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Weak factories dent hopes for global economic recovery

Manufacturers in Europe, Japan and the United States suffered in March as surveys showed trade tensions had left their mark on factory output, a setback for hopes the global economy might be turning the corner on its slowdown. Factory activity in the 19-country euro zone contracted at the fastest pace in nearly six years. In Japan, manufacturing output shrank the most in almost three years, hurt by China's economic slowdown. And a measure of U.S. manufacturing was its weakest since June 2017 while forecasters at the Federal Reserve Bank of Philadelphia slashed their estimate for economic growth in early 2019. German 10-year bond yields, which plunged on Thursday after the U.S. Federal Reserve signaled no more rate hikes this year, dived again to fall below zero. European shares and the euro also fell on Friday. In New York, the spread between the three-month U.S. Treasury bill yield and the 10-year note yield narrowed to a 12-year low -- a sign of concern among investors about the growth outlook. "No other factor shapes the euro zone business cycle more than the ups and downs of global trade," economists at Berenberg, a bank said. The United States and China are due to resume face-to-face talks next week, but it is unclear if the two sides can narrow their differences and end the trade war between the world's two largest economies. European officials are also worried about the risk of U.S. tariffs on car imports from Europe. RISKS - U.S. CHINA TENSIONS, BREXIT, ITALY The drop in the euro zone's manufacturing purchasing managers index to a 71-month low of 47.7 from 49.4 in February raised the risk trade flows could turn even more negative in the short term, the Berenberg economists said. The manufacturing downturn was partly offset by stable -- but relatively weak -- growth in the euro zone's dominant services industry. But the surveys suggested the bloc's economy had a poor start to 2019. IHS Markit, which published the surveys, said the PMIs pointed to first-quarter economic growth of 0.2 percent in the euro zone, below the 0.3 percent predicted in a Reuters poll last week. The euro zone grew 0.2 percent in the final three months of 2018, its slowest pace in four years. Earlier this month, the European Central Bank changed tack by pushing out the timing of its next rate increase until 2020 at the earliest and said it would offer banks a new round of cheap loans to help revive the economy. "We highlight downside risks mainly stemming from the external side – e.g. trade tensions, a Chinese-led global slowdown," Barclays (LON:BARC) economists Radu-Gabriel Cristea and Francois Cabau said about the euro zone. "The protracted weakness in manufacturing remains a lingering risk, and overall growth concerns are likely to intensify should the industrial backdrop further deteriorate. At the same time, Italy and Brexit woes remain non-negligible, the uncertainty a further drag on sentiment." The headline Flash Markit/Nikkei Japan Manufacturing Purchasing Managers Index (PMI) was a seasonally adjusted 48.9, the same as February's final reading. The index was below the 50 threshold that separates contraction from expansion for the second consecutive month. "Concern of weaker growth in China and prolonged global trade frictions kept business confidence well below its historical average in March," Joe Hayes, an economist at IHS Markit, said. The flash index for total new orders - domestic and foreign - fell to its lowest since June 2016, the survey showed. Japan is exposed to the dispute between Washington and Beijing as it ships to China big volumes of electronics items and heavy machinery used to make finished goods destined for the United States.

UK economy dodges no-deal Brexit hit, for now

Britain's economy has struggled beneath the weight of Brexit uncertainty for nearly three years, but many business leaders would probably be relieved just to have more of the same for the next few months. The risk of a damaging no-deal exit by the world's fifth-biggest economy from the European Union on March 29 has been averted by the reprieve granted to Prime Minister Theresa May by other EU leaders on Thursday. But the possibility could return as soon as April 12. Or the delay could stretch into May or beyond, depending on the prime minister's ability to break the Brexit impasse in parliament. Employers took some comfort from the postponement, even if it did little to settle the wide range of Brexit outcomes that has led to many of them putting their expansion plans on hold. "Businesses will accept a short extension because it’s a better alternative to no deal," Seamus Nevin, chief economist at Make UK, an engineering trade group, said. "But we really need to make decisions soon. Prolonged uncertainty just means the investment decline of recent months will continue and companies will be forced to decide whether to move production elsewhere." Carmakers have reduced expansion plans in Britain and many financial firms have set up operations in other EU countries. Overall business investment fell throughout 2018, the longest such run since the global financial crisis, and another fall is expected in 2019, threatening to worsen the country's weak productivity growth. Britain's economy lost momentum after the 2016 referendum decision to leave the EU. The slowdown deepened last year as the Brexit deadline approached, with no guarantee of a transition to smooth the shock, but also reflecting the weakening of the world economy. While Britain would bear the brunt of a no-deal Brexit hit, U.S. Federal Reserve Chair Jerome Powell has said it is a risk for the slowing U.S. economy, along with Washington's trade war with China. The shock would also be felt in Europe where Britain's closest trading partners are struggling. "It would be a material shock for the EU at a difficult time," Brian Coulton, chief economist at ratings agency Fitch Ratings, said. "Among the things that could tip the euro zone into a recession, it might be a candidate." "NATIONAL EMERGENCY" Even the strongest Brexit supporters say a no-deal divorce would deliver a shock. But they believe the economy would adjust and flourish once it is free of the constraints of EU rules and can strike its own trade deals around the world. Gerard Lyons, a pro-Brexit economist, said weak business investment was a long-standing British problem, not just a Brexit one, and he pointed to strong jobs growth and tax revenues as a sign of underlying resilience in the economy. While his preferred option was for Britain to leave EU with a transition and then hammer out a trade deal, he said a no-deal Brexit would not be a disaster because progress has been made to prepare Britain's finance industry, ports and logistics. "It’s like a kick in the groin. It depends how hard the other side wants to kick you, and how well you maneuver yourself," Lyons said. The Bank of England said on Thursday that about 80 percent of almost 300 companies it surveyed felt they were as ready as they could be for a no-deal, no-transition Brexit, up from 50 percent in January. The BoE has said a worst-case no-deal Brexit scenario -- in which Britain loses the confidence of global investors and chaos hits transport and ports -- could mean that the economy is 5 percent smaller in three years' time than if the country stayed in the EU. A more managed no-deal Brexit could reduce the hit to about 2.5 percent, still a material hit at a time when the economy is struggling to grow by more than 1.5 percent a year. Most economists say the higher the barriers for British firms to do business in the EU, the bigger the drag will be on economic growth stretching out into the decades ahead. Any gains from free trade deals with countries such as China or the United States would be "relatively modest", Britain's independent budget forecasters have said. It is small wonder therefore that many employers are hoping for a change of the Brexit plan, even if it means yet more sapping uncertainty. "Our country is facing a national emergency," the Confederation of British Industry, a major employers group, and the Trades Union Congress umbrella group said on Thursday in a rare joint letter to May, urging her to avoid a no-deal Brexit. "The shock to our economy would be felt by generations to come."

Tesla sues former employees for allegedly stealing data, Autopilot source code

Tesla Inc filed a lawsuit on Thursday against a former engineer at the company, claiming he copied the source code for its Autopilot technology before joining a Chinese self-driving car startup in January. The engineer, Guangzhi Cao, copied more than 300,000 files related to Autopilot source code as he prepared to join China's Xiaopeng Motors Technology Company Ltd, the Silicon Valley carmaker said in the lawsuit filed in a California court. Separately, Tesla lawyers on Wednesday filed a lawsuit against four former employees and U.S. self-driving car startup Zoox Inc, alleging the employees stole proprietary information and trade secrets for developing warehousing, logistics and inventory control operations. Cao, Xiaopeng and Zoox could not be immediately reached for comment. Tesla is building a vehicle assembly facility in Shanghai, putting it in direct competition with Xiaopeng and other Chinese companies in the world's largest electric vehicle market. Its Autopilot is a driver assistance system that handles some driving tasks and allows drivers to take their hands off the wheel, although the company stresses it still requires driver supervision and does not make the vehicle autonomous. Cao's LinkedIn profile shows he has been working with Xiaopeng since January as "head of perception". Xiaopeng, which debuted an electric car in Las Vegas last year, counts Alibaba (NYSE:BABA) Group Holding Ltd and Foxconn Technology Co Ltd among its investors. The company, also known as Xpeng Motors, employs at least five former Tesla employees, the U.S. carmaker alleged in the lawsuit. Apple Inc last year accused one former employee of stealing trade secrets related to self-driving cars and joining Xiaopeng's U.S. subsidiary. Several companies are racing to develop the technology required to make cars drive on their own and lawsuits against former employees have become common as firms strive to keep proprietary information in-house. Alphabet Inc's Waymo self-driving vehicle unit took Uber Technologies to court after a former employee stole thousands of confidential documents and became chief of Uber's self-driving car project. Uber later paid $245 million to settle the case.

Iran's oil exports fall in March even before further U.S. clampdown: sources

Iran's oil exports have dropped in March to their lowest daily level this year, according to tanker data and industry sources, even before Washington formally requires importing countries to reduce purchases to avoid infringing U.S. sanctions. Shipments are averaging between 1.0 and 1.1 million barrels per day (bpd) so far this month, according to Refinitiv Eikon data and three other companies that track Iranian exports. That's lower than February, when shipments were at least 1.3 million bpd. Shipments have dropped from at least 2.5 million bpd in April 2018, the month before U.S. President Donald Trump withdrew the United States from a 2015 nuclear deal with Iran and reimposed sanctions, fueling a year of economic crisis in the country. Tehran has vowed to keep exporting oil despite U.S. efforts to reduce its shipments to zero, but the export decline could be another indicator of economic pressure from the embargo. In a new year speech on Thursday, Iran's Supreme Leader Ayatollah Ali Khamenei said the Islamic Republic had resisted U.S. sanctions and called on the government to boost national production to face enemy pressures. For the oil market, the drop in Iranian shipments will add to an OPEC-led oil supply cut and comes ahead of U.S. plans to clamp down further on Iranian exports from May, after ending of the current round of fairly generous waivers from sanctions. Still, the Organization of the Petroleum Exporting Countries and its allies, which began cutting production from Jan. 1 to bolster prices, are unlikely to be in a rush to change course, analysts say, without concrete signs of a shortage. "We do expect less Iranian oil exports after May," said Sara Vakhshouri of energy consultant SVB Energy International. "However, we don't think that OPEC will increase its production in anticipation of lower Iranian oil exports, but only if there are clear signs of further Iran and/or Venezuelan export cuts in the market," Vakhshouri said. Venezuela, an OPEC member, is also under U.S. sanctions which have curbed its exports. Iran's export levels have become more opaque since U.S. sanctions on the country's oil sector took effect in November, although estimates of March supplies are falling into a narrower range than in previous months. Kpler, a company that tracks oil flows, said Iranian shipments so far in March had dropped sharply to 1.03 million bps from 1.44 million bpd in February. "Iranian crude loadings have struggled through the first half of March," Kpler said in a report, although it said exports would rise closer to 1.3 million bpd in the rest of March.

Instagram adds new feature to let U.S. users shop direct via app

Facebook Inc's Instagram began trialing a feature on Tuesday that lets U.S. users shop directly for products from the photo sharing app by adding a 'checkout' feature on items tagged for sale, the company said. The move is in line with Facebook's plan to monetize higher-growth units like Instagram as the company's centerpiece product, News Feed, struggles to generate fresh interest. Instagram said it has partnered with more than 20 brands, including Adidas, H&M and billionaire Kylie Jenner's booming cosmetic company and Michael Kors, on the new feature, easing into territory more familiar to retail giants like Amazon.com Inc and Walmart Inc. Under the new feature, users will be able to click on a product that is featured in a post and see its price, and then click again to bring up an order form. Users can then later checkout and choose to pay by Visa, Mastercard, American Express, Discover and PayPal. Previously, Instagram allowed brands to link to their respective websites for users to shop. "Facebook's plans are to evolve Instagram and Messenger into robust e-commerce platforms where you can click on ads and buy the products," said Ivan Feinseth, an analyst with Tigress Financial Partners. "Facebook is also looking to incorporate payment processing and payment transfers over Messenger, further expanding its e-commerce and interactive capabilities," Feinseth said. Instagram, which did not specify the financial details in the blog, said it would introduce a selling fee to help fund transaction-related expenses. Instagram has more than 130 million people tapping to reveal product tags in shopping posts every month, up from 90 million in September, it said.

May seeks Brexit delay after third vote on her deal is stymied

Prime Minister Theresa May will ask the European Union to delay Brexit by at least three months after her plans for another vote on her twice-defeated divorce deal were thrown into crisis by a surprise intervention by the speaker of parliament. Nearly three years after Britain voted to leave the EU, its departure is uncertain. Possible outcomes still range from a long postponement, leaving with May's deal, a disruptive exit without a deal, or even another referendum. Just 10 days before the March 29 exit date that May set two years ago by submitting a formal "Article 50" request to leave - and two days before a crucial EU summit - she was on Tuesday writing to European Council President Donald Tusk to ask for a delay, her spokesman said. It was not immediately clear how long a delay she would seek. She had warned parliament that if it did not ratify her deal, she would ask to delay Brexit beyond June 30, a step that Brexit's advocates fear would endanger the entire divorce. Other EU member states were discussing two main options: a delay of two to three months, if May persuades them she can clinch a deal at home, or much longer if May accepts that radical reworking is needed. The BBC's political editor, Laura Kuenssberg, said May would ask for an extension until June 30 - which could give her another chance to get parliament to bless her deal - with the option of a delay of up to two years. BREXIT CRISIS In a move that added to the sense of crisis in London, speaker John Bercow ruled on Monday that May's Brexit deal had to be substantially different to be voted on again by parliament. Brexit Secretary Steve Barclay said a vote this week on the deal was now less likely. But ministers were studying options, and he indicated the government still planned a third vote. "This is a moment of crisis for our country," he said. The EU's most powerful leader, German Chancellor Angela Merkel, said: "I will fight until the last minute of the time to March 29 for an orderly exit. We haven't got a lot of time for that." Her foreign minister, Heiko Maas, said: "If more time is needed, it's always better to do another round than a no-deal Brexit." If it left this way, Britain would quit the EU's 500 million-strong single market and customs union overnight, falling back on World Trade Organization rules that could mean many import and export tariffs. It would face the prospect of manufacturing and financial market disruption, sharp economic contraction and border delays.. But France was blunter, saying a no-deal exit was possible. "Grant an extension - what for? Time is not a solution, it's a method," said EU Affairs Minister Nathalie Loiseau. "If there is an objective and a strategy, it has to come from London." However, senior EU figures, while exasperated by Britain's Brexit dithering, have no appetite for pushing it out on schedule without a deal. The 2016 referendum, which produced a 52-48 percent vote to leave, exposed deep divisions and has fueled soul-searching about everything from secession and immigration to capitalism and British identity. PATIENCE RUNNING OUT The crisis has left allies and investors puzzled by a country that for decades seemed a confident pillar of Western economic and political stability. But Britons' patience with negotiations may be running out. In a Comres survey in the Telegraph, nearly half of respondents said Britain would ultimately thrive if it left without a deal. Bercow said his ruling, based on a convention dating back to 1604, did not prevent the government reshaping its proposition, or securing a vote in parliament to override his ruling. The pressure to come up with legal or procedural changes means May is likely to get only one more chance to put the deal to a vote. Brexit Secretary Barclay, who last week said Britain should not fear a no-deal exit, said a change in context might be sufficient to meet Bercow's test. Even before Bercow's intervention, May was having difficulty boosting support for her deal - which would set out to secure close trading ties with the EU while leaving its formal structures - after it was defeated by 230 votes on Jan. 15, and by 149 votes on March 12. She needs to win over at least 75 lawmakers - dozens of rebels in her own Conservative Party, some Labour lawmakers, and the Northern Irish Democratic Unionist Party (DUP), which props up her minority government. In addition to regulating the terms of departure, May's deal promises to take Britain out of the EU single market and customs union, common fisheries and farm policies and the jurisdiction of the European Court of Justice at the end of a status-quo period in which new trade arrangements would be agreed.

Macron woos East Africa but French companies struggle to make inroads

On a trip to East Africa last week, a beaming French President Emmanuel Macron was driven through the grounds of the Kenyan president's official residence in a locally assembled Peugeot 3008 car. Two days earlier, he toured churches hewn into the rock in Ethiopia. On a visit last year, he went to a Nigerian nightclub. Macron, 41, is trying to recast the style of France's engagement in Africa, where it was once a colonial power, hoping that building warmer cultural and personal ties will help boost business, trade and investment. He signed contracts worth about 2 billion euros ($2.27 billion) while in Kenya, whereas British Prime Minister Theresa May did not conclude any on a similar trip last August. A consortium led by Vinci secured a 30-year concession worth 1.6 billion euros to operate a highway linking the Kenyan capital and Mau Summit in western Kenya. Renewables firm Voltalia sealed a 70-million-euro contract for a solar power plant and an Airbus-led consortium won a 200 million euro deal for coastal and maritime surveillance. But Macron's four-day tour of Kenya, Ethiopia and former colony Djibouti showed how big a battle France faces in Africa, where China, Turkey and others have moved in quickly and aggressively, and competition is fierce from African countries. In 2017, French exports to Kenya, a former British colony, were about $200 million -- about half Uganda's exports to its neighbor. China exported $3.8 billion, making it Kenya's biggest trading partner. The personal touch is vital when competing with China, French officials say. "We've always used that form of diplomacy to implant ourselves," said a French diplomat in the region. "But it becomes all the more important when facing China, because it differentiates us from their contract-oriented, low-cost, low-interest model of doing business." TOUGH TASK Trade figures across the continent show how tough the task ahead is for France, the world's sixth largest economy. From 2000 to 2017, the portion of all French exports that went to Africa halved from 11 percent to 5.5 percent. The main competition has come from Chinese goods, particularly in French-speaking West Africa. Since coming to office in May 2017, Macron, who spent several months as a diplomatic intern in Nigeria in the early 2000s, has visited 16 African states, with two visits each to Mali and Morocco. He has focused mainly on long-running relationships in French-speaking Africa, particularly the Sahel, where the responsibilities of the 4,500 French troops deployed there include fighting Islamic State. But he also has sought to build ties with Ghana, Nigeria, Kenya and Ethiopia. Last week's trip was a chance for Macron to show that "for too long we treated these East African countries like Banana Republics and they don't like that," said a former French envoy. "They have resources, financial means and growth. "I'm not convinced that what is seen as 'our Africa' (France's former colonies) can offer the business opportunities we have elsewhere on the continent." France is now seeking more targeted investments in specific sectors. The national development agency pours about 5 billion euros a year into Africa yet that barely scratches the surface alongside the cheap loans, big infrastructure investments and financing by China. "It's not easy to develop these economic links," said Francois Gualme of the French Institute of International Relations, who worked for France's development agency. "There's a political presence, but the economic presence remains small." "FRANCE MUST COME BACK" In Ethiopia, Macron said he wanted a new economic relationship, but Beijing has also been forging economic ties with Addis Ababa. China rebuilt, and financed through a multi-billion dollar loan, the rail link between the Ethiopian capital and Djibouti that was constructed by the French in 1917. There are many signs of China's presence, including Chinese laborers building skyscrapers or greetings of "Ni Hao" from children. Some Ethiopians resent the Chinese influence and hark back to when French and European influence was felt more widely. Near the old French railway terminus in Addis Ababa, a group of former rail employees sat chatting in French at the Railway Workers' Club in between games of petanque. "You are from Paris, this is all from Paris," said one who gave his name only as Getachew. "France must come back." That sentiment was expressed elsewhere in Ethiopia, where France has said it will share its expertise to develop tourism and rebuild the landlocked country's navy. "China is bad for us," said Wonde, a 30-year-old taxi driver. "They bring China here -- workers, food, women -- and leave nothing for the Ethiopians." But the small group of business leaders that accompanied Macron on his trip showed few signs of cashing in on this sentiment. The delegation included the chief executive of telecoms group Orange, which wants to position itself in Ethiopia before the state telecoms operator is privatized, but its prospects are no clearer after the trip. Diplomats and members of the delegation said the potential is great in Ethiopia, a country of 100 million people, but complained about slow and excessive bureaucracy. "There's the political will from the prime minister, but the administration doesn't necessarily agree with everything that's being done," said one French executive. "It will take time to clear the bureaucratic hurdles." PROSPECTS IN KENYA In Kenya, an economy with a long record of enterprise and a British-style bureaucracy, the prospects appear brighter. Automaker Peugeot assembles two models in the country and a range of French companies -- from Vinci to water and waste utility Veolia, energy firm Total and electricity group EDF -- are vying for opportunities in the East African country. But French businesses account for just 1.4 percent of the total market share in Kenya, and France ranks only 17th among trading partners in the region's most dynamic economy. "The relationship is not so much unbalanced between our two countries," Macron said alongside Kenyan President Uhuru Kenyatta. "It is worse -- it is weak to poor. Macron said France should develop manufacturing projects based in Kenya. Kenyatta appeared to welcome that but did not respond directly when asked what France could offer that China and other countries could not. There was, at least, success during the trip for a smaller business. Christophe Passelande, chief executive of Malteries Soufflet, said his barley malting company broke ground on a vast new plant on the outskirts of Nairobi he hopes will tap into Kenya's large and growing beer market. "When it comes to malting, the important actors are not Chinese," Passelande told Reuters. "Our industry has real French know-how, and because of that we're here first." But there is no sign that France is about to catch up with China in Ethiopia. Asked whether France was a preferable partner to China, an Ethiopian businessman accustomed to working with the Chinese said: "Why would we want to put all our eggs in one basket?"

Apple unveils new iPad, updates Mini ahead of video streaming launch

Apple Inc, in a surprise move on Monday, launched a new 10.5-inch iPad Air and updated its iPad Mini ahead of a March 25 event where it is expected to launch a television and video service. So far in its annual March event, Apple has been making announcements related upgrades for its product lines, but this year the focus is likely to shift to services, especially after it reported its first ever drop in iPhone sales in January. The new iPad models, geared with Apple's latest A12 Bionic chip and support for Apple Pencil and Smart Keyboard, are already available for order at apple.com and in the Apple Store app in the United States and the United Kingdom, along with a few other countries. "That it announced the new lineup in advance of next week's event suggests it wants to focus on the content next week over hardware," DA Davidson analyst Tom Forte said. "Refreshing its lower-end lineup in advance of its streaming video content announcement next week speaks to the potential for Apple in streaming video content, with a strong installed hardware base, iPhones, iPads and Macs." The 10.5-inch iPad Air, starts at $499 for the 64GB WiFi model and $629 for the WiFi plus cellular model. The new iPad mini starts at $399 for the WiFi model and $529 for the WiFi plus cellular model, the iPhone maker said in a statement. With the new launch, the iPad will come in four different screen sizes, ranging from 7.9 inch to 12.9 inch. "More iPad sales won't make a big impact on the company's enormous bottom line, but it can help to show consumers and investors that Apple still has the ability to create popular devices and features," said Clement Thibault, a senior analyst at Investing.com. In the year ended September 2018, Apple made about $19 billion in revenue from iPad sales, a very small portion compared with the nearly $167 billion it generated from the sale of iPhones. Shares of Apple rose 0.63 percent at $187.22 on early Monday trading.

Austria's Signa, RFR Holding buy New York's Chrysler Building

Austrian real estate company Signa Holding and New York-based real estate developer RFR Holding LLC have acquired Manhattan's iconic Chrysler Building, Signa said https:// on Friday. Signa and RFR entered into a joint venture to acquire the asset from Abu Dhabi Investment Council and Tishman Speyer, Signa added. Reuters earlier in March reported that Signa and RFR would buy the art-deco tower, which was the world's tallest building when completed in 1930, for about $150 million.

Mueller says former Trump campaign aide still aiding probes

U.S. Special Counsel Robert Mueller on Friday asked a court to delay sentencing for U.S. President Donald Trump's former deputy campaign chairman Rick Gates, given his continued cooperation into multiple probes. "Gates continues to cooperate with respect to several ongoing investigations, and accordingly the parties do not believe it is appropriate to commence the sentencing process at this time," Mueller's team said in a court filing.