Business Blog Posts

Popular protests in Egypt and Tunisia have toppled entrenched leaders, but a defiant Gaddafi, the world's second-longest-serving leader after the Sultan of Brunei, said he would not be forced out by the deadly unrest sweeping his nation.

The turmoil in Libya, which pumps nearly 2 percent of world oil output, sent London Brent crude prices above $108 a barrel to a 2-1/2 year high but they settled below $106 on Tuesday as the Organization of the Petroleum Exporting Countries (OPEC) said it would act should there be a supply shortage.

On Wednesday, Brent was trading up around 70 cents at around $106.47. NYMEX crude for April delivery was up 50 cents at $95.92 a barrel. The contract earlier rose as high as $96.08, the highest for any nearby month since October 2008.

Japan's Nikkei 225 index .N225 was down 0.2 percent and the MSCI's index of Asia Pacific shares outside Japan .MIAPJ0000PUS was off 0.3 percent.

Transporter companies, whose fuel bills are headed up, extended sharp losses from Tuesday, with Korean Air Line (003490.KS) shedding 1.5 percent.

"The only observation an outsider sitting in Asia can make about events in the Middle East and North Africa is that the unpredictability of events and the difficulty in ascertaining the 'end game' mean that equity markets settling back into equilibrium is still some way off," said Nomura analyst Sean Darby.

"The ongoing risk is if food prices were to continue to rise due to unseasonal weather and indeed if fuel prices were to climb further. Non-linear responses such as bans on exports of food by producers or curtailment of shipments of fuel due to non-payment would only exacerbate the situation on the ground and make it more difficult to return to normalcy."

Gold, a traditional safe haven in times of trouble, were little changed around $1,400 an ounce on Tuesday, after a six-session rally, but the trend is still expected to be upwards.

Currencies viewed as safe havens, such as the yen and Swiss franc, have also been boosted by events in Libya.

The dollar traded around 0.9371 Swiss francs, not far off a three-week low around 0.9362 plumbed overnight. The euro fell to a 3-1/2 week low at 1.2782 francs and last stood around 1.2834.

The euro was at $1.3697, after having briefly risen as high as $1.3704 on EBS after European Central Bank officials said they were ready to fight inflation.

Wall Street stocks on Tuesday suffered their worst day since August in what could be the start of a long-anticipated pullback after gaining more than 20 percent in the past six months.

The Dow Jones industrial average .DJI closed down 1.44 percent. The Standard & Poor's 500 Index .SPX fell 2.05 percent. The Nasdaq Composite Index .IXIC dropped 2.74 percent.

U.S. stock futures were slightly higher, suggesting Wall Street will rise again when it reopens on Wednesday.

(Editing by Ramya Venugopal)

Violent clashes in Libya have resulted in at last three oil companies halting output in Africa's third-largest producer. Libya pumps 1.6 million barrels per day (bpd), or nearly 2 percent of global supply.

The disruptions mark the first reduction in oil supply stemming from a wave of protests that have swept through the oil-producing Middle East and North Africa. Investors fear for the potential impact on the flow of oil from top exporter Saudi Arabia if it suffers similar unrest.

U.S. crude rose as high as $96.08 a barrel, the highest level since October 2008. By 0355 GMT, the contract had trimmed gains to trade at $95.70, up 28 cents on the day.

Brent crude rose 78 cents to $106.56 a barrel. On Monday, Brent hit a 2-1/2-year high of $108.70.

"Even if Libya completely shuts down, there isn't a supply issue. But the (U.S. crude) could go to $100, given the potential for this contagion to spread to Saudi Arabia," said Jonathan Barratt, managing director of Commodity Broking Services in Sydney.

To date, protests in Saudi have been low key. But majority Shi'ites in neighboring Bahrain are protesting against the Sunni government and there is concern this could spill over to the Shi'ite minority living in Saudi Arabia's oil-producing eastern province.

A pipeline pumping Libyan gas to Italy was also closed, and operations at Libya's export terminal operations disrupted. Libyan leader Muammar Gaddafi has refused to step aside despite the growing revolt and threatened tougher action against protesters in a defiant speech on Tuesday.{ID:nLDE71L2LE]

International Energy Agency (IEA) chief economist Fatih Birol said on Tuesday that oil prices were in the danger zone and could rise further if turmoil continues in the Middle East.

"The global economy is more fragile now than it was in 2008. Growth has been driven by stimulus packages and austerity measures. I don't see it being able to absorb a rise to $140 like it did two years ago," Barratt said.

Brent crude has risen more than 13 percent so far this year. U.S. crude is up over 2 percent on the year, but is over $50 below its 2008 high of $147.27.

"(Brent) prices have broken through the $105 resistance, and if it breaks $110, it could easily move to $120," said Ken Hasegawa, a commodity derivatives manager at Newedge brokerage in Tokyo.

NO MORE CRUDE FROM SAUDI

Top exporter Saudi Arabia on Tuesday stopped short of pouring more oil on to markets, telling visiting consumer nations prices were driven by fear.

The kingdom could ramp up its oil production enough within one month to replace all of Libya's crude exports if growing strife in the African nation cuts off its oil shipments, a senior U.S. government energy official said on Tuesday.

The alternatives include the possibility of tying up with IntercontinentalExchange Inc (ICE.N) or CME Group Inc (CME.O) to wrest NYSE Euronext out of its deal with Deutsche Boerse (DB1Gn.DE), the person said.

Nasdaq may also consider selling itself or buying another competitor if it is unable to compete with Deutsche Boerse on the NYSE deal, the Wall Street Journal said.

A Nasdaq spokesman was not immediately available to comment. The person familiar with the situation asked to remain anonymous because the talks are private.

Nasdaq has found itself to be the odd-man out in a series of exchange-operator deals in recent months.

Pressure is mounting on global bourses to seek partnerships to counter the threat from bigger rivals and alternative trading platforms, and to cut costs.

In recent weeks, Deutsche Boerse agreed to buy NYSE, the London Stock Exchange Group Plc (LSE.L) announced a deal to take over Canadian stock market operator TMX Group Inc (X.TO), and BATS Global Markets said it will buy peer Chi-X Europe.

Last October, Singapore Exchange agreed to buy Australia's ASX.

It is not clear where Nasdaq's efforts will lead, the person familiar said.

Indeed, officials at both ICE and CME have been cautious about potential deals.

Earlier this month ICE Chief Financial Officer Scott Hill said his exchange, which trades energy futures as well as over-the-counter swaps, sees "a lot of opportunity in the changes that are going on."

But he said ICE is "proceeding cautiously on the M&A side, because what we don't want to do is we don't want to acquire to build scale."

Officials at CME, which owns the Chicago Mercantile Exchange, have said they are not planning any large acquisitions and have promised to return excess cash to investors in the form of dividends or share buybacks.

The New York Times' Dealbook last week said Nasdaq and IntercontinentalExchange were in talks to team up on a possible bid for NYSE Euronext.

(Additional reporting by Michael Erman; Editing by Gary Hill and Muralikumar Anantharaman)

The long-awaited ruling by U.S. Bankruptcy Judge James Peck followed a trial in which Lehman argued that Barclays got a sweetheart deal in acquiring its U.S. investment banking and brokerage operations.

Lehman agreed to sell that business for about $1.85 billion on September 20, 2008, just five days after the company's Chapter 11 filing became what many consider the seminal event of the global financial crisis.

"The court was not deceived in a manner that should now be permitted to upset the integrity of the sale order," Peck wrote in a 103-page opinion issued late Tuesday. "The sale process may have been imperfect, but it was still adequate under the exceptional circumstances of Lehman Week."

Peck said any disclosure lapses did not affect the "fairness" or outcome of the sale hearing. He said there was an "undeniably correct" perception at the time that the sale "mitigated systemic risk," helped avert "an even greater economic calamity," and benefited all interested parties.

"The court still would have entered the very same sale order because there was no better alternative and, perhaps most importantly, because the sale to Barclays was the means both to avoid a potentially disastrous piecemeal liquidation and to save thousands of jobs in the troubled financial services industry," he said.

Peck's ruling is a setback for Lehman, which last month projected it would have $60.1 billion to pay out to creditors, who believe they are owed six times that amount.

Kimberly Macleod, a Lehman spokeswoman, declined immediate comment, saying the company is reviewing Peck's decision.

Barclays spokesman Michael O'Looney said the British bank is pleased the court found the transaction "the product of arm's length negotiations," and that Barclays acted in good faith.

Lehman has also sued other banks including Bank of America Corp, Canadian Imperial Bank of Commerce, JPMorgan Chase & Co to recover assets for creditors.

The trial over the Barclays transaction lasted 34 days stretching from April to October of last year, Peck wrote.

The case is In re: Lehman Brothers Holdings Inc, U.S. Bankruptcy Court, Southern District of New York, No. 08-13555.

(Reporting by Jonathan Stempel in New York; Additional reporting by Michael Erman; Editing by Gary Hill)

The weak performance, which saw HP missing its own revenue target for the fiscal first quarter, made for a tough start for new Chief Executive Leo Apotheker.

The January quarter was the first for the former SAP CEO, who joined the company after the controversial ouster of the Mark Hurd and has since put his own stamp on the company. HP added five new directors to its board in a major shake-up just last month.

Sales from its personal systems group slipped 1 percent as the company's personal computer sales in China continued to struggle. Revenue from its giant services business slid 2 percent, as HP saw a shortfall in short-term, "add-on" deals in areas such as infrastructure technology outsourcing.

"If you use Q1 as a marker, it's clear that we do a lot of things well at HP. It's also clear that we have isolated areas we need to improve," Apotheker told reporters on a conference call.

HP's poor showing overshadowed a beat on fiscal first-quarter profit, driven in part by cost discipline and lower component costs that had also boosted rival Dell Inc.

HP's bright spots included strong sales of enterprise servers, storage and networking equipment, and a good performance in the printing group.

"The net of it was you had a miss on the PC side, and that's clearly not bouncing back," said Cross Research analyst Shannon Cross. "People are worried about the ability of HP to show strong growth."

Gross margin came in at 24.4 percent, just above Wall Street's forecast. But HP warned that lower component prices would not benefit it as much this quarter.

"If it's all from component prices they won't get any credit," said Wedbush Securities analyst Kaushik Roy. "The question is -- are gross margins getting better partly because better supply chain and mix shift to higher margin businesses like networking, storage and servers?"

The world's largest technology corporation by revenue raised its forecast for fiscal 2011 non-GAAP earnings, predicting a profit of $5.20 to $5.28 a share. But it trimmed its revenue outlook to a range of $130 billion to $131.5 billion, from a previous $132 billion to $133.5 billion.

The lower sales outlook was due to weak demand for consumer PCs, and slower-than-normal growth in HP services.

HP emphasized that its forecast -- which was also below analysts' expectations for the current April quarter on a revenue basis -- was conservative.

For a graphic comparing HP with major rivals International Business Machines Corp, Dell and Apple Inc, click r.reuters.com/nyq28r

WAITING FOR LEO

Libyan leader Muammar Gaddafi vowed defiance on Tuesday, making a fleeting television appearance to disdain protesters and deny he had fled the country.

* Elsewhere in the Middle East, two Iranian naval ships entered the Suez Canal, a canal official said on Tuesday and were heading toward the Mediterranean, a move certain to anger Israel.

* U.S. crude futures hit a 2-1/2 year high on concern the Libyan unrest could cut more of the OPEC-member's output and that a similar story could play out in other top oil producers in North Africa and the Middle East.

* In earnings news, Wal-Mart Stores' (WMT.N) quarterly results are expected to show whether the fresh management team at the U.S. discount chain has seen sales turn the corner.

* Hewlett-Packard (HPQ.N), the world's largest technology company by revenue is forecast to report strong demand for networking equipment, servers and storage, but relatively lackluster sales of low-margin personal computers due to weak consumer spending.

* Other companies reporting include fourth-quarter results from Home Depot (HD.N), Macy's (M.N), Cabot Oil & Gas (COG.N) and RadioShack (RSH.N).

* Elsewhere, BHP Billiton (BLT.L) said it was buying shale gas reserves from Chesapeake Energy Corp (CHK.N) for $4.75 billion, in a deal which sets it further apart from its mining peers with a big bet on the world's biggest gas market.

* A source with direct knowledge of the situation said on Tuesday U.S. life insurer Metlife Inc (MET.N) has drawn three bidders for its Taiwan unit and is expected to seal a deal by as early as April.

* On Sunday, Dynegy Inc's (DYN.N) top management announced their resignations after failing to sell the company for the second time in a year.

* On Monday, consumer electronics retailer Best Buy Co Inc (BBY.N) said it would close its branded stores in China and Turkey as part of an effort to generate savings of up to $70 million by fiscal 2013.

* Investors will also focus on the S&P Case-Shiller December report on house prices at 1400 GMT, while both the Richmond Federal manufacturing and service sectors index and the U.S. Consumer Confidence data for February are released at 1500 GMT.

* The U.S. markets were closed on Monday for the Presidents Day holiday, but on Friday stocks pushed higher for a third week, despite growing signals of an overheating market.

The Dow Jones industrial average .DJI gained 0.6 percent, the Standard & Poor's 500 Index .SPX added 0.2 percent and the Nasdaq Composite Index .IXIC edged up 0.1 percent.

* In Europe, the pan-European FTSEurofirst 300 .FTEU3 index of top shares fell 0.9 percent extending the previous session's losses on the Libyan worries.

(Reporting by Joanne Frearson; Editing by Jon Loades-Carter)