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US

Crucial Russian sovereign bond payment received by JPMorgan, processed -source

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File Photo: A view of the exterior of the JP Morgan Chase & Co. corporate headquarters in New York City May 20, 2015. REUTERS/Mike Segar

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NEW YORK, March 17 (Reuters) – Coupon payments on Russian sovereign bonds due this week were received by correspondent bank JPMorgan (JPM.N), processed and the bank then made an onwards credit to the paying agent Citi (C.N), a source familiar with the situation said on Thursday, an indicator that the country may have averted default.

The payment received was a U.S. dollar payment, the source said. After being credited to the paying agent, it would be checked and distributed on to various bondholders, the source said.

Russia said on Thursday it had made debt payments that were due this week. Russia was due to pay $117 million in coupon payments on Wednesday on two dollar-denominated sovereign bonds and some creditors had received payments, market sources separately told Reuters, also indicating it avoided what would have been its first external bond default in a century. read more

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The payments were widely seen as the first test of whether Moscow would meet its obligations after Western sanctions hobbled its financial dealings.

The source said that JPMorgan’s obligation as a foreign correspondent bank was to process payments, but that given the circumstances, also to check with authorities before doing so.

Sanctions imposed over Moscow’s invasion of Ukraine have cut Russia off from the global financial system and blocked the bulk of its gold and foreign exchange reserves, while Moscow has in turn retaliated – all of which complicate payments.

The bank checked with authorities before processing, the source said. Not to process the payment would have harmed bondholders, the source said.

Under the sanctions and restrictions announced last month, in response to Russia’s invasion of Ukraine, U.S. banks were prohibited from correspondent banking – allowing banks to make payments between one another and move money around the globe – with Russia’s largest lender, Sberbank, within 30 days. Washington and its partners also started barring some Russian banks from the SWIFT international payment system – a step that will stop lenders from conducting most of their financial transactions worldwide. read more

A March 2020 report by the Bank for International Settlements showed that correspondent banks have been “paring back their cross-border banking relations for the past decade.” The number of correspondent banks fell by 20% between 2011 and 2018, even as the value of payments increased, the report said.

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Reporting by Megan Davies;
Editing by Chizu Nomiyama and Andrea Ricci

Our Standards: The Thomson Reuters Trust Principles.

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Business

EXCLUSIVE Moscow sets out strict new controls on foreigners trading Russian assets

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Steam rises from chimneys of a heating power plan over the skyline of central Moscow, Russia November 23, 2020. REUTERS/Maxim Shemetov/File Photo

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  • Russia temporarily stopped foreigners selling assets
  • Foreigners now need to provide details before trading
  • Applications for permits must be made in Russian language

LONDON/NEW YORK, March 17 (Reuters) – Russia laid down strict new rules for foreigners seeking permits to buy and sell Russian assets ranging from securities to real estate, a client memo by Citigroup (C.N) showed, amid an exodus of international firms in response to Western sanctions.

Russia temporarily stopped foreigners trading Russian assets this month, saying it wanted to ensure decisions to exit were considered and not driven by political pressure, following Moscow’s invasion of Ukraine. read more

It has now revealed the details of an application process that must be followed before the Finance Ministry will decide if assets can be traded, including disclosure of any beneficiaries and strategic investments such as defence.

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Funds with tens of billions of dollars in exposure to Russia have been awaiting details on the restrictions they will face as they seek to offload assets, against a backdrop of increasing economic isolation for President Vladimir Putin.

“I don’t think anyone in Russia dares tell Putin the financial problems that lie ahead,” said Alastair Winter, a global investment strategist at Argyll Europe, predicting “mass write-offs” for many foreigners exposed to the country.

The invasion, which Moscow calls a “special military operation” to demilitarise Ukraine, has triggered an exodus of international firms and has largely cut off Russia’s economy from the rest of the world.

The Russian authorities published Decree 81 this month that stipulates that any transaction between Russians and foreign counterparties requires permission from Russia’s Government Commission for Control of Foreign Investment. read more

Effectively this means foreign investors, who had acquired Russian stocks and bonds without restrictions, were left stuck with those holdings while the economy lurches from an enticing oil-rich investment destination to a financial pariah.

“Russian authorities have announced the order for obtaining permits to carry out operations determined by Decree 81. An authorised body empowered to take decisions on the issuance of permits has been established,” the Citigroup memo says.

The process involves an application and related documents to be submitted to the Russian finance ministry, in the Russian language, containing “information on the purpose, subject, content and essential conditions of the transaction.”

Applicants must also disclose full information on beneficiaries and beneficial owners, the memo says, as well as details on any investments in companies in a “strategic sector” such as aviation, space, production of natural resources or work with weapons or military equipment.

“This is just a mechanism to control which entities can transact foreign currencies and it won’t be companies from hostile countries that are exiting the country,” said one banking source about the rules.

Citigroup declined to comment beyond confirming the authenticity of the memo.

A second bank source said they had advised clients against trading under such terms, flagging fears about the sharing of sensitive data and the lack of transparency on application approvals or rejections.

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Additional reporting by Megan Davies; editing by John O’Donnell, Edmund Blair, Elaine Hardcastle

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Business

Oil surges 7% amid warnings of Russian supply shortages

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Industrial facilities of PCK Raffinerie oil refinery are pictured in Schwedt/Oder, Germany, March 7, 2022. The company receives crude oil from Russia via the ‘Friendship’ pipeline. REUTERS/Hannibal Hanschke

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LONDON, March 17 – Oil prices climbed over 7% on Thursday after the International Energy Agency (IEA) said three million barrels per day (bpd) of Russian oil and products could be shut in from next month and despite the U.S. Federal Reserve’s decision to raise interest rates.

The supply loss would be far greater than an expected drop in demand of one million bpd triggered by higher fuel prices, the IEA said in a report on Wednesday. read more

Benchmark Brent crude futures gained $7.47, or 7.6%, to $105.49 a barrel by 1427 GMT. U.S. West Texas Intermediate (WTI) crude was up $6.85, or 7.2%, to $101.89 a barrel.

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Morgan Stanley raised its Brent price forecast by $20 for the third quarter to $120 a barrel, predicting a fall in Russian production of about 1 million bpd from April.

The fall will more than offset a downward global demand revision of about 600,000 bpd, the bank said.

“Both supply and demand are hurting but supply is currently hurting more and a tight oil market for the coming two quarters is to be expected,” bank SEB said.

Prices had sagged in the previous session after government data showed U.S. crude inventories climbed 4.3 million barrels last week, versus analysts’ expectations of a fall of 1.4 million barrels. read more

The oil market largely shrugged off a decision by the U.S. Federal Reserve on Wednesday to raise interest rates by one-quarter of a percentage point, as anticipated.

Sentiment was somewhat boosted after China pledged policies to boost financial markets and economic growth while a decline in new COVID-19 cases in China spurred hopes lockdowns will be lifted to allow factories to resume production.

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Additional reporting by Muyu Xu in Beijing; editing by Jason Neely and Marguerita Choy

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Business

Stocks steady after Fed hike, BoE’s turn next

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A man wearing a protective mask, amid the coronavirus disease (COVID-19) outbreak, walks past an electronic board displaying various countries’ stock indexes including Russian Trading System (RTS) Index which is empty, outside a brokerage in Tokyo, Japan, March 10, 2022. REUTERS/Kim Kyung-Hoon

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LONDON/TOKYO, March 17 (Reuters) – Europe’s stock markets consolidated strong gains made in Asia on Thursday, after China signalled more support for its spluttering economy and the Federal Reserve had pressed ahead with the first U.S. interest rate rise in more than three years.

Traders remained gripped by the devastating war in Ukraine, but with hopes of possible a peace deal faint but alive they were also watching to see if the Bank of England raises UK interest rates again later too. read more

The EuroSTOXX 600 (.STOXX) was 0.1% lower after an initial rise. Earlier 3.5% leaps by both the Nikkei in Tokyo (.N225) and emerging market stocks (.MSCIEF) meant MSCI’s main world index (.MIWD00000PUS) was still up and more than 6% higher in the last three days, albeit after a torrid start to the year.

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Sanctions-ravaged Russia’s ongoing shelling of Ukraine meant commodity markets continued to gyrate wildly with oil prices back over the symbolic $100 level again. The Kremlin lashed out at U.S. President Joe Biden labelling Russian President Vladimir Putin a war criminal, but said it was putting “colossal energy” into peace talks. read more

Metals markets faced more drama after nickel trading had to be halted again on London Metal Exchange again on Wednesday.

“The reaction both this morning and overnight validates that the markets think the Fed is in line or ahead of the curve and doing the right thing,” by hiking interest rates, Chief Investment Officer of Close Brothers Asset Management, Robert Alster, said.

He added it would also be the “right thing” for the Bank of England to raise its rates later for a third meeting running, back to its pre-pandemic level of 0.75%.

The BoE last month predicted inflation will peak at around 7.25% in April – almost four times its 2% target – but that forecast has been overtaken by seismic shifts in European energy markets following Russia’s invasion of Ukraine.

“The crunch point is that we are all expecting inflation to start coming down after Easter,” Alster added. “But if that doesn’t happen then we all probably need to have a reset.”

The stock market gains had followed a 2.2% surge on Wall Street’s S&P 500 (.SPX) overnight.

Bond markets meanwhile were beginning to settle after Treasury yields had spiked to nearly three-year highs following the Fed’s signal that it also planned to hike rate at every meeting for the remainder of this year to aggressively curb inflation. read more

Ten-year Treasuries were last at 2.12% while Germany’s benchmark 10-year Bund yield slipped back 2 basis points to 0.382% having started the day edging higher, extending the previous session’s gains to hit 0.408%, its highest since November 2018 DE10YT=RR.

The more upbeat sentiment in recent days means there are “fewer excuses for central banks to delay policy tightening,” ING rates strategists said in a note to clients.

UK inflation surging

ASIA RISES

The dollar, though, remained on the back foot in the FX markets. The dollar index , which tracks it against six other major currencies, was slightly weaker at 98.476 after also dropping 0.5% on Wednesday.

Where the dollar showed some strength was against Japan’s currency, standing at 118.82 yen , not too far from the more than six year high of 119.13 reached overnight amid a widening monetary policy gap.

The Bank of Japan is widely seen keeping its vast stimulus programme in place on Friday as the economy there continues to sputter. read more

Meanwhile, concerns about a sharp slowdown in China, which is battling a spreading COVID-19 outbreak with ultra-restrictive measures, were assuaged after its Vice Premier Liu He on Wednesday has signalled more stimulus was on the way.

Hong Kong’s Hang Seng index had surged more than 5% overnight, adding to a 9% leap on Wednesday. Beaten down sectors including tech and real estate soared, with Country Garden Services Holdings (6098.HK) and Country Garden Holdings (2007.HK) climbing about 28% and 26%, respectively.

Online giant Alibaba (9988.HK) leapt 9%, China’s blue chips (.CSI300) gained 2.3%, extending the previous day’s 4.3% rebound while Japan also saw outsized gains, with the Nikkei (.N225) vaulting 3.5% and touching a two-week peak.

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Reporting by Marc Jones; Editing by Toby Chopra

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World

Nazanin, Ashoori arrive in Britain after Iran prison ordeal

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BRIZE NORTON, England, March 16 (Reuters) – British-Iranian aid worker Nazanin Zaghari-Ratcliffe and dual national Anoosheh Ashoori arrived in Britain from Iran on Thursday, ending an ordeal during which they became a bargaining chip in Iran’s talks with the West over its nuclear programme.

They arrived at the British military airbase of Brize Norton in Oxfordshire, shortly after 1 a.m. local time, after flying back via a brief stopover in Oman. They walked off the plane together and smiled and waved as they entered an airport building.

“It has been a really difficult 48 hours,” British Foreign Secretary Liz Truss said shortly after Zaghari-Ratcliffe and Ashoori arrived at the base. “The expectation was that they would be released but we weren’t sure right until the last minute so it’s been very emotional but also a really happy moment for the families.”

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Prime Minister Boris Johnson celebrated the pair’s release on Twitter earlier in the day.

“I am very pleased to confirm that the unfair detention of Nazanin Zaghari-Ratcliffe and Anoosheh Ashoori in Iran has ended today, and they will now return to the UK,” Johnson said in a tweet.

Zaghari-Ratcliffe’s husband Richard said the long ordeal appeared to finally be over. “It’s just a relief, the idea that we can go back to being a normal family, that we don’t have to keep fighting, that this long journey is almost over,” he told Reuters outside his London home before his wife landed.

A statement from Ashoori’s family thanked everyone who had worked towards his release. “1,672 days ago our family’s foundations were rocked when our father and husband was unjustly detained and taken away from us.

“Now, we can look forward to rebuilding those same foundations with our cornerstone back in place.”

Antonio Zappulla, CEO of Zaghari-Ratcliffe’s employer, the Thomson Reuters Foundation, said her release was “a ray of light and hope” at a time when the world was in turmoil. The foundation is a charity that operates independently of Thomson Reuters and its news subsidiary Reuters.

In February, as months of talks on reviving a 2015 nuclear deal inched closer to an agreement, Iran, which holds a dozen Western dual nationals, said it was ready for a prisoner swap in return for the unblocking of frozen assets and release of Iranians held in Western jails.

The nuclear talks were close to an agreement 11 days ago until last-minute Russian demands for sweeping guarantees that would have hollowed out sanctions imposed following its invasion of Ukraine threw the negotiations off track.

Russia now appears to have narrowed its demands to cover only work linked to the nuclear deal, leaving a small number of issues to be resolved between Washington and Tehran, diplomats say.

British-Iranian aid worker Nazanin Zaghari-Ratcliffe and dual national Anoosheh Ashoori, who were freed from Iran, gesture after landing at RAF Brize Norton military airbase, in Brize Norton, Britain, March 17, 2022. Leon Neal/Pool via REUTERS

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Separately, Britain said detained Iranian-American environmentalist Morad Tahbaz, who also holds British citizenship, had been released on furlough on Wednesday.

TANK DEBT

Iran’s semi-official Fars news agency said Zaghari-Ratcliffe and Ashoori were freed after Britain repaid a historic debt.

Iran’s clerical rulers say Britain owed Iran 400 million pounds ($520 mln) that Iran’s former monarch, the Shah, paid up front for 1,750 Chieftain tanks and other vehicles, almost none of which were delivered after the Islamic Revolution of 1979 toppled the U.S.-backed leader.

Truss said Britain had been looking at ways to pay the debt.

“We have the deepest admiration for the resolve, courage and determination Nazanin, Anoosheh and Morad, and their families, have shown. They have faced hardship that no family should ever experience and this is a moment of great relief,” she said in a statement.

“In parallel, we have also settled the IMS debt, as we said we would,” she added, referring to the debt for military equipment. She said the debt had been settled in full in compliance with international sanctions on Iran and the funds would be ring-fenced for buying “humanitarian goods.”

Iran’s top diplomat Hossein Amirabdollahian on Wednesday said Britain had paid its debt a few days ago, denying any links between the payment and the release of the prisoners.

ILL-FATED VISIT

Zaghari-Ratcliffe’s protracted difficulties began with her arrest by Revolutionary Guards at Tehran airport on April 3, 2016, while trying to return to Britain with her then 22-month-old daughter Gabriella from an Iranian new year’s visit with her parents.

She was later convicted by an Iranian court of plotting to overthrow the clerical establishment. Her family and the foundation denied the charge.

Ashoori was sentenced to 10 years in jail in 2019 for spying for Israel’s Mossad and two years for “acquiring illegitimate wealth”, according to Iran’s judiciary.

The Thomson Reuters Foundation said that Zaghari-Ratcliffe had travelled to Iran in a personal capacity and had not been doing work in Iran.

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Reporting by Parisa Hafezi; Additional reporting by Dan Whitcomb, Eric Beech and UK bureau; Writing by Michael Georgy and Samia Nakhoul; Editing by Jon Boyle and Gerry Doyle

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Business

Oil dips on Russia-Ukraine talks, U.S. inventory data

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Oil storage containers are seen, amid the coronavirus disease (COVID-19) pandemic, in Los Angeles, California, U.S., April 7, 2021. REUTERS/Lucy Nicholson/Files

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  • Russia says some deals with Ukraine close to being agreed
  • China’s new locally transmitted COVID-19 cases nearly halve
  • IEA lowers 2022 oil demand growth forecast
  • EIA figures show bigger-than-expected bump in inventories

March 16 (Reuters) – Oil fell on Wednesday in another volatile session as traders reacted to hoped-for progress in Russia-Ukraine peace talks and a surprising increase in U.S. inventories.

Around noon in New York, global benchmark Brent was slightly lower and U.S. crude was slightly higher.

The oil market has been on a roller-coaster for more than two weeks, trading in wide ranges of several dollars a day.

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On Wednesday, global benchmark Brent crude had swung between $97.55 and $103.70 and was down $1.41 to $98.50 a barrel as of 1:21 p.m. EST (1721 GMT). U.S. West Texas Intermediate (WTI) crude lost 54 cents to $95.87 a barrel.

Last week’s frenzied rally pushed Brent briefly past $139 a barrel on worries about extended disruption to Russian supply. Now, a cascade of selling has pushed prices much lower, but some analysts have warned that this reflects too much optimism that the war will end soon.

“We’re living headline to headline here,” said Robert Yawger, director of energy futures at Mizuho.

The United States and other nations have slapped heavy sanctions on Russia since it invaded Ukraine more than two weeks ago. This disrupted Russia’s oil trade of more than 4 to 5 million barrels of crude daily.

Brent staged a 28% rally in six days and then a 24% drop over the next six sessions counting Wednesday. A number of factors drove the turnaround, including modest hopes of a Russia-Ukraine peace agreement and faint signals of progress between the United States and Iran to resurrect a 2015 deal that would allow the Islamic Republic to export oil if it agrees to limit its nuclear ambitions.

In addition, Chinese demand is expected to slow due to a surge in coronavirus cases there, although figures showed fewer new cases and Chinese stimulus hopes boosted equities.

Three million barrels per day of Russian oil and products may not find their way to market beginning in April, the International Energy Agency (IEA) said, as sanctions bite and buyers hold off.

“These losses could deepen should bans or public censure accelerate,” the Paris-based IEA said in a report that also showed a cut in its oil demand forecast for 2022.

U.S. inventories rose by 4.3 million barrels, against expectations for a loss, while stocks at the Cushing, Oklahoma, hub rose as well, alleviating a bit of concern about the low level of inventories there.

Crude settled below $100 on Tuesday, the first time since late February. Prices hit a 14-year high on March 7.

Later on Wednesday, the Federal Reserve is expected to raise U.S. interest rates for the first time in three years and give guidance on future tightening. Investors expect the central bank to raise rates by at least 25 basis points.

Signs of progress in Russia-Ukraine peace talks added to the bearish tone. Ukraine’s president said the positions of Ukraine and Russia were sounding more realistic, but time was needed. read more Russia’s foreign minister said some deals with Ukraine were close to being agreed. read more

“Fears of a supply disruption have been tempered by tentative signs of progress in ceasefire talks between Russia and Ukraine,” said Stephen Brennock of oil broker PVM.

“That said, an end to hostilities still seems like a long way off.”

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Additional reporting by Emily Chow; Editing by Barbara Lewis, Louise Heavens, David Gregorio and Tim Ahmann

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World

EXCLUSIVE State TV protester tells Russians: open your eyes to Ukraine war propaganda

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Marina Ovsyannikova, a Channel One employee who staged an on-air protest as she held up a anti-war sign behind a studio presenter, speaks to the media as the leaves the court building in Moscow, Russia March 15, 2022 in this still image taken from a video. REUTERS TV via REUTERS

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LONDON, March 16 (Reuters) – A Russian woman who burst into a state TV studio to denounce the Ukraine war during a live news bulletin told Reuters on Wednesday she was worried for her safety and hoped her protest would open Russians’ eyes to propaganda.

In her first television interview since her on-air protest on Monday, Marina Ovsyannikova said the harrowing images from Ukraine had jolted her own childhood memories of growing up in Chechnya, the southern region torn apart by war after the breakup of the Soviet Union.

“I absolutely do not feel like a hero…You know, I really want to feel like this sacrifice was not in vain, and that people will open their eyes,” the editor at Channel One told Reuters from Russia.

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“I believe in what I did but I now understand the scale of the problems that I’ll have to deal with, and, of course, I’m extremely concerned for my safety,” Ovsyannikova said.

Thousands of Russians have been detained for taking to the streets to protest the war but Ovsyannikova went further, holding up an anti-propaganda sign behind a studio presenter reading the news at prime time and shouting anti-war slogans.

State TV is a vital platform for the Kremlin, which portrays the invasion as a “special military operation” essential to prevent what it says is genocide against Russian-speakers.

Ukraine and the West dismiss that justification as a false pretext for an invasion of a sovereign country.

“The worst thing is when Ukrainians ring Russians and Russians ring Ukrainians, there’s always a conflict because the media and propaganda have divided us and put us on opposing sides of the barricades,” Ovsyannikova said.

The 43-year-old, whose father was Ukrainian, said she had no plans to leave Russia.

She told Reuters she was held in a police station and questioned overnight and had no access to a lawyer until the following afternoon when she was taken to court and fined 30,000 roubles ($280).

The Kremlin denounced her act of protest as “hooliganism” and commended Channel One for its news coverage. read more

Reuters submitted a written request on Wednesday to ask the interior ministry for further comment on her case and whether legal proceedings had been closed.

Her case stirred fears among her sympathisers that she could be prosecuted under new legislation criminalising actions that discredit the Russian army with a jail term of up to 15 years.

Ovsyannikova, mother to children aged 11 and 17, said she hoped she would not face criminal charges.

“If I end up having to serve time in jail for what I believe in then I hope it’s a minimal sentence,” she said.

MEMORIES OF CHECHNYA

Ovsyannikova said she had initially supported President Vladimir Putin, but had grown disillusioned with politics and that the war in Ukraine had first reduced her to a state of shock and then tipped her over the edge.

“The war in Ukraine was like a trigger for me. Very vivid images from my childhood (in Chechnya) came flooding back. I understood… I could feel what those unfortunate people (in Ukraine) are going through. It’s really beyond the pale,” she said.

As a child, she lived in Chechnya’s Grozny and remembers gathering up her things and having to leave suddenly in 1991 as the southern Russian region where the Russian army later fought two wars to put down a separatist and Islamist movement.

“There was shelling, I was 12 years old, we gathered up our things and left,” she said.

She first considered taking to a square near the Kremlin to protest, but concluded that would have little actual effect.

She said she wanted not only to protest against the war but also to sent a message to Russians directly:

“Don’t be such zombies; don’t listen to this propaganda; learn how to analyse information; learn how to find other sources of information – not just Russian state television.”

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Reporting by Reuters; editing by Guy Faulconbridge, Mark Trevelyan and Angus MacSwan

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World

NATO begins planning to reset military posture on eastern flank

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A member of the military holds a flag as they wait for the arrival of Canadian Prime Minister Justin Trudeau along with NATO Secretary-General Jens Stoltenberg in Adazi, Latvia, March 8, 2022. REUTERS/Ints Kalnins/File Photo

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BRUSSELS, March 16 (Reuters) – NATO is set to tell its military commanders on Wednesday to draw up plans for new ways to deter Russia following Moscow’s invasion of Ukraine, including more troops and missile defences in eastern Europe, officials and diplomats said.

While at least 10 of NATO’s biggest allies, including the United States, Britain and France, have deployed more troops, ships and warplanes to its eastern flank, and put more on stand-by, the alliance must still consider how to face up to a new security situation in Europe over the medium term.

Defence ministers from the alliance will order the military advice at NATO headquarters on Wednesday, just over a week before allied leaders, including U.S. President Joe Biden, gather in Brussels on March 24. read more

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“We need to reset our military posture for this new reality,” NATO Secretary General Jens Stoltenberg said on Tuesday. “Ministers will start an important discussion on concrete measures to reinforce our security for the longer term, in all domains.”

Ministers will also hear from their Ukrainian counterpart Oleksii Reznikov, who is expected to plead for more weapons from individual NATO countries, as Russian attacks on Ukraine’s cities continue and the Russian military seeks control of Kyiv.

“We have to continue to show in action our support to Ukraine,” British Defence Secretary Ben Wallace said as he arrived at the NATO meeting.

Ukraine is not a member of NATO. Although it has repeatedly said it wants to join to benefit from its protection, Kyiv said on Tuesday it understood it does not have an open door to NATO membership and was seeking other types of security guarantees.

Russian missiles hit a Ukrainian base near the border with NATO member Poland on March 13, bringing the invasion right up to NATO’s doorstep.

Those missiles were from Russia, the United States has said, underscoring Moscow’s ability to hit NATO’s eastern allies. The United States has also warned of undefined consequences for Moscow if Russia were to launch a chemical attack in Ukraine.

NATO, founded in 1949 to contain a military threat from the Soviet Union, is not treaty-bound to defend Ukraine. But it must defend its 30 allies.

However, diplomats say NATO wants to avoid directly stating their plans, or what would trigger their “Article 5” collective defence pledge, saying “strategic ambiguity” is also a defensive instrument against any Russian aggression.

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Reporting by Robin Emmott and Ingrid Melander; editing by Grant McCool and Raju Gopalakrishnan

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Business

China share surge boosts Asian equity gauges ahead of Fed

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A broker reacts while trading at his computer terminal at a stock brokerage firm in Mumbai, India, February 26, 2016. REUTERS/Shailesh Andrade

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  • MSCI Asia ex-Japan up more than 3%, Nikkei +1.7%
  • China Vice Premier comments trigger jump in Chinese shares
  • U.S. Treasury yields down from June 2019 highs

SHANGHAI, March 16 (Reuters) – An afternoon surge in Chinese equities lifted a broad gauge of Asian shares on Wednesday on rising hopes Beijing will roll out more economic stimulus, while investors continued to watch Ukraine-Russia peace talks and the U.S. Federal Reserve.

The Fed is expected to raise rates for the first time in three years later on Wednesday (1800 GMT) and give guidance on future tightening. read more

European bourses were poised to open stronger. Pan-region Euro Stoxx 50 futures and German DAX futures were up about 0.9% in early deals, and FTSE futures were 0.6% higher.

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U.S. stock futures also pointed higher, with S&P 500 e-minis , up 0.2%.

The rise in Asian shares came a day after mainland China and Hong Kong equity indexes had tumbled in reaction to spiking coronavirus infections in China and fading expectations for a rate cut by the People’s Bank of China.

Chinese market volatility continued on Wednesday, with a strong early rebound in China’s CSI300 index (.CSI300) evaporating by late morning. But it charged higher after Vice Premier Liu He indicated China plans to take measures to boost the economy and would also announce policies favourable to capital markets.

The CSI300 was last up more than 3.5%. Hong Kong’s Hang Seng index (.HSI) also extended gains in the afternoon, surging more than 8% at one point, leading a more than 3% rise in MSCI’s broadest index of Asia-Pacific shares outside Japan. (.MIAPJ0000PUS)

Elsewhere, Australian shares (.AXJO) and Seoul’s Kospi (.KS11) were up about 1.1%, while Japan’s Nikkei stock index (.N225) rose 1.6%.

Liu’s comments helped to ease worries that encouraging economic data for January and February were leading to complacency among policymakers in Beijing. read more

“People are concerned that (Chinese) policymakers would believe that the economy is doing much better and growth is rebounding and there’s no need for further policy easing measures,” said Ting Lu, chief China economist at Nomura.

China has seen increasing positive changes in its economic performance backed up by surprisingly good economic data, but the impact of the latest COVID-19 resurgence need to be watched, a statistics bureau spokesman said on Tuesday. read more

On Wednesday, Chinese health authorities reported a slight drop in new cases compared to a day earlier, although major Chinese cities continue to grapple with controlling the spread of the virus. read more

The gains in Asia followed a relief rally overnight on Wall Street driven by hopes of a resolution in Ukraine. The S&P 500 (.SPX) gained 2.14%, the Nasdaq Composite (.IXIC) jumped 2.92% and the Dow Jones Industrial Average (.DJI) rose 1.82%.

Ukrainian President Volodymyr Zelenskiy said on Wednesday peace talks were sounding more realistic but more time was needed, as Russian air strikes killed five people in the capital Kyiv and the refugee tally from Moscow’s invasion reached 3 million.

EYES ON FED

Analysts at ING said in a note that market moves in Asia would be “cautious” ahead of the Fed meeting later in the global day.

Investors are expecting the U.S. central bank to raise interest rates by at least 25 basis points amid surging prices. Traders will also be closely watching the Fed for details on how it plans to end its bond-buying program.

U.S. bond yields fell in Asian trade, with the benchmark 10-year note yield at 2.1545%, after earlier rising to 2.169%, the highest since June 2019.

The two-year yield was last at 1.8433% from a close of 1.857%.

The U.S. dollar was down slightly against a basket of peers, trading at 98.861, and lower against the yen at 118.22 albeit still near a five-year high. The euro edged up 0.16% to $1.0969.

Oil prices, which had traded lower early in the session, turned higher, with Russia’s invasion of Ukraine continuing to stoke volatility.

Global benchmark Brent crude rose 0.93% to $100.84 per barrel, and U.S. crude added 0.44% to $96.86.

Highlighting the impact of global disruptions and soaring oil costs, Japan reported a wider-than-expected trade deficit in February as an energy-driven surge in import costs caused by massive supply constraints added to vulnerabilities for the world’s third-largest economy. read more

Spot gold was little changed at $1,916.61 per ounce.

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Reporting by Andrew Galbraith; Editing by Richard Pullin, Simon Cameron-Moore and Kim Coghill

Our Standards: The Thomson Reuters Trust Principles.

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Oil price benchmarks fall below $100, first time in weeks

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  • Brent, U.S. crude below $100 for the first time since late Feb
  • Outbreaks in China could slow demand
  • Iran nuclear deal hopes rise

NEW YORK, March 15 (Reuters) – Oil prices tumbled more than 6% on Tuesday to their lowest in almost three weeks, as Russia suggested it would allow a revival of the Iran nuclear deal to go forward and as traders worried growing pandemic lockdowns in China could dent demand.

Both Brent and U.S. crude futures benchmarks settled below $100 per barrel for the first time since late February. Since reaching 14-year highs on March 7, Brent has slid nearly $40 and WTI more than $30. Trading has been extremely volatile since Russia invaded Ukraine more than two weeks ago.

During the session, Brent futures plummeted $6.99, or 6.5%, to settle at $99.91 a barrel. U.S. West Texas Intermediate (WTI) crude fell $6.57, or 6.4%, to settle at $96.44 a barrel. Brent fell as low as $97.44 and WTI hit $93.53, their lowest since Feb. 25.

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On technical charts, both contracts moved the closest to oversold territory since December. They had been in overbought conditions during early March. Brent at one point topped $139 a barrel.

Russia is the world’s largest exporter of crude and fuels. Numerous buyers have shunned Russian barrels since the invasion, sparking fears of a disruption of millions barrels of daily crude supply. Those fears now look overdone.

On Tuesday a Ukrainian negotiator said talks with Russia over a ceasefire and withdrawal of Russian troops from Ukraine are ongoing. The ensuing sell-off drove prices lower but many expect volatility to continue.

“Whilst reports of promising talks are to be welcomed, it is hard to see how either side at this stage would be prepared to make concessions that would be acceptable to any party,” said a research note from Kpler. “In this current situation, it is hard to see how crude oil prices are not being under-priced.”

Also on Tuesday, Russia said it has written guarantees it can carry out its work as a party to the Iran nuclear deal, suggesting Moscow would allow a revival of the tattered 2015 pact to go ahead. read more

A model of 3D printed oil barrels is seen in front of displayed stock graph going down in this illustration taken, December 1, 2021. REUTERS/Dado Ruvic/Illustration

The talks to revive the nuclear accord could lead to the lifting of sanctions on Iran’s oil sector and allow Tehran to resume crude exports. They had stalled because of Russian demands. read more

In the fallout from Russia’s invasion, which it calls a “special operation,” Western sanctions have failed to deter China and India from buying Russian crude. read more

The Organization of the Petroleum Exporting Countries said oil demand in 2022 faced challenges from the invasion and rising inflation as crude prices soar, increasing the likelihood of reductions to its forecast for robust demand this year. read more

China saw a steep jump in daily COVID-19 infections, which could slow the current pace of consumption as that nation shifts to lockdowns. read more

“It is estimated that a severe lockdown in China could put 0.5 million bpd of oil consumption at risk, which would be further compounded by fuel shortages due to inflated energy prices,” said Louise Dickson, senior oil market analyst for Rystad Energy.

The U.S. Federal Reserve is widely expected to raise interest rates by 25 basis points on Wednesday for the first time in four years to fight soaring inflation. This could strengthen the U.S. dollar and dampen demand for oil and other commodities priced in greenbacks.

Preliminary data from the American Petroleum Institute showed U.S. crude inventories rose by 3.8 million barrels for the week ended March 11 while gasoline inventories fell by 3.8 million barrels and distillate stocks rose by 888,000 barrels, according to sources, who spoke on condition of anonymity.

Official U.S. government inventory data is due on Wednesday.

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Reporting by Stephanie Kelly in New York; Additional reporting by Rowena Edwards in London and Yuka Obayashi in Tokyo; Editing by Marguerita Choy, David Goodman, Mark Porter and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

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