Retail sales gain shows some strength in economy

Retail sales unexpectedly rose in April, pointing to underlying strength in the economy and leading forecasters to bump up second-quarter growth estimates.

The surprise gain in retail sales, which account for about 30 percent of consumer spending, was the latest sign of resilience in an economy that has been hit by belt-tightening in Washington as the government tries to cut its budget deficit.

"It's more indication that our economy is growing. It's not growing as rapidly as a lot of people would like, but things are improving," said Tom Hall, an economics professor at Miami University's Farmer School of Business in Oxford, Ohio.

Retail sales edged up 0.1 percent after a 0.5 percent drop in March as households bought automobiles, building materials and a range of other goods, the Commerce Department said on Monday. Economists had expected a decrease of 0.3 percent.

 

So-called core sales, which strip out automobiles, gasoline and building materials and correspond most closely with the consumer spending component of the government's measure of gross domestic product, increased 0.5 percent after an upwardly revised 0.1 percent gain in March. February's core sales were revised higher as well.

Coming on the heels of data showing relatively sturdy job growth over the last three months, the increase in core sales helped to allay fears of an abrupt slowdown in the economy.

The dollar rose against the euro and the yen, while prices for U.S. Treasury debt moved lower. Stocks on Wall Street retreated from recent record highs, but the data helped to limit losses.

Several economists raised second-quarter growth estimates on the fairly strong core sales number. Goldman Sachs lifted its forecast by three tenths of a percentage point to a 2.1 percent annual rate, while JPMorgan pushed up its estimate by half a point to 2 percent.

The positive revisions to the core sales data for February and March initially led economists to anticipate that the government would revise higher its initial 2.5 percent estimate for first-quarter GDP growth.

However, a second report from the Commerce Department showed business inventories were flat in March for a second month, suggesting restocking was probably not as big a boost to growth in the first three months of the year as initially thought.

Even so, economists said the government's initial estimate would likely hold, given that core retail sales for February and March were stronger than earlier believed.

In addition, the lack of inventory accumulation should be a boon to second-quarter growth as businesses will likely have to stock up to meet steady demand from households.

FALLING GAS PRICES HELPING

Growth is being crimped by the end of a 2 percent payroll tax cut and higher tax rates for wealthy Americans, which kicked in on January 1. Across-the-board government spending cuts worth about $85 billion are also weighing.

But declining gasoline prices, which fell 14 cents in April, are helping to offset some of the drag on household income, freeing up money for discretionary spending.

Economists say the Federal Reserve's campaign to keep interest rates low is also helping households, in part by pushing up share prices and home values.

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"Those who doubt that the Federal Reserve is making an impact just need to look at debt restructuring and wealth effects on spending," said Diane Swonk, chief economist at Mesirow Financial in Chicago. "There is no way the consumer would be holding up so well without the support of lower interest rates."

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The tone of the retail sales report was mostly firm. Receipts at auto dealerships rose 1.0 percent after falling 0.6 percent in March. Though falling gasoline prices pushed down receipts at gasoline stations, sales excluding gasoline recorded their largest increase since December.

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Stripping out gasoline and autos, sales rose 0.6 percent.

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Sales of building materials and garden equipment supplies rose, posting their largest rise since September, a reflection of the housing market's recovery.

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Receipts at clothing stores recorded their biggest increase since February last year. There were also increases in sales at sporting goods, hobby, book and music stores, and electronics and appliances stores.

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Consumers also spent more at restaurants and bars.

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But furniture store sales were flat and receipts at grocery stores fell.

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(Editing by Andrea Ricci)

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Wall Street ends near flat after recent highs; healthcare climbs

Stocks closed little changed on Monday, pausing after hitting record highs last week, but strength in healthcare issues helped to keep declines in check.

The S&P 500 healthcare sector .SPXHC climbed 0.7 percent and was the day's best performer.

 

Shares of Theravance ( id="symbol_THRX.O_1">THRX.O) jumped 17.9 percent to $41.20 after Irish drugmaker Elan ( id="symbol_ELN.I_2">ELN.I) ( id="symbol_ELN.NELN.N) agreed to a $1 billion deal to buy 21 percent of the royalties that Theravance receives from GlaxoSmithKline ( id="symbol_GSK.LGSK.L) ( id="symbol_GSK.NGSK.N) for its respiratory drugs.

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The day's flat close followed a third straight week of gains on the major indexes, with both the Dow and S&P 500 setting record closing highs last week. The S&P 500 remains up 14.5 percent for the year so far.

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While some analysts argue the long-term trend is still higher, many see momentum waning in the near term in the absence of positive catalysts. Volume has been lighter than average, and volatility has been low in recent days.

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"Intraday volatility has essentially been nonexistent. I think it means people are really sitting on the sidelines right now seeing which way it's going to go," said Uri Landesman, president of Platinum Partners in New York. He expects the rally to top out in the next two weeks.

The CBOE Volatility index .VIX ended down 0.3 percent.

The Dow Jones industrial average .DJI ended down 26.81 points, or 0.18 percent, at 15,091.68. The Standard & Poor's 500 Index .SPX was up 0.07 point at 1,633.77. The Nasdaq Composite Index .IXIC was up 2.21 points, or 0.06 percent, at 3,438.79.

Among the day's declining issues, Yum Brands Inc ( id="symbol_YUM.NYUM.N) fell 2 percent to $68.92. After the market closed on Friday, the fast food chain operator posted a steep decline in Chinese April sales.

Other big healthcare group gainers included Pfizer ( id="symbol_PFE.NPFE.N), up 2.3 percent at $29.37; Gilead ( id="symbol_GILD.OGILD.O), up 3.1 percent at $54.47; and Biogen Idec ( id="symbol_BIIB.OBIIB.O), up 4.5 percent at $222.74.

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Helping to limit the market's decline, retail sales rose 0.1 percent in April, better than the 0.3 percent drop that had been expected and returning to growth following a decline in March. [ID:nCATDGE91U] Excluding autos, gasoline and building materials, core sales rose 0.5 percent. Retail sales account for about 30 percent of U.S. consumer spending.

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Investors are at odds over whether positive economic data can help the market rise further, or whether it will spell the end of the Federal Reserve's monetary stimulus, which could derail the rally, said Joseph Tanious, global market strategist at J.P. Morgan Funds.

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Other data showed business inventories were unchanged in March for a second straight month, versus expectations of a 0.3 percent rise, suggesting restocking could help second-quarter economic growth.

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Earnings have been mostly better than expected. With 90 percent of the S&P 500 having reported, 67.2 percent of companies have topped earnings expectations, according to Thomson Reuters data, even with the average over the past four quarters. Only 46.9 percent have beaten revenue expectations, below the 52 percent average over the past four quarters.

U.S.-listed shares of Perion Network ( id="symbol_PERI.O_14">PERI.O) surged 10.6 percent to $13.94 after the Israeli consumer Internet company posted first-quarter earnings.

Volume was roughly 5.3 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, well below the average daily closing volume of about 6.4 billion this year.

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Declines outpaced advances on the NYSE by nearly 3 to 2 and the Nasdaq by a ratio of about 13 to 11.

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(Additional reporting by Leah Schnurr; Editing by Nick Zieminski and Dan Grebler)

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Emails show lobbyists, not insiders, underpinned U.S. market-moving report

The researcher whose report prompted a spike in health stocks last month appears to have relied on lobbyists rather than U.S. government insiders who had direct knowledge of a pending healthcare decision, according to emails reviewed by Reuters.

The messages could help bolster Height Securities LLC's claim that its analyst was essentially doing what reporters, lobbyists and others in Washington do every day: trying to figure out what the government is going to do next.

 

The small research shop is among the brokerages, law firms and other "political intelligence" operations that have drawn scrutiny over concerns that they may have facilitated insider trading by passing along tips that moved markets.

Height Securities has drawn inquiries from the Securities and Exchange Commission and Iowa Republican Senator Charles Grassley since it correctly predicted on April 1 that President Barack Obama's administration would keep certain medical payment rates in place, prompting a spike in healthcare stocks before the official announcement came out.

The analyst who prepared the report, Justin Simon, reached out to a healthcare lobbyist shortly before he issued his market-moving research bulletin, the emails show.

"I'm tracking down a rumor ... any chance you have heard that POTUS/WH have stepped in" to keep the Medicare rates in place, Simon asked, using shorthand for Obama and the White House.

Other documents indicate the lobbyist, whose name was redacted from the report, is Stacey Hughes, a founding partner of the Nickles Group who used to work for several Republican senators. She could not be reached for comment.

"That is the rumor," Hughes responded, adding that it was "a little more likely" that the Centers for Medicare & Medicaid Services would not cut payment rates for healthcare providers after the acting head of the agency that oversees the two programs, Marilyn Tavenner, met with staffers of the Senate Finance Committee.

Hughes wrote that the White House could decide to keep the current payment rates for the popular health programs as a way to convince lawmakers in the Senate to make her post permanent.

"Just my opinion," Hughes wrote.

Simon released his report about an hour later, prompting a spike in health stocks that stood to benefit from the decision.

"Did you see what I did to the stock in the final 30 min of trading?" Simon wrote Hughes after his report came out. "We heard the same story from like 30 people so we went with it."

A Height spokesman said the emails reviewed by Reuters confirm that Simon based his report on multiple sources of information, rather than a single Obama administration insider who would have had direct knowledge of the decision.

"We appreciate the fact that the released documents validate our claim all along - Height did not receive or disseminate material non-public information," the spokesman said.

That appeared unlikely to satisfy Grassley, who wants "political intelligence" firms to be subject to the same disclosure laws as lobbyists.

Grassley's office said Height was not cooperating as much as they would like and appeared to be giving inconsistent information.

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"Senator Grassley continues to try to unwind the events leading up to the stock spike on April 1 and previous trading anomalies in the prior two weeks," spokeswoman Jill Gerber said.

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Michael Asaro, a lawyer who represents Simon, declined to comment.

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(Reporting by Sarah N. Lynch and Andy Sullivan; Editing by Marilyn W. Thompson and Xavier Briand)

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Walmart calls on Bangladesh to take action with three factories

Walmart ( id="symbol_WMT.N_0">WMT.N) called on the Bangladesh government on Monday to stop production at one apparel factory and investigate the condition at another until workers' safety could be assured.

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The unusual action followed the death of more than 1,100 people in the collapse of a factory in Bangladesh.

 

"The government of Bangladesh did the responsible thing last week by closing factories believed to be dangerous," Rajan Kamalanathan, Walmart vice president of ethical sourcing, said in a statement.

Walmart said that it had stopped production at Stitch Tone Apparels factory because it had discovered that a neighboring factory had structural problems.

It also said inspectors who had been contracted by Walmart had reported a potentially dangerous condition at another one of the factories Walmart uses, Liz Apparels factory. The inspectors notified the government, the factory owner and other companies that contract with the facility.

Walmart called on other companies to halt their production in these facilities.

Kamalanathan said Walmart was calling on the Bangladesh government "to show the same leadership in the Stitch Tone Apparels and Liz Apparels cases, and take any actions necessary to ensure safe conditions."

(Reporting by Jennifer Saba in New York; Editing by Toni Reinhold)

DiCaprio, Christie's raise $32 mln at auction for environmental causes

Actor Leonardo DiCaprio and Christie's auction house raised nearly $32 million for environmental causes on Monday at a charity art auction.

DiCaprio, the star of the new film "The Great Gatsby," organized the so-called The 11th Hour Auction along with his foundation and Christie's to protect the last wild places on Earth and their endangered species.

 

The 33 works of art, many of which were created for and donated to the auction by the artists, sold for $31.74 million in spirited bidding in a packed auction house. Art collectors from around the globe also placed bids by telephone.

"All I can say is thank you, thank you, thank you," DiCaprio told the audience at the end of the auction, which raised more than double the pre-sale estimate.

In addition to the sale, which set records for 13 artists including Carol Bove, Joe Bradley, Mark Grotjahn, Raymond Pettibon and Mark Ryden among others, a $5 million matching donation for three of the lots and $1.15 million in other donations raised the overall total to nearly $38 million.

At the opening of the auction, DiCaprio, who has supported environmental issues through his foundation since 1988 and also produced and narrated the 2007 documentary "The 11th Hour" about the state of the environment, urged the audience to dig deep into their pockets.

"Bid as if the fate of the planet depended on us," he said.

And they did. All of the 33 works were sold and many fetched prices that were three or four times their pre-sale estimates.

The top lot of the sale was an oil on cardboard mounted on canvas by Mark Grotjahn called "Untitled (Standard Lotus No. II, Bird of Paradise, Tiger Mouth Face 44.01)," which sold for $6.2 million as two determined bidders pushed up the price.

Zeng Fanzhi's "The Tiger," an oil on canvas, fetched nearly double its high estimate with a price of $4.8 million, and Bharti Kher's sculpture "The Skin Speaks a Language Not Its Own," went for $1.7 million.

Each of the three works had a pre-sale estimate of $1.5 million to $2.5 million.

DiCaprio donated "Ocean V" by Andreas Gursky, which sold for $600,000, and he bought an acrylic on canvas by Takashi Murakami for $700,000.

A portrait of DiCaprio painted by Elizabeth Peyton sold for $1 million.

Loic Gouzer, international specialist at Christie's and the head of the sale, said many of the works were of a quality never seen at auction before.

A panel of environmental experts and the Leonardo DiCaprio Foundation will decide which conservation projects will benefit from the proceeds of the sale.

Gouzer said he and DiCaprio had approached the artists and explained what they had hoped to accomplish with the auction, which they have been planning for a year.

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"We explained that we wanted great works and they were very reactive because of the cause. The artists are very sensitive to the fact that we are destroying our planet," Gouzer said in an interview ahead of the sale.

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(Reporting by Patricia Reaney; Editing by Eric Beech)

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Daylight shines on Tate Britain's 500-year gallop through art

Out go the themed rooms and groupings of artists at London's Tate Britain gallery, and in comes a pure, sunlit, chronological walk through British art from 1540 to the present.

The world's leading collection of British paintings and sculpture on Monday threw open a permanent gallery so radically refurbished and reorganized that every one of the 500-odd works on display had to be rehung.

"What I wanted to try and do was to have a complete chronology that wouldn't be interrupted by exhibitions," said Director Penelope Curtis.

 

She denied that the Tate was "dumbing down" for the average tourist, saying the layout offered better access to everyone from school children to art experts, put works in context with their contemporaries, and would be uncompromised by temporary shows.

The "BP Walk through British Art" winds around the perimeter of the building, beginning in 1540 with portraits by the likes of Hans Holbein and Anthony van Dyck, then sailing through the centuries right up to 2013 Turner Prize nominee Lynette Yiadom-Boakye.

Along the way, it hits the highlights from Thomas Gainsborough in the 18th century to the 19th-century rivalry of John Constable and JMW Turner, and the giants of the late 20th century such as Francis Bacon and Lucian Freud - both of whom appear in the 1940s gallery and again in the 70s and 80s.

A glass box with a desk and an overflowing ash tray by the former bad boy of British art Damien Hirst is one centerpiece of the 1990s.

SCULPTURE MUSCLES IN

Sculpture barely figures until after the Tate first opened in 1897. But it becomes a commanding presence during the years around World War Two with bronze, wood and alabaster sculptures by Henry Moore, Barbara Hepworth and Jacob Epstein.

Epstein's massive alabaster work "Jacob and the Angel", depicting the biblical combat recounted in the book of Genesis, dominates one room of the 1940s era.

It is these galleries that show off the Tate's structural improvements - not only strengthened floors designed to hold big sculptures but, above all, special glass and blinds to let in daylight without the damaging effect of direct sunshine.

"Until night, or winter, we will rely completely on daylight," said Head of Display Chris Stephens.

Each grouping of rooms is laid out with the decade stenciled in gold lettering at the entrance.

The exhibition departs from strict chronology only where large collections of individual artists' works - Turner, Constable, Moore and William Blake - command their own "spotlight" sections inside the perimeter. More space towards the center of the building will be reserved for temporary shows.

The trickiest aspect of the chronological layout was the curation of living artists in the galleries devoted to more recent years, Curtis said.

"If you do that with living artists, it's more of a challenge - because they will come and see it and they might not like it."

(Editing by Kevin Liffey)

U.S. appeals court revives lawsuit vs United Airlines over wheelchair

A U.S. appeals court on Tuesday revived a lawsuit against United Continental Holdings Inc's United Airlines that was brought by a woman who claimed she was not promptly provided a wheelchair in an airport when she asked for one.

The opinion, from the 9th U.S. Circuit Court of Appeals in San Francisco, said federal law did not pre-empt the woman's personal injury claims under state law.

A representative for United could not immediately be reached for comment.

Mark Meuser, an attorney for plaintiff Michelle Gilstrap, who has difficulty walking, said some lower court judges had disagreed about whether individuals should be able to bring claims for injuries in an airplane or terminal.

"This is a really big deal for disabled Americans across the country," Meuser said.

Gilstrap had difficulty walking due to a collapsed disc in her back and osteoarthritis, according to the court opinion. During two separate plane trips in 2008 and 2009, she alleged that United failed to supply a wheelchair on some occasions.

 

She also said United agents yelled at her, doubted whether she really needed a wheelchair and ordered her to stand in line, which she could not do because of her condition.

Gilstrap sued, and a Los Angeles federal judge dismissed her case. In Tuesday's three-judge ruling, the 9th Circuit said Gilstrap could not pursue her claims under the Americans for Disabilities Act.

However, the court ruled that Gilstrap's claims, including emotional distress and negligence, under state law were not pre-empted by the Air Carrier Access Act. The appeals court remanded the case for further proceedings.

The case in the 9th Circuit is Michelle Gilstrap vs. United Air Lines Inc., 11-55271.

(Reporting by Dan Levine; Editing by Lisa Von Ahn)

BlackBerry plans security feature for Android, iPhone

BlackBerry will offer technology to separate and make secure both work and personal data on mobile devices powered by Google Inc's Android platform and by Apple Inc's iOS operating system, the company said on Thursday.

The new feature could help BlackBerry sell high-margin services to enterprise clients even if many, or all, of their workers are using smartphones made by BlackBerry's competitors. That may be crucial for the company as it has lost a vast amount of market share to the iPhone and to Android devices, such as Samsung Electronics Co's ( id="symbol_005930.KS_0">005930.KS) Galaxy line.

Jefferies analyst Peter Misek said he expects BlackBerry's device management software to gain traction this year, and boost revenue next year.

"Supporting devices with the best, most secure, and easiest-to-use mobile solution should enable RIM to transform into what we believe is an attractive model," he said in a note to clients.

 

The offering could help BlackBerry shore up its profitable services business. BlackBerry's shares plunged in December after it said it would change the way it charges for services, cutting fees for customers that do not need advanced security and other enhanced features.

The new Secure Work Space feature will be available before the end of June, and will be managed through BlackBerry Enterprise Service 10, the platform that allows BlackBerry's corporate and government clients to handle devices using different operating systems on their networks.

BlackBerry said the feature fences off corporate email, calendar, contacts, tasks, memos, web browsing and document editing from personal apps and content, which could be less secure.

BALANCING ACT

In a bid to regain market share and return to profit, BlackBerry introduced a new line of smartphones powered by its BlackBerry 10 operating system earlier this year.

The touch screen version, dubbed the Z10, is on sale in more than 20 countries, while a device called the Q10, with a physical keyboard, will be available in April.

The new devices have a feature called Balance, which keeps corporate and personal data separate. It allows information technology departments to manage the corporate content on a device, while ensuring privacy for users, who can store and use personal apps and content on the same phone without corporate oversight.

With Secure Work Space, "we're extending as many of these (Balance) features as possible to other platforms," David Smith, BlackBerry's head of mobile enterprise computing, said in a statement.

BlackBerry's move comes as Samsung, whose Galaxy devices have gained great popularity, attempts to make itself a more viable option for business customers with security features such as Samsung Knox and SAFE, or Samsung for Enterprise.

BlackBerry said Secure Work Space means clients would not need to configure and manage expensive virtual private network VPN.L infrastructure in order to give workers' devices access to data and applications that reside behind corporate firewalls.

"Secure Work Space also offers the same end-to-end encryption for data in transit as we have offered on BlackBerry for many years, so there is no need for a VPN," Peter Devenyi, head of enterprise software, said in an interview.

SELLING SERVICES

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The new feature could also help stem declines in BlackBerry's service revenue. That business has long been a cash cow for BlackBerry because of the large clients that pay to use its extensive network and security offerings.

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However, the company has been under pressure to reduce its infrastructure access fees, and opted to do so during the transition to BlackBerry 10. Due to the changes, BlackBerry's service revenue is expected to decline over the course of this year.

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Giving its large array of corporate clients the ability to manage BlackBerry devices, along with Android smartphones and iPhones on their networks might encourage both corporate and government clients to continue to pay for and use BlackBerry's device management services.

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BlackBerry plans to report quarterly results on March 28.

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Last week, Chief Executive Thorsten Heins said sales of the Z10 had surpassed BlackBerry's expectations in emerging markets such as India, where cheaper entry-level phones are typically popular.

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On Wednesday, the company said it had received an order for 1 million BlackBerry 10 smartphones - the largest order it has ever had from a single customer - and its shares jumped.

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BlackBerry's volatile stock closed up 8.2 percent at $15.65 on the Nasdaq on Wednesday, while its Toronto-listed shares rose by a similar margin to C$16.04.

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The shares pared gains on Thursday, falling 2.3 percent to $15.29 in late morning trading on the Nasdaq. In Toronto, its shares were 2 percent lower at C$15.72. (Reporting by Euan Rocha and Allison Martell; Editing by Jeffrey Benkoe, Lisa Von Ahn and Peter Galloway)

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48 hours in Rochester, New York

Synonymous with film photography, lilacs and classical music, Rochester offers an unusual array of attractions for a mid-sized U.S. city that brought industrial prowess to a scenic river gorge on Lake Ontario's southern shore.

From top-ranked golf courses and national-landmark house museums to a children's emporium of play and America's oldest municipal park-garden cemetery, the city in western New York is crammed with surprises for visitors of all interests.

 

Its glacier-carved linchpin is a trio of waterfalls trumpeting the Genesee River's thunderous descent into Lake Ontario.

Reuters correspondents with local knowledge help visitors get the most out of a short stay in Rochester (pop. 210,855), variously known over two centuries as the Flour City, the Flower City and, less so of late, the World's Image Center.

FRIDAY

5:30 p.m. - Dinner at Dinosaur Barbecue (www.dinosaurbarbque.com), a honky tonk rib joint tucked into a former railroad station overlooking the river. Take in a view of the unstoppable torrent from the adjacent Court Street Bridge before digging in to brisket, cornbread and tomato-cucumber salad.

7 p.m. - Head back across the bridge to Blue Cross Arena (www.bluecrossarena.com) for a dash of ice-hockey escapades hollering on the Rochester Americans. For spring and summer alternatives, catch a Rochester Red Wings baseball game at Frontier Field (www.rochesterredwings.com) or the Rochester Rhinos soccer team at Sahlen's Stadium (www.rhinossoccer.com).

For people who prefer stage or dance, there's Geva Theatre (www.gevatheatre.org) or an occasional hometown performance by the top-notch Garth Fagan dance troupe (www.garthfagandance.org).

9:30 p.m. - End the day with a Genesee cream ale or Finger Lakes Riesling and a twirl on the dance floor at one of an assortment of bars and music halls that abound in the lively East End.

SATURDAY

9 a.m. - Try yogurt and granola plus an egg Danish - caramelized onions baked in fluffy pastry topped with an egg - at Flower City Bread in the Rochester Public Market (www.cityofrochester.gov/publicmarket). This magnet for bargain food shoppers, situated since 1905 on Union Street in the gritty northeast section, has a ring of casual eateries.

10:30 a.m. - Head to the Genesee River at its most spectacular stretch north of downtown for a peek into the city's water-powered origins. Repurposed factories and remnants of a once flourishing flour industry form a ghostly backdrop to the 90-foot (27.4 meter) cascade known as High Falls.

Among panoramic vantage points above the waterfall and its wide gorge basin are a pedestrian bridge and the rooftop patio of a pub-style restaurant in Genesee Beer and Ale brewery (www.geneseebeer.com/brew-house).

For more outdoors adventure, take a short drive north to a path behind Maplewood Park's rose garden that descends close to river level in the nearly 200-foot-deep gorge.

11:30 a.m. - The red-brick Victorian home of women's rights crusader Susan B. Anthony (www.susanbanthonyhouse.org) is a highlight among memorials concentrated in upstate New York that extol women's achievements in molding the nation.

Step into the parlor where Anthony was arrested after daring to vote in 1872. The home contains the trademark alligator bag she carried on frequent travels, and the bed she died in after delivering her "Failure is Impossible" speech in Washington in 1906.

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12:30 - Cross downtown into the South Wedge neighborhood for lunch at Mise en Place (miseenplacemarket.com), a modest grocery-cum-diner with window tables looking out at a string of rib restaurants, pubs and bakeries along South Avenue. Cheesy Eddie's is a stalwart for cheesecake, while newcomers include The Little Bleu Cheese Shop and Hedonist Artisan Chocolates and Hedonist Artisan Ice Cream.

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1:30 p.m. - Memorial Art Gallery (mag.rochester.edu), located for 100 years in an Italian Renaissance-style architectural gem in the East-side arts district, features an eclectic collection of 12,000 works of art, from Impressionist paintings to metal sculptures by hometown luminary Albert Paley.

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Search out the only full-size Italian Baroque organ in North America, a 600-pipe, fully restored instrument built around 1770 that is played at periodic recitals by students at the acclaimed Eastman School of Music.

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Children in tow? A popular alternative is The Strong (www.museumofplay.org), the second-largest museum devoted to children in the United States. Among dozens of interactive educational exhibits are a butterfly garden, a streetscape from television's Sesame Street and a whaling ship.

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3 p.m. - Stroll from the art gallery along University Avenue. Dawdle over coffee or antiques at the Flatiron building or photo art at Image City Photography Gallery.

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3:30 p.m. - The walk extends to George Eastman House (www.eastmanhouse.org), the world's oldest museum of photography and motion pictures with an archive of 400,000 images stretching back to 1830s daguerreotypes.

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View old cameras, famous original photos and film reels at Eastman's majestic 1905 Colonial Revival mansion and villa-style gardens. The patriarch of popular photography, Eastman founded Eastman Kodak Co, which ruled the world of film photography for over a century but has been brought to its knees by a swift shift to the digital technology it helped pioneer but couldn't capitalize on.

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6:30 p.m. - For a cut-above meal, try the restaurant Good Luck (www.restaurantgoodluck.com). Its tapas-style dishes are meant to be shared, from red lentils to smoked pork shank.

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9 p.m. - Head to The Little (www.thelittle.org) for an indie, foreign or art film in a funky 1929 Art Deco theater on East Avenue.

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SUNDAY

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8:30 a.m. - Start the day with French toast or Eggs Benedict at The Frog Pond (eatatthefrogpond.com/) in the fashionable Park Avenue district.

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10 a.m. - On the edge of downtown is Mount Hope Cemetery (www.cityofrochester.gov/mounthope), a 196-acre arboretum favored by dog walkers, history buffs and curious souls. A classic example of a pre-Civil War "rural cemetery," Mount Hope is a heavily wooded jumble of ridges, ravines and meadows with gravestones and mausoleums set amid fountains, ornate sculptures and stone terraces fringed with wildflowers and pines.

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11 a.m. - Across the street, stroll through Frederick Law Olmsted-designed Highland Park (www.monroecounty.gov/parks-highland.php), famous for its lilac bushes and a floral, food, art and musical festival in May that serves as the true advent of spring in a city where snowfall tops 100 inches (2.5 meters) in a typical winter.

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12:30 - Lunch at The Food Bar in the suburb of Pittsford.

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1:30 p.m. - Tee off at one of the Rochester region's 90-plus golf courses to get a feel for the undulating, tree-framed terrain the world's top golfers will encounter at two majors here this year: the PGA Championship at Oak Hill in Pittsford on August 5-11 and the Wegmans LPGA Championship at nearby Locust Hill from June 3-9 (www.golfrochesterguide.net/).

Lawmakers hover as more homeowners rent rooms to visitors

For British student Carly Connor a trip to London for a city break would be impossible if she had to pay for a hotel so instead she rents a room in a Londoner's home.

Connor, 26, is among a growing number of people taking advantage of a surge in the number of homeowners offering to rent out a room for a night or longer, with the cash a welcome addition to recession-squeezed budgets.

 

This new wave of hospitality sweeping the travel industry was sparked by the success of "couch surfing", where people could go online to book a free bed in a home, and is being led by a blitz of new websites that let tourists bypass resorts and hotels.

"A lot of the time you find yourself with a host who is more than happy to point you in the direction of a few local hot spots that you otherwise would have missed entirely," Connor told Reuters.

But the increasing popularity of peer-to-peer rentals has lawmakers on the alert in some countries, scrutinising tax, health and safety, and rental infringements.

Martin Buck, a director at ITB, the world's largest travel fair, said the popularity of homestays was fuelled by websites like Airbnb, Wimdu, 9flats, and HouseTrip, where users post listings for short-term rentals of all or part of their home.

Listings on Airbnb, the biggest site, have surged to about 300,000 in 192 countries from 10,000 in late 2009, with the website taking a cut on all bookings. The listings include everything from New York apartments to Costa Rican tree houses.

But Buck said unregulated homestay sites and concerns that these were actually illegal hotels was a hot topic in many places including Berlin, the headquarters of Wimdu and 9flats.

"There is talk in some areas of Berlin of prohibiting it," he told Reuters. "But can you really prevent people from using their privately owned homes as they want? It raises a whole lot of constitutional and human rights questions."

HOME OR ILLEGAL HOTEL?

Renting out a room is legal in London, up to a level.

The British government's "Rent a Room Scheme" allows householders to earn 4,250 pounds a year tax-free from letting furnished accommodation.

For the past year, Peter Tompkins has charged about 700 pounds a week to rent a spare bedroom in his apartment in the clock tower above London's St Pancras train station from where views stretch to St Paul's Cathedral.

Tompkins said he uses Airbnb to rent the room, reassured by the company's 600,000 pound insurance guarantee to hosts, as well as a 24-hour support line. He said it was important to have a professional relationship with guests akin to a hotel.

"I think you ought to behave as a hotel or regulated organisation would, but I am conscious that there's no regulation on me. I just try and behave well," he told Reuters.

The growing popularity of Airbnb, which has processed around five million paid overnight stays since 2008, is starting to cause friction with some lawmakers.

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According to Inc., a U.S.-based magazine focused on growing private companies, Airbnb made around $100 million in 2012, with the estimate based on the site's six to 12 percent commission on each room booked.

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Wimdu is Airbnb's next-biggest competitor with 150,000 properties on its books since it began in 2011. It would not divulge its revenues. Rival 9flats has 90,000 properties.

_2">

Airbnb, set up in 2008, maintains the law needs to distinguish between people who occasionally rent out rooms and landlords who illegally run residential buildings as hotels.

_3">

Airbnb is currently lobbying authorities in Washington, DC, for a review on rental laws in the United States, seeking to craft a model for cities across the world to follow.

_4">

Company spokesperson Christopher Lukezic said he understood this movement was "growing within unchartered waters" as in the previous homestay trend, couch surfing, no money changed hands.

_5">

"Our typical host is a regular resident, who, on average, is only renting out their home for a few weeks a year, helping them to make ends meet," Lukezic told Reuters.

_6">

"Not only does it help increase the number of tourists who can afford to visit a city but it also creates economic prosperity for the citizens of the city who are hosts, often in parts of the cities where there are no hotels."

_7">

While lawmakers are raising concerns about the home-stay trend, the travel industry is unperturbed as it does not expect to see any profit squeeze on hotels.

_8">

Robin Chadha, chief marketing officer of CitizenM, a Dutch boutique hotel group with a growing portfolio across Europe, said services like Airbnb have made city trips more affordable for longer stays and family groups.

_9">

"But hotels will always be safer, offer more facilities and offer service, which apartments cannot," he said.

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(Additional reporting by Victoria Bryan, Editing by Belinda Goldsmith)

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StanChart falls after short seller Muddy Waters flags bad debts

Standard Chartered ( id="symbol_STAN.L_0">STAN.L) shares fell and the cost of insuring its debt against default jumped on Monday after U.S. activist investor Muddy Waters said it had bet against the bank because of its "deteriorating" loan quality.

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Muddy Waters' founder Carson Block told a conference in Las Vegas last week he had bet against Standard Chartered debt because the market is underestimating the risk that is in the bank's loan book, a spokesman for the short seller said.

 

Block, whose company says it analyses the true worth of Chinese companies, argued that while Standard Chartered is diversified across emerging markets, a slowdown in China will lead to "considerable stress" at the lender.

Block was buying 5-year credit default swaps (CDS) for the bank, which is insurance against a default and yields a profit for buyers on any rise, the spokesman added.

Standard Chartered's 5-year CDS jumped almost 13 percent to 103.75 basis points on Monday, according to Markit. That means it costs $103,750 to insure $10 million of debt, less than for most other banks. But the price has widened from 84.5 points a week ago and was the biggest riser of the iTraxx Main and Senior Financials indices constituents on Monday.

Standard Chartered shares fell 3.9 percent to 15.22 pounds by 1139 GMT, the second biggest FTSE 100 .FTSE faller.

"The comments have added to the momentum that has built up post the trading update," said Gary Greenwood, analyst at Shore Capital. The shares have lost 10 percent since the bank warned on Wednesday it could miss this year's revenue target after a drop in first quarter operating profit.

It said losses from bad loans were up on the year, driven by an increase in its consumer bank, notably in Korea. But it said bad debts in the wholesale bank remained low and it still expected to meet analysts' profit forecasts for 2013.

"Concerns are building around China and the impact on Asia. Ultimately your view on a bank comes down to the economic backdrop, and over the long-term, China and Asia are going to be reasonably strong growth markets, maybe with some bumps along the way," Shore Capital's Greenwood said.

Standard Chartered declined to comment on Block's comments.

Muddy Waters last year bet against Asia commodities company Olam ( id="symbol_OLAM.SI_2">OLAM.SI) after slamming its high debt and business practices, forcing it to be propped up by Singapore investor Temasek and shrink its business. Temasek is also Standard Chartered's biggest investor with a stake of about 18 percent.

(Reporting by Steve Slater, Simon Jessop and Natalie Harrison; Editing by Louise Heavens)

Lufthansa says April passenger traffic stagnant

German airline Lufthansa ( id="symbol_LHAG.DE_0">LHAG.DE) said on Monday that April passenger traffic in terms of revenue seat kilometers was flat from a year earlier.

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It added that the monthly passenger load factor, a measure of passenger aircraft utilization, narrowed 0.2 percentage points to 78.3 percent.

 

(Reporting by Ludwig Burger; Editing by Christoph Steitz)

Kuwait may sign plane deal in May, Airbus favored: source

Kuwait is studying plans by its airline to buy 25 Airbus jets, a source with knowledge of the matter said, in the most sweeping overhaul since part of its fleet was seized after Iraq invaded the Gulf state in 1990.

The proposal calls for state-owned Kuwait Airways KA.UL to buy 25 new Airbus jets and to lease a further 13 to upgrade its fleet but needs government approval, the source said. It could be signed by the end of this month.

 

The move comes months after Kuwait was awarded $500 million by Iraqi Airways for damage caused when former Iraqi President Saddam Hussein's forces seized aircraft and parts, ending a two-decade row over compensation.

The Kuwaiti airline's aircraft buying committee judged that Airbus made the most attractive offer in a tender process which included bids from Boeing ( id="symbol_BA.N_1">BA.N) and Bombardier ( id="symbol_BBDb.TO_2">BBDb.TO), the source said.

The source declined to be named because the deal still needs government approval.

In August 2007, Kuwait Airways cancelled an order for 19 passenger planes worth $3 billion from local lessor Alafco ( id="symbol_ALAF.KW_3">ALAF.KW) after failing to get government approval.

Under the new proposal, Kuwait Airways would pay around 850 million dinars ($2.98 billion) for the 25 new planes, which would include 10 wide-bodied A350-900 jets and 15 of the slimmer medium-haul A320neo, the source said.

Such an order would be worth $4.38 billion at list prices, but aircraft are usually sold at a discount.

The A350 is designed to counter Boeing's ( id="symbol_BA.N_4">BA.N) 787 Dreamliner, which would have been included in the deal scrapped in 2007.

Kuwait Airways would start receiving the Airbus aircraft from 2019, the source said, confirming details of the talks originally reported by Al-Watan newspaper on Sunday.

"The final decision is the government's," the source said. "I think by the end of this month, they should take it."

Kuwait Airways and Airbus, which is owned by aerospace and defense group EADS ( id="symbol_EAD.PA_5">EAD.PA), declined to comment.

Under the plan, the airline would also lease 13 of Airbus's A330 and A320 models for six years, the source said, without giving an estimate for the cost of that part of the agreement.

One of the reasons the Airbus deal was seen as favorable was that it combined the new and leased jets, the source said, adding that the leased jets should start arriving this summer.

The airline wants to take 11 jets from its old fleet out of service.

(Additional reporting by Praveen Menon; Editing by Tim Hepher and Mark Potter)

EU can deal with treaty change issue later: Eurogroup head

Spain and Portugal called on Monday for the euro zone to complete a banking union as Germany underscored legal hurdles before a central element of the plan to deal with failing banks can be introduced.

"It is indispensable that we stick to the agreed calendar on banking union and that we take steps to make sure families and small companies receive credit," Spanish Prime Minister Mariano Rajoy told reporters.

 

"Banking union is the credibility test of the European Union," he said, after meeting Portuguese Prime Minister Pedro Passos Coelho, who backed his calls for progress on Europe's most ambitious reform of the financial crisis.

The call came as finance ministers from the euro zone met in Brussels, ahead of which German Finance Minister Wolfgang Schaeuble reiterated the need for a change to EU treaties to underpin the new system of bank resolution.

"When a bank is wound up, money and jobs are usually lost. Those affected will seek redress. If there is an activity that needs a solid legal base, it is resolution," he wrote in an article in the Financial Times on Monday.

To avoid treaty change and have a banking union "of sorts" Schaeuble proposed to stick for now to the intermediate stage of a coordinated network of national resolution authorities, rather than a new EU resolution authority.

"This would be a timber-framed, not a steel-framed, banking union," Schaeuble wrote.

Most euro zone countries and institutions believe a full banking union, which would help deal with banking crises, is needed urgently to restore investor confidence.

Under the plan, the biggest banks will be supervised by the European Central Bank from the middle of next year. There is also to be a single bank resolution mechanism that would wind down insolvent banks. Plans for a common deposit guarantee scheme are unlikely to happen any time soon.

But while the ECB bank supervision looks set to take effect as planned, the single authority that would order and finance the closure of a bank is unlikely to materialize soon, because Germany believes it needs a change to the EU treaty.

Some were sympathetic to this message. "Many of the building blocks for the banking union can be put in place. The issue of the treaty change can be addressed later on," Jeroen Dijsselbloem, the Eurogroup chairman, told reporters before the ministerial meeting.

"I think the Germans are putting forward understandable questions, which will have to be dealt with. But I don't see why that should stop us making progress on banking union," he said.

But the issue is divisive because a change to the European Union treaty could take years and entails risks - the revised law could be rejected in one of the 27 national EU parliaments during ratification.

PUSH BACK

Some policy-makers believe Germany is demanding treaty change to push the discussion on bank resolution back until after its parliamentary elections in September, in which Chancellor Angela Merkel will have to deal with rising popular discontent with bailing out euro zone banks and governments.

"You do not need treaty change for banking resolution, it can be done under the existing rules," one EU diplomat said. "Germany is erecting barriers to slow down the process, but that is a political decision, not a technical one."

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France too called for rapid progress. "We need to go fast, as fast as possible, and have a global banking union," French Finance Minister Pierre Moscovici told reporters before the euro zone finance ministers meeting.

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"Mr. Schaeuble says we need to go as far as possible with the existing treaty, and if there are problems in order to change the treaties, we'll see. I do agree with that with maybe a little nuance that I believe that we can go very very far with the existing treaty and maybe, a second thing, I am convinced that we need an integrated authority," Moscovici said.

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(Additional reporting by Robin Emmott and John O'Donnell, writing by Jan Strupczewski Editing by Jeremy Gaunt.)

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Airbus says A350 'progressing well' to first flight

Europe's newest passenger jet, the A350, is "progressing well on its route to first flight," manufacturer Airbus said on Monday.

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The planemaker issued the comment after the first flyable aircraft left the paint shop in Airbus colors, ahead of final testing and a maiden flight expected in coming weeks.

The paint job indicates the flight is fast approaching, but Airbus has abandoned the traditional grand "rollout" party as it gives priority to project execution following a series of industry delays, Reuters reported last week.

The aircraft "will soon start the final tests before its maiden flight this summer," Airbus said in a statement.

(Reporting by Tim Hepher)

Hedge fund nominees to Hess board to forgo special pay package

An activist hedge fund's nominees to the Hess Corp ( id="symbol_HES.N_0">HES.N) board of directors said they were waiving their right to receive a special pay package from the fund if the oil and gas company outperforms its peers under their watch.

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Hess shareholders are set to vote on the board nominees later this week.

Hess and the hedge fund, Elliott Management, have been working hard to lobby investors to back their nominees. Hess said last week that it would separate the posts of chairman and chief executive, stripping longtime CEO John Hess of his chairmanship.

 

If elected, the Elliott nominees would have been eligible to receive $30,000 from the hedge fund for every percentage point that Hess outperformed its peers over their first term as directors.

In a letter to shareholders, the five Elliott nominees called the attention paid to their pay arrangements a distraction.

"While each of us believes that these arrangements are appropriate and consistent with the performance of our duties as independent directors, each of us has made the decision to waive our right to receive these payments from Elliott," they said in the letter.

(Reporting By Michael Erman; editing by John Wallace)

ECB says in contact with Bloomberg over confidentiality

The European Central Bank said on Monday it was in touch with Bloomberg LP after the financial data and news company had allowed journalists to see some information about terminal usage.

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Bloomberg customers, including the U.S. Federal Reserve and the U.S. Treasury, are examining whether there could have been leaks of confidential information.

 

"The ECB takes the protection of confidentiality in the usage of data products by ECB management and staff very seriously," an ECB spokesman said. "Our experts are in close contact with Bloomberg."

The financial data and news company said on Friday it had restricted reporters' access to client data last month after a client complained.

Bloomberg, whose terminals are widely used in the global financial industry, had allowed journalists to see some information about terminal usage, including when customers had last logged in, and how often they used messaging or looked up data on broad categories, such as equities or bonds.

(Reporting by Sakari Suoninen, editing by Michael Stott)

CBOE keeps index franchise as justices stay out of dispute

CBOE Holdings Inc ( id="symbol_CBOE.O_0">CBOE.O) won a long-running legal battle to prevent rival International Securities Exchange from listing options on two key U.S. stock-market indexes, after the U.S. Supreme Court on Monday declined to consider their dispute.

The court's refusal to intervene leaves intact a lower court ruling that allows CBOE, the operator of the oldest and biggest U.S. stock market, to remain the sole market for options on the Standard & Poor's 500 Index and the Dow Jones Industrial Average.

CBOE's exclusive franchise on stock-index options is a lucrative one, generating 60 percent of CBOE's transaction fees, although they account for less than 40 percent of its trading volume.

"We are vindicated after more than six years of lengthy and unnecessary litigation that the highest court in the land has validated our position and the intellectual property rights of index providers," CBOE's chief executive and chairman, William Brodsky, said in a statement.

 

An ISE spokeswoman had no immediate comment. CBOE shares were up about 0.7 percent on the Nasdaq stock market, to $39.57, after earlier touching an all-time high.

International Securities Exchange LLC (ISE) was fighting an injunction that prevented it from listing S&P 500 and Dow Jones options, which are licensed exclusively to S&P Dow Jones Indices LLC, a joint venture of McGraw-Hill Companies Inc. ( id="symbol_MHP.N_1">MHP.N) and CME Group Inc. ( id="symbol_CME.O_2">CME.O).

S&P Dow Jones has exclusive licensing agreements with the Chicago Board Options Exchange. In March this year, CBOE extended its contract until 2033.

ISE, a unit of Deutsche Boerse AG ( id="symbol_DB1Gn.DE_3">DB1Gn.DE), claimed that CBOE effectively had a monopoly on what ISE's lawyers describe as "widely disseminated facts and ideas" that are not protected under the Copyright Act.

In 2006, ISE said it would start offering its own index options based on the two indexes without obtaining a license, prompting CBOE, CME and McGraw-Hill to sue.

In a 2012 decision, an Illinois appeals court upheld a lower court ruling against ISE.

The appeals court decided the case under Illinois state law, rejecting ISE's claims that the dispute should be decided under the federal Copyright Act.

The case is International Securities Exchange v. Chicago Board Options Exchange, U.S. Supreme Court, No. 12-940.

(With reporting by Ann Saphir in San Francisco; Editing by Howard Goller and Chris Reese)

Bernanke to speak on economy to Congress on May 22

Federal Reserve Chairman Ben Bernanke will deliver testimony on May 22 on the outlook for the U.S. economy before the Joint Economic Committee of Congress, according to an announcement on the website of committee chairwoman Amy Klobuchar.

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Bernanke's appearance will come as markets, weighing recent mixed indications on the strength of the U.S. economy, focus on the likely duration of continued bond purchases by the U.S. central bank to spur growth and hiring.

 

(Reporting By Alister Bull)

Level Global co-founder gets 6-1/2 years prison insider trading

Hedge Fund Level Global Investors LP co-founder Anthony Chiasson was sentenced on Monday to 6-1/2 years in prison for insider trading.

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At a court hearing in Manhattan, U.S. District Judge Richard Sullivan also ordered Chiasson, 39, to pay a $5 million fine.

Chiasson and Todd Newman, a former hedge fund portfolio manager with the now-defunct hedge fund Diamondback Capital Management, were convicted of conspiracy to commit securities fraud and of securities fraud in December.

 

Sullivan sentenced Newman to 4-1/2 years in prison earlier this month. Federal prosecutors had requested that Chiasson serve as many as 10 years in prison.

The two were accused of using inside information to trade in shares of computer maker Dell Inc ( id="symbol_DELL.O_0">DELL.O) and chipmaker Nvidia Corp ( id="symbol_NVDA.O_1">NVDA.O). Level Global made $68 million in illegal profits from the trades, according to prosecutors.

(Reporting by Bernard Vaughan; Editing by Gerald E. McCormick)

Hedge fund nominees to Hess board forgo controversial pay scheme

An activist hedge fund's nominees to the Hess Corp ( id="symbol_HES.N_0">HES.N) board of directors said they were waiving their right to receive a controversial pay package under which the fund will pay them extra if the oil and gas company outperforms its peers under their watch.

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The pay package had become a point of contention in the heated proxy battle between the oil and gas company and hedge fund Elliott Management, which nominated the slate of directors. Hess said the pay -- which would not be available to the company's other directors -- compromised the nominees' independence.

 

Hess shareholders are set to vote on the board nominees on Thursday.

Hess and Elliott Management, have been lobbying investors to back their nominees. Hess said last week that it would separate the posts of chairman and chief executive, stripping longtime CEO John Hess of his chairmanship.

If elected, the Elliott nominees would have been eligible to receive $30,000 from the hedge fund for every percentage point that Hess outperformed its peers over their first term as directors.

"As we have said all along, Elliott`s directors compromised their independence and judgment by agreeing to accept Elliott`s compensation scheme," Hess lead director John Mullin said in a statement.

"The admission today by Elliott and its nominees makes it clear that shareholders agree that Elliott`s scheme was unacceptable," he said.

Elliott Management, which owns a 4.5 percent stake in Hess, has been clamoring for change at the company since January, when it launched its campaign to seat the new directors and pitched a plan to break up the company. The hedge fund has railed against the current board, alleging that directors are too closely tied to Hess Chief Executive John Hess and that poor oversight has led to underperformance.

As Hess has mounted its defense against Elliott's arguments, the company has announced plans to exit its retail gasoline, marketing and trading businesses and assembled its own slate of new independent directors for its board.

In a letter to shareholders, the five Elliott nominees called the attention paid to their pay arrangements a distraction.

"While each of us believes that these arrangements are appropriate and consistent with the performance of our duties as independent directors, each of us has made the decision to waive our right to receive these payments from Elliott," they said in the letter.

Hess shares rose 11 cents to $69.41 on the New York Stock Exchange in midday trading on Monday.

(Reporting By Michael Erman; editing by John Wallace and David Gregorio)

Plains CEO urges shareholders to back Freeport deal

The chief executive of Plains Exploration & Production Co ( id="symbol_PXP.N_0">PXP.N) urged shareholders on Monday to vote in favor of Freeport McMoRan Copper & Gold Inc's ( id="symbol_FCX.NFCX.N) proposed takeover of the energy company.

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The open letter from CEO James Flores follows recommendations by two proxy advisory firms, ISS and Glass Lewis & Co, that shareholders vote against the $6 billion deal, arguing that it undervalues the oil and gas company.

 
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Freeport said on Thursday that it does not plan to raise its offer, which values each Plains share at $25 plus 0.6531 of its common stock, calling the terms of the friendly deal "best and final.

In December, copper miner Freeport announced plans to buy Plains as well as another oil and gas company, McMoRan Exploration Co ( id="symbol_MMR.N_2">MMR.N), aiming to diversify into the U.S. energy sector in a hedge against copper's uncertain outlook. <ID: nL1E8N52E3>

Flores said in his letter to shareholders that as result of the takeover the combined company would be stronger and better positioned to develop future projects.

Flores stands to gain some $150 million if the deal goes through, and he would earn a base salary for running Freeport's new oil and gas business that would equal or exceed those of Freeport's Chairman Jim Bob Moffett and Chief Executive Richard Adkerson.

Both Adkerson and Moffett received $18.45 million in total direct compensation in 2011, including their base salaries of $2.5 million, according to Freeport's proxy statement.

The two oil and gas takeovers will transform Freeport into the largest U.S.-based diversified natural resource company. The combined company will have good access to debt markets, increased cash flows and lower cost of capital investment on future growth, Flores said.

Plains shareholders are set to vote on the deal on May 20.

Shares of Plains fell 0.58 percent to $44.78 on Monday on the New York Stock Exchange, while Freeport's stock was down 2.46 percent at $31.75.

(Reporting by Julie Gordon; Editing by Leslie Gevirtz)

Stemcor and lenders appoint advisors for standstill talks

Stemcor's banks have appointed PricewaterhouseCoopers to advise them as they assess the steel trader's proposal for a standstill on $1.2 billion of loans, people familiar with the situation said on Monday.

Stemcor's advisors Ernst and Young and Goldman Sachs are helping the company to secure the standstill agreement as lenders form a co-ordinating committee to assess Stemcor's standstill proposal, the people said.

Privately-owned Stemcor, the world's largest independent steel trading company and the fifth-largest private company in the UK, was forced to seek a standstill agreement after failing to refinance an $850 million loan.

Stemcor had no official comment.

Under a standstill agreement, lenders agree not to ask for repayment and work with the company to restructure the debt or extend its maturity.

Stemcor is asking banks to keep its loans in place until it is able to repay them in the next couple of years by accelerating a restructuring program and selling off units.

The steel trader had turnover of 5 billion pounds in 2012 and is restructuring parts of its business and cutting jobs in response to weak market conditions.

Talks are going well and the standstill is expected to be agreed shortly, the people said.

Donations, lobbying by high-speed traders on the rise: report

High-frequency trading firms increased their campaign contributions to federal lawmakers by 673 percent from the 2008 to the 2012 election cycle, according to a report that sheds light on their political connections in Washington and efforts to impact policymaking.

The report by the Washington-based nonprofit watchdog Citizens for Responsibility and Ethics in Washington (CREW) comes as U.S. financial market regulators mull whether new rules should be adopted to rein in high-speed traders, whom some critics accuse of harming smaller investors.

 

It compiles the campaign and lobbying records for 48 different firms like Citadel Investments, Getco, Knight Capital ( id="symbol_KCG.N_0">KCG.N), Virtu Financial LLC and Tradeworx which engage in high-speed trading, a strategy that uses lightning-fast computers to search for ways to take advantage of tiny price moves in the marketplace.

It also identifies lawmakers who raked in the most campaign dollars over the course of three election cycles from high-frequency traders, with some of the biggest recipients from New York and Illinois, home to the country's two largest financial hubs.

The increases in campaign and lobbying spending marks a shift from just a few short years ago, when high-speed traders still were not well-known to the public and did not have much of a presence on Capitol Hill.

The Futures Industry Association sought to change that in 2010 with the creation of the FIA Principal Traders Group, a trade association representing the interests of high-speed firms.

The biggest event that got Washington more focused on high-speed trading was the May 6, 2010 "flash crash," in which the Dow plunged roughly 700 points before sharply rebounding.

In the aftermath of the "flash crash," regulators determined the plunge was not due to high-speed traders. The way those firms behaved during the event itself, however, helped spark a dialogue about whether new regulations were needed for high-speed trading firms.

High-frequency traders have generally argued against many of the proposed regulations that have been publicly debated, such as charging them for generating excessive message traffic or taking steps to forcibly slow the trading down.

Proponents of the practice say it brings much-needed liquidity to the market.

Melanie Sloan, the executive director of CREW, said the report published on Monday, titled "Rise of the Machines," demonstrates a typical Washington trend.

"An industry that is not a big player in Washington suddenly sees potential regulatory action coming down the pipe, and low and behold, it starts to make campaign contributions and having lobbying expenditures," she said. "That is what we see here with the huge increases."

CREW's report does not draw any conclusions about what impact the ramp up in campaign and lobbying spending has had over the past five years.

U.S. regulators have still not taken any steps toward imposing new regulations on the firms, despite a string of high-profile market events over the past few years.

The U.S. Securities and Exchange Commission has said it is still collecting data on high-speed trading activities to help it formulate its policy views.

Last year, regulators shifted gears to focus more on how to keep technology errors from spiraling out of control after a glitch at Knight Capital led to a $440 million trading loss and nearly toppled the firm.

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The Commodity Futures Trading Commission is expected sometime in the coming months to issue a broad release asking a series of questions about high-speed trading and whether new rules are needed.

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BIG GIVERS

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CREW's report found that since 2008 - the height of the financial crisis - the firms included in the study collectively spent $10 million to lobby Congress, the SEC and the CFTC.

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Much of that spending occurred between 2009-2010, the period that includes both the "flash crash" and the time frame in which the Dodd-Frank Wall Street reform law was debated, drafted and enacted.

_4">

For campaign contributions, the firms collectively went from spending just $2.1 million in the 2008 cycle, to $16.1 million in the 2012 cycle - a 673 percent increase.

_5">

The biggest single donor over the three election cycles reviewed, CREW said, was Renaissance Technologies - a New York-based hedge fund.

_6">

While the hedge fund is not considered a high-speed trading firm, CREW said it included the fund in its report because it is known to deploy some "high-frequency strategies."

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Over the three election cycles reviewed, it gave $13.8 million in donations, CREW said.

_8">

A second high-speed trading firm, Quantab Financial, also ramped up its giving considerably.

_9">

The Texas-based firm, which employs Patton Boggs as one of its top lobbying shops, increased its campaign contributions from just $8,300 in the 2008 cycle to more than $1.1 million in the 2012 cycle, the report says.

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BIG WINNERS?

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It is not a shock that many of the recipients of the big high-speed trading bucks come from New York, home to Wall Street, or Illinois- the home to the CME Group ( id="symbol_CME.O_1">CME.O) and the Chicago Board Options Exchange ( id="symbol_CBOE.O_2">CBOE.O).

_12">

Perhaps what is more surprising is that the largest single recipient of donations from high-speed trading is Illinois Republican Senator Mark Kirk.

_13">

While Kirk does hail from a state that is home to the CME Group and sits on the Senate Banking Committee in charge of overseeing the issue, he has publicly said very little if anything on the topic of high-speed trading compared with some of his other Senate colleagues.

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By contrast, the lawmaker who has received the second-largest chunk of change from high-speed trading firms - New York Democratic Senator Charles Schumer - has been very vocal.

_15">

On several different occasions, Schumer has pushed for more regulation of high-speed firms, including a proposal that would force them to take on "market maker" obligations so they could not pull out of markets during a crisis the way they did in the flash crash.

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The report by CREW can be found here: www.citizensforethics.org/hftraders

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(Reporting by Sarah N. Lynch; editing by Andrew Hay)

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Dell committee seeks more info from Icahn, Southeastern

Dell Inc's special board committee asked activist investor Carl Icahn on Monday for details of his plan to buy the computer maker, including how he would finance a cash payout for shareholders and who would run the company if his preferred slate of board directors was installed.

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Last week, Icahn and Southeastern Asset Management Inc offered $12 in cash per share or additional shares to existing investors as an alternative to Michael Dell's $24.4 billion bid to take the company private. And the billionaire investor warned he would put up his own roster of candidates for the board if shareholders greenlit the company founder's offer.

 

Icahn's plan assumes that only as much as 80 percent of the company's shareholding will opt for a cash payout, translating into a maximum outlay of $16.8 billion.

Michael Dell, major shareholders such as Southeastern and Icahn are waging a battle over the future of the world's third largest personal computer maker, once a tech-industry high flyer, but now struggling to evolve as people embrace smartphones and tablet computers.

Michael Dell and private equity firm Silver Lake want to take the company private for $13.65 per share, but stockholders, including Southeastern and T. Rowe Price Group Inc, have complained that offer severely undervalues the company.

Instead, Icahn and Southeastern, two of Dell's biggest investors, proposed to give stockholders $12 cash for every share they own, as well as allow them to keep their stock.

Shareholders last week welcomed the alternative proposal, which they said sustained a discussion around Dell's future. But investors might find the latest option on the table unpalatable because of a lack of specifics, some analysts say.

"Most shareholders would prefer the certainty of $13.65 in cash rather than risk the uncertainty and the ensuing stock volatility," Jefferies & Co analyst Peter Misek wrote in a Monday research note. "Our estimates point to possible minimal upside ... to the $13.65 Silver Lake offer, which we do not think would warrant the potential volatility."

Icahn is being advised by investment bank Jefferies Group.

In a letter to Icahn, the committee said it was not clear if he intended to make "an actual acquisition proposal that the Board could evaluate," or if he intended his offer as an alternative in the event the pending sale to Silver Lake and Michael Dell is not approved.

Dell shares were down about 0.2 percent at $13.48 at midday.

QUIZ

Icahn and Southeastern's challenge comes after Blackstone ended its pursuit of Dell in April and pulled out a month after it teamed up with Icahn to challenge the take-private attempt.

Icahn argued in a letter sent to the board and made public in a filing on Friday that Dell operates a large enterprise-focused computing business in addition to its ailing PC division, with strong ties Microsoft Corp and Intel Corp.

Without specifying details, he also said cost savings could be had from merging assembly plants across the world, while there remained opportunities to spin off non-core businesses.

Apart from asking who would make up the company's senior management team under Icahn, the committee said in its Monday letter that they wanted to know his "strategy and operating plan."

The committee also asked for information on the terms of the debt financing required for Icahn's proposal and "contingencies available if cash on hand or stockholder rollovers are less than anticipated," as well as financing commitment letters.

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It said the proposal did not seem to take into account the additional borrowing required if Icahn uses the company's cash in the transaction and reduces future cash flow by selling accounts receivables. In addition, it asked for an analysis of whether the receipt of additional shares would be taxable.

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It also wanted to know more about the relationship between Icahn and Southeastern.

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Icahn was not available for comment.

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Both Icahn and Southeastern said they would finance the proposal from existing cash and about $5.2 billion in new debt.

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Icahn and Southeastern together hold about 13 percent of Dell stock. The billionaire investor previously proposed paying $15 per share for 58 percent of Dell.

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(Reporting by Poornima Gupta, Sinead Carew and Nicola Leske; Editing by Lisa Von Ahn and Andre Grenon)

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