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Germany signals shift in veto on Leopard tanks for Ukraine

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PARIS/LVIV, Ukraine, Jan 23 (Reuters) – Germany would not stand in the way if Poland wants to send its Leopard 2 tanks to Ukraine, Germany’s foreign minister said, signalling a possible breakthrough for Ukraine as it tries to bolster its forces ahead of an expected new Russian offensive.

Eleven months after Russia invaded its southern neighbour, the fighting is centred on the town of Bakhmut in Ukraine’s east, where Russia’s Wagner mercenaries and Ukrainian forces have been locked in a battle of attrition.

Russia’s defence ministry said for the second straight day on Sunday that its forces were improving their positions in Ukraine’s southern region of Zaporizhzhia, though a Ukrainian military spokesperson told the state broadcaster the situation there was “difficult” but stable.

Reuters was not able to independently verify battlefield accounts.

Ukrainian officials have been calling on Western allies to supply them with the modern German-made tanks for months but Germany has held back from sending them or allowing other NATO countries to do so.

Leopard tanks, which are held by an array of NATO countries but whose transfer to Ukraine requires Berlin’s approval, are seen by defence experts as the most suitable for Ukraine.

Western allies pledged billions of dollars in weapons for Ukraine last week but they failed to persuade Germany to lift its veto on providing the tanks.

But in an apparent shift in Germany’s position, foreign minister Annalena Baerbock said her government would not block Poland if it were to send its Leopard 2 tanks without German approval.

“For the moment the question has not been asked, but if we were asked we would not stand in the way,” she told France’s LCI TV, when asked about her government’s reaction to any such Polish decision.

Germany has been under heavy pressure to let Leopards go to Ukraine but the Social Democrat party of Chancellor Olaf Scholz is traditionally sceptical of military involvements and wary of sudden moves that could trigger Russia to escalation.

Baerbock’s remarks appeared to go further than Scholz’s comments at a summit in Paris earlier on Sunday that all decisions on weapons deliveries would be made in co-ordination with allies, including the United States.

Ukraine says the heavily armoured battle tanks would give its ground troops more mobility and protection ahead of a new Russian offensive expected in coming months.

But Germany has appeared to have tied any such contribution to a U.S. move to send its Abrams tanks, something American officials have said they are reluctant to do because the vehicles are complicated to maintain.

‘TERRIBLE WAR’

American lawmakers pushed their government on Sunday to export M1 Abrams main battle tanks to Ukraine, saying that even sending a symbolic number would be enough to push European allies to do the same.

Britain recently said it was supplying 14 Challenger 2 tanks to Ukraine. Its foreign minister, James Cleverly, said on Sunday it still wanted an international deal to provide Ukraine with the German-made tanks.

French President Emmanuel Macron, meanwhile, said he did not rule out the possibility of sending Ukraine Leclerc tanks.

Last week, the Kremlin’s spokesman said Western countries supplying additional tanks to Ukraine would not change the course of the conflict, but would add to the problems of the Ukrainian people.

A close ally of President Vladimir Putin said on Sunday that deliveries of offensive weapons to Kyiv that threaten Russia’s territories would lead to a global catastrophe and make arguments against using weapons of mass destruction untenable.

Vyacheslav Volodin, speaker of Russia’s lower house of parliament, warned that the United States and NATO’s support of Ukraine was leading the world to a “terrible war”.

Since its invasion on Feb. 24, which it has cast as defending itself from an aggressive West, Russia has taken control of parts of Ukraine and has said it will never return them. Ukraine has said that restoring its territorial integrity is not open for negotiation.

In Ukraine’s embattled east, the top Russian-installed official in the occupied parts of the Donetsk region said late on Sunday he had visited the town of Soledar that Russia says it captured this month.

Denis Pushilin, the administrator, published a short video on the Telegram messaging app that showed him driving and walking amidst uninhabited areas and destroyed buildings.

Reuters was not able to independently verify when and where the video was taken.

On Jan. 11, the private Russian military group Wagner said it had captured Soledar and Russian-installed authorities in the Donetsk region said last week they were in control of the salt-mining town.

Ukraine has never publicly said that the town was taken by Russian forces. On Sunday, the general staff of its armed forces said in a daily update that Russian forces had fired on Ukrainian positions in the area.

Reporting by Andreas Rinke and Leigh Thomas; Additional reporting by Tom Sims, Lidia Kelly and Humeyra Pamuk; Editing by Clarence Fernandez

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World

Germany would not block Poland from sending tanks to Ukraine, minister says

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PARIS, Jan 22 (Reuters) – Germany’s foreign minister said on Sunday her government would not stand in the way if Poland wants to send its Leopard 2 tanks to Ukraine, in a possible breakthrough for Kyiv which wants the tanks for its fight against Russia’s invasion.

Ukrainian officials have been calling on Western allies to supply them with the modern German-made tanks for months – but Berlin has so far held back from sending them, or allowing other NATO countries to do so.

Asked what would happen if Poland went ahead and sent its Leopard 2 tanks without German approval, Annalena Baerbock said on France’s LCI TV: “For the moment the question has not been asked, but if we were asked we would not stand in the way.”

Her remarks appeared to go further than German Chancellor Olaf Scholz’s comments at a summit in Paris earlier on Sunday that all decisions on weapons deliveries would be made in coordination with allies including the United States.

Germany has been under heavy pressure to let Leopards go to Ukraine. But Scholz’s Social Democrat party is traditionally sceptical of military involvements and wary of sudden moves that could cause Moscow to further escalate.

German defense minister Boris Pistorius said on Sunday that he expected a decision soon on the tanks, though he kept up a note of caution.

Pistorius told ARD TV that Germany would not make a hasty decision because the government had many factors to consider, including consequences at home for the security of the German population.

Ukrainian President Volodymyr Zelenskiy repeated his long-standing plea for the tanks at his Sunday meeting with former British Prime Minister Boris Johnson who was visiting Kyiv.

A Leclerc XLR battle tank manufactured by Nexter is displayed at the Eurosatory international defense and security trade fair in Villepinte, near Paris, France June 13, 2022. REUTERS/Benoit Tessier/File Photo

“We need more weapons: tanks, aircraft, long-range missiles,” Zelenskiy said, according to a statement on his website.

Ukraine says the heavily armoured Western battle tanks would give the Ukrainian ground troops more mobility and protection ahead of a new Russian offensive which Kyiv expects in the near future. It would also help Ukraine retake some of the territory that has fallen to Russia.

After the Paris summit, Scholz told a news conference that all weapons deliveries to Ukraine so far had taken place in close coordination with Western partners. “We will do that in the future,” he said.

Speaking at the same news conference, French President Emmanuel Macron said he did not rule out the possibility of sending Leclerc tanks to Ukraine.

Macron said that sending tanks must not escalate the situation, must take into account the time to train Ukrainians to be effective, and must not endanger France’s own security.

“Regarding the Leclercs, I asked the Army minister to work on it, but nothing has been ruled out,” Macron said, adding that the move would have to be coordinated with allies such as Germany in the coming days and weeks.

German sources have told Reuters they would allow German-made tanks to be sent to Ukraine to help its defence against Russia if the United States agrees to send its own tanks. But U.S. officials have said President Joe Biden’s administration is not poised to send its own tanks, including the M1 Abrams.

The Kremlin’s spokesman said on Friday that Western countries supplying additional tanks to Ukraine would not change the course of the conflict and that they would add to the problems of the Ukrainian people.

Reporting by Andreas Rinke and Leigh Thomas; Additional reporting by Tom Sims, Lidia Kelly and Humeyra Pamuk; Editing by David Holmes, Andrew Heavens and Diane Craft

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World

Berlin sets condition for U.S. on supplying German-made tanks to Ukraine – source

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  • Germany’s Leopard tanks seen as best suited for Ukraine
  • All eyes on Germany when defence leaders meet on Friday
  • U.S. to provide $125 mln to Ukraine to support energy systems
  • Cabinet minister among dead in Ukraine helicopter crash

KYIV/BERLIN, Jan 19 (Reuters) – Germany will send German-made tanks to Ukraine so long as the United States agrees to do likewise, a government source in Berlin told Reuters, as NATO partners remained out of step over how best to arm Ukraine in its war against Russia.

Ukraine has pleaded for modern Western weapons, especially heavy battle tanks, so it can regain momentum following some battlefield successes in the second half of 2022 against Russian forces that invaded last February.

Berlin has veto power over any decision to export its Leopard tanks, fielded by NATO-allied armies across Europe and seen by defence experts as the most suitable for Ukraine.

Several times in recent days, German Chancellor Olaf Scholz has stressed, behind closed doors, the condition that U.S. tanks should also be sent to Ukraine, the German government source said on condition of anonymity.

When asked about Germany’s stance, U.S. President Joe Biden’s spokesperson Karine Jean-Pierre said: “The president believes that each country should make their own sovereign decisions on what steps of security assistance and what kinds of equipment they are able to provide Ukraine.”

NATO allies have sought to avoid the risk of appearing to confront Russia directly and have refrained from sending their most potent weapons to Ukraine.

According to a U.S. official, the Biden administration is set to approve a new aid package for Ukraine, worth more than $2 billion, which would likely include Stryker armoured vehicles for Kyiv, but not M1 Abram tanks.

The package could be announced as early as Friday during a meeting of top defence officials from dozens of countries at the U.S. Ramstein Air Base in Germany.

The Pentagon is still not prepared to meet Kyiv’s request for M1 Abrams tanks, Colin Kahl, the Pentagon’s top policy adviser who had just returned from a trip to Ukraine, has said.

“I just don’t think we’re there yet,” Kahl said. “The Abrams tank is a very complicated piece of equipment. It’s expensive. It’s hard to train on. It has a jet engine.”

Germany’s new Defence Minister Boris Pistorius will host U.S. Defense Secretary Lloyd Austin on Thursday.

Austin will press Pistorius at the meeting to allow for the transfer of German-made Leopard tanks to Ukraine, as several NATO countries had them and were willing to deliver them quickly, U.S. officials said.

PRESSURE ON GERMANY

Attention at Friday’s meeting will be focused on Germany, which has said Western tanks should only be supplied to Ukraine if there is an agreement among Kyiv’s main allies.

Britain has raised the pressure on Berlin this month by becoming the first Western country to send tanks to Ukraine, pledging a squadron of its Challengers. Poland and Finland have said they will send Leopard tanks if Germany approves them.

In a speech by video link to the Davos forum on Wednesday, Ukrainian President Volodymyr Zelenskiy urged Western allies to supply his country before Russia mounts its next missile and armoured ground attacks.

“The supplying of Ukraine with air defence systems must outpace Russia’s next missile attacks,” Zelenskiy said. “The supplies of Western tanks must outpace another invasion of Russian tanks.”

Germany’s Leopard 2 is regarded as one of the West’s best tanks. It weighs more than 60 tons (60,000 kilograms), has a 120mm smoothbore gun and can hit targets at a distance of up to five kilometres (three miles).

Ukraine, which has relied primarily on Soviet-era T-72 tank variants, says the new tanks would give its troops the mobile firepower to drive out Russian troops in decisive battles.

TOUGH FRONTLINE SITUATION

The fighting has been concentrated in the south and east of Ukraine, after Russia’s initial assault from the north aimed at taking Kyiv was thwarted during the first months of an invasion that Russian President Vladimir Putin called a “special military operation”.

“The situation on the frontline remains tough, with Donbas being the epicentre of the most fierce and principled battles,” Zelenskiy said in a video address on Wednesday. “We are seeing a gradual increase in the number of bombardments and attempts to conduct offensive actions by the invaders.”

Donbas, comprised of Luhansk and Donetsk, is the industrial heartland of Ukraine’s east. Russian forces have been pressing for months for control of the city of Bakhmut in Donetsk but with limited success, and have shifted their attention to the smaller nearby town of Soledar in recent weeks.

Ukrainian military analyst Oleh Zhdanov said in a YouTube video that Ukrainian army units remained in Soledar, with heavy fighting in western districts despite Russian claims for more than a week that it now controlled the town.

Reuters could not verify battlefield reports.

HELICOPTER CRASH

Separately, a helicopter crashed in fog near a nursery outside Kyiv on Wednesday, killing 14 people, including Ukraine’s interior minister, and a child.

Ukrainian officials have not suggested that any action by Russia was responsible for the helicopter going down.

The crash was “a terrible tragedy” and “the pain is unspeakable”, Zelenskiy said on Telegram, and in his nightly video address, he said the had asked the SBU intelligence service to investigate the cause.

Reporting by Andreas Rinke in Berlin and Reuters bureaux; Writing by Grant McCool and Himani Sarkar; Editing by Howard Goller and Simon Cameron-Moore

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Business

Exclusive: ECB union says staff losing faith in leadership over inflation, pay

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  • 40% of ECB staff has low or no trust
  • Two-thirds say confidence is damaged
  • 63% worried about ECB’s ability to protect purchasing power

FRANKFURT, Jan 18 (Reuters) – (This Jan. 17 story has been corrected to restore the dropped words in paragraph 11)

European Central Bank staff are losing confidence in the institution’s leadership following the ECB’s failure to control inflation and a pay award that lagged the leap in prices, according to a survey by trade union IPSO.

The responses underline that even central banks, whose primary responsibility is fighting inflation, are not immune to staff dissatisfaction with the sharply rising cost of living.

The survey was organised in the context of a dispute between IPSO, which holds six out of nine seats on the ECB’s staff committee, and the central bank’s board over pay and remote-working arrangements.

An ECB spokesperson did not comment directly on IPSO’s findings when asked but pointed to a separate staff survey, run by the ECB itself last year, showing that 83% of nearly 3,000 respondents were proud to work for the ECB and 72% would recommend it.

Results of IPSO’s survey, which largely focused on pay and remote-working arrangements but also included questions about trust in the board, were sent to ECB staff on Tuesday in an email, seen by Reuters.

They showed two-thirds of roughly 1,600 respondents said their trust in Lagarde and the rest of the six-member ECB board had been damaged by recent developments such as high inflation and a pay increase that did not match the rise in prices.

Asked how much trust they had in Lagarde and the board when it comes to leading and managing the ECB, the central bank for the 20 countries that use the euro, just under half of respondents said “moderate” (34.3%) or “high” (14.6%).

But over 40% of respondents said they had “low” (28.6%) or “no” (12%) trust, while 10.5% could not say.

“This is a serious concern for our institution, as no one can correctly lead an organisation without the trust of its workforce,” the union said in its email.

INFLATION SURGE, PAY BATTLES

The survey was the first by IPSO to ask about trust in top management since Christine Lagarde took over as ECB President in late 2019.

A similar IPSO survey of ECB staff, taken just before her predecessor Mario Draghi stepped down, showed 54.5% of 735 respondents rated his presidency “very good” or “outstanding”, with support for his policy measures even higher.

Then, however, inflation in the euro zone had been low for a decade. Its recent surge to multi-decade highs in countries around the world has seen a revival in battles over pay between workers and the companies and institutions that employ them.

And a majority of respondents in the October 2019 survey also complained about a lack of transparency in recruitment and perceived favouritism under Draghi.

The most recent Bank of England staff survey, also conducted in 2019, showed 64% of respondents had “trust and confidence in the Bank’s leadership”.

A 2022 U.S. government survey of employees at departments and federal agencies found that 61% of respondents had “a high level of respect” for their organisation’s senior leaders – roughly stable compared to the previous two years.

The ECB spokesperson also pointed to internal surveys in 2020-21 that found roughly 80% of respondents were satisfied with health-and-safety measures taken by the ECB in response to the coronavirus pandemic.

The latest IPSO survey showed 63% of staff who responded were worried about the ECB’s ability to protect their purchasing power after being handed a pay increase of just 4% last year – or roughly half the rise in consumer prices.

The ECB has been criticised by politicians, bankers and academics for initially underestimating a surge in the cost of living and then making up for it with large and painful increases in borrowing costs.

Lagarde, who is not an economist and had not been a central banker before joining the ECB, colourfully defended her board at an event with staff last month.

“If it wasn’t for them I’d be a sad, lonely cowgirl lost somewhere in the Pampa of monetary policy,” Lagarde said, according to a recording of the Dec. 19 town hall seen by Reuters.

She and fellow board members have long worried about the risk of a potential “wage-price spiral”, where higher salaries feed into prices, which they argue would make it harder for the ECB to bring inflation back down to its 2% target.

But IPSO said that concern is misplaced and workers should not be made to bear the brunt of the current bout in inflation.

“The ECB might be preaching lower real wages, but this is not our stance as your staff union,” it wrote in its message to ECB employees.

Editing by Catherine Evans

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World

Ukraine pushes for tanks as holdout Germany says new minister to decide

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  • New German defence minister announced as Boris Pistorius
  • Wary Berlin holding up tanks from other European allies
  • Death toll from missile strike in Dnipro rises to 44

DNIPRO, Ukraine/KYIV, Jan 17 (Reuters) – Ukraine came a step closer on Tuesday in its bid to win a fleet of modern battle tanks it hopes could turn the course of the war with Russia, after the West’s big holdout Germany said this would be the first item on its new defence minister’s agenda.

In the central city of Dnipro, authorities called an end to the search for survivors in the ruins of an apartment building destroyed during Russian missile attacks on Saturday.

Forty-four people were confirmed killed and 20 remain unaccounted for in the attack, the deadliest for civilians of a three-month Russian missile bombardment campaign, according to Ukrainian officials. Seventy-nine people were wounded and 39 rescued from the rubble.

Nearly 11 months after Russia invaded, Kyiv says a fleet of Western battle tanks would give its troops the mobile firepower to drive Russian troops out in decisive battles in 2023.

German-made Leopard battle tanks, workhorse of armies across Europe, cannot be delivered without authorisation from Berlin, which has so far demurred.

With Western allies meeting at a U.S. air base in Germany on Friday to pledge military support for Ukraine, Berlin is under intense pressure to lift its objections this week.

The decision sits on the desk of Germany’s new Defence Minister Boris Pistorius, named on Tuesday to replace Christine Lambrecht, who quit after comments critics called insensitive.

“When the person, when the minister of defence, is declared, this is the first question to be decided concretely,” German Economy Minister Robert Habeck told Deutschlandfunk radio broadcaster on Tuesday, before the appointment was announced.

FEARS OF ESCALATING CONFLICT

In his first comments on the job, Pistorius, a regional politician viewed as close to Chancellor Olaf Scholz, made no mention of weapons for Ukraine: “I know the importance of the task,” he said in a statement. “It is important to me to involve the soldiers closely and to take them with me.”

Pistorius will host U.S. Defense Secretary Lloyd Austin on Thursday ahead of Friday’s meeting of allies at Ramstein air base.

Germany has been cautious about approving weapons that could be seen as escalating conflict.

Scholz, speaking on Tuesday in an interview for Bloomberg TV, confirmed that discussions with Germany’s allies on tanks were ongoing but should not be conducted in public.

The Kremlin said last week that new deliveries of weapons, including French-made armoured vehicles, to Kyiv would “deepen the suffering of the Ukrainian people” and would not change the course of the conflict.

Vladimir Solovyev, a pro-Kremlin presenter on Rossiya 1 state television, said any Western countries which supplied more advanced weapons to Ukraine should be considered legitimate targets for Russia.

[1/5] A view shows a kitchen inside an apartment block heavily damaged by a Russian missile strike, amid Russia’s attack on Ukraine, in Dnipro, Ukraine January 15, 2023. REUTERS/Yan Dobronosov

Since President Vladimir Putin ordered troops into Ukraine on Feb. 24, the United States and its allies have given tens of billions of dollars’ worth of weaponry including rocket systems, drones, armoured vehicles and communications systems.

Ukraine’s top general, Valeriy Zaluzhnyi, said he had outlined his forces’ “urgent needs” in a first personal meeting on Tuesday in Poland with the chairman of the U.S. Joint Chiefs of Staff, General Mark Milley.

Poland and Finland have already said they would send Leopards if Berlin gives re-export approval.

Separately, Dutch Prime Minister Mark Rutte told U.S. President Joe Biden on Tuesday the Netherlands would join the United States and Germany in sending Patriot missiles to Ukraine.

British Foreign Secretary James Cleverly said NATO allies were conveying a clear message to Putin by boosting their arms supplies to Ukraine.

“The message we’re sending to Putin… is that we made a commitment to support Ukrainians until they are victorious,” Cleverly told a forum at the Center for Strategic and International Studies in Washington.

A senior Ukrainian official blamed Russia for carrying out the bulk of more than 2,000 cyberattacks on Ukraine in 2022, speaking at a news conference he said was itself delayed because of a cyberattack. There was no immediate comment on his allegations from Moscow.

CUDDLY TOYS AT MEMORIAL

Tens of thousands of people have been killed and millions driven from their homes since Russia launched last February what it calls a “special military operation” to eliminate security threats in Ukraine. Kyiv and its Western backers call Russia’s actions a land grab.

Ukrainian forces drove Russian troops back during the second half of 2022, but over the past two months the front lines have largely been frozen in place despite both sides enduring heavy losses in relentless fighting.

Moscow has turned since October to a tactic of raining missiles down on Ukrainian cities far from the front lines in the east and south, mainly targeting electricity infrastructure.

Russia says it aims to reduce Ukraine’s ability to fight; Kyiv says the attacks serve no military purpose and are intended to harm civilians, a war crime.

In Dnipro, residents left flowers and cuddly toys at a makeshift memorial near the apartment block devastated during a wave of missile attacks on Saturday.

Hundreds of mourners bade farewell to boxing coach Mykhailo Korenovskyi, killed in a strike, while footage showed the kitchen of his apartment, decorated in bright yellow colours, now exposed to the air after the external wall was torn off.

A recent family video, filmed in the same kitchen, showed Korenovskyi’s daughter smiling and blowing out four candles on her birthday cake while he stood behind her, holding another child in his arms.

Moscow denies intentionally targeting civilians, and blamed Ukraine’s air defences for the missile that hit the apartment block. Kyiv says it was hit by a notoriously inaccurate Russian anti-ship missile for which Ukraine has no defences.

Writing by Peter Graff and Gareth Jones; Editing by Nick Macfie, Alex Richardson and Mark Heinrich;

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Business

Shares slip as China data stokes economic slowdown fears

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  • Euro STOXX 600 down 0.2%
  • China reports weak Q4 data
  • Asia shares slip 0.4%
  • Yen close to 7-month highs

LONDON/HONG KONG, Jan 17 (Reuters) – European shares paused their new year rally and Asian equities slipped after China reported weak fourth-quarter economic data on Tuesday, keeping investors on edge over the prospects of a global recession.

The Euro STOXX 600 (.STOXX) lost 0.2%, slipping from its nine-month high hit on Monday. Global equities have enjoyed a rally so far in 2022, spurred by hopes of a rebound in China’s economy and an easing of prices pressures in the United States and Europe.

But the Chinese data showed that the world’s second-biggest economy grew 2.9% in the fourth quarter of last year, beating expectations but underscoring the toll exacted by Beijing’s stringent “zero-COVID” policy.

China’s growth for 2022 of 3% was far below the official target of about 5.5%. Excluding a 2.2% expansion after COVID-19 first hit in 2020, it was the worst showing in nearly half a century.

Asia Pacific shares outside Japan (.MIAPJ0000PUS) widened losses in response, and were last down 0.4%. Shares in Hong Kong’s (.HSI) dropped 0.8% and China’s benchmark CSI300 Index (.CSI300) clawed back losses to close flat.

In Europe, China-exposed financials HSBC (HSBA.L) and Prudential (PRU.L) fell 1% and 0.4% respectively. Economy-sensitive consumer staples such as Unilever and Danone (DANO.PA) also fell more than 1% each.

Market players said investors were taking stock of how economies would expand as inflation peaks and central bank tightening of monetary policy slows, with the China data underscoring doubts over whether it could act as a spur.

“What will be the thing that reinvigorates growth?” said Gaël Combes, head of fundamental research at Unigestion. “China is probably unlikely to provide the lift is has provided in the past, like during the global financial crisis.”

Wall Street was set to open slightly lower after a public holiday on Monday, with E-mini futures for the S&P 500 down 0.3%.

BOJ UNDER PRESSURE

The dollar index bounced from a seven-month low of 101.77 made a day ago, holding at 102.30, while the Japanese yen stayed close to seven-month highs as investors held their breath for a potential policy shift at the Bank of Japan (BOJ).

The yen steadied around 128.51 on Tuesday after hitting a top of 127.22 per dollar on Monday, with traders braced for sharp moves when the Bank of Japan (BOJ) concludes a two-day meeting on Wednesday.

The BOJ is under pressure to change its interest rate policy as soon as Wednesday, after its attempt to buy itself breathing room backfired, emboldening bond investors to test its resolve.

Euro zone bond yields inched up from month lows hit late last week, but trading in bonds globally was cautious ahead of the result of the BOJ meeting.

Across the world, the R-word continues to loom large.

Two-thirds of private and public sector chief economists surveyed by the World Economic Forum in Davos expected a global recession this year, with some 18% considering it “extremely likely” – more than twice as many as in the previous survey conducted in September 2022.

As equities rallied this year, other riskier assets also gained. The No.1 cryptocurrency bitcoin has clocked a gain of about a quarter in January, leaping over 20% in the past week alone, putting in on course for its best month since October 2021. It was last trading flat at $21,208.

Spot gold was down 0.5% at $1909.23 per ounce.

Reporting by Tom Wilson in London and Kane Wu in Hong Kong; Editing by Gerry Doyle, Neil Fullick and Alex Richardson

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Business

Tesla slashes prices in U.S., Europe to drive demand

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  • Tesla cuts prices in U.S., Europe by up to 20%
  • Move follows price cuts across Asia last week
  • Some models now qualify for U.S. tax credits
  • Model 3 price in Germany in line with Volkswagen’s ID.3

Jan 13 (Reuters) – Tesla (TSLA.O) has slashed prices on its electric vehicles in the United States and Europe by as much as 20%, extending a strategy of aggressive discounting after missing Wall Street estimates for 2022 deliveries.

The move, which prompted a 3.8% fall in Tesla’s shares in Frankfurt, came after CEO Elon Musk warned that the prospect of recession and higher interest rates meant it could lower vehicle pricing to sustain volume growth at the expense of profit.

The lower pricing across Tesla’s major markets marks a reversal from the strategy the automaker had pursued through much of 2021 and 2022 when orders for new vehicles exceeded supply. Musk acknowledged last year that prices had become “embarrassingly high” and could hurt demand.

The U.S. price cuts, announced late Thursday in U.S. time on the Model 3 sedan and Model Y crossover SUV, ranged between 6% and 20% compared with prices before the discount, according to Reuters calculations.

That is before an up to $7,500 federal tax credit that took effect for many electric vehicle models at the start of January.

Following is a table of the price cuts by model in Germany and the United States:

Reuters Graphics

Tesla also cut prices for its Model X luxury crossover SUV and Model S sedan in the United States.

In Germany, it cut prices on the Model 3 and the Model Y – its global top-sellers – by between about 1% and almost 17% depending on the configuration. It also cut prices in Austria, Switzerland and France.

For a U.S. buyer of the long-range Model Y, the new Tesla price combined with the U.S. subsidy that took effect this month amounts to a discount of 31%. In addition, the Tesla move broadened the vehicles in its line-up eligible for the Biden administration tax credit.

Before the price cut, the five-seat version of the Model Y had been ineligible for that credit, a designation Musk had called “messed up”. After the price cut, the long-range version of the Model Y will qualify for the $7,500 federal credit.

“This should really boost 2023 (Tesla) volumes,” Gary Black, a Tesla investor who has remained bullish on the company and its prospects through the recent, sharp share price decline, said in a tweet. “It’s the right move.”

Still, some users on Tesla fan forums online complained the price cuts disadvantaged customers who had recently bought their vehicle, leaving them with a lower-valued item on the second-hand car market.

“I’m not very pleased with these huge price sways. Just reducing 10,000 euros like that – definitely makes you feel that you just paid far too much,” one user wrote on a ‘Tesla Drivers and Friends’ forum on Friday.

In China, where Tesla cut prices last week by 6-13.5%, owners protested at delivery centres across the country, pressing Tesla for compensation.

Before the price cut, Tesla inventory in the United States, as tracked by the models its website shows as immediately available, had been trending higher. Prices on used Tesla models had also been declining, increasing the pressure on it to adjust new-car sticker prices.

For 2021, the United States and China combined had accounted for about 75% of Tesla sales, although the automaker has been growing sales in Europe, where its Berlin factory has been ramping up production.

Reuters Graphics

NEW SALES LEADERSHIP

The shift is the first major move by Tesla since appointing its lead executive for China and Asia, Tom Zhu, to oversee U.S. output and sales.

Tesla cut prices in China and other Asian markets last week. Along with previous price cuts announced in October and recent incentives, the Chinese price for a Model 3 or Model Y was down 13% to 24% from September after the recent move, Reuters calculations showed.

Tesla has also cut prices in South Korea, Japan, Australia and Singapore.

Analysts had said the Chinese price cuts would boost demand and increase pressure on its rivals there, including BYD (002594.SZ), to follow suit in what could become a price war in the largest single market for electric vehicles.

That pressure could be building in Europe as well.

Tesla’s Model 3 was the best-selling electric vehicle in Germany last month, followed by the Model Y, beating Volkswagen’s (VOWG_p.DE) all-electric ID.4. Volkswagen recently raised the price of its entry-level ID.3, putting it at parity with the now-discounted Model 3.

Tesla missed Wall Street estimates for fourth quarter deliveries. Full year growth in deliveries was 40% – also short of Musk’s own forecast of 50%.

Tesla shares under pressure

Reporting by Zhang Yan in Shanghai, Hyunjoo Jin in Seoul, Victoria Waldersee in Berlin; Writing by Kevin Krolicki in Singapore; Editing by Lincoln Feast, Kenneth Maxwell, Mark Potter and Alexander Smith

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World

Police move on coal mine protesters barricaded in abandoned German village

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LUETZERATH, Germany, Jan 11 (Reuters) – Hundreds of police began clearing climate protesters out of an abandoned village on Wednesday in a showdown over the expansion of an opencast lignite mine that has highlighted tensions around Germany’s climate policy during an energy crisis.

The protesters formed human chains, made a makeshift barricade out of old containers and chanted “we are here, we are loud, because you are stealing our future” as police in helmets moved in. Some threw rocks, bottles and pyrotechnics. Police also reported protesters were lobbing petrol bombs.

The demonstrators, wearing masks, balaclavas or biosuits, have been protesting against the Garzweiler mine, run by energy firm RWE (RWEG.DE) in the village of Luetzerath in the brown-coal district of the western state of North Rhine-Westphalia.

Climate activist Greta Thunberg plans to join the demonstration on Saturday, a spokesperson for Luetzerathlebt environmentalist group told Reuters.

Economy Minister Robert Habeck of the Greens called for no further violence after police and protesters scuffled.

“Leave it at that – from both sides,” he told reporters.

Police say the standoff could take weeks to resolve.

As the officers moved in, some activists perched on the roofs or the windows of the abandoned buildings, chanting and shouting slogans.

Others hung suspended from wires and wooden frames, or were holed up in treehouses to make it harder for police to dislodge them after a court ruling allowed for the demolition of the village now otherwise empty of residents and owned by RWE.

Julia Riedel, who said she has been camping in the village for two-and-a-half years, said the demonstrators had taken up their positions “because the issue here is whether the climate will cross the tipping point or not.”

Police, who had water cannon trucks on standby, led away and carried some protesters from the site.

The project has underscored Germany’s dilemma over climate policy, which environmentalists say has taken a back seat during the energy crisis that has hit Europe after Russia’s invasion of Ukraine, forcing a return to dirtier fuels.

It is particularly sensitive for the Greens party, now back in power as part of Chancellor Olaf Scholz’s coalition government after 16 years in opposition. Many Greens oppose the mine’s expansion, but Habeck has been the face of the government’s decision.

[1/14] Police officers keep guard as activists stage a sit-in protest against the expansion of the Garzweiler open-cast lignite mine of Germany’s utility RWE, in Luetzerath, Germany, January 11, 2023 that has highlighted tensions over Germany’s climate policy during an energy crisis. REUTERS/Thilo Schmuelgen

“The empty settlement of Luetzerath, where no one lives any more, is the wrong symbol in my view,” Habeck said with reference to the demonstration.

HEAVY MACHINERY

Birte, a 51-year-old midwife who joined the protest on Sunday, was in tears as police led her away.

She said it was important for politically moderate citizens to attend the protest, to show “that these are not just young, crazy, violent people, but that there are people who care”.

Police have urged the protesters to leave the area and remain peaceful.

“It’s a big challenge for the police and we need a lot of special forces here to deal with the situation. We have aerial rescue specialists,” said police spokesperson Andreas Mueller.

“These are all factors that make it difficult to tell how long this will last. We expect it to continue for a least several weeks.”

A Reuters eyewitness saw police using heavy machinery to start dismantling high barricades.

RWE said earlier on Wednesday it would start to dismantle Luetzerath, and had begun building a fence around the area.

“RWE is appealing to the squatters to observe the rule of law and to end the illegal occupation of buildings, plants and sites belonging to RWE peacefully,” RWE said.

The fallout of Russia’s invasion of Ukraine has prompted Scholz’s government to change course on previous policies.

Those include firing up mothballed coal power plants and extending the lifespan of nuclear power stations after Russia cut gas deliveries to Europe in an energy standoff that sent prices soaring.

The government has, however, brought forward the date when all brown coal power plants will be shut down in North Rhine-Westphalia, to 2030 from 2038, acceding to a campaign promise from the Greens.

Writing by Paul Carrel and Matthias Williams; Editing by Tom Hogue, Christopher Cushing, Conor Humphries and Alison Williams

Our Standards: The Thomson Reuters Trust Principles.

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US

U.S. airports rumble back to life after FAA computer outage

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WASHINGTON, Jan 11 (Reuters) – U.S. flights were slowly beginning to resume departures and a ground stop was lifted after the Federal Aviation Administration (FAA) scrambled to fix a system outage overnight that had forced a halt to all U.S. departing flights.

The cause of the problem, which delayed thousands of flights in the United States, was unclear, but U.S. officials said they had so far found no evidence of a cyberattack.

“Normal air traffic operations are resuming gradually across the U.S. following an overnight outage to the Notice to Air Missions system that provides safety info to flight crews. The ground stop has been lifted. We continue to look into the cause of the initial problem” the FAA said in a Tweet.

More than 4,300 flights had been delayed and 700 canceled as officials said it will take hours to recover from the halt to flights.

The FAA had earlier ordered airlines to pause all domestic departures after its pilot alerting system crashed and the agency had to perform a hard reset around 2 a.m., officials said.

The FAA said shortly before 8:30 a.m. departures were resuming at Newark and Atlanta airports.

The FAA is expected to implement a ground delay program in order to address the backlog of flights halted for hours. Flights already in the air had been allowed to continue to their destinations during the ground stop.

U.S. President Joe Biden ordered the Transportation Department to investigate the outage and said the cause of the failure was unknown at this time. Asked if a cyber attack was behind the outage, Biden told reporters at the White House, “We don’t know.”

Transportation Secretary Pete Buttigieg pledged “an after-action process to determine root causes and recommend next steps.”

The FAA said it was working to restore the Notice to Air Missions system that alerts pilots to hazards and changes to airport facilities and procedures that had stopped processing updated information.

A total of 4,314 U.S. flights were delayed as of 9:04 a.m. ET, flight tracking website FlightAware showed. Another 737 were canceled.

MODERNIZATION NEEDED

United said it has resumed operations. The Chicago-based carrier, however, warned that customers might continue to see some delays and cancellations.

Shares of U.S. carriers fell in Wednesday’s premarket trading. Southwest Airlines (LUV.N) was down 2.4%, while Delta Air Lines Inc (DAL.N), United Airlines (UAL.O) and American Airlines (AAL.O) were down about 1%.

“America’s transportation network desperately needs significant upgrades … We call on federal policymakers to modernize our vital air travel infrastructure.” said Geoff Freeman, President and CEO of the U.S. Travel Association, a group representing U.S. airlines, hotels, car rental companies, and theme parks.

FAA’s system outage comes weeks after an operational meltdown at Southwest at the end of last year left thousands of passengers stranded.

A severe winter storm right before Christmas coupled with the Texas-based carrier’s dated technology led to over 16,000 flight cancellations last month.

The DOT, FAA’s parent agency, heavily criticized Southwest’s failures and pressured the airline to compensate passengers for missed flights and other related costs. There is no legal requirement that the FAA must compensate passengers for flight delays caused by agency computer issues.

ESSENTIAL INFORMATION

A NOTAM is a notice containing information essential to personnel concerned with flight operations, but not known far enough in advance to be publicized by other means.

Information can go up to 200 pages for long-haul international flights and may include items such as runway closures, bird hazard warnings and construction obstacles.

United Airlines (UAL.O) said it had temporarily delayed all domestic flights and would issue an update when it learned more from the FAA.

Germany’s Lufthansa and Air France both said they were continuing to operate flights to and from the United States, while the French airline said it was monitoring the situation.

The operator of Paris international airports – Paris Charles de Gaulle airport and Orly airport – said it expects delays to flights.

Austin-Bergstrom International Airport said on Twitter that ground stops across the country were causing delays. A ground stop is an air traffic control measure that slows or halts aircraft at a given airport.

In an earlier advisory on its website, the FAA said its NOTAM system had “failed”, although NOTAMs issued before the outage were still viewable. Earlier this month, a problem with a different airline computer control system delayed dozens of flights in Florida.

A total of 21,464 flights are scheduled to depart airports in the United States on Wednesday with a carrying capacity of nearly 2.9 million passengers, data from Cirium shows.

American Airlines has the most departures from U.S. airports with 4,819 flights scheduled, followed by Delta and Southwest, Cirium data showed.

Reporting by Doina Chiacu and David Shepardson in Washington, Abhijith Ganapavaram in Bengaluru, Jamie Freed in Sydney and Rajesh Kumar Singh in Chicago; Additional reporting by Nathan Gomes and Steve Holland in Washington
Writing by Shailesh Kuber and Alexander Smith Editing by Edmund Blair and Nick Zieminski

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Business

Global shares retreat after Fed inflation nudge

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LONDON, Jan 10 (Reuters) – Global shares fell for the first time in three days on Tuesday, after comments from two Federal Reserve officials injected a note of caution over the U.S. rate outlook, knocking equities, commodities and other risk assets.

The MSCI All-World index (.MIWD00000PUS) fell 0.2%, but remained in sight of Monday’s three-week high, while the dollar – a gauge of investor risk appetite – edged up against a basket of major currencies.

In the past six weeks, China has dismantled its zero-COVID policy even as cases have surged around the country, which has given markets a bumpy ride as investors weighed up the economic benefits of reopening against the impact to activity from the wave of infections.

Adding to that has been a sense of optimism that inflation has peaked, especially in the United States, and, as such, the Fed will not have to raise rates as much as many had feared.

However, with consumer price pressures still well above the central bank’s target of 2%, two Fed officials on Monday issued a stark reminder that interest rates will have to keep rising, no matter what investors have priced in.

“The market is trying to get one step ahead of the Fed, but it’s not actually listening to what it’s saying. And the Fed is being quite clear with its message – that rates are going to push higher and they’re going to stay higher for longer,” CityIndex strategist Fiona Cincotta said.

“If we look at expectations of inflation later this week – the big focus – core inflation is still expected to remain high. It doesn’t matter which way you look at it. It’s still higher than the target the Fed is aiming for,” she said.

U.S. consumer price data, due on Thursday, is expected to show headline inflation slowed to 6.5% in December from 7.1% in November.

The data could be key to setting expectations for what happens with rates at the Fed’s next policy meeting and beyond.

San Francisco Fed President Mary Daly told the Wall Street Journal she would pay close attention to Thursday’s data and both 25- and 50-basis point hikes were options for her. Atlanta Fed President Raphael Bostic said his “base case” was for no rate cuts this year or next.

“The main theme overnight was cautiousness in the equity space as stocks pared gains after hawkish comments from two Fed officials. Raphael Bostic and Mary Daly said the Fed would likely hike (interest) rates to above 5% and hold them there for some time,” Commerzbank said in a note.

Fed Chair Jerome Powell addresses a conference on central bank independence later on Tuesday and investors will likely scour his remarks for any signal on monetary policy.

“Given that the recent rebound in equity markets and fall in bond yields and the US dollar is loosening financial conditions, today might offer an opportunity for Fed chairman Jay Powell to reset the narrative slightly,” CMC Markets chief strategist Michael Hewson said.

FRAGILE CHINA

In Europe, the STOXX 600 (.STOXX), which on Monday hit its highest in eight months, fell 0.7%, led by a decline in industrials. London’s FTSE 100 (.FTSE) lost 0.2%, while Frankfurt’s DAX (.GDAXI) fell 0.5%.

U.S. stock index futures , fell 0.3%, indicating Wall Street could open a touch lower after a volatile session the previous day.

The dollar carved out gains against the Australian dollar , which is highly sensitive to the Chinese economy and has gained 3.5% in the last three weeks alone, based on the optimism around reopening.

The Aussie was last down 0.5% at $0.6877, while the offshore yuan lost 0.1% against the dollar to trade around 6.7913. It reached its strongest level since mid-August the previous day.

The dollar index rose 0.2%. The euro was flat, while the pound fell 0.3%. The yen fell 0.1% against the dollar to 132.06, even after data showed a faster pick-up in Tokyo inflation that could prompt the Bank of Japan to tighten monetary policy more quickly.

Strategists at BlackRock, the world’s largest asset manager, on Tuesday said they expected the Chinese economy to grow by 6% this year, which should cushion the global slowdown as recession hits developed-market economies. But any bounce may be fleeting.

“We don’t expect the level of economic activity in China to return to its pre-COVID trend, even as domestic activity restarts. We see growth falling back once the restart runs its course,” Wei Li, who is global chief investment strategist for the BlackRock Investment Institute, wrote in a note.

Copper eased back from six-month highs , as bullishness from China’s emergence from COVID-19 was offset by concern about the risks of a broader global downturn.

London Metal Exchange copper futures fell 0.5% to $8,813 a tonne, having hit their highest in over six months on Monday, while zinc fell 0.7% and lead dropped 2%.

Oil pared earlier losses, but concern persisted that China returning to more normal activity may not translate into a boom in energy demand.

“The social vitality of major Chinese cities is rapidly recovering, and the restart of China’s demand is worth looking forward to. However, considering that the recovery of consumption is still at the expected stage, the oil price will most likely remain low and range-bound,” analysts from Haitong Futures said.

Brent crude futures were last up 0.4% to $80.00 a barrel. The oil price is about 2.3% below where it was a year ago and 45% below the highs around $139 after Russia invaded Ukraine last February.

Additional reporting by Selena Li in Hong Kong; Editing by Muralikumar Anantharaman, Angus MacSwan and Chizu Nomiyama

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