Archive for February, 2011

Brent oil hits $113 on Libya unrest

Wednesday, February 23rd, 2011 | Finance News

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SYDNEY (Reuters) – Unrest in Libya and the threat of contagion to other oil producing countries in the region drove Brent crude to $113 a barrel Thursday, but the selloff in Asian stocks eased as investors started to nibble at beaten-down shares.

Copper also bounced off one-month lows, although the dollar stayed on the back foot as some investors worry that the U.S. economy would be vulnerable to high oil prices, given its reliance on consumer spending to drive growth.

London Brent crude rose as high as $113 a barrel for the first time since September 2008, having gained nearly 10 percent in the past four sessions. U.S. crude last traded at around $99.38 a barrel, a whisker away from Wednesday's high of $100.

Worries that higher energy prices will crimp corporate profits had sparked a steep selloff in Asian stocks in the past two sessions, but that looked to be losing its punch.

Japan's Nikkei 225 index (.N225), while still 0.4 percent lower on the day, was off its lows and stocks elsewhere in Asia (.MIAPJ0000PUS) erased early losses to be up 0.4 percent.

"As Japanese stocks have tumbled for the past two sessions (losing 2.6 percent), today's losses may not be sharp," said Masumi Yamamoto, a market analyst at Daiwa Securities Capital Markets.

Hong Kong's Hang Seng (.HSI) put on 0.2 percent and China's Shanghai Composite Index (.SSEC) edged up 0.2 percent. Gains in U.S. stock futures suggest a steadier start on Wall Street after two sessions of declines.

Gold, a traditional safe haven in times of trouble, traded at around $1,412 an ounce, not far from a record high around $1,430 set in December.

Copper gained 1.1 percent to $9,526 a metric ton, climbing off a one-month low of $9,365.

The dollar index (.DXY), which tracks its performance against a basket of major currencies, shed 0.3 percent to 77.173.

Against the Swiss franc, the dollar fell to a record low at around 0.9277 franc, surpassing the previous trough of 0.9301 set at the end of the year.

The euro held firm at $1.3776, coming within easy reach of its February 2 peak of $1.3862, helped also by recent hawkish comments on inflation by European Central Bank officials, which raised expectations the ECB will hike interest rates before the Federal Reserve.

"There may be a realization that if oil prices rise sharply, that would hit all the developed countries and in that sense it effects every major currency the same," said Tsutomu Soma, manager of foreign bonds at Okasan Securities.

"And if the impact from the Middle East crisis is roughly equal on each currency, you could argue that currencies with a yield advantage will benefit at the end of the day," Soma said.

The New Zealand dollar continued to struggle at two-month lows below $0.7500, with markets now pricing in an 88 percent chance that the next rate move will be a 25 basis point cut.

The move followed the deadly earthquake that hit the country's second biggest city of Christchurch Tuesday.

(Additional reporting by Ayai Tomisawa and Hideyuki Sano in Tokyo; Editing by Tomasz Janowski and Yoko Nishikawa)

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Obama pushes multibillion-dollar mortgage pact: report

Wednesday, February 23rd, 2011 | Finance News

NEW YORK (Reuters) – The Obama administration is trying to push a settlement that could force the largest U.S. banks to pay for reductions in loan principal worth billions of dollars following breakdowns in mortgage servicing, The Wall Street Journal said.

Should a settlement be reached, some state attorneys general are also pushing for banks to pay more than $20 billion of civil fines or to fund a similar amount of loan modifications for troubled borrowers, the newspaper said on Wednesday, citing people familiar with the matter.

Regulators are looking to settle with as many as 14 servicers, including three of the nation's four largest banks: Bank of America Corp (BAC.N), JPMorgan Chase & Co (JPM.N) and Wells Fargo & Co (WFC.N), the newspaper said, citing people familiar with the matter.

The administration wants a commitment from loan servicers to reduce loan balances for borrowers who owe more than their homes are worth, and that such costs would not be borne by investors who bought mortgage-backed securities, the newspaper said, citing people familiar with the matter.

It would thus force servicers that mishandled foreclosure procedures to bear losses by writing down loans they service on behalf of clients such as Fannie Mae (FNMA.OB), Freddie Mac (FMCC.OB) and other investors, the newspaper said.

A settlement would let banks devise their own modifications or use existing government programs, and require them to reduce second-lien mortgages when primary mortgages are modified, the newspaper said, citing people familiar with the matter.

Terms remain fluid and have not been presented to banks, the newspaper said, citing people familiar with the matter.

Bank of America, JPMorgan and Wells Fargo declined to comment to the newspaper. None could be immediately reached after-hours for comment.

(Reporting by Jonathan Stempel in New York; Editing by Ramya Venugopal)

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Google Ventures invests in power-saving technology

Wednesday, February 23rd, 2011 | Finance News

MOUNTAIN VIEW, California (Reuters) – Google Inc's venture capital arm on Wednesday announced an investment in an energy conversion technology that could save power in everything from consumer electronics to hybrid cars.

Google Ventures, Kleiner Perkins and other venture capitalists announced a $20 million round of funding for Transphorm, which cuts energy losses that result from converting alternating current, which comes out of wall sockets, to direct current, used by PCs and the like.

About 10 percent of energy lost in the United States occurs in conversions -- inefficient adapters on laptops heat up, for example.

The technology, which cuts conversion losses by up to 90 percent, would essentially save all the energy needed to power the West Coast if the entire United States adopted it, executives said.

Transphorm will begin rolling out products later this year, targeting computer data markets, they said. The company and investors did not detail the breakdown of investment by each venture capitalist.

(Reporting by Peter Henderson; Editing by Steve Orlofsky)

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