Business

Sun Jun 29 20:07:32 PDT 2008

By Ben Hirschler

LONDON, June 29

(Reuters)

- Scientists have linked 32 genetic variations to Crohn’s disease, a bowel disorder, highlighting the complexity of many common diseases and the difficulties facing researchers seeking treatments.

Scientists said on Sunday that new research had tripled the number of genetic regions implicated in Crohn’s, the most common form of inflammatory bowel disease, and many more were probably still undiscovered.

"These explain only about a fifth of the genetic risk, which implies that there may be hundreds of genes implicated in the disease, each increasing susceptibility by a small amount," said Jeffrey Barrett from the Wellcome Trust Centre for Human Genetics at the University of Oxford, who led the research.

Scientists have known for years that genes, along with environmental factors, play a role in increasing the risk that people will develop many common problems like asthma, high blood pressure, rheumatoid arthritis, cancer and heart disease.

But they are still trying to work out which parts of the genome — the 3 billion sub-units of DNA in our cells — are actually responsible.

One way to find out is to conduct genome-wide association studies, in which genetic markers from thousands of volunteers are analysed in order to identify genetic differences between diseased and healthy individuals.

The latest picture to emerge for Crohn’s, which was reported in the journal Nature Genetics, represents the most complete picture yet assembled of the genetic influences on risk of a common disease.

Significantly, three of the individual genes that have been implicated in Crohn’s have previously been shown to influence risk of type 1 diabetes and asthma, suggesting a possible common genetic mechanism underlying these disorders.

Crohn’s disease affects between one in 500 and one in 1000 people in the industrialised world, causing inflammation, pain, ulcers and diarrhoea.

Modern biotech drugs like Abbott Laboratories’s Humira, UCB’s Cimzia and Johnson & Johnson’s Remicade can help, but many patients end up needing surgery.

By pinpointing genes linked to the condition, researchers hope to find fresh targets for new drugs.

One of the most promising is thought to be the CCR6 gene, which is believed to be part of the signalling machinery that causes white blood cells in the gut to become over-active, leading to inflammation.

The same white blood cells are also present in inflamed joints, implying that CCR6 may play a role in rheumatoid arthritis as well, making it of added interest to the pharmaceutical industry, Barrett and colleagues said.

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Sun Jun 29 20:14:39 PDT 2008

(Adds details, company comment)

WELLINGTON, June 30 (Reuters) - Publishing firm APN News & Media Ltd <APN.AX> <APN.NZ> said on Monday it expects operating earnings for the half year to June 2008 to be marginally behind last year. The performance of its Australian businesses had improved slightly in the six month period, while its New Zealand publications were marginally weaker, chief executive Brendan Hopkins said in a statement.

"Assuming no further deterioration in market conditions, APN expects to deliver another satisfactory year of achievement," Hopkins said in a statement.

Shares in APN, which has newspapers and radio stations in Australia and New Zealand, closed on Friday at A$3.01, having fallen 44 percent so far this year.

APN said in the six months to June revenue would be about 2 percent higher but the increased costs of investment projects would mean a drop in operating earnings. Net profit would be flat, the company said.

APN said it was continuing to reduce staff to bring down costs, with 200 positions already axed.

At its full year result in February, APN said it could not give earnings forecasts for the coming financial year because of turmoil in world markets.

Its net profit before one-off items for the year to December 2007 was A$169.4 million ($162.9 million), up 8 percent on the previous year and in line with expectations. ($1=A$1.04)

(Reporting by Adrian Bathgate)

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Sun Jun 29 20:14:01 PDT 2008

By Poornima Gupta

DETROIT, June 29 (Reuters) - After three decades at work in a GM factory, John Martinez has reached a crossroads.

Martinez, 50, must choose between retiring and making a long and expensive commute across state lines to stay with General Motors Corp. Any future he can imagine is going to be costly and tough.

"My whole family is under stress," he said.

The same can be said of the embattled U.S. auto industry and its recession-hardened hometown, Detroit. GM, once an emblem of U.S. post-war economic might, is being driven to the brink by dwindling sales that are expected to test cash reserves and the nerves of investors in the months ahead.

Crosstown rivals Ford Motor Co and privately held Chrysler LLC face similar pressures. As the automakers weigh their options to ride out the industry’s most-trying slump in 25 years, thousands of Detroit families are doing the same.

For many, the choices line up from bad to worse.

With four kids, retirement is not an option for Martinez. But driving more than 100 miles (160 km) daily between home in the Detroit suburb of Lincoln Park and Toledo, Ohio — where GM has a job for him — is going to hurt with gas over $4 a gallon.

Moving from Detroit, one of the markets hit hardest by the ongoing housing slump, could prove impossible.

"I can’t probably sell my home for what it’s worth," said Martinez. "I will owe more than I sell it for."

When Martinez joined GM in the late 1970s, it controlled 46 percent of the U.S. vehicle market. A union job in the U.S. auto industry was seen as steady work with good wages and rock-solid benefits — for life.

But last week, GM shares skidded to their lowest level since 1955. The stock had its worst week since trading in the wake of the Sept. 11, 2001 attacks, with Wall Street analysts handicapping when and how it will raise new capital.

GM’s sales have dropped 15 percent so far this year, and its share of the U.S. market is down to just 21 percent.

When major automakers report sales for June on Tuesday, there is a chance that GM will be overtaken by Toyota Motor Co as the monthly sales leader, a reversal that points to the popularity of small cars like the Yaris and the abandonment of SUVs and trucks like the Yukon and Silverado.

CUTS, CUTS, AND THEN MORE CUTS

GM has responded by slashing costs, cutting truck production and slashing its factory work force to less than half of the 118,000 it employed four years ago.

When Martinez joined GM, it was near its peak factory payroll of 468,000 with a new factory in Oklahoma City set to start up. Now it is rolling back, shuttering plants and cutting jobs. On Friday, 17,000 more GM workers took buyouts to leave.

On a combined basis, GM, Ford and Chrysler have cut more than 100,000 factory jobs since sales began to slow in 2006.

For Detroit, the downturn has been brutal. Michigan’s jobless rate jumped to a 16-year high of 8.5 percent for May. Detroit led the nation with its home foreclosure rate in 2007.

In nearby Inkster, hometown of Motown’s Marvelettes, businesses on either side of the Picture Perfect beauty salon are boarded-up.

Tasha Shaw, the salon owner, is considering giving up too. Sales have dropped 60 percent over the last year as clients in the auto industry been forced to cut back.

"I have never seen it this bad," she said.

Inkster is tied to the fortunes of Ford, headquartered in nearby Dearborn. In the industry’s boom days, jobs were plentiful, drawing workers from around the country. Civil rights activist Malcolm X lived in Inkster in the early 1950s and worked briefly in a local Ford plant.

But now, for many left in Inkster, a haircut is no longer an affordable luxury, Shaw said. "They have so many bills. People have lost their cars, homes… It’s terrible," she said.

Across town in the suburb of Oak Park, Lauri Kopack’s husband, an electrician, has been forced to take a job in West Virginia. He comes home on weekends when he can, but gas is expensive for his Ford F-150 pickup truck.

"There are no jobs here," Kopack said, adding that about 1,400 in her husband’s union local are out of work.

"It’s tough," she said. "When he comes home, he is like a visitor."

(Editing by Braden Reddall)

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Sun Jun 29 19:51:04 PDT 2008

By Soyoung Kim

DETROIT, June 27 (Reuters) - U.S. auto sales in June are expected to post a double-digit decline, dropping to a 15-year low as record gas prices killed the market for trucks and SUVs and made it impossible for many drivers to swap out for more fuel-efficient, new cars.

Major automakers, including Ford Motor Co and General Motors Corp, and leading dealerships have warned that June sales plummeted and shoppers grew suddenly scarce.

Now the urgent question for investors has become whether the world’s largest car market has hit bottom or whether an even deeper downturn awaits over the remainder of the year due to $4 per gallon gasoline and tighter credit.

Evidence of a prolonged slump would also add to concerns that Detroit’s automakers, saddled with truck-heavy lineups and mounting losses, may not have enough cash to ride out the current tailspin.

"My expectation is that the second half of this year isn’t going to be much better, if at all, than the first half," Jerry York, a veteran auto industry executive and adviser to billionaire investor Kirk Kerkorian, told Reuters this week.

GM, Ford and Toyota Motor Corp have responded to a plunge in truck sales by cutting production and adding sale incentives. But Wachovia Capital Markets forecast that despite the moves, inventory of light trucks still rose in June.

Analysts expect June sales to drop more than 10 percent after adjusting for the number of selling days.

Forecasts for the annualized sales rate in June range from 12.5 million units to 13.7 million units, compared with 14.3 million in May. Even at the top end of expectations, sales would mark the worst result for the industry since 1993.

U.S. light vehicle sales dropped 8.4 percent to 6.2 million units in the first five months of 2008, led by a 16 percent decline in sales of trucks and SUVs.

Rising gas prices and a corresponding shift toward more fuel-efficient cars and crossovers have hit U.S. automakers particularly hard.

"There is still uncertainty in the marketplace, and we have no reason to believe gas prices will decrease in the short term," said Jesse Toprak, an analyst at auto industry tracking firm Edmunds.com.

Toprak cut his 2008 sales forecast from 15.5 million units to 14.9 million.

Wall Street analysts now expect U.S. auto sales to be near or below 15 million units this year, down from 16.15 million in 2007. Just six months ago, most had projected only a slight decline in sales this year before a significant recovery in 2009.

But questions about the sales outlook have grown with concern about the near-term risks for the U.S. automakers.

Goldman Sachs downgraded GM to a sell rating on Thursday and warned it would have to raise capital, sending the stock to a 53-year low and prompting selling across the sector.

TRUCK SALE WOES

The collapse in demand for pickup trucks and SUVs has sent their resale value plunging. Prices for used pickup trucks were down 21 percent in May, according to Manheim, a firm that provides auction pricing benchmarks for dealers.

That drop is significant because used car prices are a closely watched barometer for new vehicle sales as a majority of purchases involve a trade-in model and better prices tend to spur more trade-ins.

Many customers, dealers have said, were shut out of the market in June because the trade-in value of their trucks had dropped to less than their remaining loan or lease payments.

Lehman Brothers analyst Brian Johnson said he projects a 10 percent overall decline in U.S. June auto sales and a steeper, 18 percent drop for the Detroit automakers.

GM is expected to post a drop of more than 15 percent in June sales, with Ford sales seen down as much as 17 percent. Sales at Chrysler are expected to be down nearly 23 percent, according to analyst forecasts.

"Chrysler has the most disproportionate exposure to light trucks versus its Detroit-based competitors and therefore will likely experience the most pain from the industry’s mix shift," Wachovia Bank said in a research note.

Meanwhile, the rush to smaller cars has helped shelter sales for Japanese automakers, who have more fuel-efficient line-ups than their U.S. rivals.

Sales at Toyota Motor Co, now No. 2 in U.S. auto sales, are seen flat from a year ago. Honda Motor Co is expected to report a 17 percent gain while sales at Nissan Motor Co are seen up 4 percent from a year ago, according to Edmunds.

(Editing by Gary Hill)

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Sun Jun 29 23:36:18 PDT 2008

PARIS, June 30 (Reuters) - France Telecom said on Monday it had withdrawn its proposal to buy Scandivanian telecoms group TeliaSonera, saying it could not reach an agreement on the financial conditions of its offer.

"Following its proposal for a friendly combination with TeliaSonera announced on 5 June, France Telecom has today decided not to submit a firm offer to TeliaSonera’s shareholders," the French group said in a statement.

"Notwithstanding the interest shown in the project, the dialogue opened with the board of directors of TeliaSonera was unable to reach agreement on its financial conditions," it added.

France Telecom had made an indicative cash-and-share offer worth roughly $40 billion.

(Reporting by Sudip Kar-Gupta; Editing by Quentin Bryar)

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Sun Jun 29 22:38:54 PDT 2008

(Adds analyst comments, share price reaction, background)

By Adrian Bathgate

WELLINGTON, June 30 (Reuters) - New Zealand rural services firm PGG Wrightson Ltd <PGW.NZ> said it would pay NZ$220 million ($167 million) for a 50 percent stake in meat producer Silver Fern Farms (SFF), sending its shares lower.

PGG Wrightson said on Monday it might raise around NZ$75 million in new shares to pay for its investment in one of the country’s largest sheep and beef meat producers.

Meat processing is an industry which PGG Wrightson has some knowledge of, and the company could look to the deal as a precursor to further forays into meat processing, said AMP capital investors analyst Guy Elliffe.

"It’s something they’ve clearly got in mind, and now they’ve set up a structure where they can make further transactions."

Shares in PGG Wrightson fell as much as 5.8 percent, with ABN Amro Craigs equities dealer Bryon Burke saying the firm’s decision to invest in a struggling industry had been viewed negatively by some investors.

Silver Fern Farms, formerly known as PPCS, accounts for about a third of the sheep and beef meat industry in New Zealand with annual sales of NZ$1.8 billion. It has been closing plants and shedding staff in an industry hit by low meat prices and farmers switching to the more lucrative dairy trade.

Earlier this year, a proposal to create an industry wide company for meat processors, broadly similar to the giant dairy co-operative Fonterra which controls virtually all of New Zealand’s dairy exports, fell apart after the companies could not agree terms to merge.

Shares in PGG Wrightson last traded down 3.9 percent at NZ$2.50, after falling as low as NZ$2.45 in a market down 0.3 percent.

SFF is owned by 9,000 farmer shareholders, and will require 75 percent approval for the PGG Wrightson stake.

PGG Wrightson, formed when Wrightson Ltd merged with Pyne Gould Corporation, has around 15 percent of the rural services market. It provides retail, finance, livestock and property services to farmers and rural communities.

The move is expected to save about NZ$60 million a year in the short term, growing to NZ$110 million a year in the longer term, PGG Wrightson chairman Craig Norgate said.

"There are very clear synergies, in terms of cost and performance benefits, that both parties bring to the table," Norgate said in a statement.

Norgate is a veteran of the agriculture industry, and played a prominent role in the dairy industry merger which created Fonterra.

Silver Fern Farms chairman Eion Garden said the idea of private investment in a co-operative was needed to resolve the crisis the industry was in.

"The goal is to lift returns for New Zealand’s red meat farmers," chairman Eion Garden said. ($1=NZ$1.32)

(Reporting by Adrian Bathgate; Editing by Anshuman Daga)

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Sun Jun 29 20:15:43 PDT 2008

MELBOURNE, June 30 (Reuters) - New Zealand dairy cooperative Fonterra and National Foods are working together on a possible joint bid for Australia’s Dairy Farmers, the dairy producer said.

In a statement, Dairy Farmers said it had waived confidentiality agreements to allow Fonterra and dairy and juice producer National Foods, which is owned by Japan’s Kirin Holdings <2503.T>, to work together on a National Foods-led bid.

Dairy Farmers, which is owned by some 2,000 Australian farmers and makes Dairy Farmers brand milk, Coon cheese and Ski yoghurt, put itself up for sale in April. Analysts estimate a deal could be worth between A$800 million and A$1 billion ($770-$960 million).

Dairy Farmers Chief Executive Rob Gordon said the talks between Fonterra and National Foods reflected the high level of interest in the dairy producer.

"As we move through this (sale) process, major local and international dairy players are taking positions and joining forces to increase their capacity to secure Dairy Farmers’ assets and brands," Gordon said.

A source familiar with the situation had told Reuters on Friday the two firms had held talks about a potential joint bid.

Fonterra and National Foods, with its venture partner Warrnambool Cheese and Butter Ltd <WCB.AX>, have already lodged separate, individual bids for Dairy Farmers.

Italy’s Parmalat <PLT.MI> has also lodged a bid, and all three have sought regulatory clearance for a deal.

The competition regulator is due to make its first ruling, on the National Foods and Warrnambool bid, this week. It will rule on the other bidders in coming weeks. ($1=A$1.04)

(Reporting by Victoria Thieberger; Editing by James Thornhill)

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Mon Jun 30 00:29:25 PDT 2008

(Adds details, background)

BASEL, June 30 (Reuters) - Raising interest rates remains an option for China in its battle against inflation although it has a range of monetary policy tools at its disposal, central bank governor Zhou Xiaochuan said on Monday.

Although China has declared a shift to a tight monetary policy, it has not budged on interest rates this year.

Instead, China has raised reserve requirements, which tie up money banks could otherwise lend, five times this year to a record 17.5 percent and has kept a tight rein on bank lending.

"We have several choices of using monetary policy including market operations, central bank bills, reserve requirements and others," Zhou told journalists on the sidelines of the Bank of International Settlements’ (BIS) annual meeting in Basel.

"So we can compare in the current stage which instrument is most appropriate," he said.

Asked if there was room for China to use interest rates to fight inflation, he said: "It is always possible…. We don’t exclude any possibilities."

Questioned further on whether China was holding back on raising interest rates because of hot money inflows, he said: "Hot money is one of our concerns."

China’s foreign exchange reserves, already the world’s largest, have hit nearly $1.8 trillion this year, with strong evidence of surging speculative inflows.

Chinese investors have been jittery for the past week, worried the central bank may raise interest rates to negate the inflationary impact of this month’s fuel price hike.

The country’s benchmark index <.SSEC> was knocked by Zhou’s latest comments and closed down 0.5 percent. Zhou said earlier this month that fighting inflation was still China’s primary economic concern, even in the face of a potential global economic downturn.

Chinese inflation is running near 12-year highs, driven largely by soaring prices for food. Consumer prices rose 7.7 percent from a year earlier in May, down from 8.5 percent in April but still significantly higher than the government’s aim for the year as a whole of 4.8 percent.

Speaking to reporters in Basel on Sunday, Zhou noted the slight improvement in inflation data in May but gave a mixed message on the outlook.

"We anticipate that in the summer time because we got a good harvest and some of the supply side policies started to impact. So inflation, especially the food inflation could slow down a little bit," he said.

"However, we know the international price of energy and other commodities, they add additional pressure to inflation in China."

(Additional reporting by Simon Rabinovitch in Beijing)

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Sun Jun 29 23:53:12 PDT 2008

(Adds stocks, detail)

By Aiko Hayashi

TOKYO, June 30 (Reuters) - Japan’s Nikkei stock average dipped 0.5 percent on Monday to book its worst first half since 1995, though it gained about 8 percent this quarter, recovering about half of what it lost since a year-low hit in mid-March.

Retailers weighed on the market, with Takashimaya Co down 1.3 percent after the department store operator’s first-quarter operating profit fell 8 percent and it cut its annual sales outlook.

One bright spot was trading houses such as Mitsubishi Corp and other energy-linked shares after oil prices rose to a record near $143 a barrel on Friday as a drop in global equities markets sent investors into commodities.

"There are expectations for a rebound, but investors can’t buy too aggressively due to last week’s fall in U.S. stocks, unstable currency moves and uncertainty about the outlook for oil prices," said Yoshinori Nagano, chief strategist at Daiwa Asset Management.

The Nikkei average shed 62.98 points to 13,481.38, falling for an eighth straight day, its longest losing streak since last November.

The benchmark fell 11.9 percent for the first half of this year, the worst since 1995 when it lost 26 percent.

Still, it gained 7.6 percent for the April-June quarter.

The broader Topix edged down 0.04 percent to 1,320.10.

Nagano also said that while the market could expect another downturn in the short term, the U.S. economy, a key market for global goods, appears to be on a recovery track from next year.

"The U.S. economy is bad now, but it’s not accelerating in a downward spiral," he said.

"I wouldn’t be surprised if the (Japanese) market started moving solidly in the latter half of this year as the stock market could start factoring in the recovery about six months in advance."

Market participants said active buying was also inhibited before the Bank of Japan’s tankan business sentiment survey due on Tuesday and U.S. jobs data later in the week.

"We can’t really be sure if the market has hit its bottom as that still depends on how the credit-squeeze problems will pan out," said Katsuhiko Kodama, senior strategist at Toyo Securities.

RETAIL DRAGS

Takashimaya shed 1.3 percent to 963 yen.

Fellow department store operator Isetan Mitsukoshi also slid after Takashimaya’s results confirmed a tough operating environment. It lost 5.6 percent to 1,137 yen.

Scattered selling of blue-chip exporters saw Sony Corp dragged down 4.1 percent to 4,640 yen, while industrial robot maker Fanuc Ltd slid 3.1 percent to 10,370 yen.

Toyota Motor Corp slipped 1.2 percent to 5,010 yen.

Trading houses gained as Japan’s top trading firms invest heavily in overseas oil fields and mines. Mitsubishi Corp, Japan’s largest trading house, rose 3.2 percent to 3,500 yen.

Among other energy-linked shares, Nippon Oil Japan’s largest oil distributor, shot up 7.4 percent to 713 yen. Oil explorer Inpex Holdings gained 4.7 percent to 1.34 million yen.

(Reporting by Aiko Hayashi; Editing by Chris Gallagher)

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Mon Jun 30 00:30:07 PDT 2008

(Corrects timeline of Capital Markets Integration Act to next February in paragraph 10)

(Adds more comment, share price)

SEOUL, June 30 (Reuters) - South Korea’s Woori Finance Holdings <053000.KS> plans to increase capital at its brokerage and consumer finance units, its chairman said on Monday, signalling its intention to raise stakes in the two arms.

Shares in Woori Investment & Securities <005940.KS> and Woori Financial <021960.KS> fell sharply after the announcement, on concerns about possible new share issues by the two companies that would dilute the value of existing shares.

Lee Pal-seung, who took the helm at the financial group this month, is aiming to strengthen its non-banking business significantly and to cut the group’s dependence on banking from the current 80 percent. Woori Finance runs the country’s No. 3 bank.

"The securities industry will be at centre of our non-banking business growth," Lee told reporters at a news conference.

"We want to grow Woori Investment & Securities as a multiple investment financial company, and if we have reserved profits, we are planning to increase capital at Woori Investment and Woori Financial."

Woori Financial is a leasing and installment-financing company which the group bought from private equity fund MBK Partners for 271 billion won ($259.6 million) last year.

The holding group, 73 percent owned by the government, has a controlling 35 percent stake in Woori Investment & Securities and 50 percent in Woori Financial.

Lee, 64, who led the securities company until 2005, did not elaborate on how much further the group wanted to lift its holdings in the two units.

The group is aiming to double assets to 600 trillion won ($574.8 billion) and net profit to 4 trillion won by 2011 through domestic and foreign acquisitions, while the government is trying to privatise Woori and two other state-owned banks.

The Capital Markets Integration Act, to be in place from next February, is designed to give securities companies a bigger role in reshaping the financial sector as depositors are shifting to investment assets for higher returns.

The chairman expressed concerns about weaker lending margins and the capital base at Woori’s banking arm, as well as tightened liquidity in the capital market.

"We are concerned about lending. Our ratio measuring loans versus deposits has risen to 130 percent," Lee said, when asked about the effect of strong inflation to lending business.

"I think 80-90 percent is an appropriate level," he said, which a group executive interpreted as the group’s plan to control lending growth.

President Lee Myung-bak told ministers last week to make fighting inflation a top national task as he faces calls for a swift response to rising prices.

Shares in Woori Investment fell 2.85 percent to 18,750 won by 00553 GMT, underperforming the broader market <.KS11> which edged down 0.5 percent.

Woori Financial shares slid 4.26 percent to 12,350 won, while the holding group lost 1.48 percent to 16,650 won.

($1=1043.8 Won)

(Reporting by Kim Yeon-hee; Editing by Jonathan Hopfner)

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