Business Blog Posts

Already the world's largest gold miner, Barrick is looking to bolster its position in copper, a primary industrial metal, while prices are near record highs.

Toronto-based Barrick said Equinox had agreed to be acquired for C$8.15 a share, an 8.7 percent premium over the company's Thursday closing price. According to Reuters data, Equinox has about 879.5 million listed shares, which would make the deal worth nearly C$7.2 billion.

Minmetals earlier this month offered to buy Equinox for C$7 a share, but the Australian copper miner called that proposal a low-ball bid. Equinox said it believes the Barrick bid is superior in terms of price and likelihood of completion.

Barrick said its agreement for Equinox prevents the Australian miner from soliciting superior bids and gives Barrick the right to match any higher offers. Equinox would have to pay Barrick C$250 million to walk away from the deal, even if it accepts a higher bid.

Equinox has prime copper assets in Africa and Saudi Arabia that make it attractive to larger miners. Its Lumwana copper and uranium mine in Zambia is Africa's third-largest copper mine by production and the Jabal Sayid copper development in Saudi Arabia is due to start production next year.

Barrick Chief Executive Aaron Regent said the deal would improve the company's copper exposure in a strong price environment for the metal, which is used in construction and industrial applications.

"Combined with our Zaldivar mine and Cerro Casale project in Chile, this acquisition would position Barrick with significant production growth potential in two of the most prolific copper-producing regions of the world," Regent said.

As part of its agreement to be bought by Barrick, Equinox will pull its unsolicited bid for Lundin Mining (LUN.TO). Equinox had been trying to take over its rival copper miner since February but conceded on Monday that its own shareholders would not likely have supported the deal.

U.S.-listed shares of Barrick slid 1.4 percent to $54.85 in premarket trading after the announcement.

Barrick said it has committed cash and financing in place for the transaction. It expects the deal to add to earnings per share and cash flow immediately.

Morgan Stanley and RBC Capital Markets advised Barrick on the deal, while CIBC World Markets, Goldman Sachs and TD Securities acted as financial advisers to Equinox.

(Reporting by Michael Erman; Editing by Frank McGurty)

Of S&P 500 companies that have reported, 75 percent beat analysts' expectations. That is just above the average over the past four quarters but well above the average of 62 percent since 1994, according to Thomson Reuters data.

The Dow hit a high for the year last week and is trading near a three-year high. The S&P 500 has moved to the top end of its recent trading range where it is facing resistance at its last high for the year.

Companies reporting earnings on Monday include Express Scripts (ESRX.O) and Ameriprise Financial (AMP.N). This week is a hectic one for earnings with another 180 S&P 500 companies reporting their quarterly scorecards.

"The earnings reports from last week were pretty positive," said John Brady, senior vice president at MF Global in Chicago. "There will be a focus and concentration on earnings here."

Brent crude oil rose above $124 a barrel, pushed higher by an escalation of violence in the oil-producing Middle East, as well as post-election unrest in OPEC member Nigeria.

Brady noted that activity would likely be subdued as many major European markets remain closed over the long Easter weekend. U.S. traders are returning after markets were closed on Friday for the Easter holiday.

Silver jumped more than 5 percent and gold rose to a record on Monday as investors sought shelter against a weaker dollar, while prices of grains and crude oil surged on supply fears.

S&P 500 futures added 3.2 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 27 points and Nasdaq 100 futures rose 6.25 points.

"It's going to be very modest volume today," said Brady. "It's a day we want to play defense and not offense."

The U.S. Federal Reserve is meeting this week and will hold the first of four news conferences on Wednesday. Investors are looking for clues about the direction of monetary policy when the Fed's bond-buying program ends in June.

RadioShack Corp's (RSH.N) quarterly profit fell due to weakness in its T-Mobile business and higher costs related to the roll-out of its wireless kiosks in Target (TGT.N) stores. The shares fell 3.1 percent to $15.34 before the opening bell.

Road construction equipment maker Astec Industries Inc (ASTE.O) posted better-than-expected quarterly results, helped by higher asphalt and mining group revenue.

(Editing by Kenneth Barry)

Commodities pushed higher with spot gold hitting a record high of $1,517.71 an ounce and U.S. silver futures scaling a 31-year peak.

The dollar edged up 0.1 percent against a basket of currencies to 74.086 .DXY, but remained within sight of a trough of 73.735 struck last week, its lowest since August 2008.

The dollar rose 0.4 percent against the yen to 82.22 yen, supported by dollar-buying by Japanese importers and as traders took aim at stop-loss dollar buying orders said to be lurking near 82.50 yen.

"The market is thin today because London is closed today, and people are basically just trying to trigger stops," said a trader at a Japanese bank, referring to Easter Monday holidays across much of Europe.

Markets are looking to a news conference by Federal Reserve Chairman Ben Bernanke on Wednesday after the bank's two-day policy meeting to see how the central bank plans to exit from its super-easy monetary policy.

Traders are also nervously watching Greece after newspaper reports that it is considering extending maturities on its sovereign debt as one option for a possible restructuring.

Most Asian stock markets were sluggish as they reopened after the long Easter weekend, but South Korea's benchmark stock index clawed above a peak scaled last week and hit another record intraday high. The benchmark index was last up 0.9 percent at 2,217.59 .KS11.

Japan's benchmark Nikkei share average dipped 0.1 percent .N225, but gains in shippers helped temper losses.

Japan's Nikkei business daily reported at the weekend that earnings sharply rebounded at three major marine transport companies in the year that ended on March 31.

Mitsui OSK Lines (9104.T) rose 2 percent, Nippon Yusen (9101.T) gained 1.3 percent and Kawasaki Kisen (9107.T) added 0.7 percent.

"The shippers' gains are straightforward. The expectations for good results reflect strong demand in the global economy and they suffered relatively little damage from the March earthquake," said Naoki Fujiwara, a fund manager at Shinkin Asset Management.

The Australian dollar, which tends to attract buying when the global economy is doing well and commodity prices rise, touched a 29-year high of $1.0777. It later trimmed its gains to stand at $1.0735, little changed on the day.

U.S. crude futures oil rose as violence in Syria and Yemen escalated over the weekend, stirring fears of supply disruptions from the Middle East and North Africa.

NYMEX crude for June delivery edged up 30 cents a barrel to $112.59.

U.S. 10-year Treasuries were little changed in price to yield 3.396 percent, down about 1 basis point from late U.S. trade on Thursday. The U.S. Treasury market was closed on Friday for a U.S. holiday.

Stock markets in Australia and Hong Kong were closed on Monday for a holiday. (Additional reporting by Ayai Tomisawa and Hideyuki Sano in Tokyo; Editing by Kim Coghill)

NYSE Chief Executive Duncan Niederauer also sees the biggest NYSE and Deutsche Boerse customers saving at least $3 billion from the combination of their European derivatives platforms, according to spokesman Richard Adamonis.

Adamonis was confirming comments made earlier by Niederauer in an interview with the Financial Times.

The new savings estimate, along with a 100 million euros in benefits coming from cross-selling and distribution opportunities, would bring the total savings and benefits from the deal to about $725 million, closer to the estimates from a competing takeover offer.

Nasdaq OMX Group Inc and IntercontinentalExchange Inc have launched a rival $11.2 billion takeover bid for NYSE Euronext. That deal promises net savings and benefits, or synergies, of $740 million.

Last week, NYSE's board rejected the Nasdaq/ICE bid for the second time in 11 days.

JOB CUTS

U.S. Sen. Charles Schumer of New York was expected to ask Nasdaq and ICE about potential job losses if they succeeded in their bid, the Wall Street Journal reported on Sunday.

In a letter expected to be sent Monday, Schumer cited estimates by NYSE that a merger with Nasdaq could cost 1,000 U.S. jobs, or about a third of the U.S.-based employees of the combined company, the Journal reported.

The estimates are based on NYSE's research from about 12 to 18 months ago when it looked at buying Nasdaq, the paper reported, citing an unnamed source.

Earlier this month, Schumer said he was concerned about the impact of the bid on jobs in New York.

A spokesman for Schumer could not be reached immediately for comment late on Sunday.

The U.S. lawmaker is one of the key political figures whose support could be crucial for any deal involving NYSE, the iconic exchange whose takeover can take on a populist hue.

Pride and nationalism around domestic exchanges have scuttled such deals in the past. Earlier this month, the Australian government blocked Singapore Exchange Ltd's $8 billion bid for ASX Ltd, saying changes to the country's financial systems were needed before foreigners could buy the bourse.

In their bid, Nasdaq and ICE are hoping some of these fears work to their advantage over the German exchange. They have appealed heavily to the United States' thirst for remaining the world's financial center, its anxiety about losing out on new listings and its need for a more stable market.

SHAREHOLDER VOTES

All four exchanges involved in the increasingly bitter takeover battle are trying to persuade NYSE shareholders to back their deal.

Niederauer's comments come ahead of a closely watched NYSE shareholder meeting on April 28 for their annual vote on the company's directors.

Analysts have said that vote could be an early sign of how shareholders feel about the NYSE board's decision to back the Deutsche Boerse over the rival, higher bid.

The vote on the Deutsche Boerse deal is expected on July 7, according to Niederauer's comments and confirmed by his spokesman.

(Reporting by Paritosh Bansal, editing by Bernard Orr and Matt Driskill)

A combination of rising gasoline prices and bad weather has prompted a number of big banks to cut their forecasts for U.S. economic growth in the first quarter.

The preliminary snapshot of U.S. GDP growth, which a Reuters survey puts at 2.0 percent, will be released on April 28.

In the UK, where weak consumer demand is expected to weigh on first-quarter output, the preliminary reading will be released on Wednesday.

"The GDP figures will probably zoom in the focus more closely on fundamentals. A disappointment in the UK and U.S. may temper some of the buoyancy behind commodity and equity prices," said Lena Komileva, global head of G10 currency strategy at Brown Brothers Harriman in London.

Many economists, including Federal Reserve Chairman Ben Bernanke, believe commodity price rises will prove temporary, and will thus have no lasting impact on inflation or growth.

But the most recent data suggests the U.S. economy won't regain momentum soon. On Thursday, data showed factory activity in the Middle Atlantic states braked sharply in April.

Slower U.S. growth coupled with persistently high unemployment suggests the Fed is in no hurry to raise interest rates, even as it is almost certain to end a $600 billion bond buying program in June as planned.

Bernanke will get a chance to explain the Fed's thinking when he faces the media April 27 for his first post-meeting press conference.

"Communication is an extremely important tool for the Fed -- now more than ever -- to continue to manage down rate (hike) expectations at a time when it is too early for the economy to bear a rate hike," Komileva said.

Most analysts expect the Fed will hold support for the economy steady by maintaining the size of its balance sheet after June.

The Bank of England faces more pressure than the Fed to reverse course, with inflation seen rising again, and analysts say the GDP data may be important in influencing the BoE's decision on the timing of rate hikes.

Like the Fed, the BoE has kept rates at a record low for more than two years. In contrast, the European Central Bank raised borrowing costs this month for the first time since July 2008.

Weak GDP data would strengthen the hand of those Bank of England members worried what raising interest rates would do for fragile demand.

On the fiscal side, the UK is already undergoing strict austerity measures and may offer a preview of what lies in store for the United States when it starts to tighten its belt.

"The UK data is probably a little more due to fiscal austerity. That's something the U.S. ought to contend with next year, and the UK is contending with now," said Michael Feroli, U.S. economist at JPMorgan.

Standard & Poor's on Monday threatened to downgrade the United States' prized triple-A credit rating unless the Obama administration and Congress find a way to slash the yawning federal budget deficit within two years.

President Barack Obama on Wednesday warned that if the U.S. slashes spending too deeply, it could face a second recession.

"If all we are doing is spending cuts, and we are not discriminating about it, if we are using a machete instead of a scalpel, and we are cutting out things that create jobs, then the deficit could actually get worse because we could slip back into another recession," he said.

Complicating things further, the United States won't learn the full impact on its economy from last month's catastrophic earthquake and tsunami until the second quarter is well under way.

Feroli said the impact could be "pretty significant."

Japan, though, will get its first post-earthquake look at some important indicators, including inflation, household spending and industrial production.

The Bank of Japan is also set to provide an update of its growth and inflation forecasts.

(Editing by James Dalgleish)