Stocks climb on Italy bank action, before Fed

LONDON (AFP): European stock markets rose solidly Tuesday, led by Milan's main index and Italian banking shares, after ailing UniCredit said it would axe thousands of jobs and raise billions of euros. Leading Asian stock markets ended higher, with Tokyo closing at a one-year high, while Wall Street got off to a strong start. Attention was turning to a much-anticipated Federal Reserve rate meeting, while analysts said a Trump-fuelled rally that saw the Dow reach another record close Tuesday may have been overblown. Oil prices advanced as the International Energy Agency hiked its forecast for global crude demand growth, before profit-taking set in. Around 1445 GMT, the main eurozone markets Frankfurt and Paris were both around one percent higher, while Milan rallied by 1.5 percent. Outside the eurozone, London gained 0.7 percent as traders assessed a bigger-than-expected jump to British inflation, partly the result of a weaker pound following the Brexit referendum.

Separate data showed that despite uncertainty over Italy's troubled banks and upcoming elections in Europe, investor confidence in Europe's economic powerhouse Germany held steady this month.

- Recapitalising Italy's banks -

Mike van Dulken, head of research at Accendo Markets, said stock market sentiment was buoyed Tuesday "by suggestions of progress in recapitalising Italy's troubled banks as well as expectations that the Fed will... still signal a cautious path for further rate hikes" following an expected raise Wednesday.

Italy's biggest bank, UniCredit, announced plans Tuesday to slash 14,000 jobs as the country gets to grips with political instability and a banking crisis.

The bank, one of the worst performers in European bank stress tests, confirmed it would also need 13 billion euros ($13.8 billion) in fresh capital from investors despite political complications in Italy and the nation's third-largest bank scrambling to avoid a government-led rescue.

At the weekend Italy's troubled Monte dei Paschi di Siena (BMPS) said it would go ahead with plans to seek a private sector-led rescue.

In Tuesday mid-afternoon trading, shares in UniCredit were up more than five percent and BMPS climbed 1.2 percent.

There is meanwhile little room for doubt that the US Federal Reserve will raise its benchmark interest rate on Wednesday for only the second time in a decade.

Any rate move will come against the backdrop of US unemployment at a nine-year low, jobs being created at an average of 180,000 per month, the world's biggest economy growing at better than three percent in the most recent quarter and some signs of a pickup in inflation.

Investors will be looking out for guidance on next year's Fed moves, but Craig Erlam, at Oanda, said that rising oil prices and the Trump administration's spending plans are clouding the outlook.

"The Fed may be forced to raise interest rates at a faster pace that it had planned and the markets have currently priced in," he said.

Qatar, Kuwait to cut oil production

from January 1

DOHA (AFP): Oil companies in Qatar and Kuwait on Tuesday announced that they will reduce production levels from the beginning of the year. The reduction -- beginning on January 1 -- comes following the recent decisions by OPEC and non-OPEC oil-producing countries to cap output. "We have started advising our customers of the expected reductions in oil deliveries to ensure the state's compliance with OPEC's allocations," said a statement from Saad Sherida Al-Kaabi, president and chief executive of state-owned Qatar Petroleum. "This decision comes in line with the state of Qatar's commitment to the recently agreed production levels by the members of OPEC during its ministerial meeting held on 30 November, 2016." No further details about production levels were given in the statement. National oil conglomerate Kuwait Petroleum Corp (KPC) also said on Tuesday it has informed its clients that their export quantities will be reduced, starting in January.

KPC said this was part of the Gulf state's commitment under the OPEC deal last month.

It did not provide any details of the quantities to be reduced, but local media said Kuwait's share is around 130,000 barrels a day out of its daily output of 3.0 million bpd.

UAE's ADNOC had announced on Saturday that it was also "committed to meeting new OPEC terms", adding on Twitter that it will "work closely with customers on revised allocations for January".

ADNOC produces more than 3.15 million bpd.

On November 30, Qatar, Kuwait and the United Arab Emirates were among the OPEC countries which agreed to reduce output by 1.2 million barrels per day (bpd).

This was followed earlier this month by non-OPEC oil producing countries agreeing a cut of 558,000 bpd.

China says output, retail sales accelerate in November

BEIJING (AFP): China's industrial output and retail sales growth both accelerated in November, government data showed Tuesday, in a sign of stabilisation for the world's second-largest economy. Industrial output rose 6.2 percent in the month, ahead of both October's figures and economists' predictions of 6.1 percent in a Bloomberg News survey. Retail sales rose 10.8 percent on-year in nominal terms, up from 10.0 percent in October, while fixed-asset investment, a gauge of infrastructure spending, rose 8.3 percent in the first 11 months of the year, the National Bureau of Statistics (NBS) said. China is a key driver of the world economy but its expansion has slowed significantly from the double-digit years of the past. Now Beijing is seeking to make a difficult transition away from its dependence on exports and heavy industry towards consumption as the engine of the economy.

After a bumpy start to the year, it has shown resilience in the last quarter, aided by ample credit policies and the weakening of the yuan currency, making Chinese goods cheaper to buy for overseas customers.

Total retail sales reached 3.1 trillion yuan ($450 billion) in the month, boosted by the annual "Singles Day" online sales promotions for November 11.

Sales of household electrical appliances, office goods, communication devices and automobiles were particularly strong.

Utilities and auto sales came in stronger than expected in the month, as growth shifted towards industry and away from construction and services last month, IHS Global Insight analysts said in a note.

- Trump uncertainty -

Together the data show that China's recovery "remains intact heading into 2017", Julian Evans-Pritchard of Capital Economics said in a note.

But as credit growth has cooled and the red-hot property sector faces a correction, the economy is likely to begin slowing again next year, he added.

The recovery has been driven by state-owned enterprises, suggesting that the government and SOEs are taking up a larger share of the economy, Zhao Yang of Nomura said.

Recent curbs on buying real estate led to a slight slowdown in property investment and sales that will continue to kick in, "adding downward pressures" in coming months, he noted.

And the outlook for China's performance is clouded by uncertainty over the coming US presidency of Donald Trump, who has promised to declare China a currency manipulator and threatened to slap 45 percent punitive tariffs on imports from the country to protect American jobs.

In an interview broadcast Sunday, Trump doubled down on tough rhetoric towards Beijing, saying he did not see why the US must "be bound by a one China policy unless we make a deal with China having to do with other things, including trade".

In a statement, NBS analyst Mao Shengyong described economic development as "steady and sound" in November, citing factors including supply-side structural reform, stimulus policies and improved factory efficiency.

But he added: "We should be aware that domestic and external conditions are still complicated with a number of unstable and uncertain factors."

Investors welcomed the stronger-than-expected results, with Chinese stocks ending slightly higher Tuesday.

The benchmark Shanghai Composite Index closed up 0.07 percent to 3,155.04.

IMF agrees to Ivory Coast loans of $659m

WASHINGTON (AFP): The International Monetary Fund has approved two loans totaling $658.9 million for the Ivory Coast, while welcoming recent economic and financial reforms made by the country. Abidjan will immediately receive a $94.1 million tranche, while the rest will be paid following semi-annual reviews of the economic program's implementation, the IMF said Monday. IMF Deputy Managing Director Mitsuhiro Furusawa said the Ivory Coast "economy has made an impressive turnaround since 2012 and its outlook remains favorable. "Nevertheless, reducing poverty and closing human capital and infrastructure gaps will take time, and structural bottlenecks pose challenges." The IMF noted the country's "impressive turnaround since 2012" as well as its improved political climate and a "supportive fiscal policy facilitated by extensive debt relief." Real GDP grew an average of nine percent per year between 2012 and 2015, reversing a decline in per capita income that lasted nearly a decade.

But this return to growth has not "fully shed the socio-economic legacies of decades of sluggish growth compounded by conflict," the IMF said.

For 2016, the IMF expects real GDP to grow at around eight percent over the year.