the inflation index and near double-digit consumer prices have provoked criticism of the government, which subsidises other fuels such as diesel and cooking gas.

The widening price gap between gasoline and diesel has slowed the growth of gasoline consumption, which has recently fallen behind that of diesel.

(Reporting by Nidhi Verma; Editing by Jo Winterbottom)

Protests against military rule cloud Egypt election

(Reuters) – The Arab League approved unprecedented economic sanctions against Syria, isolating President Bashar al-Assad’s government over its eight-month crackdown on protests against his rule.

Britain said the sanctions could help enlist support at the United Nations for action against Damascus, which launched the crackdown against protesters calling for Assad’s removal soon after the uprising began eight months ago.

The United Nations says Syrian security forces have killed more than 3,500 people in the crackdown.

Anti-Assad activists said there was no respite and security forces had killed at least 24 civilians on Sunday, many in a town north of Damascus that has become a focus for the protests. Others were killed in raids on towns in the province of Homs.

“The indications are not positive … the sanctions are still economic but if there is no movement on the part of Syria then we have a responsibility as human beings to stop the killings,” Sheikh Hamad bin Jassim al-Thani, Qatar’s prime minister and foreign minister, told reporters.

“Power is not worth anything when a ruler kills his people,” he said after 19 of the League’s 22 members approved the decision to immediately enforce the sanctions at a meeting in Cairo on Sunday.

The sanctions include a travel ban on top Syrian officials, a freeze on assets related to Assad’s government and are aimed at halting dealings with Syria’s central bank and investment in the country, Sheikh Hamad said.

He added that Turkey, which attended the meeting, would also honour some of the measures, which will be another blow to the Syrian economy already reeling from sanctions imposed by the European Union and United States.

Arab nations wanted to avoid a repeat of what happened in Libya, where a U.N. Security Council resolution led to NATO air strikes. Sheikh Hamad warned other Arab states that the West could intervene if it felt the league was not “serious”.

British Foreign Secretary William Hague said the “unprecedented decision to impose sanctions demonstrates that the regime’s repeated failure to deliver on its promises will not be ignored and that those who perpetrate these appalling abuses will be held to account”.

Hague said Britain hoped the move would help break what he called United Nations silence “on the ongoing brutality taking place in Syria” after Russia and China thwarted Western efforts to pass a U.N. Security Council resolution on Syria.

“To that end we welcome the commitment by the Arab League to engage with the U.N. Secretary General at the earliest opportunity to gain the U.N.’s support to address the situation in Syria,” he said.

Britain has repeatedly ruled out a military attack on Syria.

Assad, who inherited power from his father in 2000, said in an interview this month that he would continue the crackdown and blamed the unrest on outside pressure to “subjugate Syria”.

Many Arab leaders have become increasingly concerned by a series of “Arab Spring” revolts that have toppled the rulers of Tunisia, Egypt and Libya.

Graphic on violence, click link.reuters.com/muw82s

MERCHANT CLASS

A Western diplomat said Assad could for now count on support from China and Russia at the United Nations but that the two countries may change position if Assad heightens the crackdown and if the Arab League campaigns for international intervention.

China and Russia have oil concessions in Syria. Moscow also has a mostly disused naval base in the country and military advisers to the Syrian army.

“The sanctions are likely to lose Assad support among those in Syria who have been waiting to see whether he will be able to turn things around, such as merchants who could now see their businesses take more hits,” the diplomat said.

The president of the Union of Arab Banks, a division of the Arab League, said on Sunday the sanctions would hit Syria’s central bank, which has “big deposits” in the region, especially the Gulf.

Arab ministers were spurred to action by worsening violence in Syria and by the Assad government’s failure to meet a deadline to let in Arab monitors and take other steps to end its crackdown on the uprising.

Syrian official media quoted an undated letter by Syrian Foreign Minister Walid al-Moualem to the Arab League as saying Damascus viewed the plan for monitors as interference in its affairs.

The League has been galvanised by pressure from Gulf Arabs, already angry at Syria’s alliance with regional rival Iran, by the political changes brought about by Arab uprisings, and by the scale of the Syrian bloodshed.

Along with peaceful protests, some of Assad’s opponents are fighting back. Army defectors have loosely grouped under the Syrian Free Army and more insurgent attacks on loyalist troops have been reported in the last several weeks.

Officials blame the violence on armed groups targeting civilians and its security forces and say 1,100 security force members have been killed.

(Additional reporting by Yasmine Saleh in Cairo; editing by Elizabeth Piper)