Business Blog Posts

Troubled brokerage MF Global Holdings (MF.N) was nearing a deal to file for bankruptcy protection and sell assets to Interactive Brokers Group (IBKR.O), according to reports.

The Institute for Supply Management-New York releases the October index of regional business activity at 8:30 a.m. EDT. In September, the index read 538.0.

At 9:45 a.m. EDT, the Institute of Supply Management Chicago releases October index of manufacturing activity. Economists forecast a reading of 59.0, compared with 60.4 in September.

Amazon (AMZN.O) has added more titles to Prime Instant Video with a new digital video licensing agreement with Disney-ABC television group, giving Prime members more video content for their new Kindle Fire.

The China unit of investment bank JP Morgan (JPM.N) won approval to become a trading member of the Shanghai Gold Exchange, the eighth foreign financial institute to obtain such membership, said the exchange on its website (www.sge.com.cn).

Google Inc (GOOG.O) is making another push to bring its Web savvy to television sets, hoping to tap into a vast new market despite consumers' lukewarm reaction to one of its initial offerings.

Allstate (ALL.N), the largest publicly traded home and auto insurer in the United States, reports quarterly results. Analysts expect its profit to tumble to 8 cents per share from 83 cents a year ago. Other companies announcing results included Anadarko Petroleum (APC.N) and Humana (HUM.N).

Groupon Inc is considering raising its IPO price range as underwriters grow more confident about demand after completing the East Coast leg of a two-week roadshow to woo investors.

European shares .FTEU3 fell 0.8 percent early on Monday, giving back a little of last week's strong gains, with miners hurt by falling metals prices after Japan intervened to stem the rise in its currency against the dollar.

Japan sold the yen for the second time in less than three months after it hit another record high against the dollar, saying it intervened to counter speculative moves that were hurting the economy.

The dollar leapt against the yen by the most in three years, hitting a three-month high after the intervention, while metals prices fell.

U.S. stocks closed out a fourth week of gains in quiet fashion on Friday, edging higher as the market took a breather after rallying 3 percent on Europe's deal to stem its debt crisis.

The Dow Jones industrial average .DJI gained 22.56 points, or 0.18 percent, to 12,231.11. The Standard & Poor's 500 Index .SPX.INX added 0.49 point, or 0.04 percent, to 1,285.08. The Nasdaq Composite Index .IXIC shed 1.48 points, or 0.05 percent, to 2,737.15.

(Reporting by Atul Prakash; Editing by David Holmes)

As per a tentative plan, MF Global's holding company would file for bankruptcy protection and derivatives trader Interactive Brokers would buy the assets, the Wall Street Journal and the Financial Times reported.

Interactive Brokers would likely make an initial bid of about $1 billion during a court supervised auction, the Journal said.

MF Global, the U.S. futures brokerage run by former Goldman Sachs (GS.N) Chief Executive Jon Corzine, has been struggling over the past week in which it posted a quarterly loss, its shares fell by two-thirds and its credit ratings were cut to junk.

The company is suffering because of low interest rates and bets it made on European sovereign debt, making it possibly the most prominent U.S. casualty yet from the eurozone debt crisis.

MF Global was in talks on Sunday with possible buyers, aiming "squarely" to do a deal, though all options remained on the table as the firm hired restructuring and bankruptcy advisers, sources familiar with the situation told Reuters.

The New York Times reported in its electronic edition that by Sunday evening, the talks had narrowed to one bidder, Interactive Brokers.

Sullivan & Cromwell's restructuring and mergers teams have joined the long roster of those advising MF Global, one source familiar with the situation said.

Weil, Gotshal & Manges was also hired to prepare potential restructuring options, a second source familiar with the situation said. The sources could not be identified by name because the talks were not public.

Weil would focus on MF Global's UK subsidiary if it needed to pursue a formal restructuring overseas, the Journal reported in its electronic edition.

The securities company also has hired firms Skadden, Arps, Slate, Meagher & Flom, the newspaper said.

MF Global and Interactive Brokers declined to comment. The law firms could not be reached immediately for comment.

A number of interested parties were considering several possible deals, including buying all or parts of MF Global, said the source, who requested anonymity.

"The goal is squarely for some sort of M&A transaction," the source said, adding the situation was "fluid."

QUARTERLY LOSS

Corzine, who became CEO in March last year after a term as New Jersey's governor, has been trying to transform MF Global from a brokerage that mainly places customers' trades on exchanges into an investment bank that bets with its own capital.

The plunge last week in MF Global's corporate bonds to distressed levels, and in its shares to below $1 at one point on Friday, makes it all the more urgent for the company to come up with some sort of solution before markets open on Monday.

MF Global has given potential buyers limited information about its financials and has not set up a data room for bidders to conduct due diligence, a buyside source earlier said.

The source, who is looking into deals both for the whole company and for its parts, said he was skeptical about the possibility of MF Global striking a deal over this weekend.

The company's positions are big and hard to value, especially the firm's sovereign risk exposure, the source said.

"How do you put a price on that? How do you get a deal done when the right side of the balance sheet keeps moving so dramatically?" the source said.

REACHING OUT TO BANKS

The company hired boutique investment bank Evercore Partners Inc (EVR.N) to help find a buyer, separate sources said this past week.

It reached out to banks including Barclays Plc (BARC.L), Citigroup Inc (C.N), Deutsche Bank (DBKGn.DE), Jefferies Group Inc (JEF.N), JPMorgan Chase & Co (JPM.N), Macquarie Group Ltd (MQG.AX), State Street Corp (STT.N) and Wells Fargo (WFC.N), a source familiar with the situation said on Friday.

Macquarie has shown interest in MF Global, but a source with knowledge of the development said he would be surprised if Macquarie did a deal immediately. The source was not authorized to speak to the media and thus declined to be named.

A Macquarie spokeswoman declined comment.

Private equity firm J.C. Flowers, which has a stake in MF Global, is also in talks about possibly taking it private, the Wall Street Journal reported on Friday.

The investment is the latest to go sour for the financial services-focused buyout shop, founded by ex-Goldman banker J. Christopher Flowers.

Earlier this year, the firm was among investors who failed to block the nationalization of German mortgage bank Hypo Real Estate.

MF Global, which runs a Futures Commission Merchant and a broker-dealer, was scrambling last week to reassure customers about its stability as signs grew that some of them were withdrawing money.

A drop in a broker's credit rating to junk erodes confidence in its creditworthiness and can then restrict its ability to borrow -- the bedrock of any financial institution -- and fund day-to-day operations.

(Additional reporting by Caroline Humer and Nick Brown in NEW YORK, Tom Hals in WILMINGTON, Jessica Hall in PHILADELPHIA and Narayanan Somasundaram in SYDNEY; Editing by Dale Hudson, Vinu Pilakkott and Muralikumar Anantharaman)

The dollar rose more than 4 percent against the yen to above 79 yen, hours after briefly falling to a record low of 75.31 yen. The dollar index .DXY as measured against six major currencies rose 1.3 percent.

Japanese Finance Minister Jun Azumi said Japan intervened unilaterally in the foreign exchange market on Monday to counter speculative moves that did not reflect the health of the Japanese economy.

U.S. crude futures also fell more than $1 as a stronger dollar made commodities priced in the U.S. currency more expensive for investors holding other currencies, thereby reducing demand.

The dollar's rally sent gold down more than 1 percent and silver down more than 2 percent.

The Nikkei .N225 ended down 0.7 percent at 8,988.39, but still logged a monthly gain of 3.3 percent. Investors locked in profits on concerns the yen won't stay down for long.

The yen's persistent strength has raised worries about Japanese companies' earnings. .T

The dollar has come under pressure as investors cautiously returned to riskier assets after Europe laid out a basic framework to tackle its debt crisis last week.

"A weak dollar, short-covering and an overbought market since the beginning of October was enough to trigger a correction (as the dollar spiked)," said Colin Bradbury, Daiwa Capital Markets' regional chief strategist for Asia ex-Japan.

"After rallying strongly to technically overbought territory, the markets were ripe for profit taking," he said.

MSCI's broadest index of Asia Pacific shares outside Japan slid 1.7 percent on Monday, after posting its best week in nearly three years as a long-awaited plan to resolve the European debt crisis sparked a huge relief rally.

Despite the steep falls, the index was set to end October up more than 12 percent for its best monthly gain since May.

Hong Kong's benchmark Hang Seng index .HSI was down 1.14 percent while the mainland's Shanghai Composite .SSEC fell 0.7 percent as investors locked in gains. But both indexes were set for their biggest monthly gains in 2-1/2 years on signs Beijing is selectively relaxing its tightening campaign.

EVENTFUL WEEK

The Singapore dollar and South Korean won fell on Monday as investors covered dollar-short positions with their central banks suspected of intervening, which caused reluctance to buy emerging Asian currencies.

Last week, emerging Asian currencies rose as investors added risk assets after Europe's debt deal. The won breached a technical resistance line to indicate more appreciation in the local currency.

"It became more difficult to short dollar/Asia here, especially after suspected intervention from most of Asia," said a Singapore bank dealer.

Copper also fell on a firmer dollar but was set for its biggest monthly rise since December.

"Investors are taking a wait-and-see attitude ahead of the slew of data this week," said CIFCO Future analyst Zhou Jie. "There wasn't particularly good news out of the euro zone this weekend, nor evidence of the anticipated monetary loosening in China yet."

Events this week include monetary policy meetings by the European Central Bank and the U.S. Federal Reserve, as well as the G-20 summit, with focus on any coordinated efforts to help stabilize global financial markets.

Among key data due this week were China's purchasing managers' index, as well as U.S. ISM manufacturing and jobs data, with investors looking for clues on the state of the economy at the world's two biggest economies.

"The momentum for risk appetite remains intact and the pressure on the dollar is expected to stay while the market shifts its focus from Europe to U.S. data and the Fed," said Junya Tanase, chief strategist at JPMorgan Chase in Tokyo.

"The follow-through buying of equities around the world after the European summit suggests there were other factors supporting sentiment, such as expectations for more U.S. easing, hopes the U.S. economy and corporate earnings will not be too bad," he said.

Tanase said if data this week fails to suggest clear risks of a hard landing in China or a U.S. recession, the risk-taking momentum will continue.

MSCI's all-country world stock index hit its highest level in nearly three months and posted its best week since July 2009 on Friday.

U.S. stocks in October were on track to be the best month since 1974, supported by strong earnings. Merck & Co Inc (MRK.N) and Chevron Corp (CVX.N) both topped expectations with financial results on Friday.

The CBOE Volatility index VIX .VIX -- a 30-day risk forecast of volatility in the S&P 500 -- fell on Friday to its lowest in nearly two months.

EURO NOT OUT OF WOODS

The euro fell 1 percent on Monday as the dollar rallied on Japanese intervention.

The single currency reached a seven-week high around $1.4247 last Thursday, and looked set to end the month up nearly 5 percent for its best monthly performance in just over a year. But uncertainty about a possible interest rate cut on Thursday by the ECB could limit its upside for now. <FRX/>

A weak sale of Italian bonds on Friday also underscored fragility of the euro zone's debt progress. The 10-year yield gap between Italian and German bonds widened after the auction to 378 basis points, about 10 bps wider on the day.

Italy paid record high cost of more than 6 percent to borrow on the debt market.

The head of EFSF, Klaus Regling, in Asia on a tour for potential investors, said on Monday he had been reassured by Japan's top currency official Tokyo would continue to buy its bonds. Last week, he played down hopes for a quick deal with China for its support behind efforts to resolve the crisis.

Asian credit markets weakened, reflecting fragility of risk appetite. The spreads on the iTraxx Asia ex-Japan investment grade index, a gauge for whether investor risk appetite is returning, widened five basis points on Monday.

(Additional reporting by Umesh Desai in Hong Kong; Jongwoo Cheon in Singapore and Carrie Ho in Shanghai; Editing by Kavita Chandran)

Qantas had taken the drastic step to ground all flights on Saturday, disrupting around 70,000 passengers and spurring the government and its labor-market regulator into action to seek an immediate end to hostilities between the airline and unions.

At the government's instigation, Australia's labor tribunal stepped in and ordered Qantas to resume flights and also banned trade unions, which have waged a long and damaging campaign of industrial action, from staging any more strikes.

Qantas CEO Alan Joyce, dubbed a "kamikaze" by a newspaper for effectively staging his own strike against the unions at the weekend, welcomed the tribunal's ruling, which gives both sides 21 days to settle the dispute or submit to binding arbitration.

"That was the only way we could bring that to a head," a bleary-eyed Qantas Chief Executive Alan Joyce told reporters on Monday as shares in the airline jumped 6 percent on the ruling.

Qantas says it has lost almost A$70 million since September from industrial action in its dispute with three trade unions over pay, working conditions and a plan to base more operations in Asia. Joyce had complained of "death by a thousand cuts" and said the future of the 90-year-old airline was at stake.

Qantas said flights were set to resume on Monday afternoon, on a limited schedule and subject to regulatory clearance. The airline hoped to return to normal in 24 hours.

Despite Qantas's share price rebound, the stock has lost more than a third of its value this year and investors worry about longer-term damage to the brand from the grounding, which disrupted the travel plans of some leaders at the end of a summit of Commonwealth nations in the western city of Perth.

"I will never ever even think of flying Qantas in the future. Happy, Alan Joyce?," said Robert Moore in a posting on the airline's Facebook page.

Qantas counters were still deserted at airports on Monday morning, but the mood on the street in downtown Sydney was also that Joyce may have overplayed his hand.

"It's a very Machiavellian move and it'll damage the reputation of Qantas. I don't think it necessarily had got to that stage yet, they could have still worked with the unions to get a better outcome," Michael Williams, a company director, said as he walked through the financial district.

PM FUMING

The government also welcomed the tribunal's ruling, which came in the early hours of Monday.

"We are pleased that after 24 hours of turmoil that common sense will be restored to the aviation and tourism sectors of Australia," Assistant Treasurer Bill Shorten said.

But with 108 aircraft grounded, almost 500 flights canceled and Australia's tourism image tarnished in a single weekend, Prime Minister Julia Gillard was left fuming at Qantas's tactic.

"I believe Qantas took an extreme approach on Saturday," Gillard told Channel Seven TV. "With very little notice to government or passengers, it grounded planes. It did that in circumstances where it had other options."

The dispute has dogged Qantas for months but it escalated recently when it announced plans to cut 1,000 jobs and order $9 billion worth of new aircraft as part of a makeover to salvage its loss-making international business.

The airline made a pre-tax profit of $552 million in the year to June 30.

Union representatives said they would work with Qantas to resume flights as soon as possible but some sought to cast Joyce as a reckless manager prepared to risk the airline.

"The board should immediately sack their out-of-control CEO," said Captain Richard Woodward, vice president of the Australian and International Pilots Association. He described Joyce's behavior as "megalomaniacal."

Qantas carries about a fifth of Australia's international passengers and, according to Joyce, the weekend grounding of the fleet cost the airline about A$20 million each day.

MASSIVE DISRUPTION

The labor tribunal had deliberated for more than 12 hours as lawyers for the airline, union and government questioned executives and advisers made submissions.

Qantas said a series of rolling stoppages by unions had cost the airline almost A$70 million since September and driven down bookings, threatening its survival.

The Qantas dispute is the latest in a tide of industrial unrest as unions press for a greater share of profits amid tight labor markets and high commodity prices.

It had threatened to become the most significant disruption to Australian aviation since a six-month 1989 dispute forced the government to use the airforce to keep flights running. Strikes by engineers cost Qantas around A$130 million in 2008.

Qantas airline, which usually flies more than 60,000 people a day, has been paying for accommodation and expenses for stranded travellers over the weekend and arranging on alternative flights.

Australian rival Virgin Australia said earlier it was adding 3,000 seats on its domestic network on Monday, in addition to 3,500 seats on Sunday.

Virgin Australia's airline partners Abu Dhabi's Etihad Airways and Air New Zealand said they were looking at options to increase capacity to and within Australia.

Qantas' decision left many passengers venting their anger after they were stranded in 22 cities around the globe.

The weekend was one of Australia's busiest for travel, with tens of thousands traveling to the hugely popular Melbourne Cup horse race on Tuesday.

(Additional reporting by Narayanan Somasundaram, Amy Pyett and Ed Davies in SYDNEY and James Grubel in CANBERRA; Editing by Mark Bendeich)