Dollar, U.S. bond yields drop as oil tumbles on output cut doubts

By Hideyuki Sano | TOKYO

TOKYO The dollar and U.S. bond yields fell on Monday as investors reversed a "Trumpflation" trade that has gripped markets since the U.S. elections, after oil prices slid on fears that producer countries meeting this week could fail to agree an output cut.

Brent crude futures last traded at $47.13 per barrel LCOc1, down slightly on the day, after having fallen by as much as 2.0 percent in early Asian trade, following on from a 3.6 percent fall on Friday as doubts arose over whether the Organization of the Petroleum Exporting Countries would reach a deal later this week.

Prospects of reduced upward pressure on inflation from oil prices, prompted investors to temper expectations for rises in U.S. interest rates, bring down treasury yields and the dollar.

That gave some relief to Asian shares, which had underperformed on worries about capital flight to higher-yielding U.S markets in the weeks since Donald Trump's Nov.8 election win.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.6 percent, led by gains in Hong Kong .HSI and Taiwan .TWII.

In contrast, U.S. stock futures ESc1 slipped 0.2 percent after their stellar performance this month on hopes President-elect Trump's policy of fiscal spending, deregulation and protection of domestic industries will boost U.S. inflation and benefit Corporate America.

European shares are expected to dip, with spread-betters looking at a fall of 0.2 percent in Germany's DAX .GDAXI and 0.1 percent in Britain's FTSE .FTSE.

Japan's Nikkei average .N225, which had performed even better than Wall Street thanks to the yen's fall, ended down 0.1 percent.

"It will be scary to think markets may fully reverse their moves since the elections, changing their mind that Trump's policy may not be so good after all," said Bart Wakabayashi, head of Hong Kong FX sales at State Street Global Markets.

Wall Street's four main indexes .DJI .SPX .IXIC all hit record highs last week, a feat last achieved in 1999.

Yet some investors question whether the market may have got carried away with optimism on Trump's policy, given the uncertainty on the political neophyte's presidency, including on how closely he can work together with the Congress.

But languishing oil prices, giving investors a more immediate reason to have second thoughts about how prospects for inflation and U.S. interest rates.

Saudi Arabia said on Friday it will not attend talks on Monday with non-OPEC producers to discuss supply cuts.

"Oil prices have fallen considerably on worries about the deal. That would pressure energy shares, and could hit the entire stock markets. Given their rally in recent days, it's no surprise to see some adjustment," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.

Saudi Arabia's energy minister Khalid al-Falih said on Sunday that he believed the oil market would balance itself in 2017 even if producers did not intervene, and that keeping output at current levels could therefore be justified.

His comments raised worries that a preliminary agreement reached in September for OPEC to reduce output to between 32.5 million and 33 million barrels per day may fall apart when OPEC ministers meet on Wednesday to finalize that deal.

OPEC also wants non-OPEC producers such as Russia to support the intervention by curbing their output and many market players still expect them to reach a deal.

As lower oil prices reduce inflationary pressure, they sapped momentum for a sell-off in U.S. Treasuries and a rally in the dollar, the market's favorite play since the U.S. election.

The dollar sank more than 1.6 percent against the yen to as low as 111.355 yen JPY=, down sharply from its eight-month high of 113.90 set just on Friday. It last traded at 111.90 yen.

"As long as the dollar holds above 111-111.50 yen, I do not judge the (dollar's rising) trend has changed," said Koichi Yoshikawa, executive director of financial markets at Standard Chartered in Tokyo.

The dollar's index against a basket of six major currencies .DXY =USD stood at 100.88, slipping 0.6 percent on day and off its 13 1/2-year high of 102.05 touched on Thursday.

The dollar shed more than 0.5 percent against many emerging market currencies, including the Mexico peso MXP=, the biggest loser after Trump's election victory, the South African rand ZAR= and the Turkish lira TRY=.

The euro EUR= gained 0.8 percent to $1.0655, extending its rebound from its near one-year low of $1.0518 touched on Thursday.

The single currency has so far shown limited reaction to the French conservatives' presidential primaries on Sunday.

Former Prime Minister Francois Fillon, a socially conservative free-marketeer, won the run-off, setting up a likely showdown next year with far-right leader Marine Le Pen that the pollsters expect him to win.

Gold XAU= bounced back to $1,192.0 per ounce from Friday's low $1,171.5, which was its lowest level since early February.

The yield on 10-year U.S. Treasuries US10YT=RR dropped almost 5 basis points to 2.323 percent, off its 16-month high of 2.417 percent touched on Thursday.

On the other hand, some commodities gained sharply on hopes of strong demand for property and infrastructure investment in China and the United States.

Chinese steel futures SRBcv1 jumped over 6 percent, while iron ore futures DCIOcv1 also gained about six percent and zinc CMZN3, used to galvanize steel, powered to a nine-year high on the London Metal Exchange.

(Editing by Simon Cameron-Moore)

Read more

Trump, without evidence, says illegal voting cost him U.S. popular vote

By Roberta Rampton and Dustin Volz | PALM BEACH, Fla./WASHINGTON

PALM BEACH, Fla./WASHINGTON U.S. President-elect Donald Trump said in a tweet on Sunday that he won the popular vote in the Nov. 8 election "if you deduct the millions of people who voted illegally", though he provided no evidence of widespread voter fraud.

The allegation by Trump, who won the required votes in the Electoral College to secure the presidency, comes as Democratic rival Hillary Clinton's lead in the popular vote over Trump has surpassed 2.0 million votes and is expected to grow to more than 2.5 million as ballots in populous states such as California continue to be tallied.

Clinton's legal team said on Saturday it had agreed to participate in a recount of Wisconsin votes after the state's election board approved the effort requested by Green Party candidate Jill Stein, which Trump has called "ridiculous."

"In addition to winning the Electoral College in a landslide, I won the popular vote if you deduct the millions of people who voted illegally," the Republican Trump tweeted as reporters waited for him to leave his Mar-a-Lago golf resort in Florida to fly back to his residence in New York City.

The U.S. presidential race is decided by the Electoral College, based on a tally of wins from the state-by-state contests, rather than by the national vote. Trump has surpassed the 270 electoral votes needed to win the White House. The Electoral College results are expected to be finalized on Dec. 19. Trump takes office on Jan. 20.

"It would have been much easier for me to win the so-called popular vote than in the Electoral College in that I would only campaign in 3 or 4 states instead of the 15 states that I visited," Trump added in follow-up tweets.

Several hours later, Trump tweeted, again without citing evidence: "Serious voter fraud in Virginia, New Hampshire and California - so why isn't the media reporting on this? Serious bias - big problem!" Clinton won all three states.

A spokesman for Trump did not immediately respond to a request for comment.

CRITICIZING RECOUNT EFFORT

Before the election, Trump made unsubstantiated allegations that the results of the election might be "rigged" against him but several studies have found no evidence of widespread or significant voter fraud in the United States.

Since the vote, his message has alternated between appealing for unity and railing against his opponents and the media.

In a video message released ahead of the U.S. Thanksgiving holiday on Thursday, Trump said he hoped it would be a time for Americans "to begin to heal our divisions" following a "long and bruising political campaign."

In a tweet on Saturday, Trump derided the fundraising effort by Stein to launch recounts in Wisconsin, Michigan and Pennsylvania as a "scam" that is "is now being joined by the badly defeated and demoralized Dems."

Those states had voted Democratic in recent presidential elections but all voted narrowly in favor of the Republican Trump in this month's election. The recounts are not expected to change the results of the election.

Stein, who won about 1.0 percent of the national vote, has said she wants a recount to guarantee the integrity of the U.S. voting system, a push that came after some computer scientists and election lawyers raised the possibility that hacks could have affected the results.

Democratic President Barack Obama's administration has said there is no evidence of electoral tampering, but experts have said that the only way to verify the results are accurate is to conduct a recount.

(Reporting by Roberta Rampton and Dustin Volz; Writing by Peter Cooney; Editing by Clive McKeef)

Read more

Pfizer walks away from $118 billion AstraZeneca takeover fight

By Ben Hirschler and Bill Berkrot | LONDON/NEW YORK

LONDON/NEW YORK Pfizer abandoned its attempt to buy AstraZeneca for nearly 70 billion pounds ($118 billion) on Monday as a deadline approached without a last-minute change of heart by the British drugmaker.

The decision ends a month-long public fight between two of the world's biggest pharmaceutical companies that sparked political concerns on both sides of Atlantic over jobs and corporate tax maneuvers.

British rules now require an enforced cooling-off period. AstraZeneca could reach out to Pfizer after three months and Pfizer could take another run at its smaller British rival in six months time, whether it is invited back or not.

Pfizer's move came two hours before a 5.00 pm (1200 ET) deadline to make a firm offer or walk away, under UK takeover rules. Its decision to quit the stage, at least for now, had been widely expected after AstraZeneca refused its final offer of 55 pounds a share.

"Following the AstraZeneca board's rejection of the proposal, Pfizer announces that it does not intend to make an offer for AstraZeneca," Pfizer said in a short news release.

The biggest U.S. drugmaker promised it would not go hostile by taking its offer directly to AstraZeneca shareholders, leaving the fate of what would have been the world's largest ever drugs merger in the hands of its target, whose board would have had to make a complete U-turn to get a deal done.

"We continue to believe that our final proposal was compelling and represented full value for AstraZeneca based on the information that was available to us," said Ian Read, Pfizer's chairman and chief executive.

Pfizer's final offer was at a price that many analysts and investors had previously suggested would bring AstraZeneca to the table for serious negotiations.

But in rejecting an earlier offer of 53.50 pounds as undervaluing the company, the British group indicated it needed a bid more than 10 percent higher, or at least 58.85 pounds per share, for its board to consider a recommendation.

Pfizer had urged AstraZeneca shareholders to agitate for engagement and several expressed disappointment at its intransigence, although others - encouraged by AstraZeneca's promising drug pipeline - backed the firm's standalone strategy.

AstraZeneca Chairman Leif Johansson welcomed Pfizer's decision to back down, which he said would allow the British company to focus on its growth potential as an independent company.

What happens next will depend upon whether AstraZeneca's share price deteriorates in the coming weeks and how hard its shareholders push for it to revisit a deal with Pfizer.

BlackRock, AstraZeneca's biggest shareholder, backed the board's rejection of Pfizer's 55 pounds a share offer, but urged it to talk again in the future.

POLITICAL OPPOSITION

The proposed transaction ran into fierce opposition from politicians in Britain, Sweden - where AstraZeneca has half it roots - and the United States over the likelihood that the marriage would lead to thousands of job cuts.

Ultimately, it was price and the lack of room for eleventh-hour maneuvering by Pfizer that killed the deal.

Pfizer had several reasons for taking aim at AstraZeneca for what would have been its fourth mega-merger in 14 years.

Highest on the list appeared to be Pfizer's desire to take part in a recent trend of so-called tax inversions, under which it could reincorporate in Britain and pay significantly lower corporate tax. Pfizer would also be able to use tens of billions of dollars it has parked overseas, avoiding high U.S. taxes for repatriating the huge cash pile.

Pfizer also had its eye on a promising portfolio of drugs in AstraZeneca's developmental pipeline, especially several potentially lucrative cancer medicines.

It was this pipeline that AstraZeneca management used to make its case for Pfizer significantly undervaluing the company.

Chief Executive Pascal Soriot went as far as making a 10-year forecast for a 75 percent rise in sales by 2023.

"As we said from the start, the pursuit of this transaction was a potential enhancement to our existing strategy," Pfizer's Read said. "We will continue our focus on the execution of our plans, bringing forth new treatments to meet patients' needs and remaining responsible stewards of our shareholders' capital."

The merger would have restored Pfizer as the world's largest drugmaker by sales, a position it relinquished to Swiss-based Novartis when billions of dollars in annual revenue evaporated after its top-selling cholesterol fighter Lipitor began facing generic competition in 2011.

(Editing by David Evans and Mark Potter)

Read more

CFL: Burris leads Redblacks to shock Grey Cup victory

By Steve Keating | TORONTO

TORONTO Henry Burris threw three touchdowns, including one in overtime, and ran in two others as the Ottawa Redblacks stunned the Calgary Stampeders 39-33 to win the 104th Grey Cup in one of the biggest upsets in Canadian Football League history on Sunday.

Burris was named the game's Most Valuable Player after completing 35-of-46 passes, none bigger than the 11-yard strike to Ernest Jackson in overtime that gave Ottawa their first Grey Cup for 40 years, when the team were known as the Rough Riders.

The 41-year-old Burris, who also connected on touchdown passes to Brad Sinopoli and Patrick Lavoie and threw for a total of 461 yards, became the oldest quarterback to lead his team to a Grey Cup triumph.

The Redblacks' victory over the heavily favored Stampeders also erased the disappointment of losing to the Edmonton Eskimos in last year's title showdown.

"It was almost a situation where I wasn't able to play today, my knee locked up on me before the game but I wouldn't accept that," said Burris, who guided the Stampeders to the CFL championship in 2008.

"For all those haters out there, all those organizations who haven't won a Grey Cup for decades, here we are.

"Right now all I want to do is enjoy the party."

The Redblacks ended the season with an 8-9-1 record and were not expected to represent much of a problem for a Calgary juggernaut that had ripped through the schedule (15-2-1) behind the league's outstanding quarterback Bo Levi Mitchell.

But Ottawa fans, who had seen both the Rough Riders and Renegades fold since they last celebrated a Grey Cup in 1976, were ready to party early as the Redblacks rolled to 20-7 halftime lead.

When Burris found Sinopoli with a nine-yard touchdown pass to open the second half, some in the sellout crowd at BMO Field were already preparing to make a swift exit and avoid the rush.

The Stampeders, however, would not go down without a fight, turning the rout into a nail-biter by scoring 10 points on a DaVaris Daniels touchdown run and Rene Paredes field goal in the final two minutes to send the game into overtime.

Even the decisive touchdown did not come without a fright as Jackson wildly juggled the ball before finally gaining control as he crossed into the end zone to cement the victory.

"It hurts, we made the largest comeback in Grey Cup history we just didn't finish it," said Mitchell, who tossed two touchdowns but was intercepted three times. "We had the opportunity we put ourselves in perfect position to finish it."

(Editing by Peter Rutherford/John O'Brien)

Read more

Frida Kahlo painting, unseen for 60 years, sells for $1.81 million

By Walker Simon | NEW YORK

NEW YORK Mexican artist Frida Kahlo's "Nina con Collar," an early painting whose whereabouts had been a mystery for 60 years, has sold for $1.81 million at a Sotheby's Latin American art auction.

Works by Mexican Rufino Tamayo and Colombia's Fernando Botero topped sales at the auction.

"We saw a series of exceptional prices for the giants of Latin American modern art," said Axel Stein, Sotheby’s Latin American art chief, commenting on the $16.84 million in total sales on Tuesday evening in New York.

Leading the sale was Tamayo's "Sandías y naranja" (Watermelons and orange), a 1957 oil and sand on canvas once owned by film star Audrey Hepburn, Sotheby's said. It sold for $2.29 million.

A Botero bronze sculpture, "Man on a Horse," fetched $1.82 million, and his "Homage to Bonnard," a large-scale nude painting, went for $1.39 million.

Kahlo's "Nina con Collar," (Girl with Necklace), which had not been seen publicly for six decades, went to an unidentified European buyer. The 1929 oil on canvas is among the first 20 of the Mexican artist's 143 paintings, Stein said.

The work, whose subject is about 13 or 14, prefigures hallmarks of Kahlo's self-portraits, including winged eyebrows and a full frontal gaze.

Kahlo died at age 47 in 1954. The following year, her widower, the muralist Diego Rivera, gave "Nina con Collar" to one of her studio assistants, who hung it in her California home for 60 years, according to Stein.

The work came to light when the unidentified former studio assistant, now in her mid-90s, contacted Sotheby's last summer, Stein said.

In international art markets, works by Kahlo have fetched more than any other Latin American artist, according to Stein.

Last May, Christie's sold a 1939 Kahlo painting for $8 million, an auction record for her work.

Sotheby's has privately sold Kahlo works for more than $15 million each, said Dan Abernethy, an auction house spokesman.

One reason Kahlo's works are so valued in the international market is that Mexico barred their export for several decades under laws to conserve the country's cultural heritage, Stein said.

(Editing by Daniel Wallis and Jeffrey Benkoe)

Read more
Older Post