Monday, 15 September 2014

TECHNOLOGY NEWS: Alibaba boosts IPO as demand strengthens

HONG KONG/NEW YORK (Reuters) - Alibaba Group Holding Ltd [IPO-BABA.N] raised the price range on its initial public offering to $66 to $68 on Monday, reflecting strong demand from investors for the year's most anticipated debut and potentially the world's largest-ever IPO.

The Chinese e-commerce company, which handles more transactions than Amazon.com Inc (AMZN.O) and eBay Inc (EBAY.O) combined, has attracted investors keen to buy into the country's rapid growth and its evolving Internet sector.

The company and selling shareholders will now raise almost $22 billion at the top of the new IPO range. Alibaba remains on track to set an IPO record if underwriters exercise an option to sell additional shares to meet demand, overtaking Agricultural Bank of China Ltd's (601288.SS) $22.1 billion listing in 2010.

Alibaba embarked on its roadshow for the IPO last week and attracted enough demand to cover its entire deal within two days, people familiar with the process said last week. Trading is expected to kick off this week.

The company and some shareholders previously offered 320.1 million American depositary shares at an initial $60 to $66 indicative range. It raised the price on Monday but left the number of shares unchanged.

Alibaba can still decide to price its IPO above the indicated range. But a source close to the deal told Reuters the final level will be "investor-friendly."

"Demand has been overwhelming since the launch," said the person, who couldn't be named because details of the IPO aren't yet public. "Increasing the price range was already on the cards from the beginning."

Reuters reported on Friday that Alibaba plans to close its IPO order book early, after it received enough orders to sell all the shares in the record-breaking offering.

OVERSEAS EXPANSION

Alibaba plans to expand its business in the United States and Europe after the much anticipated IPO, billionaire founder Jack Ma said on Monday as the Chinese e-commerce titan pitched its record deal to investors in Asia.

"After being listed in the U.S., we will develop our business in Europe and in the U.S.," Ma told a packed group of journalists ahead of his presentation to investors. "We will not give up the Asia market because, as I would say, we are not a company from China, we are an Internet company that happened to be in China."

The investor luncheon took place in a huge venue at the luxury Ritz Carlton hotel. The hotel shares the same building as three of the main bookrunners of the IPO, just an elevator ride away from Credit Suisse, Deutsche Bank and Morgan Stanley offices, across the harbor from the city's financial center.

Fund managers and analysts were given orange bracelets to give them access to the banquet of smoked salmon, chicken breast and mango pudding. The event had two videos and a question and answer session with Ma answering most of the questions, according to investors at the presentation.

MISSED OPPORTUNITY

Alibaba picked New York for its debut after Hong Kong officials rejected its request to allow a small group of company insiders to nominate the majority of its board.

The request went against Hong Kong's "one share, one vote" principle, which has been staunchly defended by its securities regulator.

Ma, who is also Alibaba's executive chairman, said that the missed opportunity came about in part because of how Alibaba communicated its plans to local authorities, mirroring statements he gave last year.

"People say that Hong Kong lost the Alibaba deal. To me, I think it is Alibaba that missed this great opportunity to list in Hong Kong," Ma added. "We love Hong Kong. We will continue to love Hong Kong and invest in Hong Kong."

The company is expected to price the deal on Sept. 18. It will start trading a day later

(Reporting by Elzio Barreto and Fiona Lau of IFR; Additional reporting by Supriya Kurane in Bangalore; Editing by Matt Driskill, Bernard Orr)



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TOP NEWS Iran supreme leader spurns U.S. overture to fight Islamic State

PARIS/DUBAI (Reuters) - Iran's supreme leader said on Monday he had personally rejected an offer from the United States for talks to fight Islamic State, an apparent blow to Washington's efforts to build a military coalition to fight militants in both Iraq and Syria.

World powers meeting in Paris on Monday gave public backing to military action to fight Islamic State fighters in Iraq. France sent jets on a reconnaissance mission to Iraq, a step towards becoming the first ally to join the U.S.-led air campaign there.

But Iran, the principal ally of Islamic State's main foes in both Iraq and Syria, was not invited to the Paris meeting. The countries that did attend - while supporting action in Iraq - made no mention at all of Syria, where U.S. diplomats face a far tougher task building an alliance for action.

Washington has been trying to build a coalition to fight Islamic State since last week when President Barack Obama pledged to destroy the militant group on both sides of the Iraqi-Syrian border.

That means plunging into two civil wars in which nearly every country in the Middle East already has a stake. And it also puts Washington on the same side as Tehran, its bitter enemy since the Islamic revolution of 1979.

In a rare direct intervention into diplomacy, Iran's supreme leader, Ayatollah Ali Khamenei, said Washington had reached out through the Iranian embassy in Baghdad, requesting a meeting to discuss cooperation against Islamic State.

Khamenei said that some Iranian officials had welcomed the contacts, but he had personally vetoed them.

"HANDS ARE DIRTY"

"I saw no point in cooperating with a country whose hands are dirty and intentions murky," the Iranian leader said in quotes carried on state news agency IRNA. He accused Washington of "lying" by saying it had excluded Iran from its coalition, saying it was Iran that had refused to participate.

U.S. Secretary of State John Kerry said Washington was "not cooperating with Iran", but declined to be drawn on whether it had reached out through the embassy in Baghdad for talks.

"I am not going to get into a back and forth," he said. "I don't think that's constructive, frankly."

Islamic State fighters set off alarms across the Middle East since June when they swept across northern Iraq, seizing cities, slaughtering prisoners, proclaiming a caliphate to rule over all Muslims and ordering non-Sunnis to convert or die.

IS fighters, known for beheading their enemies or captives, raised the stakes for the West by cutting off the heads of two Americans and a Briton in videos posted on the Internet which showed the prisoners bound in orange jumpsuits.

French officials said they had hoped to invite Iran to Monday's conference but Arab countries had blocked the move.

"We wanted a consensus among countries over Iran's attendance, but in the end it was more important to have certain Arab states than Iran," a French diplomat said.

Calling the decision regrettable, Iraq's Foreign Minister Ibrahim al-Jaafari said Baghdad had wanted Iran to attend.

Iran sponsors the governments of both Iraq and Syria and has been at the center of defenses against Islamic State in both countries. The United States reached out to Iran last year when secret talks led to a preliminary deal on nuclear issues.

Iran has occasionally played down its conflicts with the West since President Hassan Rouhani, a relative moderate, was elected last year. Khamenei's intervention, including his statement that some Iranian officials welcomed the U.S. overture, was a rare public acknowledgment of division but also a reminder that powerful interests in Iran oppose a wider thaw.

"THROAT-SLITTERS"

At Monday's international conference in Paris, the five U.N. Security Council permanent members, Turkey, European and Arab states and representatives of the EU, Arab League and United Nations all pledged to help Baghdad fight Islamic State.

"All participants underscored the urgent need to remove Daesh from the regions in which it has established itself in Iraq," said a statement after the talks. Daesh is an Arabic acronym for the group which now calls itself Islamic State.

"To that end, they committed to supporting the new Iraqi Government in its fight against Daesh, by any means necessary, including appropriate military assistance...." it said.

Several Western and Arab officials said no concrete commitments were made and that talks on the different roles of those in the coalition would take place bilaterally and over the next 10 days at the United Nations General Assembly.

"This conference was like a mass. A big gathering where we listen to each other, but it's not where miracles happen," said another French diplomat. "It was a strong political message of support for Iraq and now we prepare to fight."

Foreign Minister Laurent Fabius said French aircraft would begin reconnaissance flights over Iraq. A French official said two Rafale fighters and a refueling aircraft had set off.

"The throat-slitters of Daesh - that's what I'm calling them - tell the whole world 'Either you're with us or we kill you'. When one is faced with such a group there is no other attitude than to defend yourself," Fabius said at the end of the talks.

Iraqi President Fouad Massoum told Monday's conference he hoped the Paris meeting would bring a "quick response".

"Islamic State's doctrine is either you support us or kill us‎. It has committed massacres and genocidal crimes and ethnic purification," he told delegates.

VOTE OF CONFIDENCE

Monday's conference was an important vote of confidence for the new Iraqi government formed last week, led by a member of Iraq's Shi'ite majority, Prime Minister Haider al-Abadi, and also including minority Sunnis and Kurds in important jobs.

Iraq's allies hope Abadi will prove a more consensual leader than his predecessor Nuri al-Maliki, a Shi'ite whose policies alienated many Sunnis, and that the new government will win back support from Sunnis who had backed the Islamic State's revolt.

The broad international goodwill towards Abadi shown at Monday's conference means Washington will probably face little diplomatic pushback over plans for air strikes in Iraq.

Syria, however, is a much trickier case. In a three-year civil war, Islamic State has emerged as one of the most powerful Sunni groups battling against the government of President Bashar al-Assad, a member of a Shi'ite-derived sect.

Washington and its allies remain hostile to Assad, which means any bombing is likely to take place without permission of the Damascus government. Russia, which backs Assad, says bombing would be illegal without a resolution at the U.N. Security Council, where it has a veto.

Foreign Minister Sergei Lavrov told reporters in Paris that Moscow was already providing military assistance to both Iraq and Syria, suggesting Western countries were guilty of a double standard by helping Assad's foes.

"Terrorists can't be good or bad. We must be consistent and not involve our personal political projects, not prioritize them over the general goal of fighting terrorism."

The United States resumed air strikes in Iraq in August for the first time since the 2011 withdrawal of U.S. troops. Obama's plans, announced last week, involve stronger military action in Iraq and extending the campaign to Syria.

U.S. officials said several Arab countries had offered to join air strikes against Islamic State, but declined to name them. Ten Arab states committed last week to a military coalition without specifying what action they would take.

Britain, Washington's main ally when it invaded Iraq in 2003, has yet to confirm it will take part in air strikes, despite the killing of British aid worker David Haines by Islamic State fighters this past week.

France has said it is ready to take part in bombing missions in Iraq but is so far wary of action in Syria.

(Additional reporting by John Irish, Marine Pennetier, Alexandria Sage and Nicholas Vinocur,; Writing by Peter Graff; Editing by Peter Millership)



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TOP NEWS Autos weigh on U.S. factory output; outlook still upbeat

WASHINGTON (Reuters) - U.S. manufacturing output fell for the first time in seven months in August, but the underlying trend remained consistent with a steadily expanding factory sector.

That view was bolstered by other data on Monday showing factory activity in New York state jumped to its highest level in nearly five years in September.

"The weakness in factory output in August is likely to be transitory," said Millan Mulraine, deputy chief economist at TD Securities in New York.

Factory production dropped 0.4 percent last month as motor vehicle production fell sharply after surging in July, the Federal Reserve said. The drop, which followed a gain of 0.7 percent in July, confounded economists' expectations for a 0.3 percent rise.

Excluding automobiles, manufacturing output gained 0.1 percent in August. So far in the third quarter, factory production is running at a 4.6 percent annual pace, a sign that manufacturing will continue to support economic growth.

Motor vehicle output declined 7.6 percent last month after a 9.3 percent jump in July. Economists attributed the surge in July to difficulties adjusting the data for seasonal fluctuations after some automakers kept assembly lines running instead of closing plants for the traditional summer retooling.

With auto sales at a 8-1/2 year high, motor vehicle production is expected to rebound.

In a separate report, the New York Federal Reserve Bank said its Empire State general business conditions index soared to 27.54 this month, the highest reading since October 2009, from 14.69 in August.

A reading above zero indicates expansion in the region's factory activity. A gauge of new orders rose last month and inventories continued to shrink, keeping the balance between orders and inventories favorable.

GROWING STRONGLY

"If we can be persuaded to look though the volatility of the official data, it's evident that the U.S. economy has continued to grow strongly in the third quarter," said Chris Williamson, chief economist at Markit in London.

Third-quarter growth estimates range as high as a 3.5 percent annual pace. The economy expanded at a 4.2 percent in the second quarter.

With the economic data, including retail sales and housing, continuing to be upbeat, analysts say that could result in a hawkish tilt in the Fed's statement when policymakers conclude a two-day meeting on Wednesday.

"Investors will have to start getting used to the reality that the Fed is going to raise interest rates, most likely during the first half of next year," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

The dollar was trading higher against the euro and the British pound, while U.S. stocks were mixed. Prices for U.S. Treasury debt rose.

Mining output increased 0.5 percent in August, while utilities production rebounded 1.0 percent.

That helped to cushion the drag from manufacturing, leaving overall industrial production falling only 0.1 percent in August.

The amount of manufacturing capacity in use fell to 77.2 percent last month from 77.6 percent in July, while overall industrial capacity use hit a six-month low of 78.8 percent.

(Reporting by Lucia Mutikani; Additional reporting by Daniel Burns in New York; Editing by Paul Simao)



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TOP NEWS Apple iPhone 6 pre-orders hit record 4 million on first day

(Reuters) - Apple Inc said many customers will need to wait until next month for their new iPhones after a record 4 million first-day pre-orders were logged, double the number for the iPhone 5 two years ago.

The company said demand had outstripped supply of the new iPhone 6 and iPhone 6 Plus, which feature larger screens and longer battery life. Deliveries of pre-orders will begin on Friday and will continue through October.

Bumper first-day pre-orders point to first-weekend sales of up to 10 million units, analysts estimated.

"Assuming preorders are similar to the 40 percent of first weekend sales for the iPhone 5, this would imply iPhone 6/6Plus first weekend sales could be around 10 million," Wells Fargo Securities analysts wrote in a note.

About 2 million pre-orders were received for the iPhone 5 in the first 24 hours after it went on sale in September 2012. Apple sold 5 million of these phones in the first weekend.

Apple sold 9 million iPhone 5Ss and 5Cs, which were launched last year, in the first three days in stores. The company did not reveal pre-order numbers for these phones.

Raymond James analysts said they expect sales of iPhone 6 and iPhone 6 Plus to top 9 million in the first weekend.

"Apple will be selling every iPhone it can make, at least through October. Because of this, the first weekend sales are typically more indicative of supply than demand," they said.

The company routinely grapples with iPhone supply constraints, particularly in years that involve a smartphone re-design.

Apple's website showed last week that the larger 5.5-inch "Plus" models displayed a wait time of up to a month. The 4.7-inch version was available for delivery on Sept. 19.

Janney Capital Markets analysts said the large number of pre-orders was due to "pent-up demand" for bigger iPhone screens.

The brokerage raised its sales estimate for the latest iPhones to 37.4 million units for the current quarter and 60 million for the quarter ended December.

"We believe significant demand will even spill into the March and June quarters given supply and the timing of shipments in China," Barclays analysts wrote in a note.

The company said the new iPhone models will be available to customers in its stores in the United States, Canada, Australia and some other countries on Friday morning.

AT&T Inc, Sprint Corp, T-Mobile US Inc, Verizon Wireless and some Apple authorized resellers will also start selling the phones on Friday.

The phones will come equipped with Apple's new payments service, "Apple Pay", which launches in the United States next month and allows users to pay for items in stores with their phones.

Apple's shares were up less than 1 percent at $102.92 Monday afternoon.

(Reporting By Lehar Maan and Soham Chatterjee in Bangalore; Editing by Saumyadeb Chakrabarty)



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TOP NEWS Swiss say would shield Snowden from 'political' extradition to U.S

ZURICH (Reuters) - Former intelligence contractor Edward Snowden could be granted safe passage in Switzerland if he helped a potential criminal inquiry into U.S. spying there, the Swiss public prosecutor's office said on Monday.

He would probably not be extradited to the United States if Washington asked, but it was also unlikely that he would be granted political asylum, according to a document laying out Switzerland's legal options if Snowden were to visit.

The prosecutor's office, which provided the document to Reuters, stressed the issue was "purely hypothetical" because Snowden had not been invited to come from his current refuge in Russia. It had no further comment.

The document was leaked last week and prompted a lively debate in the Swiss media.

Some German politicians have suggested inviting Snowden to Germany to testify about National Security Agency spying there, but Berlin has ruled that out to avoid a clash with Washington over extraditing him to the United States.

Michael McCaul, Republican head of the U.S. House of Representatives Committee on Homeland Security, reacted to the Swiss debate by telling the U.S.-based Foreign Policy magazine that Snowden should not be allowed to "trade our intelligence community's sources and methods for safe haven in other countries".

GENEVA CIA ACTIVITIES

According to the three-page Swiss document, "Edward Snowden could be assured of free movement by the federal prosecutor if he cooperated with a criminal investigation" into U.S. spy activities he says he learned about while working in Geneva.

Switzerland would not comply with a U.S. extradition request if he is accused of treason or divulging state secrets because such charges would have a "political character" under Swiss law, the document said.

The guarantee for Snowden's free passage in Switzerland could be trumped by "higher state obligations" such as a treaty, the document said, adding this required more study.

Marcel Bosonnet, Snowden's lawyer in Switzerland, did not comment on the document.

The prosecutors said Snowden was not likely to be granted asylum in Switzerland because he has already been given a three-year residency in Russia last month.

The decision on whether to grant Snowden asylum in Switzerland ultimately lies with the government and with justice officials.

Snowden worked as a computer technician for the Central Intelligence Agency in the U.S. mission to the United Nations in Geneva between 2007 and 2009.

He has told London's Guardian newspaper he had a "formative" experience in the Swiss city when the CIA deliberately got a Swiss banker drunk and encouraged him to drive home.

When he was arrested, a CIA operative offered to intervene and later recruited the banker, Snowden has claimed. Some Swiss officials have questioned if the incident ever happened.

(Reporting by Katharina Bart in Zurich and Mark Hosenball in London; Editing by Tom Miles and Tom Heneghan)



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TOP NEWS On last visit before vote, PM Cameron appeals to Scots to keep Britain intact

ABERDEEN/LONDON (Reuters) - British Prime Minister David Cameron used his last visit to Scotland before a historic independence referendum this week to implore Scots to remain part of the United Kingdom, warning on Monday that a breakaway vote would be irreversible.

With opinion polls suggesting the referendum remains too close to call, Cameron, the leader of the ruling Conservative party, which draws most of its support from England, pleaded with voters not to use the referendum as a protest vote.

"There's no going back from this. No re-run. If Scotland votes 'yes' the UK will split and we will go our separate ways forever," he told an audience packed with Conservative party supporters in Aberdeen, the center of Scotland's oil industry.

"Don't think: I'm frustrated with politics right now, so I'll walk out the door. If you don't like me I won't be here forever. If you don't like this government it won't last forever. But if you leave the UK that will be forever."

Cameron's trip was a last-ditch effort to try to persuade Scotland's many undecided voters to reject independence. Up to 500,000 people out of more than 4 million registered voters are estimated to be unsure how they will vote.

Campaigning in Scotland is fraught with difficulty for Cameron, whose right-leaning party is unpopular with Scots who have traditionally voted for the left-leaning opposition Labour party and harbor bitter memories of former Conservative prime minister Margaret Thatcher's 1979-1990 stint in power.

Cameron's Conservatives have only one of 59 British parliamentary seats in Scotland, and the pro-independence Scottish National Party (SNP) has elbowed Labour aside in recent years to emerge as the dominant political force.

Cameron, his voice at times faltering with emotion, spoke after a video was shown extolling British achievements and some of the most prominent figures of British history from Winston Churchill to Alexander Fleming, a Scot who discovered penicillin.

"Independence would not be a trial separation. It would be a painful divorce," Cameron said, standing in front of a giant Union Jack flag and a poster saying "Lets stick together".

"Head and heart and soul, we want you to stay."

Cameron has conceded his public image as a privileged Englishman with aristocratic roots does not make him the best person to advocate against Scottish independence.

Scottish nationalists criticized him for staying away in the early months leading up to the vote as complacent, and now that he is showing his face, they portray him as a condescending Englishman in no position to advise Scots on how to vote.

Details of his visits north of the English border are not revealed until the last minute for security reasons and critics say his advisers try to minimize his contact with the public to avoid nationalist heckling. The visit was expected to last only hours.

CONFIDENT PRO-INDEPENDENCE LEADER

Alex Salmond, the pro-independence SNP leader, was out campaigning too on Monday in Edinburgh where he met business leaders who back the breakaway campaign.

He predicted Scotland would vote for independence and that the next time Cameron visited would be to discuss the details of the 5-million strong population's divorce settlement from the United Kingdom.

"The next time he comes to Scotland it will not be to love-bomb or engage in desperate last-minute scaremongering," Salmond said in a statement. "It will be to engage in serious post-referendum talks."

Independence supporters say it is time for Scotland to choose its own leaders and rule itself, free of control from London and politicians they say ignore their views and needs.

Cameron repeated the anti-independence "Better Together" campaign's core message: that by staying in the United Kingdom, Scotland can take advantage of the benefits of belonging to a larger, more influential entity while enjoying an ever-increasing measure of autonomy.

"No" campaigners counter that Scotland is more secure and prosperous as part of the United Kingdom and say the end of the union would destroy three centuries of bonds and shared history as well as bring in economic and financial hardship.

Cameron's visit comes after David Beckham, the retired footballer, added his name to a petition of English celebrities who say they want the Scots to stay. The celebrity group, "Let's Stay Together", is organizing a public rally on Monday evening in London's Trafalgar Square.

It was the pro-independence camp's turn on Sunday night when a host of Scottish rock stars including the band Franz Ferdinand and Mogwai played a concert in Edinburgh.

Singer Amy McDonald told the audience: "People fight and die for this (independence) and all we have to do is put a little cross in a box. Scotland, you know what to do."

Opinion polls indicate the vote is hard to call.

Out of four recent polls, three showed those in favor of maintaining the union had a lead of between 2 and 8 percentage points. But an ICM poll conducted over the Internet showed supporters of independence in the lead with 54 percent and unionists on 46 percent. More than 4 million Scots as well as English and foreign residents, from the Highlands and Islands to Glasgow's gritty inner city estates, are eligible to vote.

The question on the ballot paper will ask simply: "Should Scotland be an independent country?"

(Additional reporting by Alistair Smout and Angus MacSwan in Edinburgh and Sarah Young, William James and Kate Holton in London; Editing by Sonya Hepinstall)



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