Syria retakes Homs gas field from hardline group

#GNN - #Syrian #army said on Sunday it recaptured a gas field east of the central city of Homs that was seized by hardline Islamic State fighters earlier this month.

Syrian television showed footage of soldiers running and deploying in a vast desert area which it said was the Sha'ar gas field. The army said in a statement it retook the field after a "precise operation in which dozens of terrorists were killed."

However, a source from the Islamic State said the fighters pulled out after destroying the field's equipment and capturing at least 15 tanks and dozens of rockets which were used to guard the field.

"We pulled out because it was no longer good for us to stay. The goal was to get the tanks and rockets present at the field and we did," he said. "There is no point in staying there and become an easy target for the regime and its warplanes."

Islamic State, previously known as the Islamic State in Iraq and Levant, has advanced in Syria and taken over swaths of territory in neighboring Iraq in what it has described as a bid to establish an Islamic caliphate.

At least 1,100 soldiers and pro-Assad fighters have been killed since the Islamic State intensified its attacks against government forces this month, the Syrian Observatory for Human Rights said.

During the assault on the field, the Islamic State fighters killed at least 270 soldiers, guards and staff and also killed at least 85 soldiers when they captured an army base in the province of Raqaa on Friday, the Observatory said. The fighters said they decapitated most of the soldiers and hung several heads outside the base gates.

(GNN - AIP)(Reuters)(Reporting by Mariam Karouny; Editing by Larry King)

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#China shares lead Asia higher, dollar buoyed

#GNN - #Asian #stocks shrugged off a drop in Wall Street and hovered near three-year highs on Monday, with China taking the lead after data showed a robust jump in profits earned by industrial firms in the world's second-largest economy.

The dollar traded near six-months peaks against a basket of major currencies as the euro continued to sag.

Profits earned by Chinese industrial firms rose 17.9 percent in June to 588.08 billion yuan ($94.98 billion) from a year earlier, up sharply from an 8.9 percent rise in May, the National Bureau of Statistics said.

Recent data have reinforced market expectations that the Chinese economy is powering through its recent soft patch as the government uses targeted stimulus measures to support growth.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 percent, close to a three-year high of 509.23 scaled on Friday.

China's CSI300 jumped 2.3 percent and the Hang Seng climbed 0.8 percent.

Tokyo's Nikkei, which hit a six-month closing high Friday, was up 0.5 percent.

Funds from Middle Eastern and Asian investors were trickling in again as the Muslim fasting month ends, helping to shore up regional stocks, said Soichiro Monji, chief strategist at Daiwa SB Investments in Tokyo.

"Geopolitical concerns remain as the conflict in the Ukraine does not look like it will end soon, but there is some relief spreading that the impact will be contained," he said.

The focus turned to whether this week's run of U.S. data would be strong enough to keep fuelling risk appetite.

Upcoming U.S. indicators include the Case-Shiller price index on Tuesday, second-quarter GDP due on Wednesday and non-farm payrolls on Friday.

Factory activity surveys for major Asian economies will also be released on Friday.

The euro traded little changed at $1.3432, within close reach of $1.3421 plumbed on Friday, its lowest since November 2013.

The euro took another hit on Friday when Germany's Ifo business climate index painted a gloomy picture of the economy.

It had already been under pressure from a range of factors including expectations of further easing by the European Central Bank and diverging interest rates seen favouring the U.S. over Europe.

"We should brace for the euro breaking below key support at 1.34, given diverging U.S. and European monetary policies. Dollar buying pressure is building as shown by the strength of the dollar index, which this week's data, if upbeat, could enhance further," said Junichi Ishikawa, market strategist at IG Securities in Tokyo.

The two-day Federal Reserve policy review ending on Wednesday was also in focus but expectations were for Chair Janet Yellen to deliver the usual dovish message.

The dollar index, a gauge of its strength against a basket of key currencies, stood little changed at 81.026 after striking a near six-month high of 81.804 on Friday.

The dollar fetched 101.81 yen, having lost a bit of momentum in the wake of a rise in U.S. Treasury yields after climbing to a two-week high of 101.94 on Friday.

While the attention of equity and currency markets has shifted towards major corporate earnings and macroeconomic trends, geopolitical issues remained a key factor in commodities such as oil.

Brent crude shed 0.4 percent to $107.96 a barrel but still retained a chunk of its gains from Friday, when it climbed more than $1 as fighting in Ukraine and deteriorating relations between Russia and the United States ignited new fears of supply disruptions. [O/R]

(Editing by Eric Meijer & Kim Coghill)

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#Audi cuts spare-part prices in #China amid anti-monopoly probe

#GNN - #Volkswagen AG's #premium #brand Audi said it would cut spare-part prices in China as global automakers rush to change their pricing strategies after Chinese anti-monopoly regulators began probing the auto industry.

The National Development and Reform Commission (NDRC), China's state planner, is investigating the industry amid domestic media complaints that foreign carmakers, using a dominant market position, are overcharging Chinese customers on products and spare parts.

"As a premium market leader Audi has made the price adjustments proactively," Audi said in an emailed statement over the weekend, adding the new prices will be effective Aug 1. "Audi and its joint venture FAW-Volkswagen support the efforts of the NDRC to examine the pricing in the after-sales area in China."

The announcement by Volkswagen's (VOWG_p.DE) Audi came on the heels of a move by British luxury carmaker Jaguar Land Rover to cut prices on three models in China in response to the NDRC's probe.

Earlier this month, Daimler AG's premium brand Mercedes-Benz cut service charges and spare-part prices in China by as much as 20 percent.

China is stepping up efforts to bring companies in compliance with an anti-monopoly law enacted in 2008. In recent years, it has targeted industries ranging from drugmakers and milk powder producers to jewelers and technology firms.

The NDRC, which regulates pricing activities, has handed down record fines over the past year to a number of multinational companies including Mead Johnson Nutrition Co and Danone SA.

A senior NDRC official said in February that the pricing regulator was collecting evidence of possible anti-competitive behavior by the country's auto parts market.

The government has also been collecting information on whether there's monopolistic behavior by automakers in the country's vehicle market.

'LOCALIZATION MEASURES'
If Chinese regulators determine that there are anti-competitive practices in the car industry, it's not clear whether the price cuts foreign automakers are making could help them avoid penalties.

A separate statement on Audi's China website quoted an NDRC official as saying the regulator "welcomes global brands such as Audi to voluntarily make corrective measures, and hope other companies can also review their operations and actively take measures to comply with the Chinese law."

Audi said that localization measures and economies of scale allow it to "adjust" the prices for spare parts in China and pass these "cost advantages" onto customers.

Audi did not provide details of the price cuts, but said they reduce the total cost of spare parts for an Audi A6L by about 30 percent.

Foreign automakers have been frequently criticized by local media for charging Chinese customers more than those in other markets pay.

Audi, Subaru and Jaguar Land Rover were singled out in a December report by China's state television that accused foreign carmakers of over-charging in the after-sales market where services and spare parts are sold.

(Editing by Richard Borsuk)

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#Investors pin #growth hopes on U.S. as Ukraine crisis casts shadow on Europe

#GNN - With the prospect of stiffer sanctions against Russia rattling confidence in Europe, investors will be looking to the United States and China to underpin the global economy.

Wednesday's U.S. gross domestic product (GDP) reading and jobs data on Friday will help markets to judge the strength of the economy's rebound and the likely speed of the Federal Reserve's return to more conventional monetary policy. The Fed meets on Tuesday and Wednesday.

"The U.S.-China story is looking more encouraging," said James Knightley, an economist with ING. "With the European Central Bank's moves, that should allow the euro zone economy to swing upwards but with a good six- to 12-month lag."

In Europe, the downing of a Malaysia Airlines airliner over eastern Ukraine has left countries such as Germany with little choice but to change their long-passive stance and impose tougher sanctions on Moscow over the role of pro-Russian separatists.

Early this week, European Union ambassadors are expected to meet to finalize sanctions that could include closing EU capital markets to state-owned Russian banks, placing an embargo on arms sales and restricting supply of energy technology.

Globally, such sanctions would bite hardest in Europe, where Russia does most trade, compounding economic problems not only for Russia but throughout the region.

The International Monetary Fund has already flagged the 'chilling effect' on investment in Russia of sanctions as it pared back its forecast for global economic growth last week.

Confidence amongst businesses in Germany, which accounts for more than one quarter of all exports across the European Union, has dipped further since the plane crash.

"The situation is very dangerous," said Michael Heise, chief economist of Allianz, one of the globe's largest fund investors.

"An escalation carries large risks for the economy," he said, cautioning in particular of the knock to confidence. "There is a big risk from further sanctions although one has to accept that clear (diplomatic) signals are needed."

BOUNCE-BACK
The crisis comes at a delicate moment for the 18 countries using the euro, where a fledgling recovery is losing pace. Investors will get a snapshot of the bloc's inflation rate, which has sunk well below the European Central Bank's target, on Thursday.

With Britain, one of the stronger European economies, caught up in the push for mutually painful sanctions against Russia, economic growth prospects hinge on the United States and China.

"We think there is going to be a bounce-back in (U.S.) gross domestic product," said ING's Knightley. The Reuters consensus shows annualized growth picking up to 3 percent in the April-June quarter.

Data from Beijing is expected to confirm China's economy picked up in July after government moves to boost lending to business, such as reducing the amount of cash banks must hold in reserve.

China's economy grew at 7.5 percent in the second quarter. But the drags on growth, including a downturn in property prices and high local government debts, are similar to those in Europe.

Analysts believe that deeper reforms, such as overhauling giant state companies, will be needed in the long term to keep the economy growing at the pace the authorities want.

That keeps the focus on U.S. Federal Reserve and how fast it will run down the stimulus that has pumped cheap money around the world, prompting investors to take increasing risks.

The Fed gathers on Tuesday for its two-day meeting but no change of course is expected yet.

Earlier this month, Federal Reserve Chair Janet Yellen signaled that she would keep the central bank's purse strings loose until the effects of the financial crisis are "completely gone."

But some analysts say the central bank may be forced to take a stricter approach to avoid pumping up market bubbles.

"People worry that the Fed may raise interest rates earlier than expected," Nie Wen, an analyst with Hwabao Trust in Shanghai, told Reuters. He predicts a rise in interest rates as soon as early next year.

Michael Heise of Allianz warns that keeping money too cheap for too long carries a major risk.

"If the central banks stay too accommodative for too long, you can have a boom ... and it can come to a massive correction."

In a reminder of the delicate balance facing financial policymakers, Argentina will seek next week to reach agreement with investors suing the country for full repayment of their bonds.

President Cristina's Fernandez's unflinching stance would appear to indicate that the country will go down to the wire. If talks fail, Argentina faces its second default in 12 years.

(Additional reporting by Kevin Yao in Beijing, Adrian Croft in Brussels and David Chance in Washington; Editing by Ruth Pitchford)

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