China services growth adds to economic revival hopes

BEIJING (Reuters) – Growth in China‘s increasingly important services sector accelerated in December at its fastest pace in four months, adding to signs of a modest year-end revival in the world’s second-largest economy.

China’s official purchasing managers’ index (PMI) for the non-manufacturing sector rose to 56.1 in December from 55.6 in November, the National Bureau of Statistics (NBS) said on Thursday.

Two PMIs on the manufacturing sector earlier this week also suggested China’s economic growth was picking up late in 2012, although signs persist it depends primarily on state-led investment.

Data so far suggests only a muted revival in economic growth, rather than a return to the double-digit pace seen in China over the past three decades, Hong Kong-based economist Dariusz Kowalczyk said.

“Absolute levels of both December manufacturing and non-manufacturing PMIs remain relatively low by historical standards and consistent with only modest rebound in economic activity,” Kowalczyk, Credit Agricole’s senior economist for Asia except Japan, said.

He said economic growth picked up in the fourth quarter of 2012 after sliding for seven straight quarters, but in sharp contrast to China’s previous, more pronounced bull runs, it could fade after the first quarter of 2013.

The greatest driver in the pick up in the non-manufacturing sector in December was a jump in construction services to 61.9 from 61.3 in November. Industries including transport slumped, the NBS said in an accompanying statement.

A reading above 50 indicates growth is accelerating, while one below 50 indicates it is slowing.

The strength in construction services is consistent with other indicators, including rising land prices, that point to a revival in China’s property markets, which support about 40 other industries. Signs of a pick up come despite central government protestations that it will not relax credit and purchasing curbs that have stifled the sector in the past two years.

The transport slowdown is also consistent with weak demand for China’s exports in the face of euro area and Japan recessions and an uncertain fiscal outlook in the United States.

SERVICES GROW IN IMPORTANCE

The official manufacturing PMI survey in December matched November’s seven-month high of 50.6, the NBS said on Tuesday, while a complementary survey with a greater focus on the private sector reached 51.5, its highest since May 2011.

China’s fast-growing services industry has so far weathered the global slowdown much better than the factory sector, with the PMI consistently signaling healthy expansion and hitting a 10-month high of 58.0 in March.

That’s partly due to a maturing economy as well as a historic shift in the last decade leading a majority of Chinese to live and work in cities rather than the countryside.

China’s services sector generated 43 percent of China’s GDP in 2010 and by 2011 provided nearly 36 percent of new jobs, exceeding the agricultural sector for the first time.

Beijing has acknowledged that greater consumer activity is needed to reduce the economy’s reliance on the exports sector and investment-led growth.

“Expanding domestic demand will be a major stimulus for China’s economic growth, and the greatest potential will come from the service sector,” Xia Nong, deputy director-general of the Department of Industry under the National Development and Reform Commission, said on Friday, according to the China Daily.

Xia pledged to open the services sector to more foreign competition as well as encouraging Chinese service firms to go overseas.

Foreign investment into the service sector of $ 47.57 billion in the first 11 months of 2012 surpassed that directed to the manufacturing industry, which slumped by 7.1 percent, the China Daily said over the weekend, citing Ministry of Commerce data.

The growing services sector has taken up some of the slack from the property sector, which has struggled with investment and purchasing restrictions as well as a credit crunch.

Overseas company investment into China’s urban transportation surged 24-fold in the first 11 months from a year ago, followed by a 12-fold rise in telecommunications and other information services, and a sevenfold increase in pipeline transportation industries, at sevenfold, the China Daily said, again citing Ministry of Commerce figures.

The sector, formerly the bastion of smaller private businesses, is now important enough to have its own five-year plan, issued in September.

(Editing by Neil Fullick)

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Asian shares up on US fiscal deal

2 January 2013 Last updated at 01:02 ET

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Asian markets have risen after the US House of Representatives passed a deal to stave off the fiscal cliff.

A failure to agree a deal would have triggered spending cuts and tax increases worth $ 600bn (£370bn).

There had been fears that the measures would have derailed economic recovery in the world’s biggest economy and in a worst case push it into a recession.

Hong Kong’s Hang Seng index gained 2.1%, South Korea’s Kospi added 1.7% and Australia’s ASX 200 rose 1.2%

Along with being the world’s largest economy, the US also is a key market for most of Asia’s export-dependent economies.

There were concerns that if the full effects of the fiscal cliff were allowed to take hold, it may have led to a reduction in consumer spending.

That in turn could have hurt demand for Asian exports to the US and impacted growth amongst the region’s leading manufacturers and economies.

Analysts said the approval of the deal had helped allay those fears among investors.

“With the final hurdle being passed now, we’ve got a minimum deal that avoids any immediate threat of the US falling off the cliff,” said Jason Hughes, head of premium client management for IG Markets Singapore.

“That’s definitely boosted Asian equities markets.” he said.

Regional boost

Market sentiment was also boosted by some encouraging regional economic data.

Manufacturing activity in China, the region’s biggest economy and one of the key drivers of global growth in recent years, expanded for the third straight month in December.

China’s official Purchasing Managers’ Index (PMI), a key indicator or activity in the sector, stood at 50.6 in December. A reading above 50 shows expansion.

Meanwhile, a survey of manufacturing activity in South Korea indicated an expansion in the sector for the first time in seven months in December.

Over in Japan, the yen continued to weaken against the US dollar.

The Japanese currency was trading as low as 87.30 yen against the US dollar, the lowest level since July 2010.

Japan’s new Prime Minister, Shinzo Abe, has promised to take measures to weaken the yen to help revive the country’s struggling economy.

The yen has fallen almost 9% against the US dollar since 15 November amid hopes of additional stimulus from the newly elected government.

A weaker yen bodes well for Japanese exporters as it makes their goods more affordable to foreign buyers and also helps boost profits when they repatriate their foreign earnings back home.

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Insight: How Colombian drug traffickers used HSBC to launder money

(Reuters) – When several Colombian men were indicted in January 2010 on money-laundering charges, the case in Brooklyn federal court drew little attention.

It looked like a bust of another nexus of drug traffickers and money launderers, with mainly small-time operatives paying the price for their crimes.

One of the men was Julio Chaparro, a 48-year-old father of four who owned three factories that made children’s clothing in Colombia.

But to U.S. authorities the case was anything but ordinary. Chaparro, prosecutors alleged, helped run a money-laundering ring for drug traffickers that took advantage of lax controls at UK-based international banking group HSBC Holdings Plc. It was one of the most important leads for U.S. investigators pursuing a case against the bank that eventually led to a $ 1.9 billion settlement on December 11.

Chaparro was “basically putting the orchestra together” and investigators saw “him as a major player in terms of cleaning a lot of money,” said James Hayes, special agent in charge of Homeland Security Investigations at U.S. Immigration and Customs Enforcement in New York. Known as ICE, the agency and its task force led the probe.

The Colombian’s lawyer, Ephraim Savitt, said Chaparro was a middleman in the operation, but disputed the extent of his client’s role, saying he was the “page turner of sheet music for the conductor.”

Chaparro, who was arrested in Colombia in 2010 and extradited to the United States in 2011, pleaded guilty to a money-laundering conspiracy count in May and is awaiting sentencing in 2013.

An HSBC spokesman declined comment.

Much about the trail that drug traffickers used to move U.S. dollars – the proceeds from drug sales – through HSBC and other banks remains unclear. By design, the process is layered to evade detection.

But a review of confidential investigative records that originate from two U.S. Attorney office probes and federal court filings in New York and California, as well as interviews with senior law-enforcement officials, shows how investigators tracing the activities of people who allegedly worked with Chaparro were able to expose large-scale money laundering at one of the world’s biggest banks.

The federal law-enforcement task force – named after El Dorado, the mythical city of gold in South America – used wire taps, email and computer searches, information from at least one inside source, and old-fashioned surveillance, to piece together the ring’s operations.

SMUGGLED ACROSS BORDER

Drug cartels sold narcotics in the United States and routed the cash to Mexico, often using couriers to smuggle it across the border. That cash would then be put into bank accounts at HSBC‘s Mexico unit, where large deposits could be made without arousing suspicion, according to U.S. Department of Justice documents.

In one filing, U.S. prosecutors said, Chaparro and others allegedly utilized accounts at HSBC Mexico to deposit “drug dollars and then wire those funds to … businesses located in the United States and elsewhere. The funds were then used to purchase consumer goods, which were exported to South America and resold to generate ‘clean’ cash.”

In a typical transaction, a middleman in a drug cartel would offer to deliver consumer goods, such as computers or washing machines, to Colombian businesses on favorable terms. Another person in the United States would buy the goods from firms using funds from drug trafficking, and fulfill those orders.

Money launderers exploited the laxness of HSBC in policing shadowy money flows, the Department of Justice said earlier this month. Failures included not conducting due diligence on customers, not adequately monitoring wire transfers or cash shipments and not having enough employees to run anti-money laundering systems. U.S. Assistant Attorney General Lanny Breuer called the lapses “stunning failures of oversight.”

The situation was so bad, according to the Department of Justice, that in 2008, the head of HSBC‘s Mexican operations was told by Mexican regulators that a local drug lord described the bank as “the place to launder money.”

The Chaparro probe, led by ICE and the Justice Department, converged over the past two years with two other investigations – led by federal prosecutors and investigators in West Virginia and by the Manhattan district attorney – resulting in this month’s settlement with HSBC.

HSBC and its employees avoided criminal indictments, as the bank agreed instead to a deferred-prosecution deal that forces it to strengthen controls and accept a compliance monitor.

Today, Chaparro sits in a federal detention center in Brooklyn, reading the Bible and awaiting sentencing, said Savitt, a former U.S. prosecutor in Brooklyn, who submitted a list of questions to Chaparro for Reuters.

“He is contrite, regretful and ashamed about his crimes,” Savitt said. “He wants to serve his time and rejoin his family. He understands that a prison term could prevent that from happening for many years.”

Under federal guidelines, he could face 15 to 18 years in prison.

ON CHAPARRO’S TRAIL

The El Dorado federal task force, based in a building on the west side of Manhattan near Chelsea Piers, serves as an umbrella organization for some 250 law-enforcement officials from state, local and federal agencies.

One of the task-force supervisors is Lieutenant Frank DiGregorio, a former New York detective who spent years tracking the so-called Black Market Peso Exchange, which is used to convert dollars to Colombian pesos through trading in goods. DiGregorio along with two younger investigators – Graham Klein and Carmelo Lana – led the HSBC case.

The overall probe began in 2007 when investigators analyzed how courier companies ferried cash through airports in Miami and Houston, a person familiar with the case said. They ultimately tracked that to HSBC‘s operations in Mexico and then connected it to funds moving through New York.

A tipping point in the investigation came in 2009 when El Dorado agents arrested a man named Fernando Sanclemente. Two sources familiar with the case say Sanclemente was an operative in Chaparro’s network.

Sanclemente, who was charged with allegedly conducting financial transactions tied to narcotics trafficking, is free on bail with a $ 200,000 bond, according to the latest court docket entry, which dates to January 2012. His lawyer, James Neville, declined to discuss the status of the case.

According to a criminal complaint filed against him by Lana, the El Dorado agent, on June 30, 2009, task force agents followed Sanclemente for more than two hours as he drove around Queens in New York to ferry cash from drug sales.

Sanclemente first met with a person for about “30 seconds” on one street corner, and left with a yellow plastic bag. Later that night, he drove to a Dunkin’ Donuts near LaGuardia Airport, where a black livery cab pulled up and the driver handed him a black bag.

The El Dorado team followed Sanclemente to Laurel Hollow, New York, some 40 minutes away, where the investigators stopped and searched him, finding about $ 153,000 in the two bags. At Sanclemente’s apartment, investigators said they found ledgers and documents consistent with money laundering.

With the arrest, investigators gained insight into Chaparro’s alleged transactions. At one point, investigators set up undercover bank accounts where they were able to get Chaparro’s network to wire proceeds that could be traced back to HSBC‘s Mexico operations, according to people familiar with the situation and a Department of Justice filing in the HSBC case.

Federal agents would ultimately home in on $ 500 million that had moved from HSBC Mexico to HSBC‘s operations in the United States, according to the confidential investigative records.

Between October 6, 2008 and April 13, 2009, Chaparro and others conducted money laundering transactions totaling $ 1.1 million tied to narcotics trafficking, the indictment against Chaparro alleged.

(Reporting By Carrick Mollenkamp and Brett Wolf of the Compliance Complete service of Thomson Reuters Accelus; Additional reporting by Tomas Sarmiento Cordero in Mexico City and Aruna Viswanatha in Washington; Editing by Paritosh Bansal and Martin Howell)

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Behind the Bidding War For a Gene Sequencing Firm

In June, Complete Genomics (GNOM), the struggling maker of the world’s most accurate gene-sequencing machine, put itself up for sale. Nothing happened initially. Analysts predicted the company would soon need to wind down operations.

Cut to December. A pair of genomics superpowers, China’s BGI and San Diego-based Illumina (ILMN), have suddenly made competing bids to buy Complete, and politicians and regulators want to weigh in on its future. The question is whether foreign ownership might create a national security threat to the U.S. “This budding research area has the opportunity to really advance the development of bioweapons,” says Michael Wessel, a member of the U.S.-China Economic and Security Review Commission, which reports to Congress. He’s concerned that Complete will “advance China’s capabilities in that area beyond what they already have.”

Founded in 2005, Complete has offices in a sedate office park across the street from Google (GOOG) in Mountain View, Calif. It makes a machine that can decode strands of DNA, but unlike most of its rivals offers a sequencing service instead of selling the machine to customers. In its most recent quarter, Complete posted revenue of $ 7.3 million and a net loss of $ 18 million.

Complete’s machines stand out for their ability to accurately sequence entire human genomes, instead of just portions of a person’s DNA. That’s much needed in clinical settings where physicians want to know for sure whether a patient has a particular illness. Complete also has been able to amass a large database of precise genomic information. Finding patterns among that data, comprising thousands of DNA sequences, could be useful in developing novel therapies.

The unique properties of Complete’s sequencers, which have been used for studies of cancer, aging, and disease traits, make them a good fit for BGI. Backed by loans from government-run banks, BGI has spent more than a decade creating a huge DNA database. Believed to be the world’s largest purchaser of sequencing machines, it’s been opening offices worldwide to offer services that complement its research. But BGI lacks the know-how to build its own sequencer, an area in which the U.S. remains far ahead of other countries.

In September, BGI offered $ 118 million to acquire Complete, and Complete’s board approved. Together the companies would have a database of 30,000 whole human genomes—about 10 times larger than that of their nearest competitor, says George Church, a professor of genetics at Harvard Medical School. With such a vast trove of data, BGI could gain a leg up in the race to create therapies and diagnostic tools using sequencing information. “I think this is a very big deal,” says Church, who advises dozens of companies in the industry including BGI, Illumina, and Complete.

The possibility of BGI and Complete uniting has not been lost on Illumina, the world’s biggest seller of sequencing machines, which counts BGI as a top customer. In November, Illumina offered a $ 123.5 million counterbid for Complete, which the company’s board rejected, saying regulators would not approve the deal because of Illumina’s market dominance. (Illumina claims its machines produce 90 percent of the world’s sequencing data.)

This in turn prompted Illumina Chief Executive Officer Jay Flatley to raise national security and privacy concerns about BGI’s bid in a letter to Complete’s board that the board later made public. An Illumina spokesperson declined to comment. In a statement, Complete CEO Cliff Reid said, “There’s no risk to U.S. national security raised by Complete Genomics merging with BGI.” Church and others have speculated that the real reason Illumina wants to keep BGI from acquiring sequencing machine technology is that it wants to avoid losing the company as a customer.

Both the Federal Trade Commission and the Committee on Foreign Investment in the U.S. (CFIUS), which weighs national security issues, are reviewing BGI’s bid and will make a recommendation that will likely determine if the deal goes through. Last year, Huawei Technologies, a Chinese maker of telecommunications equipment, abandoned its acquisition of hardware startup 3Leaf Systems, when CFIUS recommended rejecting the deal before it was reviewed by President Obama.

It’s hard to find a genomics expert who sees real national security concerns in a BGI-Complete deal. DNA sequencing machines are readily available, and Complete’s technology isn’t considered uniquely capable of some uniquely nefarious use. Several startups around the world are developing a new generation of sequencing machines that could soon make today’s obsolete. Church, though, says the Complete kerfuffle has provided U.S. regulators with “a good wake-up call” about the potential for this technology and the need for the U.S. to keep investing in its DNA sequencing lead. “Our politicians don’t follow technology as well as they should,” he says.

The bottom line: A BGI-Complete deal could lead to one entity owning 30,000 human genomes, 10 times more than its nearest competitor.

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Starbucks expands cup campaign aimed at U.S. fiscal deal

(Reuters) – Starbucks Corp is expanding its campaign of using messages written on coffee cups to inspire U.S. lawmakers to reach a deal and avoid going over the “fiscal cliff” of automatic tax hikes and government spending cuts.

As President Barack Obama and congressional leaders were in a final effort to reach a budget agreement before year’s end, Starbucks this week began urging workers in its roughly 120 Washington, D.C.-area shops to write the words “come together” on customers’ cups.

A spokesman for the world’s largest coffee chain said the company would expand the effort to all U.S. stores, continuing through next week.

“Stores from across the country have been asking if they could join in and we have been saying absolutely yes,” Starbucks spokesman Jim Olson said in an email late Friday.

“Based on this unprecedented response, we are inviting all of our partners at U.S. stores to start signing their customers’ cups with Come Together through next Friday,” Olson said.

Starbucks’ cup campaign aims to send a message to sharply divided politicians and serve as a rallying cry for the public in the days leading up to the January 1 deadline to avert harsh across-the-board government spending reductions and tax increases that could send the U.S. economy back into recession.

“We believe the (Washington) DC effort caught on so swiftly because they Come Together message is such a simple and respectful gesture that expresses the optimism that is core to our country’s heritage and to Starbucks mission,” Olson said.

“This is an important moment for Starbucks to use its scale for good and give Come Together an even louder voice – as we move from signing tens of thousands of cups in DC to tens of millions of cups across the U.S. over the course of next week.”

(Reporting by Julie Ingwersen; Editing by Vicki Allen)

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Obama to make statement at 5:45 p.m.: White House

WASHINGTON (Reuters) – President Barack Obama is scheduled to make a statement to the media at 5:45 p.m. ET, the White House said on Friday. The statement follows a meeting with congressional leaders on avoiding fiscal cliff tax increases and spending cuts.

The president and lawmakers are working ahead of a January 1 deadline to come up with a compromise to prevent a fiscal shock that economists warn could slow fragile economic growth.

(Reporting By Mark Felsenthal)

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In Bangladesh, the Garment Factories Keep Burning

On Nov. 24, a fire broke out in the Tazreen Fashions plant outside Dhaka, Bangladesh. It was the worst industrial accident in Bangladesh’s history, resulting in 111 deaths and provoking widespread calls for improved safety measures in the country’s garment industry.

In the four weeks since the Tazreen fire, 17 additional conflagrations have broken out in Bangladeshi textile and garment factories, based on reports in the local press that were compiled by the Dhaka office of Solidarity Center, an organization affiliated with the AFL-CIO. In one case, a worker died as panic-stricken employees jammed a stairwell to escape their workplace. A separate case involved no fire, but workers rushed out of a factory after an electric short circuit made a loud noise.

Abdus Salam Murshedy, president of the Exporters Association of Bangladesh and a member of the Bangladesh Garment Manufacturers & Exporters Association, says the fires were triggered by short circuits, faulty wiring, or sudden power surges. “Some workers got injured when they started running out of their factories in a panic. We are trying to boost confidence among the workers so they don’t panic in case of a fire.”

Murshedy is coordinating an effort to improve safety standards in garment factories in the industrial belt of Ashulia, on the outskirts of Dhaka. “We won’t be able to do our business any more without improving compliance standards,” he says.  The government of Bangladesh did not respond to requests for comment.

If the Tazreen fire effectively pushes the government and the factory owners to make Bangladesh’s garment factories safe—much as the Triangle Shirtwaist fire did in the U.S. a century ago—“It would be a sea change that we’ve been looking for for a long time,” says Celeste Drake, trade policy specialist for the AFL-CIO. The use of child labor in Bangladesh has diminished considerably, thanks in part to outside pressure, she says, noting it may take action by the U.S. government to convince Bangladeshis to change further. In particular, she says, “the president has the power to remove tariff benefits from a country,” which would make U.S.-bound exports from Bangladesh more expensive.

For Cathy Feingold, director of the AFL-CIO’s international department, and Scott Nova, executive director of the Worker Rights Consortium, big U.S. and European retailers and apparel companies must be persuaded to press Bangladesh to do more. “The brands need to take responsibility for their supply chains,” says Feingold. Nova says he figures it would cost the big brand companies less than 10¢ per garment to ensure safe factories in Bangladesh. Instead, “as long as the companies press for low prices from their suppliers, the government of Bangladesh cannot be active in improving safety,” he says. With subcontractors in Bangladesh operating on razor-thin margins, they face an incentive to cut corners.

The best motivation for Bangladeshis to improve worker safety may come not from corporations or the West, however, but from neighboring Burma. As that country emerges as a potential center for textile and apparel manufacturing, Burmese trade unions are viewing Bangladesh as a case study in how an emerging-market economy should not handle issues of safety and workers’ rights, says Tim Ryan, Asia department director for Solidarity Center. “They look at Bangladesh and say, ‘we don’t want to go down that route,” he says, suggesting that a prospering, worker-friendly state on its border might add to pressure for Bangladesh to improve workplace safety and overall conditions for its own garment workers.

Devnath a special correspondent for Bloomberg News in Dhaka.

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Brent holds near $111 on US fiscal uncertainty; Japan supports

SINGAPORE (Reuters) – Brent crude held near $ 111 per barrel on Thursday as jittery investors stayed on the sidelines with a deadline to avert a U.S. fiscal crisis approaching, while hopes the new Japanese government’s policies will spur demand supported prices.

U.S. President Barack Obama and Republican lawmakers resumed talks on Wednesday over the so-called fiscal cliff – tax hikes and spending cuts slated to take effect next week that could push the economy back into recession.

“There is no easy way to resolve the U.S. fiscal cliff, but there should be a compromise at some point and that’s what the market is looking for,” said Tetsu Emori, a commodity fund manager at Astmax in Tokyo.

Front-month Brent futures slipped 16 cents to $ 110.91 per barrel at 0501 GMT, giving up some of the previous session’s 2 percent gain.

Brent may face some resistance between $ 112 and $ 113 before falling towards $ 102.7 over the next three months, according to Wang Tao, Reuters market analyst for commodities and energy technicals.

U.S. crude dropped from a nine-week high reached on Wednesday, shedding 6 cents to $ 90.92.

Oil futures rose in early Asian trade, taking a cue from Japanese stocks, which were at an 18-month high after the country’s new prime minister said beating deflation in the world’s No. 3 oil consumer and taming a strong yen were his top priorities.

“There are hopes that the aggressive fiscal policies will help Japan get out of deflation and, as it is an importer of commodities, that’s a positive for oil markets,” Emori said.

The government will pursue bold monetary policy, flexible fiscal policy and a growth strategy to encourage private investment, Prime Minister Shinzo Abe said on Wednesday .

CLIFFHANGER

The White House and Republicans are still far apart, as hopes for legislation to prevent the U.S. economy from tumbling off the fiscal cliff switch to the Senate.

Democrats control a majority in that chamber but still need some support from Republicans across the aisle for a likely attempt to raise taxes on the wealthy.

Obama will try to revive budget crisis talks – which stalled last week – when he returns to Washington on Thursday after cutting short his Christmas holiday in Hawaii.

“While markets have vacillated between optimism and pessimism over the prospects for a compromise, we expect a deal only at the last minute, with lots of decisions delayed into the New Year and austerity of roughly 2 percent of GDP,” Bank of America-Merril Lynch analysts said in their weekly report.

Worries about supplies from the Middle East rose once more after security forces in the United Arab Emirates arrested a cell of UAE and Saudi Arabian citizens which they said was planning to carry out militant attacks in both countries and other states.

The region holds some of the world’s largest oil fields and as a result any unrest in the area triggers supply concerns.

Oil futures may rise in the first quarter of 2013 with the global economy showing early signs of a pick-up, and on expectations that the fiscal crisis will be resolved.

Encouraging economic data from China, aggressive action by the European Central Bank to help its economies, and quantitative easing by the U.S. Federal Reserve together brighten the outlook for oil in the near-term.

U.S. crude could rise to $ 100 per barrel and Brent may test $ 120 by the end of March, said Emori.

Also supporting prices are expectations that U.S. crude stockpiles may have decreased last week as refiners kept inventory low for year-end tax purposes.

Crude stocks may have dropped by 1.9 million barrels in the week ended Dec 21, a Reuters poll showed on Wednesday.

Inventory data from the American Petroleum Institute will be released on Thursday, while numbers from the Energy Information Administration will be out on Friday, a day later than usual, because of the Christmas holiday.

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Sale shoppers ‘set to spend £3bn’

26 December 2012 Last updated at 00:11 ET

British shoppers are expected to spend almost £3bn in the Boxing Day sales, experts have predicted.

Millions of bargain-hunters are set to descend on High Streets and shopping centres across the UK.

Shops will be cutting prices and opening as early as 06:00 GMT in a bid to tempt customers in.

Market analyst Experian says online spending is expected to be the “biggest and busiest ever”, accounting for almost £500m on Boxing Day.

Tube strike

Amazon UK said it had seen sales on Christmas Day increase by 263% over the last five years.

This was partly due to the growth in home broadband and the popularity of tablets and smartphones.

MoneySupermarket.com said shoppers were set to spend £2.9bn in the Boxing Day sales.

A survey for the website found that four million people plan to head to the stores, as well as five million who will shop online.

However, there could be problems for shoppers in London because of a strike by Tube drivers – although extra buses will be provided to the West End and the Westfield shopping centres in Stratford and White City.

Experian said visits to retail websites were expected to reach 126 million on Boxing Day, an increase of 31% on last year.

James Murray, from Experian, said: “Christmas 2012 is on track to be another record-breaker for online retail, outstripping 2011 on all fronts.

“The current market trends suggest that in the UK, Boxing Day will be the biggest day for online retail, with an estimated 126 million visits to online retail outlets and a massive 17 million hours spent online shopping on this day alone.”

But comparison website Pricerunner said figures suggested that almost half people asked were not planning on buying anything in the sales.

Business failures

The British Retail Consortium (BRC) said Christmas spending in shops this year was “acceptable but not exceptional”.

BRC spokesman Richard Dodd said poor accessibility on high streets, lack of parking and weak consumer demand were more of a threat than an increase in online shopping.

He said some High Street retailers would “undoubtedly” fail after Christmas.

“Retail sales over the weekend have been up to expectations but expectations were relatively modest. Christmas will turn out to be acceptable but not exceptional,” he said.

“There are a lot of myths around online retail. Ten per cent of overall retailing over the year comes from online shopping and actually it presents lots of opportunities for the retail sector.”

But business recovery group Begbies Traynor warned that High Street retailers faced the threat of closure as more people shopped online.

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Japan’s policy veteran Motegi likely to serve as trade minister: media

TOKYO (Reuters) – Incoming Japan Prime Minister Shinzo Abe is likely to pick policy veteran Toshimitsu Motegi as trade minister, who will also take charge of energy and other key economic policies, media reported on Tuesday.

Motegi, 57, a former policy affairs chief for the Liberal Democratic Party (LDP), will tackle energy problems after last year’s Fukushima nuclear crisis, as well as issues such as the U.S.-led Trans-Pacific Partnership (TPP) free trade pact, public broadcaster NHK said.

Motegi was a leading member of the LDP’s panel tasked with drafting an economic revival plan aimed at tackling the strong yen, deflation and preventing Japanese firms from shifting overseas.

The LDP returned to power in the December 16 election for the lower house, calling for radical monetary easing and big spending on public works.

First elected to parliament in 1993 as a member of a small opposition party, Motegi joined the LDP shortly thereafter and has served posts including parliamentary vice-minister for the trade ministry and senior vice-minister for foreign affairs.

Motegi’s formal appointment is likely to be made on December 26, when Abe is expected to be elected as prime minister in parliament and form a new cabinet.

(Reporting by Tetsushi Kajimoto)

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For a Great Stocking Stuffer, Give a Kid a Vaccine

If you are looking for the perfect present to give kids this holiday season, what about immunity from a range of deadly communicable diseases? It is cheap and widely available at any good pediatricians’ office or vaccination clinic. Even so, this wonderful present is spurned by a growing number of parents in America and Europe.

A big reason that more children than ever will be around to enjoy the holiday season worldwide this year is because vaccination rates for a range of diseases have shot up over the last few decades. In the case of measles, the World Health Organization suggests 16 percent of infants were vaccinated against the disease in 1980 compared with 85 percent in 2010. The results speak for themselves: In 1980, measles killed 2.6 million people a year; that number was down to 139,000 in 2010. And that’s thanks not least to the efforts of the Global Alliance for Vaccines & Immunizations, which buys vaccines at bulk and sells them on to developing countries using a sliding price scale that depends on the country’s income. GAVI has helped improve vaccination rates significantly even in some of the world’s most challenging countries. Yemen, for example, started a rotavarius vaccination campaign with GAVI support in 2012.

But for all that Western aid has helped in increasing global coverage, vaccination rates are going the opposite direction in the West itself. Amanda Glassman and colleagues at the Center for Global Development developed a measure of global performance looking at the sustained level of vaccination against diphtheria, whooping cough, and tetanus (the DPT shot) over the 1980-2010 period. On that ranking, the U.S. came in No. 24 behind countries that include Slovakia, Hungary, and Albania. France ranked No. 31, and the U.K. No. 91—behind Gambia and Eritrea.

Unvaccinated kids are concentrated within those countries, which considerably increases the risk of outbreaks. A lot of rich Californians with kids in private schools have managed to clump together with enough like-minded fellow thinkers to create large reservoirs of unvaccinated kids. The opt-out rate in private schools in the state doubled from 2004 to 2011. There are now 110 private schools across California where more than half of the kids skipped some or all vaccinations, and 247 private schools saw vaccination rates below 90 percent, the threshold critical to minimizing the potential for disease outbreak.

Declining vaccination rates have had the inevitable result. In 2011, according to health economist Victoria Fan, France had more than 14,000 cases of measles—the highest since 2000 and considerably more than the total number of cases in all of the Americas that year. Latin America eliminated measles in 2002, but because of dropping vaccination coverage in the North, the U.S. is importing measles cases from Europe and threatens to reexport them to South America. The U.S. has also seen outbreaks of meningitis despite the availability of an infant vaccine since 1987. And in the first nine months of 2012, the U.S. suffered more cases of whooping cough than it had in decades, with 25,000 cases and 13 deaths.

Parents who don’t vaccinate risk their own children’s lives—but also those of newborns too young for vaccination, kids of other vaccine-deniers, and older people for whom vaccines have proven ineffective. And they slow efforts to wipe out diseases completely, so that no one has to go to the bother and expense of getting the vaccines that these selfish, misguided, or ignorant parents are already leaving on the shelf. Think smallpox—it killed 300 million-plus people last century, but no one is vaccinated against it today because a global campaign succeeded in wiping it out.

Insanely, in a country that mandates car seats for all kids, parents in 20 states, including California, are allowed to opt out of vaccination programs for “philosophical reasons.” And the situation is the same across much of Europe.  Whereas a child out of a car seat who gets involved in a crash is only a danger to herself, an unvaccinated kid is a danger to others. The public policy case for mandating vaccination is far stronger than that for car seats.

Meanwhile, no child whose parents have shown the practical love of turning up at the clinic and no vaccine worker who has braved the struggle to set up that clinic should be thwarted for lack of a few dollars to finance the vaccines. (For an example of that bravery, look no further than the eight polio vaccination workers murdered last week in Pakistan, where the Taliban has opposed the campaign.)

So if you’ve already got your kids vaccinated, why not help a kid in another country get his or her full set? Donate to child vaccination efforts through Unicef or such groups as the Lions and Rotary clubs that have been longtime supporters of global vaccination efforts. Meanwhile, if you haven’t got your own kids vaccinated, here’s hoping an elf repeatedly whacks you with the lump of coal in your stocking until you repent.

Kenny is a fellow at the Center for Global Development and the New America Foundation.

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Florida governor asks Obama to block possible ports strike

MIAMI (Reuters) – Florida‘s Republican governor wants President Barack Obama to invoke federal law and order a cooling-off period if nearly 15,000 longshoremen walk off the job in a looming strike that would be a big blow to the state’s economy, according to a letter he sent the president this week.

The International Longshoremen’s Association union and the U.S. Maritime Alliance grouping of shippers and ports have been bargaining since March but reportedly remain far from a deal covering cargo handling at 15 ports on the U.S. Gulf and eastern coasts.

In October, when a previous contract expired, the sides agreed to a 90-day extension of terms that runs out on December 29.

Florida ports in Miami and Fort Lauderdale would be directly hit by a strike or lockout but a stoppage would also rattle overall transport and trade, which accounts for 550,000 jobs in the state and $ 66 billion in economic activity, Florida Governor Rick Scott said in a letter dated Thursday.

“The threat to national safety and security that would result from mass closure of ports cannot be overstated,” Scott told Obama.

Scott said Obama had the power under 1947′s Taft-Hartley Act to prevent or interrupt a work stoppage at the ports. Presidents Richard Nixon and George W. Bush both used Taft-Hartley, which calls for 80-day cooling-off periods and mediation, Scott said.

“The Taft-Hartley Act provides your administration with tools that can help avoid this threat,” Scott said. “On behalf of the State of Florida, I respectfully request that you invoke the act when the contract … expires at the end of the month.”

(Reporting By Michael Connor in Miami; Editing by Cynthia Johnston)

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Google trio win sentence appeal

21 December 2012 Last updated at 08:47 ET

An Italian court has overturned the conviction of three Google executives found guilty of breaking Italian law by allowing a video of a bullied teenager to be posted online.

The clip was uploaded in 2006 and had featured a boy with autism.

The employees were given six-month suspended jail sentences in 2010.

Google had appealed against the ruling, saying it had removed the video within two hours of being notified by the authorities.

The three employees – global privacy counsel Peter Fleischer, chief legal officer David Drummond and former Google Italy board member George De Los Reyes – had been convicted of privacy violations, but absolved of defamation in the original case.

The offending video clip was a mobile phone upload showing four students at a school in Turin bullying the victim. Prosecutors had highlighted that it had been online for two months despite several users posting comments calling for its removal.

At the time Google had said it would be impossible to pre-screen every film posted to its sites to check their contents.

The firm described the appeal ruling as a “victory”.

“We’re very happy that the verdict has been reversed and our colleagues’ names have been cleared,” said a spokesman,

“Of course, while we’re all delighted with the appeal, our thoughts continue to be with the family who have been through the ordeal.”

Giovanni Maria Riccio, professor of IT Law at the University of Salerno, described the ruling as a “landmark decision” since it signalled that internet services were not obligated to monitor all their content.

“Another condemnation for Google would had jeopardised investments of big internet players in Italy and would had a negative impact also on small operators and ISPs [internet service providers], which are not in the condition of monitoring contents on their service,” he told the BBC.

“It is a happy news not only for Italy, but for the whole internet.”

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ICE Gets the NYSE For $2.8 Billion Less Than Nasdaq Would Have Paid

The New York Stock Exchange finally found a dance partner. Ten months after European regulators blocked its $ 9.5 billion attempt to merge with Germany’s Deutsche Börse, the 200-year-old stock exchange is selling itself to a much younger Atlanta-based rival, the IntercontinentalExchange (ICE), for $ 8.2 billion.

ICE (ICE), an options and futures exchange, is paying $ 33.12 a share, which at the time of the deal was about a 37 percent premium. Thursday morning, shares of NYSE Euronext jumped more than 7 percent, to above $ 31, wiping out what had been a year of steady losses. Shares of NYSE were trading around $ 22 in mid-November. A third of the deal is being funded with cash.

This is the second time ICE has bid for at least part of NYSE Euronext (NYX). In 2011 it teamed up with Nasdaq OMX Group to counter the Deutsche Börse offer with an $ 11 billion hostile bid that fell apart within weeks after the U.S. Justice Department raised concerns over antitrust violations.

This time around, a deal was more than welcome with NYSE. In a statement released Thursday morning, Jan-Michiel Hessels, chairman of the board of NYSE Euronext, says, “The Board of NYSE Euronext carefully considered a range of strategic alternatives and concluded that ICE is the ideal partner for NYSE Euronext in an evolving market landscape.”

The deal caps a rough year, if not a rough decade, for the vaunted U.S. exchange. Ever since U.S. regulators passed rules to foster more competition among exchanges in the late 1990s, NYSE has steadily lost market share to smaller electronic rivals, such as BATS and Direct Edge, as well as to private trading venues known as dark pools, which sometimes offer better prices and faster execution times. As investors remain spooked from the market crash four years ago, and uncertainty lingers about the shaky global economy, trading volumes have continued to decline, giving NYSE a smaller piece of a shrinking pie.

In November, NYSE reported that its third-quarter profit fell 42 percent. After its failed merger, NYSE focused on cost-cutting to help offset lost revenue. But even reducing costs by $ 82 million so far this year hasn’t staunched the bleeding.

“It’s been a much better year for ICE,” says Howard Tai, a senior analyst at Aite Group. ICE has benefited from increased energy and commodity trading that takes place over its electronic platform, particularly in the oil markets. West Texas Intermediate, which trades on the New York Mercantile Exchange, is no longer considered the world’s benchmark oil contract. Brent, which trades on the ICE, surpassed it in mid-2012. Annual volume for ICE Brent futures has risen 20 percent year-over-year as of June 2012.

The lower price for NYSE, $ 2.8 billion less than what was offered not even two years ago, reflects the current state of the stock market, says Tai. “The stock trading business isn’t what it once was,” he says. “Trading has been fragmented across so many different venues. The primary exchanges are no longer the destination of choice, and that’s reflected in this valuation.”

This summer NYSE got creative and ended up winning SEC approval of a temporary plan to try to lure back trading volume it has lost over the years to dark pools and wholesaler brokerages that fill orders internally rather than sending them to exchanges. This “dark trading” makes up about a third of all equity volume. The dark pools and wholesalers that execute these trades off exchanges aren’t subject to the same rules and regulations as the public exchanges, which feel they’ve been put at a disadvantage. At a U.S. Senate subcommittee hearing this week on market structure, officials of the NYSE and its rival Nasdaq told legislators that dark pools are bad for investors.

The combined NYSE and ICE exchange will be a formidable operation. ”It’s probably the correct model going forward,” says Tai. “A centralized place for transactions across multiple asset classes. NYSE realized it could no longer be a one-trick pony.”

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After Newtown, Gun Control Steps We Can Take

In September 1994, President Bill Clinton signed an assault weapons ban into law. Some in the gun industry were distraught. “We’re finished,” Ron Whitaker, then the chief executive of Colt, told several other members of a firearm trade association. Colt made substantial profits from the AR-15, the quintessential assault rifle. Whitaker, it turned out, was wrong. The AR-15 was not finished. It was just getting going.

In the face of a ban that turned out to be laughably easy to evade, the industry kept making civilian versions of military rifles. The prohibition actually helped transform what had been a marginal product for most manufacturers into a gun-rights poster child, celebrated by the National Rifle Association and sought-after by a much bigger share of the gun-buying public. The law was written to last just 10 years, and in 2004 this porous excuse for gun regulation expired.

Now, in the wake of the elementary school massacre in Newtown, Conn., President Obama and congressional Democrats are calling for a renewed ban on assault weapons. Proponents of the legislation vow they will do a better job this time. No loopholes, they promise. Skepticism is warranted. Senator Dianne Feinstein, author of the 1994 law, has conceded the bill she plans to introduce early next year will “grandfather in” weapons legally possessed on the date of enactment. Moreover, the California Democrat has said the legislation will exempt 900 weapons used for hunting and sporting purposes.

There you have the Democrats’ opening bid: Nine hundred exemptions, and millions of pre-ban weapons to remain in private hands. The legislative fight hasn’t even begun, and gun-control advocates are surrendering the all-important fine print.

While politicians in Washington are clearing their throats, the marketplace has responded. Dick’s Sporting Goods (DKS), a national chain, suspended sales of a handful of semiautomatic rifles similar to the one used in the Connecticut rampage. Cerberus Capital Management, a $ 20 billion private equity firm, announced that, as a result of investor pressure, it will sell its controlling interest in Freedom Group, a North Carolina-based conglomerate of gun and ammunition makers. Hollywood, for the moment, is backing away from some gun- and death-themed television reality shows.

Maybe this time is different—different from Columbine, Virginia Tech, Tucson, and Aurora, all of which were followed by calls for new restrictions on guns, and none of which led to any. Perhaps 20 tiny coffins will prove a catalyst for compromise previously beyond the reach of our polarized politics. Sounding uncharacteristically conciliatory, the NRA scheduled a press conference for Dec. 21, saying it would make “meaningful contributions” to avert another Newtown.

Like abortion, guns evoke irreconcilable ideological cleavages. We live in a big country. Our conflicting values cannot all be neatly squared. And if history provides a guide, the latest carnage could provide little more than an occasion for renewed culture war. That would be a shame, because there are steps that a majority of Americans ought to be able to agree to, even without resolving our deep-seated societal conflict over whether firearms represent self-reliance or a threat to children (or both). The Newtown tragedy is a chance for opposing sides to focus on potential consensus and enact reforms that would do what everyone says they want: keep guns out of the hands of criminals and psychotics.

This sad occasion is not, however, going to change the fundamental reality that the U.S., for better or worse, is a gun culture. Nearly half of American households have one or more firearms, according to Gallup. The hard truth for gun foes is that firearms are out there, and they’re not going away.

The defunct 1994 ban on assault weapons offers an instructive place to begin any serious conversation, if for no other reason than Democrats are placing so much emphasis on reviving it. Among its many flaws was a focus on particular rifle models and cosmetic features, such as whether the guns had a bayonet mount or flash suppressor. This emphasis on form over function allowed manufacturers quite easily to “sportify” the prohibited models, and voilà: A banned weapon became unbanned.

An even more fundamental weakness was that the law created confusion over just what makes a weapon an “assault weapon.” As the term has come to be used, it denotes a military-style rifle that fires one round for each pull of the trigger. These rifles are called semiautomatic because with each shot fired, they eject the empty shell case and load a new round into the firing chamber.

Fully automatic machine guns, by contrast, fire continuously as long as the trigger is held. They generally aren’t available for sale to civilians. Although they may have a tough military look, semiautomatic assault weapons, shot-for-shot, are no more lethal than Grandpa’s Remington wooden-stock deer-hunting rifle. Arguing about whether a particular rifle is an assault weapon makes no sense. Worse, it creates the impression among firearm advocates that gun-control proponents either don’t know what they’re talking about or that a ban on assault weapons is actually a precursor to broader prohibition. By labeling her forthcoming legislation an “updated assault-weapons bill” and hearkening to the misbegotten 1994 law, Feinstein undercut her credibility right out of the box.

The sole characteristic of a semiautomatic rifle that makes it especially deadly is ammunition capacity. The Newtown killer used multiple 30-round magazines to fire scores of times in a matter of minutes, according to police officials. Magazines are the spring-loaded containers of bullets that snap into the bottom of a rifle or the grip of a pistol. If a shooter couldn’t obtain large mags, he’d have to reload more often, possibly limiting bloodshed.

Feinstein says her bill will ban the manufacture, sale, or transfer of magazines holding more than 10 rounds. If she’s smart, she’ll streamline the legislation to focus strictly on magazine capacity, rather than inviting another confusing fracas over what qualifies as an assault weapon. Even if the bill does zero in on magazines, though, to make such a limitation meaningful, Congress would have to ban the possession of large magazines, not just the sale of new ones. Otherwise, the tens of millions of big magazines already on the market will provide an ample supply to future mass killers. Are lawmakers prepared to send sheriffs and police out to take away privately owned magazines exceeding 10 rounds? In the 1990s the answer was no. It’s doubtful that’s changed. (Imagine being the Texas or Florida cop given that assignment.)

That’s why a more promising response to Newtown would be one that stresses keeping guns out of the hands of criminals and the dangerous mentally ill. These are goals that the NRA cannot credibly oppose. Which does not mean the NRA will cooperate. The gun lobby thrives on controversy, not compromise. It needs enemies to raise money. Legislation framed as crime control, rather than gun control, stands a better chance of winning over firearm owners and Republican politicians.

Tightening the faulty federal background-check system ought to be the top priority on Capitol Hill. No serious person objects to the FBI-coordinated computerized record checks that prevent sales of firearms to felons, domestic-violence misdemeanants, and those formally deemed mentally ill. But the background check applies only to sales by federally licensed firearm dealers. Nonlicensed “private collectors” may sell to strangers, no questions asked. By some estimates, 40 percent of all gun transfers take place without background checks: an invitation to criminals if ever there was one. If Democrats lined up a battalion of police chiefs to demand universal application of background checks as a way to deter crime, they’d have an appealing pitch to the American public.

Would enactment of such a reform stop the determined school shooter, or even the violent career criminal, from obtaining weapons on the black market? No. The passage in the 1990s of the background-check and assault-weapons laws had negligible effects on crime, according to Mark Kleiman, a professor of public policy at the University of California at Los Angeles and one of the country’s most independent-minded criminologists. An improved background-check system would not have prevented the Newtown shooter from getting hold of his mother’s legally acquired guns. Mass killers tend to be young men who, despite deranged minds and evil hearts, prepare carefully. Some have clean records before going berserk. Others obtain their weaponry from relatives or friends. Fixing background checks is still worth doing. It might deter some criminals, and the imposition on Second Amendment rights would be slight. To sell a gun to a neighbor, the owner could be required to conduct the transaction via a local licensed dealer, who, for a modest fee, would run the computerized check.

To make a universal record check more effective, lawmakers could begin what would be an arduous process of reviewing and reforming how we deal with serious mental illness in the U.S. Some steps seem embarrassingly obvious. At both the federal and state level, there are numerous agencies with mental health information that has not been entered into the background-check system. The president could remedy that with executive orders and additional financial incentives for states to comply. Then there is the much more daunting challenge of what to do about the unintended legacy of deinstitutionalizing the dangerous mentally ill.

In the 1970s and 1980s, the U.S. emptied many state mental hospitals because they provided dreadful care or none at all. We didn’t follow through on the promised community-based treatment. As a result, we created a de-facto policy of waiting until seriously mentally ill people commit crimes and then consigning them to prison. Over the past half-century, the number of psychiatric beds in the U.S. has decreased to 43,000 from 559,000, even as the overall population increased, according to the Treatment Advocacy Center in Arlington, Va.

Other important research suggests that more effective treatment of the mentally ill can contribute to lower homicide rates. Steven Segal, a social work professor at the University of California at Berkeley, published a paper in November 2011 in the journal Social Psychiatry & Psychiatric Epidemiology showing that increased access to inpatient psychiatric care, better-performing mental health systems, and more flexible criteria for involuntary civil commitment account for 17 percent of the state-to-state variation in homicide rates.

One of the most troubling observations I’ve encountered since Newtown came from Dr. Carl Bell, a psychiatrist and professor at the University of Illinois at Chicago. Shortly after the massacre, Bell and I appeared as guests on the National Public Radio program Tell Me More. The soft-spoken academic interrupted the conversation about the nuances of gun control to point out that random mass shootings are typically suicides augmented with multiple murders as a way of dramatizing the shooter’s pain and self-hatred. Copious amounts of research show that media publicity of suicides leads to copy-cat crimes. “It seems to me,” the professor politely interjected, “that the more we report that this sort of assault weapon was used, that this person had this kind of bulletproof vest, that this person entered the school this way—that gives other people who are depressed and suicidal and want to take a whole bunch of people with them the knowledge on how to pull it off.” The media, Bell said, should self-censor their sensational, detailed coverage of mass shootings.

That’s not going to happen—for the same reason that the inevitable commissions and hearings on violence in films and video games will conclude that there’s little for government to do about bloodshed in entertainment. The First Amendment protects a robust right to expression. A parallel exists with the Second Amendment, another emblem of freedom, forged in the 18th century yet still hallowed generations later. These uniquely American rights come with tremendous responsibilities—and haunting costs.

The bottom line: Stricter background checks are a start—but better care for the mentally ill will be more effective at reducing the number of shooting sprees.

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A Banner Year for Sex Toys

Santa knows who’s been naughty and who’s been nice. This year, he’s rewarding couples who want to be both. Spurred by the global sensation of the Fifty Shades of Grey bondage trilogy—the best-selling books of all time in Britain—sex toys featured in the tale are leading to a banner Christmas for the adult novelty industry. Europe’s retailers are struggling to keep up with demand for the leather-covered spanking paddles and blindfolds featured in the novels.

Just as Sex and the City made the Rabbit vibrator an acceptable household appliance for single women more than a decade ago, the erotic novels’ popularity has made restraints and so-called love balls acceptable stocking stuffers for couples this year. Explains Nick Hewson, head of Hewson Group, which does market research on women’s products: Sex play, such as bondage, domination, and sadomasochism, “tends to be a couples activity. You need at least two people there.” The $ 2 billion industry has grown from 5 percent to 10 percent annually in the past decade as retailers went upscale and targeted women, according to Hewson; it will expand at the top end of that range this year and could exceed 15 percent next year due to the ripple effect of Fifty Shades.

Lovehoney.co.uk, Britain’s No. 1 online retailer of erotic merchandise, is betting on that expansion. It won the rights to produce and sell a range of Fifty Shades-branded sex toys everywhere except the Americas. The line of 20 products, including vibrators and bondage kits, was introduced in time for Christmas and endorsed by the book’s author, E.L. James. Prices start at £11.99 ($ 19.32) for blindfolds, feather ticklers, or “vibrating bullets,” and rise to £54.99 for the “Submit to Me” bondage kit. Lovehoney, which reported sales of £15.9 million in the fiscal year ended in March, estimates the line will generate £10 million in revenue in its first year on the market.

Lovehoney, also the official distributor of Fifty Shades products to other retailers, sold out its first production run within days of the line’s Nov. 12 debut. It’s seen booming sales of products such as $ 24.99 “Inner Goddess” silver pleasure balls like those the lead character, tycoon Christian Grey, tries on Anastasia Steele, the book’s heroine. “Fifty Shades has had an incredible effect on business,” says Lovehoney co-founder Richard Longhurst. “It’s given couples permission to enter the market” and told them “that buying toys is all right.”

That’s good news for sex toy merchants at the second-busiest time of year for the industry. (Only Valentine’s Day is bigger.) Shares of Beate Uhse (USE), Europe’s only publicly traded adult goods retailer, are up 154 percent this year as a stronger focus on women helped it reach an operating profit in the first nine months of 2012 after two years of losses. “We see that we sell more S&M articles such as little whips and handcuffs,” says Chief Executive Officer Serge Van Der Hooft. “That’s really due to the book.”

The retailer, which doesn’t have a license to use the book’s name for its products, has still displayed together the ones most often used by Grey to dominate Anastasia, including whips, in its shops. The chain is sending actors dressed as Christmas angels onto the streets of German cities to advertise the shops and will open more outlets focused on women and couples next year in Germany, the Netherlands, and Belgium. “If people don’t have the money for a holiday or a television, they search for little things to enjoy life more without too much investment,” Van Der Hooft says. “Our products are very good for that.”

Hewson says growing acceptance of sex goods will also benefit upmarket products such as those made by Sweden’s Lelo, which sells the $ 159 Tiani 2 couples toy, and Jimmyjane, producers of Little Something precious metal vibrators, including a $ 3,500 diamond-and-platinum version. Such high-end gadgets represent only about 7 percent of the market by value, Hewson estimates, leaving plenty of room for growth. “If you work in the City and make good money, how would it look if you went into the special part of your cupboard and had something ugly?” says Allison England, a saleswoman at Coco de Mer, a chain of British lingerie and luxe sex toy boutiques that also has a shop in Manhattan. Men who wear bespoke suits and drive expensive cars want to impress in the bedroom, too, she says.

Another trigger for growth in coming months could be the end of the holidays themselves. According to Renee Denyer, a manager at London shop Sh!, which sells a range of Fifty Shades merchandise, sex toy sales usually spike again following Christmas as people look for distractions after prolonged periods spent with their relatives.

The bottom line: Europe’s $ 2 billion sex toy industry is benefiting from the popularity of the Fifty Shades of Grey trilogy, Britain’s biggest-selling books ever.

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“Fiscal cliff” hopes lift Asian shares, other risk assets

TOKYO (Reuters) – Asian shares and other risk assets rose on Tuesday as signs of compromise sparked new optimism that the U.S. “fiscal cliff” budget tussle could be settled before tax hikes and spending cuts begin to bite early next year.

Differences over how to resolve the fiscal cliff narrowed significantly Monday night as President Barack Obama made a counter-offer to Republicans that included a major change in position on tax hikes for the wealthy, according to a source familiar with the talks.

The move, which the source stressed was not Obama’s final offer, was welcomed by a spokesman for Republican House of Representatives Speaker John Boehner, potentially advancing negotiations towards a deal by the end-year deadline.

Oil, copper and gold also firmed on the prospect of progress in the U.S. budget talks, which reduced worries about economic damage, but expectations of more monetary easing in Japan kept the yen soft.

“The market will view any advance in talks as positive for confidence, which has been battered by the daily flow of political fighting,” Ben Taylor, sales trader at CMC Markets said in a report.

“Regardless of what is decided, the market is looking for a decision and any compromise will help provide a clearer picture for the future.”

European shares were expected to keep up the positive momentum, with financial spreadbetters predicting London’s FTSE 100 <.ftse>, Paris’s CAC-40 <.fchi> and Frankfurt’s DAX <.gdaxi> will open as much as 0.5 percent higher. A 0.3 percent gain in U.S. stock futures suggested a higher Wall Street opening. <.l><.eu><.n></.n></.eu></.l></.gdaxi></.fchi></.ftse>

MSCI’s broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> was up 0.2 percent, following a rise in global shares on Monday. The index snapped an eight-day winning streak on Monday as investors took profits from last week’s rally.</.miapj0000pus>

Regional equities also took direction from local factors.

Australian shares <.axjo> gained 0.5 percent to a 17-month high, with resource stocks elevated by a rise in iron ore prices <.io62-cni> to a five-month high.</.io62-cni></.axjo>

“Iron ore is a very key commodity in the Chinese industrial machine, steel usage will bounce back and that is good news for our exporters,” said Baillieu Holst director Richard Morrow.

Seoul shares <.ks11> rose marginally but underperformed some others in Asia, as investors were reluctant to build positions ahead of South Korea’s presidential vote on Wednesday.</.ks11>

London copper was up 0.3 percent to $ 8,085 a metric ton (1.1023 tons).

“Before the end of the year, I don’t really see huge selling pressure, with improving data from China and expectations for a resolution to the fiscal cliff,” said analyst Bonnie Liu of Macquarie.

U.S. crude surged 0.8 percent to $ 87.85 a barrel and Brent rose 0.7 percent to $ 108.41.

Spot gold added 0.3 percent to $ 1,702.01 an ounce.

Solid performance in stocks boosted Asian credit markets, narrowing the spreads on the iTraxx Asia ex-Japan investment-grade index by two basis points.

JAPAN POLITICS MATTER

In Japan, the Nikkei average <.n225> closed up 1.0 percent at an 8-1/2-month high and edged closer to the key 10,000-mark, with sentiment bolstered by a landslide election win for the conservative Liberal Democratic Party on Sunday. <.t></.t></.n225>

LDP leader Shinzo Abe, due to be confirmed as Japan’s premier on December 26, is calling for far more aggressive monetary stimulus and huge public works spending to rescue Japan from decades-long deflation. His pledges are seen as pressuring the yen and supporting Japanese stocks by improving earnings for the country’s exporters.

“The Nikkei is up today primarily due to the rise in U.S. stocks overnight, but the ‘Abe-effect’ is surprisingly longer-lasting as investors seem to be postponing the timing of unwinding their positions until they see the details and specifics in policies,” said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank.

The dollar inched up 0.1 percent to 83.96 yen, off a 20-month high of 84.48 yen hit on Monday but well above its late New York levels on Friday.

Abe applied fresh pressure on the Bank of Japan on Monday, saying that the election result reflected strong public support for his views, which he hoped the BOJ would take into account at its two-day policy meeting starting on Wednesday.

“The dollar has more upside against the yen ahead of the BOJ’s meeting, with expectations for some additional easing steps being strengthened after Abe’s comments yesterday,” said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo.

“The corrective fall in the dollar/yen after the election was small and it’s crawling up because the yen weakening trend is still intact. But after the BOJ meeting, there will likely be pre-holiday profit-taking, pushing the dollar/yen down by 1 to 2 yen,” Saito said, adding that the dollar could temporarily touch 85 yen before profit-taking sets in by year-end.

Concerns that big-scale fiscal stimulus could seriously increase the country’s debt burden pushed the benchmark 10-year Japanese government bond yield to a one-month high of 0.750 percent.

U.S. Treasury yields also inched up in Asia, with the 10-year yields briefly reaching 1.796 percent, its highest level since October 26, on hopes for a deal on the U.S. fiscal cliff. [US/T

(Additional reporting by Victoria Thieberger in Melbourne and Manash Goswami and Melanie Burton in Singapore; Editing by Richard Borsuk)

Business News Headlines – Yahoo! News

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Analysis: Huge mandate for Japan’s LDP may be less than meets the eye

TOKYO (Reuters) – Even Japan‘s next prime minister, Shinzo Abe, realizes that his party’s landslide election victory is not the sweeping mandate that it appears at first blush.

An analysis of the vote as well as Abe’s own comments suggests he would be best served by focusing on what matters most to voters – the economy – and steering clear of divisive issues such as revising Japan’s pacifist constitution.

That said, aggressive moves by China in a territorial row over tiny islands in the East China Sea could act to bolster support for Abe’s tough-talking stance toward its giant rival.

Three years after a crushing defeat, Abe’s Liberal Democratic Party (LDP) surged back to win 294 seats in Sunday’s vote for the 480-member lower house.

Together with a smaller ally, the New Komeito party, the LDP also took a two-thirds ‘super majority‘ that could help break Japan’s persistent policy deadlock in parliament.

The ruling Democratic Party of Japan (DPJ), in comparison, managed a mere 57 seats – less than a fifth of its showing when it swept into power for the first time in a historic 2009 vote.

Abe himself, however, admitted the victory was more a rejection of the novice Democrats’ messy reign than a vote of confidence for the LDP, which ruled Japan for most of the past half-century before its ouster three years ago.

“Our victory this time does not mean trust in the Liberal Democratic Party has been completely restored. Rather, it was a decision by the public that they should put an end to the political stagnation and confusion over the past three years, caused by the Democratic Party‘s misguided political leadership,” Abe told a news conference on Monday.

“We must move forward and achieve results.”

Japanese voters have been on a roller coaster of hopes and disappointment for the past decade since charismatic leader Junichiro Koizumi took office in 2001 pledging bold reforms.

Lured by Koizumi’s promises, voters handed the LDP a massive victory in 2005 only to kick out the long-ruling party four years later in hopes that the Democrats would do a better job.

In a sign that both enthusiasm and expectations are fading, turnout on Sunday was a record low 59 percent, according to a Kyodo news agency estimate.

Nor did the LDP win a majority of votes from those who did cast their ballots. The main opposition party won about 43 percent of the vote in the single-seat constituencies that supply 300 of the chamber’s seats, but a first-past-the post system and split votes amongst a clutch of new, small parties meant that the party secured 79 percent of those seats.

JULY ELECTION HURDLE

In the proportional representation blocks that provide the other 180 seats, the LDP won about 28 percent of the votes compared to 16 percent for the DPJ, while the new right-leaning Japan Restoration Party took 20 percent, media estimates showed.

“It’s clear that only 30 percent or less of voters solidly support the LDP. Unless Abe is careful, his cabinet support will go down to that level very quickly and even with a two-thirds majority, he would be in trouble,” said Sophia University political science professor Koichi Nakano.

Abe, who quit in 2007 after a troubled year in office, will have to persuade voters quickly that they made the right choice ahead of an election for parliament’s upper chamber in July.

Although the LDP-New Komeito “super majority” will allow the lower house to enact bills rejected by the upper chamber, doing so is a time-consuming and cumbersome process, so the new government will be keen to win a majority in July’s poll.

“He’s preparing for the next election and understands that what he does in the first few months will have a big impact and voters are most interested in the economy,” said Jeff Kingston, director of Asian studies at Temple University’s Japan campus.

Abe has vowed to rescue Japan from its fourth recession since 2000, end deflation and tame the strong yen with a recipe of hyper-easy monetary policy and big spending on public works.

Equally central to his agenda, however, is a push to shed the shackles of Japan’s post-war pacifism by revising the U.S.-drafted constitution and rewriting wartime history with a less apologetic tinge.

Changing the charter – never altered since its adoption in 1947 – requires approval by two-thirds of both houses of parliament and a majority of voters in a national referendum.

Straw polls of voters suggest that the economy tops the list of public priorities and LDP ally New Komeito is not keen on revising the constitution’s pacifist Article 9.

But a strong showing by the nationalist Japan Restoration Party in the election also indicates simmering support for a tough stance towards China as well as hope for a decisive leader to restore Japan’s flagging self-respect.

That could grow if Beijing steps up its activities in waters and airspace near the disputed islands, known as the Senkaku in Japan and the Diaoyu in China.

Last week, a Chinese government plane entered what Japan considers its airspace over the islets in the East China Sea, prompting Japanese fighters to scramble and escalating tension in the row between Asia’s two biggest economies.

“This has not been a strong mandate for Abe in foreign policy or security matters,” said Narushige Michishita, an associate professor at the National Institute for Policy Studies. “But if China continues to provoke us as they did several days ago, that might change.”

(Editing by Raju Gopalakrishnan)

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