German online classified-ads firm Scout24 exploring sale: FT

(Reuters) – German online classified-ads company Scout24 AG (G24n.DE) is exploring a sale that could see it taken private in one of the country’s largest leveraged buyouts in years, the Financial Times reported on Thursday.

Scout24 has retained banks and advisers to help with a potential sale and a number of private equity firms are taking a look at a bid for the company, FT said, citing sources.

U.S. technology focused buyout firm Silver Lake is expected to be among the bidders to acquire Scout24, the newspaper reported.

Scout24 spokesperson declined to comment.

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German upswing continues despite trade conflicts

BERLIN (Reuters) – The German economy remains on a growth track due to strong domestic demand, but the upswing is being slowed down by a difficult trade environment and temporary effects in the automobile sector, the Economy Ministry said on Thursday.

“Trade conflicts, emerging market currency turmoil and geopolitical conflicts weigh on the global economy and have increased general uncertainty about the economic development,” the ministry said in its monthly report.

“The postponement of the British parliament’s vote on the Brexit agreement has not averted the risk of a disorderly exit of the United Kingdom from the European Union,” it added.

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On the other hand, the government’s agreed measures such as lowering the income tax and increasing benefits for families with children will give the economy an additional boost from the beginning of next year, the ministry said.

“All in all, the German economy should perform well in this difficult environment,” it said.

Economy Ministry Peter Altmaier on Monday lowered the government’s growth forecast for this year to around 1.5 to 1.6 percent, down from the previous estimate of 1.8 percent.

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ECB worries multiply even as money-printing presses stop

FRANKFURT (Reuters) – The European Central Bank is all but certain to formally end its lavish bond purchase scheme on Thursday but will take an increasingly dim view on growth, raising the odds that its next step in removing stimulus will be delayed.

The long-flagged end of bond buys must be irreversible for the sake of credibility, but with France and Italy in political turmoil, a global trade war still looming large and growth slowing, ECB chief Mario Draghi will be keen to emphasize that other forms of support will remain.

This leaves Draghi with yet another delicate balancing act: appear confident enough to justify the end of the 2.6 trillion euro ($2.95 trillion), four-year-long bond buying program, but also sound sufficiently concerned to keep investors expectations about further policy tightening relatively cool.

“Ending quantitative easing now looks more like the ammunition is running out rather than (being) based on a convincing economic outlook,” Societe Generale economist Anatoli Annenkov said.

The ECB’s problem is that growth is weaker than policymakers thought even just weeks ago while the predicted rise in underlying inflation has failed to materialize, putting in doubt some of the bank’s assumptions about the broader economy.

Overall inflation, the ECB’s primary objective, may be near the target now but falling oil prices suggest a dip in the months ahead and a solid rise in wages is not feeding through to prices, leaving the bank with an unexplained disconnect.

Highlighting this complication, the ECB is likely to cut growth and underlying inflation projections and may take a dimmer view on risks, all while Draghi argues that growth is merely falling back to normal after a recent run.

The ECB announces its rate decision at 1245 GMT and Draghi will hold a news conference at 1330 GMT. Economists polled by Reuters unanimously expect unchanged rates.

SWEETENERS?

To take the edge off the bad news, the ECB could also hint at some sweeteners.

It is likely to keep open-ended its time horizon for investing cash from maturing bonds and could discuss fresh long-term loans to banks or whether to push back its first rate hike since 2011.

The bank now sees rates at record lows at least through next summer and some argue that an easy way to keep borrowing costs low is to push out those expectations.

“We now expect the ECB to hike interest rates in 2020 and not by late 2019 as currently communicated in the banks’ forward guidance,” Fitch Ratings said on Wednesday. “We expect the ECB to change its forward guidance on interest rates in the next few months.”

New long-term bank loans are also seen as a relatively low-hanging fruit and Draghi has already raised the prospect of rolling over the ECB’s previous facilities. Sources told Reuters earlier that discussions are in their early stages and no decision is likely until next year.

In another long-awaited set of decisions, the ECB is also due to spell out how it will spend cash from maturing bonds.

While most of these decisions are expected to be technical, sources said the horizon for reinvestments will remain open, another relatively easy step in keeping longer-term borrowing costs down.

Investors will be keen to know whether the ECB aims to adjust its holdings of national government bonds to match its shareholder structure after buying more French, Italian and Spanish debt than the rules of its program dictate.

This “capital key” of the ECB was updated earlier this month, with the shareholdings of Italy and Spain in the central bank falling on account of their underperforming economies during the crisis.

But countries that need the ECB’s support the most could be hurt if it buys less of their debt, so policymakers are likely to opt for a long transition to any change in its portfolio.

To avoid upsetting markets, some policymakers want to maintain the distribution of the ECB’s stock of bonds as it is, taking a snapshot on Dec. 31, sources have told Reuters.

Others, particularly countries that have been underbought, are advocating rigorously applying the shareholder structure, be it the old or new one, and adjusting this stock over time.

All of these steps are relatively modest and will be effective only if growth stabilizes at a fast enough pace to generate inflation.

“We have seen this “fingers crossed” attitude in the ECB’s communication for some months now. Given the limitations of the toolbox, it is understandable, even if it is not very reassuring for investors,” Bank of America Merrill Lynch said. 

($1 = 0.8824 euros)

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Trade war optimism lifts European shares

LONDON (Reuters) – European shares rose on Tuesday as optimism over the China-U.S. trade dispute helped them recover from the two-year lows hit in the previous session on a burst of political risk and worries over slowing global growth.

The pan-European STOXX 600 benchmark index rose 1.5 percent, while euro zone stocks .STOXXE added 1.3 percent and Germany’s DAX .GDAXI, the most sensitive to China due to its big exporters, rose 1.5 percent.

Sentiment was lifted by reports that Chinese and U.S. trade officials spoke by phone, a sign that discussions between the world’s top two economies continued even after the arrest of a top executive at Chinese tech giant Huawei.

Further cementing expectations that trade talks had not been interrupted was a report that China was preparing to cut its tariffs on U.S. car imports.

“That would tick off one of Trump’s post-G20 promises, while going someway to reassuring the markets that, despite the situation with Huawei’s (CFO) Meng Wanzhou, the nations are willing to adhere to what was agreed in Argentina,” said Connor Campbell, analyst at Spreadex.

China and the United States agreed this month to a ceasefire in their bitter trade war after high-stakes talks in Argentina between Presidents Donald Trump and Xi Jinping.

The export-oriented auto and tech sectors were among the biggest gainers, both up more than 2 percent, while materials stocks rose more than 3 percent as the trade hopes boosted metal prices. [MET/L]

France’s CAC 40 .FCHI was up 1.4 percent after French president Emmanuel Macron pledged late on Monday to raise the minimum wage and cut taxes in a bid to prevent more violent protests that have rocked the euro zone’s number two economy.

France’s Suez (SEVI.PA), however, fell 2.8 percent as a source said the board of French utility Engie (ENGIE.PA) decided to stick with its 32 percent stake in the utilities group.

In Italy, Banco BPM (BAMI.MI) rose 2.5 percent after announcing it had agreed to sell up to 7.8 billion euros in bad loans along with a stake in its debt recovery business to Credito Fondiario and U.S. fund Elliott.

WPP (WPP.L) rose 4.8 percent after the company said it would spend 300 million pounds and cut 2,500 jobs under a plan by new boss Mark Read to steer the world’s biggest advertising group back to growth.

Shares in Ashtead (AHT.L) jumped 3.6 percent as the equipment rental firm said it expected full-year results ahead of expectations.

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Germany hit by transport chaos as rail staff strike over pay

FRANKFURT • Germany was plunged into transport chaos yesterday as most train services were halted by a workers’ strike over pay, affecting millions of passengers.

Inter-city and regional services as well as many urban commuter trains were cancelled because of the four-hour stoppage from 5am local time (noon Singapore time), railway company Deutsche Bahn said.

The strike halted all high-speed InterCity Express trains and other inter-city services as well as most cargo trains, causing delays that continued well into the afternoon.

In the capital Berlin, where the entire public announcement system broke down too, frustrated commuters were asked to switch from S-Bahn commuter trains operated by Deutsche Bahn to subways, buses or trams.

The strike came after talks broke down on Saturday between Deutsche Bahn and the EVG railworkers’ union, which is demanding a 7.5 per cent salary rise for 160,000 employees.

“The employer made offers which did not correspond to the demands of our members,” said EVG negotiator Regina Rusch-Ziemba.

Deutsche Bahn described the strike as a “completely unnecessary escalation”, insisting that its offer was “attractive and met the main demands” of employees. The railway company had offered a pay rise of 5.1 per cent in two phases, with an option for staff to take extra time off instead, and a one-off payment of €500 (S$783), the DPA national news agency reported.

Deutsche Bahn in a tweet also denied it had broken off negotiations, charging that “the EVG left the talks and went on strike”. The train operator said it was ready to restart talks at any time. “(Deutsche Bahn) remains ready to continue the negotiations at any time.”

A Deutsche Bahn spokesman added: “Parties that negotiate must be prepared to make concessions.”

The union responded by saying it was considering returning to the table this afternoon.

The strike also impacted Deutsche Bahn customer services offices, meaning that at many stations, passengers were left without information over loudspeakers or display boards.

Deutsche Bahn said purchased tickets would remain valid until next Sunday or could be refunded. It urged passengers to delay travel where possible.

AGENCE FRANCE-PRESSE, BLOOMBERG

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Canadian court weighs bail for jailed CFO of China's Huawei

VANCOUVER (Reuters) – A Canadian provincial court weighing whether to grant bail to a top executive of Chinese telecoms giant Huawei Technologies [HWT.UL], who is facing possible extradition to the United States, adjourned on Monday without deciding her fate.

U.S. prosecutors want Chief Financial Officer Meng Wanzhou to be extradited to face accusations she misled multinational banks about Huawei’s control of a company operating in Iran, putting the banks at risk of violating U.S. sanctions which would incur severe penalties, court documents said.

Meng, the 46-year-old daughter of Huawei’s founder, was arrested on Dec. 1 as she was changing planes in Vancouver. In a sworn affidavit, she said she is innocent and will contest the allegations against her at trial if she is surrendered to the United States.

The judge in Monday’s bail hearing said he rolled the proceedings over to Tuesday at 10 a.m. PST (1 p.m. EDT/1800 GMT) because he wants to hear more about the issue of surety – who will take responsibility for Meng’s actions if she is released.

Meng’s lawyer David Martin, who told the court high-tech surveillance devices and a 24-hour security detail would ensure his client does not flee and proposed a C$15 million ($11.3 million) bail guarantee, had offered her husband as surety.

But the judge and the public prosecutor called into question whether Meng’s husband could perform this duty as he is not a resident of British Columbia, where Vancouver is located, and would not suffer if she were to breach her bail conditions.

Meng’s arrest has roiled markets over fears it would exacerbate tensions between the United States and China, already at a high over tariffs. The two sides have agreed to trade negotiations that must be concluded by March 1.

Beijing has demanded Meng’s immediate release and threatened “consequences” for Canada. But both Chinese and U.S. officials appear to be avoiding linking her arrest to the trade dispute.

Meng’s lawyer offered C$14 million in property equity and C$1 million in cash as a guarantee. The public prosecutor said he wanted half in cash and half in property.

At one point the judge asked why Meng had avoided travel to the United States since 2017 if not to avoid arrest. Martin cited a “hostile” climate toward Huawei in the United States.

“I ask the court to ask itself, what motive could she possibly have to flee?” Martin said, arguing the evidence against her was not overwhelming.

“If she were to flee, or breach order in any way … it doesn’t overstate things to say she would embarrass China itself.”

Meng appeared confident in court early on Monday, smiling and taking her lawyer’s arm. But by mid-afternoon she appeared more tense, gesturing rapidly as she conferred with members of her legal team.

She has argued she needs to be released because she has severe hypertension and fears for her health.

Huawei is the world’s largest supplier of telecommunications network equipment and second-biggest maker of smartphones, with revenue of about $92 billion last year. Unlike other big Chinese technology firms, it does much of its business overseas.

U.S. officials allege Huawei was trying to use the banks to move money out of Iran. Companies are barred from using the U.S. financial system to funnel goods and services to sanctioned entities.

Huawei and its lawyers have said the company operates in strict compliance with applicable laws, regulations and sanctions of the United States and other parties.

“We will continue to follow the bail hearing tomorrow. We have every confidence that the Canadian and U.S. legal systems will reach a just conclusion,” the company said on Monday.

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Investors ditch European stocks, BASF slides on profit warning

LONDON (Reuters) – Simmering U.S-Chinese trade tensions dented European shares on Monday as investors fled risk at the start of a highly uncertain week, with Britain’s parliamentary vote on Brexit also looming and chemicals stocks dented by a BASF profit warning.

The pan-European STOXX 600 index fell 0.9 percent to hit a fresh two-year low, with Britain’s FTSE 100 .FTSE down 0.4 percent and Germany’s DAX .GDAXI down 0.8 percent at around 0930 GMT.

Oil stocks .SXEP fell 1.1 percent, erasing their 2018 gains. Oil had been the last sector holding onto gains in Europe, and all the STOXX 600 sector indices are now in the red (with falls of 26 percent for autos and banks) or flat on the year.

Shaunak Mazumder, a senior fund manager at Legal & General Investment Management, said a combination of worries about the U.S.-China trade row and the Brexit vote was weighing on the market.

“The market is lacking proper conviction. If the U.S.-China issue blows over, that could give support to the market. But it’s difficult to call,” he added.

Shares in BASF (BASFn.DE) fell 4.7 percent after the German chemicals firm slashed its forecast for 2018 profits on Friday.

It said the decline was mainly due to its chemicals business, while low water levels on the Rhine and weak automotive demand especially in China were also to blame.

BASF peer Symrise (SY1G.DE) also tumbled 3.1 percent, Sika (SIKA.S) fell 5.1 percent and Imerys (IMTP.PA) lost 5 percent, helping to drag the pan-European chemicals index .SX4P down 2.5 percent and making it the worst-performing sector.

Construction and materials stocks .SXOP, also highly sensitive to economic growth, fell 1.5 percent, while autos stocks .SXAP declined 1.3 percent as trade tensions took their toll.

Unless U.S.-China trade talks wrap up successfully by March 1, new tariffs will be imposed, U.S. Trade Representative Robert Lighthizer said on Sunday, clarifying there is a “hard deadline”.

Chipmakers AMS (AMS.S), Siltronic (WAFGn.DE) and STMicro (STM.PA) fell 2.9 to 5.1 percent as investors ditched the tech sector.

Outside of trade, politics drove some of the biggest moves.

French retail, hotel, and transport stocks tumbled anew after a fourth weekend of “yellow vest” protests which are disrupting the economy.

LVMH (LVMH.PA) and Kering (PRTP.PA) were among the biggest drags on the STOXX. But France’s CAC 40 .FCHI overall did not underperform European peers, down just 0.6 percent.

Shares in British energy utilities Centrica (CNA.L) and SSE (SSE.L) fell around 3 percent as investors held their breath ahead of a crucial vote on Brexit on Tuesday.

Traders said a Sunday Telegraph report flagging a risk Centrica may struggle to pay its dividend was also hurting sentiment.

British housebuilders Berkeley Group (BKGH.L), Persimmon (PSN.L), Taylor Wimpey (TW.L) and Barratt Development (BDEV.L) fell 1.5 to 2.5 percent as nerves built and Peel Hunt cut its ratings.

Outside large-cap moves, shares in Interserve (IRV.L) plunged as much as 71 percent, last trading down 51 percent, after the embattled British outsourcer said it was in talks with debtholders and considering converting debt to equity.

(For a graphic on ‘All European sectors 2018 gains’ click tmsnrt.rs/2QL7Foh)

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Long-distance rail traffic in Germany halted due to strike

BERLIN/FRANKFURT (Reuters) – Rail workers in Germany staged a four-hour strike over pay on Monday morning, bringing long-distance rail traffic to a standstill and disrupting commuter and freight trains, state-owned rail operator Deutsche Bahn said.

The company said that regional train traffic, too, was significantly affected across Germany, with only a few commuter trains operating in the cities of Berlin, Munich and Frankfurt.

“Currently long distance traffic is suspended,” Deutsche Bahn said on its website. It also said freight trains faced severe disruptions.

The strike from 0400 GMT to 0800 GMT, comes after wage talks between railway union EVG and Deutsche Bahn broke down on Saturday. A warning from EVG, which represents most railway industry workers and professionals, that strike action is inevitable has raised fears that Christmas travel could be disrupted.

“We are asking the EVG to return to the negotiation table,” a spokesman for Deutsche Bahn said. “We are ready to talk.”

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Qatar Investment Authority has accelerated investments in technology: CEO

DOHA (Reuters) – The Qatar Investment Authority (QIA) has accelerated its investments in technology and is keeping the door open to strategic partnerships for technology investments, its CEO said on Monday.

In the United States, the fund is focusing on “classic” sectors such as real estate, financials, and technology, Mansour Ibrahim al-Mahmoud told Reuters on the sidelines of an event in Doha, adding this was until the QIA revisits its strategy in the near future.

“We have already accelerated and we have done several investments in technology and we will keep the momentum until we increase our pie,” he said.

His comments came after sources told Reuters that Qatar’s $300 billion sovereign fund was exploring more acquisitions in the technology sector.

QIA and hedge fund Elliott Management Corp in December 2017 took Gigamon Inc, the U.S. networking software company, private for $1.6 billion.

Mahmoud said the fund was open to strategic partnerships in technology investments, but did not provide more details.

The QIA’s board was restructured last month as part of a broader government reshuffle, with Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani appointed chairman.

The fund injected billions of dollars into Qatari banks last year to offset outflows from Arab banks after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt imposed a diplomatic and commercial boycott on Doha.

Mahmoud was appointed CEO last September, replacing Sheikh Abdullah bin Mohamed bin Saud al-Thani. He had previously worked at the QIA, heading risk management.

The QIA has held talks with technology-focused private equity funds and is also considering purchasing direct stakes in technology firms and startups in a sector it is relatively underweight compared with other state-backed funds, say sources.

The technology shift will pit the Qatari fund against Saudi-backed SoftBank and the Public Investment Fund, which have bought significant stakes in technology firms such as Uber [UBER.UL].

Financial sources said the QIA’s technology focus was part of a rebalancing of its portfolio towards the United States and Asia after building up a large European portfolio such as a stakes in Credit Suisse, London Stock Exchange (LSE.L) and Volkswagen (VOWG_p.DE).

“Technology is a massive buzz and they see themselves underweight,” said a financial source who has held talks with QIA. “They will be looking for like-minded partners who have expertise in technology.”

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European stocks tumble as investors shun risk, BASF hit by profit warning

LONDON (Reuters) – Simmering tensions between the U.S. and China dented European shares on Monday as investors fled risk at the start of a highly uncertain week with Britain’s parliamentary vote on Brexit looming.

The pan-European STOXX 600 index fell 0.8 percent to hit a two-year low once more by 0830 GMT, with Britain’s FTSE 100 .FTSE down 0.3 percent. Germany’s DAX .GDAXI, the most sensitive to China due to its big exporters, fell 0.9 percent.

Shares in BASF (BASFn.DE) fell 4.3 percent after the German chemicals firm slashed its forecast for 2018 profits on Friday.

It said the decline was mainly due to its chemicals segment while low water levels on the Rhine and weak automotive demand especially in China were also to blame.

BASF peer Symrise (SY1G.DE) also tumbled 3.6 percent, helping drag the pan-European chemicals sector .SX4P down 2.3 percent, the worst-performing.

Autos stocks .SXAP also fell 1.8 percent as trade tensions took their toll.

Chipmakers AMS (AMS.S), Siltronic (WAFGn.DE), STMicro (STM.PA) also fell 2.9 to 5.1 percent as investors ditched the tech sector.

Politics drove some of the biggest moves.

French retail, hotel, and transport stocks tumbled anew after a fourth weekend of “yellow vest” protests which are disrupting the economy.

British energy utilities Centrica (CNA.L) and SSE (SSE.L) both fell around 3 percent as investors held their breath ahead of a crucial vote on Brexit on Tuesday.

Housebuilders Berkeley Group (BKGH.L), Persimmon (PSN.L), Taylor Wimpey (TW.L) and Barratt Development (BDEV.L) fell 1.5 to 2.5 percent as nerves built and Peel Hunt cut its ratings.

Outside large-cap moves, shares in Interserve (IRV.L) plunged 71 percent after the embattled British outsourcer said it was in talks with its debt holders and considering converting debt to equity.

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