UPDATE 2-Merkel sees German parlt backing Spanish bank aid - Reuters UK
(Adds details, quotes)
By Michelle Martin
BERLIN, July 15 (Reuters) - Chancellor Angela Merkel said on Sunday she was confident that a majority of German lawmakers would back aid for Spain's ailing banking sector at a special sitting of the lower house Bundestag set for Thursday.
Euro zone finance ministers agreed last Monday on a rescue package of up to 100 billion euros for Spanish banks, which have been crippled by a burst housing bubble.
Merkel's government needs a green light from the Bundestag before Finance Minister Wolfgang Schaeuble can commit at a meeting of euro zone finance ministers on Friday to pay out Germany's share of the bailout.
"We always get the majority we need," Merkel said in a pre-recorded interview for ZDF television channel due to be aired on Sunday evening.
Michael Grosse-Boehmer, chief whip of Merkel's conservatives and Volker Kauder, the conservatives' parliamentary leader, both said in newspaper interviews on Sunday they were confident Merkel would get a majority, even if it was not absolute.
But Grosse-Boehmer also sounded a cautious note, saying while the vast majority of her Christian Democrat Party (CDU)supported Merkel's course of action, some members of parliament were questioning whether they could support her on this issue.
"Everyone is aware of the concerns of the people in their electoral districts," he told Spiegel news magazine.
A small minority of lawmakers from Merkel's centre-right coalition voted recently against the euro zone's new bailout fund and new budget rules, highlighting the growing unease in Germany about the costs of supporting weaker members of the single currency bloc.
Merkel's government easily won a two-thirds majority for the two measures, however, with the help of opposition parties.
On Sunday, Merkel also said the euro zone had not yet resolved the issue of whether its bailout funds - the European Financial Stability Facility and its eventual successor, the European Stability Mechanism (ESM) - or recipient states would be liable for future aid payments to banks.
"We have not yet adopted a final position on how to solve the liability issue if a (pan-European) banking supervisor can intervene in national banks, if it can restructure them and if it can set conditions for them," she said.
The conservative leader reaffirmed her stance that the price of continued support for euro zone countries in difficulty must be strict adherence by the governments concerned to tough fiscal targets and close European monitoring of their progress.
"All attempts ... to say 'oh let us practice solidarity and nonetheless have no supervision and no conditions' will stand no chance with me or with Germany," Merkel said.
OPPOSITION CONDITIONS
Opposition Social Democrat parliamentary whip Thomas Oppermann s aid on Sunday Merkel should not take his party's support for granted.
"The chancellor must always have an absolute majority in key issues. That is also true of the aid for Spain. A decision on an aid packet of more than 100 billion euros is not a secondary issue," he said in a statement.
The opposition often takes this line before votes but in fact Merkel only needs a simple majority of votes, not an absolute majority, to win approval for the Spanish aid package.
Oppermann has previously told Spiegel Online his party would vote in favour of the aid for Spanish banks under the EFSF but said: "Spain must commit itself to creating a new, healthy banking system."
On Greece, Merkel said she wanted to wait for a report from the 'troika' of lenders on Athens' reform progress before deciding on further steps.
The troika of officials from the European Commission, the European Central Bank and the International Monetary Fund has begun a review of Greece's faltering progress after weeks of political paralysis during the election campaign.
Greece, just weeks away from running out of cash, wants to renegotiate the terms of its 130 billion rescue plan with the European Union and IMF, but the lenders - led by Germany - have said they can adjust but not rewrite the document.
"I have firmly resolved that I will only say what we will do on the basis of this (troika) report and we must therefore wait for another couple of weeks," Merkel said. (Reporting by Michelle Martin and Andreas Rinke, writing by Gareth Jones and Michelle Martin; Editing by Susan Fenton and Patrick Graham)
China's Lenovo inches closer to a global tech title - Reuters
HONG KONG |
HONG KONG (Reuters) - Lenovo Group Ltd is on track to overtake Hewlett-Packard Co as the world's biggest PC maker by sales as soon as this year, making it the first Chinese company to grab the top spot globally in a technology sector.
The ThinkPad maker's rise highlights the advance of China's technology firms on the world stage in recent years thanks to a combination of aggressive pricing, overseas acquisitions and their taking advantage of a fast-growing home market.
Analysts, however, also warn that Lenovo's rapid gains in market share have come at the expense of profit margins, while the company faces slowing growth in the market for personal computers and tough rivals in the tablet PC space.
"It's just a matter of time before Lenovo becomes No. 1 and it won't be surprising at all if it happens later this year," said Frederick Wong, executive director at Avant Capital Management (Hong Kong) Ltd, which owns shares in Lenovo.
He added, however, that competition in the tablet sector and a weak PC market outlook could put pressure on Lenovo.
Lenovo, which became the world's No. 2 PC vendor in the third quarter of 2011, had a 14.9 percent global market share in the April-June quarter this year, a mere 0.6 percentage point away from HP's 15.5 percent, according to research firm IDC's latest data. Figures from industry tracker Gartner show an even narrower gap, with Lenovo just 0.2 percentage point from HP.
In another technology sector, China's Huawei Technologies Co Ltd, the world's No.2 maker of telecom equipment, had been expected to surpass Sweden's Ericsson in 2011 sales. But slow telecom spending, stiff competition in the handset market and difficulties in tapping the massive U.S. market held it back.
SWITCHING LANES
Lenovo's rise has been helped by its purchase of Germany's Medion and a joint venture with Japan's NEC Corp last year, as well as its acquisition of IBM Corp's PC business in 2005.
Investors have rewarded Lenovo for its market share gains, sending its stock up by around 16 percent this year and outpacing rivals HP, third-ranked Dell Inc and No. 4 Acer Inc, whose stocks have dropped over the same period.
Lenovo currently trades at a multiple of 12.5 times forward earnings, the second-highest among the top-five PC makers and well above the 4.6 times multiple for HP, Thomson Reuters Starmine data showed.
But profit margins have suffered. Lenovo had a 1.4 percent operating margin in the latest quarter, lower than HP's 7.4 percent and Dell's 6.2 percent, the data showed.
"HP, Dell and Acer have switched lanes in the PC race and passed the baton to Lenovo in terms of focusing on sales rather than margins," said Dickie Chang, an analyst at IDC in Hong Kong.
Another risk is slowing growth in the PC market as the global economy, including Lenovo's home turf and stronghold China, eases.
China accounts for about 42 percent of Lenovo's total revenue, with the bulk of that coming from PC sales.
Global PC shipment growth was largely flat in the second quarter, marking the seventh straight quarter of low 0 to 5 percent growth for the industry.
"We remain positive on Lenovo's market share expansion, but the absolute growth is nevertheless being negatively impacted by a slower market," Jefferies said in a report. Jefferies has an "underperform" rating on Lenovo with a price target of HK$5.70.
Overall PC demand could pick up this year with the launch of Windows 8, though the catch is that competition in the sector for tablet PCs -- not Lenovo's strongest area -- will heat up because the operating system is designed to run on laptops and tablets.
Mizuho analyst Charles Park forecasts the PC market will grow by just 3 percent this year.
Lenovo's tablets, its LePads, will also face competition from new products, including the next versions of Amazon.com Inc's Kindle Fire and Apple Inc's iPad, as well as Google Inc's Nexus 7 and Microsoft Corp's Surface.
(Additional reporting by Vikram Subhedar; Editing by Anne Marie Roantree and Chris Gallagher)
Warren blows Scottish Open chance as Singh wins - ESPN.co.uk
Marc Warren threw away the chance to book his place at next week's Open Championship on Sunday, losing his nerve when in possession of a three-stroke lead at the Scottish Open, which was won by Jeev Milkha Singh.
Warren, born in Rutherglen, led a talented field on the final day as he moved to a seemingly winning score of 20-under. However, the 31-year-old will have to wait for the chance to end his five-year spell without a European Tour title, after he lost his nerve over the concluding four holes to finish on 16-under, one stroke off the top score.
Warren had started the final round two strokes behind the leader, but five unanswered birdies through the opening 12 holes propelled him to the top of the leaderboard. With four left to play the Scot found himself defending his own two-shot advantage, which was wiped out when his putter completely failed him for a double-bogey at 15.
He was handed a lifeline when the man with whom he shared his lead, Francesco Molinari, himself bogeyed 15 to once again give Warren the edge. However, further bogeys at 16 and 17 ruined the Scot's bid, leaving him to sign for a one-under 71, which opened the door for Molinari to force a play-off.
With Singh already in the clubhouse on 17-under, Molinari entered the final hole knowing a birdie would secure him victory. As he approached the green he faced a tricky putt for par, which he drained to force the play-off, but Singh claimed the title - and a spot at The Open - by winning the first play-off hole.
Warren was left to settle for a tie for third alongside Alex Noren.
Matthew Baldwin was the highest finishing Englishman, finishing with a five-under 67 to complete on 15-under. Baldwin produced his second flawless round of the competition to sign off on an excellent week's work.
The big names failed to fire in round four, with Phil Mickelson particularly disappointing after he had played his way into contention. The American had moved to within three strokes of the third-round leader, but his challenge capitulated when he posted four bogeys between seven and 14 on Sunday.
Mickelson eventually signed for a two-over 74, leaving him on an overall score of 12-under. That left him level with world No. 1 and defending champion Luke Donald, who also failed to break par as he ended with a 73.
Padraig Harrington was another to settle for a 12-under score, with former world No. 1 Martin Kaymer further back on 10-under. All four players will acknowledge the need for improvement heading into The Open.
© ESPN EMEA Ltd
Taliban blamed for suicide bombing at Afghan wedding - CBC
An initial investigation into a bloody weekend suicide bombing at a wedding suggests Taliban militants were responsible, Afghanistan's interior minister said Sunday.
A suicide bomber drew close to a warlord-turned-legislator at his daughter's wedding on Saturday, then blew himself up, killing the father of the bride and 22 others.
The Taliban have not claimed responsibility for the attack, nor have they denied that they carried it out.
Bismullah Khan Mohammadi, Afghanistan's interior minister, says preliminary evidence points to Taliban involvement in Saturday's blast. 'We are hopeful that we will be able to capture the perpetrators of this attack,' he says. (Sam Dillon/U.S. army via Getty)The grisly attack showed again how militants still have the capability of causing havoc in Afghanistan, despite a decade-long U.S.-led military campaign there.
Interior Minister Bismullah Khan Mohammadi was in Samangan province in northern Afghanistan on Sunday to attend the funeral of Afghan National Police Gen. Sayed Ahmad Sameh, the commander for the western region, who was killed in the attack.
The apparent target of the blast in the provincial capital of Aybak was Ahmad Khan Samangani, a well-known ethnic Uzbek who commanded forces fighting the Soviets in the 1980s and later became a member of parliament.
Samangani was welcoming guests to the wedding when the blast ripped through the building.
Also killed were Mohammad Khan, the intelligence chief in the province, and Mohammadullah, an Afghan National Army division commander who uses only one name.
About 60 other people, including government officials, were wounded in the explosion.
Arrests hoped for
The interior minister said a government-appointed delegation was still investigating, but evidence already collected indicates the Taliban orchestrated the bombing with some other militants.
"They came yesterday and they have started their work to investigate this incident," Mohammadi said.
"Our police and the provincial governor of Samangan told me that some evidence has surfaced that indicates that Taliban and terrorists were involved," he said. "Since this incident just happened, they are continuing their work, and we are hopeful that we will be able to capture the perpetrators of this attack."
Also Sunday, a vehicle in a convoy transporting Afghan Higher Education Minister Obaidullah Obaid hit a roadside bomb during a trip between Baghlan and Kunduz provinces. The minister was not riding in the car that hit the bomb and was not injured. Two of his bodyguards were slightly wounded, according to Abdul Majid, the governor of Baghlan, who was in the motorcade.
Singapore Navy takes part in RIMPAC off coast of Hawaii - Channel NewsAsia
Singapore Navy takes part in RIMPAC off coast of Hawaii
By Claire Huang | Posted: 15 July 2012 2105 hrs
SINGAPORE: The Republic of Singapore Navy (RSN) is taking part in a multilateral exercise off the coast of Hawaii. The maritime exercise called Rim of the Pacific (RIMPAC) started in late June and is expected to end in August.
The RSN sent its frigate, the RSS Formidable.
Hosted by the United States Navy, the exercise has two phases. One is a shore planning phase and the other is a 24-day sea phase.
22 countries are taking part in the exercise, involving 40 ships, six submarines, more than 200 aircraft and 25,000 personnel.
In the exercise, RSS Formidable commands a task unit, comprising four other warships from Australia, Canada, Japan and the US, to conduct combined anti-submarine and air defence missions, among others.
The Republic's warship also carried out simultaneous live-firing of two Harpoon Surface-to-Surface missiles.
Commanding Officer of the RSS Formidable, Lieutenant-Colonel Ong Chee Wei, said: "Exercise RIMPAC is a good opportunity for the RSN to train with other established navies to perform complex maritime operations in a high intensity environment.
"This year, the RSN is commanding a multinational task unit and this has allowed the RSN to enhance our engagements with other navies, strengthen professional understanding and interoperability with them."
This year's Exercise RIMPAC also involves maritime forces from countries such as Australia, Canada, France, India, Indonesia, Japan, Malaysia, New Zealand, Norway, South Korea, the Philippines, Russia, Thailand, the United Kingdom and the United States.
-CNA/ac
Insight: Top palm oil producer Indonesia wants to be more refined - Reuters
JAKARTA/KUALA LUMPUR (Reuters) - For decades, Indonesia has shipped out tanker loads of raw palm oil for processing into higher value cooking oil and margarine in Rotterdam, Mumbai and Kuala Lumpur.
Now, the world's No. 1 producer of the edible oil is seeing a more than $2.5 billion wave of investment to build a refining industry that will double its capacity and mean it could supply the entire needs of Asia's top food consumers - India and China.
The transformation - driven by Indonesia's move to slash export duties for processed oil last October - will heat up competition with rivals such as Malaysia and send ripples through the palm oil market as new supply pressures prices of traded refined products such as palmolein, used as cooking oil.
A Reuters survey of 30 firms operating in Indonesia - from the world's biggest listed palm oil firm Wilmar to conglomerate Unilever - shows plans to nearly double refining capacity to 43 million metric tonnes (47.39 million tons) of palm oil, or 80 percent of total world output.
"The government is sending a clear message - to survive, you need a refinery. So the palm oil firms are putting their money out and following the big guys in the industry who have already done so," said Thomas Mielke, an analyst at industry publication Oil World.
"There is the threat of over capacity. But palm oil firms with the whole supply chain behind them, we are talking about having plantations to mills and ports, will be the kings."
Gleaming silver storage tanks standing ten-storeys' high are becoming a feature of Indonesia's landscape as more refineries spring up, threatening the stranglehold on processing held by neighboring Malaysia, the No.2 palm oil producer.
At a newly built refinery near Jakarta, staff wearing face masks and hair caps work on conveyor belts carrying boxes of margarine and cooking oil.
The $249-million Marunda plant run by PT SMART was launched before the tax change and Indonesia's top palm oil firm plans to spend a further $200 million on new refining capacity despite the infrastructure issues it faced building Marunda.
PT SMART will be one of the biggest investors in the sector along with Wilmar and unlisted Musim Mas, which plans to spend $860 million, according to the survey.
Government officials in Malaysia and Indonesia say these firms had aggressively lobbied Jakarta to cut duties on refined palm oil to half those levied on crude.
Much of the expansion is led by companies owned by powerful tycoons in Indonesia. SMART is controlled by the family of Eka Tjipta Widjaja, who created a palm oil empire from his humble start selling biscuits from a rickshaw.
Foreign firms are not far behind. Commodities trader Louis Dreyfus formed joint ventures with planters such as Singapore-listed Kencana Agri to build refineries in Indonesia.
Until now, Indonesia had focused on expanding plantations. Oil palms cover roughly 8.2 million hectares (20.3 million acres), an area about the size of the island of Ireland, and their cultivation is often blamed for rainforest destruction.
BRING DOWN PRICES
Palm oil, the world's most traded and consumed edible oil, is used mainly as an ingredient in food such as biscuits and ice cream, or as a biofuel.
For decades, refined palm olein enjoyed premiums of 5-10 percent over crude palm oil futures.
But with more Indonesian supplies coming on stream, more inefficient refining operations could get shut.
On the flip side, greater competition could cut final product costs to the benefit of consumers in India and China, where food inflation is a constant concern for policy makers. So far this year, palm olein prices have fallen nearly 10 percent on higher Indonesian supplies.
Under its refining plans, Indonesia could meet domestic needs of around 10 million metric tonnes annually as well as supplying the combined 20 million metric tonnes of edible oil imports required by top buyers China and India.
Indonesia's crude palm oil output - estimated at 23 to 25 million metric tonnes in 2012 - looks set to be outpaced by the planned increase in refining capacity in the next two years.
That means some palm oil firms may build refineries run at lower capacities until more edible oil supply comes in.
DBS analyst Ben Santoso said latecomers to Indonesia's refining business could see margins squeezed to $40 per tonne from $70, although still healthier than its main competitor.
"The capacity of some of these smaller companies will turn idle. But let's not forget, Malaysia's refining margin is just $9 to $10 a tonne," he added.
MALAYSIA AND INDIA FEEL THE PRESSURE
As Indonesia rushes to build refineries, vegetable oil refiners in Malaysia and India are feeling the pressure.
"I am having sleepless nights. I have closed down 30-40 percent of my factory and I hope it won't be more," said a refiner in Malaysia's Johor state.
Malaysia currently has 22.9 million metric tonnes of refining capacity, with only about three quarters of it used last year down from a record 90 percent in 2005.
And this shows in exports. Malaysia's combined refined palm olein exports in April and May dropped 19 percent to about 1 million metric tonnes from a year ago, according to cargo surveyors.
Indonesian palm olein shipments jumped 55 percent in the same period to nearly 600,000 metric tonnes.
Malaysia could respond by removing a tax free export quota for crude palm used to feed the overseas factories of some firms or replicate Indonesia's tax system to level the playing field.
Both options are politically risky with an election on the horizon, as they entail taxing crude palm oil that in Malaysia is mostly produced by small farmers who make up the bulk of the electorate and come under the tax free export quota.
To capitalize on Indonesia's export tax changes, Malaysia's top planter Sime Darby is building an Indonesian refinery. KL Kepong and IOI Corp are expected to follow suit.
India, the world's largest edible oil buyer, has been fending off industry calls to hike the import duty on refined palm oil to stem the inflow of cheap cargoes from Indonesia for fear of stoking inflation.
India currently imposes a 7.5 percent tax on refined palm oil from Indonesia. But it is still $15 cheaper a tonne to import Indonesia's processed palm oil than to ship in crude and refine it, traders say.
"Before Indonesia changed the export taxes, a lot of refiners were expanding their factories," said Ashok Sethia, President of the Solvent Extractors Association of India.
"Now all those plans have been abandoned," he added.
Refined palm olein used to make up below 5 percent of total imports and now accounts for nearly 20 percent of 883,410 metric tonnes shipped into India in May.
This will make it hard for India to preserve its processing capacity of 15 million metric tonnes.
SENSITIVE POLICY
Palm oil is just part of Indonesia's efforts to attract investment and squeeze more from its agricultural and mineral resources, a policy that has sometimes backfired.
In May, Indonesia imposed a 20 percent tax on some metal ore exports and told miners to submit plans to build smelters or process ore domestically. The government says this should help Indonesia earn more revenue, although a union said miners had laid off more than 200,000 workers since the ruling.
Taxes on palm oil were introduced in 1994 with the aim of ensuring palm-based cooking oil was available in the developing country of more than 200 million people.
But the system fell apart when the rupiah currency collapsed during the Asian financial crisis in the late 1990s, prompting palm oil firms to export more and triggering food riots at home.
With this in mind, export taxes on crude palm oil were kept much lower than on refined oil to shore up domestic supply. That frustrated the processing industry with many firms thinking of exiting Indonesia in 2010 and 2011, said Sahat Sinaga, executive director of the Indonesian Vegetable Oil Refiners Association.
"If the government did not take action, we would have just remained a crude palm oil exporter and earned much less," said Sinaga."
(Chew Yee Kiat reported for the story from SINGAPORE; Editing by Ed Davies)
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