Jet fuel prices cut by 4.51 percent

New Delhi, Oct 31 (IANS) India's largest fuel retailer Indian Oil Thursday announced a 4.51 percent cut in the price of jet fuel in New Delhi region, effective from midnight Thursday.

According to IOC, the air turbine fuel (ATF) will cost the airlines 4.51 percent less at New Delhi, which comes to Rs.73,607.26 per kilolitre from Rs.77,089.42 per kilolitre.

The fuel price difference in other major cites will be decided by factoring in the state tax regimes applicable there.

The reduction came after the three state-owned oil marketing companies (OMCs), which revise jet fuel prices on the first day of every month, had hiked fuel prices by 6.9 percent for purchases from Sep 1.

This was the fourth hike since June due to the fall in rupee value. The increase in ATF prices last month had led to three airlines namely Air India, Jet Airways and budget passenger carrier SpiceJet to increase fares by 25 percent.

Fuel prices are a determining factor in the tough Indian aviation sector as the cost comprises about 50 percent of the total operating costs of an airline.

High prices have dented the sector as major airlines bleed under the high state sales tax regime which ranges from 4-34 percent.

Currently, ATF sold in the country is nearly 50-60 percent costlier than in overseas markets like Bangkok, Singapore or Dubai.

There has been a longstanding perception that ATF, which is a super-refined form of kerosene, should not be subsidised for air travel.

The government currently subsidises sensitive products like diesel, LPG (liquefied petroleum gas) cylinders and kerosene.

Currently, the central government is trying to get the fuel as a notified category item. Once listed as a notified product or a declared good under the Central Sales Tax (CST) Act, airlines will only have to pay a uniform sales tax of four percent.

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Asian shares sag, dollar up after upbeat U.S. data

By Lisa Twaronite

TOKYO (Reuters) - Asian shares struggled on Friday, while the dollar pushed higher after upbeat U.S. data added to uncertainty over when the Federal Reserve will begin tapering its massive stimulus programme.

Reassuring signals on China's factory activity capped losses for equities, however.

China's manufacturing sector grew at the fastest pace in 18 months in October, with the official Purchasing Managers' Index (PMI) rising to 51.4 last month from September's 51.1, beating economists' consensus forecast of 51.2.

A separate private report, the final HSBC/Markit PMI, came in at 50.9, up from 50.2 in September and unchanged from a preliminary flash estimate released last week.

"China is on track for a gradual growth recovery," said Hongbin Qu, HSBC's chief economist for China, in a statement accompanying the PMI.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2 percent, while Japan's Nikkei stock average extended losses in the afternoon session, dropping 1.2 percent.

U.S. S&P E-mini futures edged up slightly, after the S&P 500 Index closed down about 0.4 percent but still gained 4.5 percent for the month.

Later on Friday, the U.S. ISM survey of manufacturing for October could offer investors a fresh signal on the Fed's future course.

"If the ISM report is better than expected, it could add to revived tapering expectations, and U.S. yields and the dollar could go up and stocks could go down," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.

Data on Thursday showed the pace of business activity in the U.S. Midwest jumped more than expected in October, soothing some worries about sluggish fourth-quarter growth after last month's federal government shutdown.

A decline in new jobless claims in the latest week also added to evidence that the economy weathered the shutdown. New claims fell by 10,000 to 340,000, just above the average estimate of 339,000.

Still, not all investors or economists were convinced that the latest U.S. data heralded a shift in monetary policy expectations.

"The existence of noise in the October data will likely make it difficult for the Fed to gather enough evidence to start tapering in December," strategists at Barclays wrote in a note to clients, adding that they still to expect the central bank to begin reducing its current $85 billion monthly bond purchases in March 2014.

PRESSURE ON EURO

The euro remained under pressure after plunging in the previous session as euro-zone inflation dropped to its lowest rate in nearly four years, heightening expectations that the European Central Bank will further ease its monetary policy.

The euro dropped about 0.2 percent to $1.3557, moving away from a two-year peak of $1.3833 set one week ago. On Thursday, it suffered its biggest one-day fall against the greenback in six months, tumbling 1.1 percent.

Data on Thursday showed euro-area inflation slowed to a four-year low of 0.7 percent last month, far below the ECB's target of just under 2 percent. Other data showed unemployment held at record highs in September.

The dollar index <.dxy>, which measures the greenback against six major currencies, was on track for a sixth session of gains, rising about 0.1 percent to 80.296 after touching a two-week peak of 80.418 and pulling further away from a nine-month trough of 78.998 hit one week ago.

Against the Japanese currency, the dollar was about 0.4 percent lower on the day at 97.94 yen.

In commodities trading, gold steadied but was still trading close to its lowest in nearly two weeks, hurt by sharp losses in the previous session from month-end profit-taking, the strong U.S. economic data and the higher dollar.

Spot gold edged up 0.1 percent to $1,324.86 an ounce, after sliding 1.4 percent on Thursday.

Copper got a lift from the China data, rising 0.1 percent to $7,256 a tonne, moving back toward a one-week peak of $7,300 hit on Thursday.

Brent crude for December was slightly up at $109.05 a barrel, while U.S. crude also edged up to $96.46.

(Additional reporting by Natalie Thomas in Beijing; Editing by Eric Meijer & Kim Coghill)

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World stocks take small hit from Fed, BOJ supportive

By Marc Jones

LONDON (Reuters) - Markets suffered a glancing blow on Thursday after the U.S. Federal Reserve's latest outlook was deemed less alarmist about the state of the economy than some had wagered, lifting both bond yields and the dollar.

The impact was mostly superficial, with European shares opening down just 0.2 percent after MSCI's index of Asia-Pacific shares outside Japan had edged back 0.6 percent.

In Asia, sentiment was helped by the Bank of Japan's decision to stick with a massive stimulus program that has shown tentative signs of breaking the grip of deflation.

And in Europe, some mildly disappointing German retail and French consumer data focused attention on the European Central Bank as one of its policymakers hinted at further injections of cheap cash.

That all helped lessen the drag from Wall Street, which had slipped after the U.S. central bank kept its $85 billion-a-month stimulus plan intact but did not sound quite as alarmed about the state of the economy as some had anticipated.

Given U.S. shares had reached record highs this week, the resulting profit-taking came as no surprise.

The MSCI world equity index, which tracks 45 countries, eased 0.3 percent from a high not seen since January 2008.

Dealers said the market had talked itself into expecting the Fed would make "dovish" changes to its statement in favour of holding off longer with any monetary tightening. So it was somehow considered "hawkish" when those did not materialise.

"We interpreted the statement as neutral and balanced and think the Fed is essentially in a holding pattern," said analysts at Australia and New Zealand Bank.

U.S.-based Citibank moved its prediction for the Fed's first trimming of bond-buying forward to January and shortened the odds on a December move. But the vast majority of analysts still pointed to it holding off until later in the new year.

The Fed funds futures barely budged on the statement and short-dated Treasury yields stayed well anchored while the longer end moved up only modestly. Yields on the 10-year note were steady at 2.53 percent.

ECB FOCUS

Britain's FTSE 100 was down 25 points by 0830 GMT, or close to 0.4 percent, Germany's DAX 0.4 percent and France's CAC 40 0.3 percent. But with those markets in general hovering near 5-year highs there were few concerns.

A survey of Japanese manufacturing out on Thursday showed activity accelerated to its fastest in more than three years in September, although Japan's Nikkei fell 1.2 percent in late trading as corporate earnings from the likes of Honda Motor Co Ltd disappointed investors.

There was some soft European data to contend with. Euro zone unemployment was steady at a record high in September, German retail and French consumer was weaker-than expected while the pace of inflation slowed to a near 4-year low.

"In Europe the story is gradually becoming one of slow inflation again and that should be an additional argument for the ECB to do more." said Jan von Gerich, chief developed markets strategist for Nordea.

Benchmark European government bonds, were a touch softer amid the focus on ECB monetary policy.

Speaking in a TV interview, Ewald Nowotny, one of its longest serving policymakers said the central bank would provide more liquidity by the time cheap long-term loans it made in late 2011 and early 2012 expire.

The dollar index was fractionally higher on the day at 79.782 despite signs momentum was fading. The euro dipped to $1.3696.

The New Zealand dollar bounced after the country's central bank said increases in interest rates were still likely to be needed next year, putting it well ahead of most other developed economies in tightening.

The currency rallied as much as half a U.S. cent in reaction, though the central bank also noted that a strong currency meant it might be able to wait longer before having to raise rates.

Spot gold faded after rising the most in a week at one stage on Wednesday. It fetched $1,336.20 an ounce on Thursday.

Brent crude eased 31 cents to $109.25 a barrel.

(Additional reporting by Wayne Cole in Sydney; editing by Patrick Graham)

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Sensex hits record closing high

Mumbai, Oct 31 (IANS) A benchmark index of Indian stock markets Thursday hit a record closing high of 21,164.52 points, helped by strong buying in bank and consumer durables scrips.

The 30-scrip S&P Sensex of the Bombay Stock Exchange (BSE) closed 130.55 points or 0.62 percent higher at 21,164.52 points. This is the highest closing level of the benchmark index.

The Sensex breached its previous highest closing mark on Wednesday at 21,033.97 points. The benchmark index's highest closing till Wednesday stood at 21,004 points registered Nov 5,2010.

The Sensex is just a mere 0.19 percent away from its record high of 21,206.77 points on Jan 10, 2008. It touched an intra-day high of 21,205.44 points in Wednesday's trading.

The wider 50-scrip S&P CNX Nifty of the National Stock Exchange (NSE) also made healthy gains. The Nifty closed 0.76 percent or 47.45 points higher at 6,299.15 points.

There was healthy buying support in bank, consumer goods, metal, public sector undertakings (PSU) and oil and gas stocks. However, healthcare companies fell.

The S&P BSE Bank index was up 248.13 points, followed by consumer durables index which gained 163.03 points, metal index, up 156.41 points, PSU index, up 139.99 points, and oil and gas index, up 126.87 points.

However, the BSE healthcare index declined 122.60 points.

Prominent Sensex gainers were: State Bank of India (SBI), up 4.33 percent at Rs.1,795.50; Tata Steel, up 2.45 percent at Rs.33.40; Gail India, 2.31 percent at Rs.352.85; Tata Power, up 1.99 percent at Rs.82.05; and ICICI Bank, up 1.96 percent at Rs.1,121.05.

Only nine of the 30 Sensex scrips closed in the red. Dr Reddy's Lab, down 2.64 percent at Rs.2,455.95; Sun Pharma, down 1.72 percent at Rs.607.95; Cipla, down 1.16 percent at Rs.431.95; Mahindra and Mahindra (M&M), down 0.97 percent at 888.35; and Hindustan Unilever, down 0.67 percent at Rs.609.25 were among the major Sensex losers.

Among the Asian markets, Japan's Nikkei closed 1.20 percent down, Hong Kong's Hang Seng was lower by 0.42 percent, and China's Shanghai Composite Index fell 0.87 percent.

In Europe, London's FTSE 100 was trading 0.44 percent lower, and Germany's DAX Index was down 0.19 percent. The French CAC 40 Index gained 0.18 percent.

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Six major central banks make currency swap accords permanent

By Leika Kihara

TOKYO (Reuters) - Six major central banks said on Thursday they would make their web of currency swap arrangements permanent as a "prudent liquidity backstop" in case of future global financial strains.

The Bank of Japan, U.S. Federal Reserve, the European Central Bank, the Bank of England and the central banks of Canada and Switzerland will convert their "temporary bilateral liquidity swap arrangements" into standing arrangements that "will remain in place until further notice".

"The existing temporary swap arrangements have helped to ease strains in financial markets and mitigate their effects on economic conditions," a coordinated statement from the central banks said. "The standing arrangements will continue to serve as a prudent liquidity backstop."

Currency swap lines were first introduced nearly six years ago in response to a global credit crunch that starved banks of liquidity and threatened to gum up the entire financial system.

They were an important part of the policy response to the 2007-2009 financial crisis, keeping a lid on funding costs which had spiralled due to fear over counter-party risk.

The arrangements were next due for review in February.

Speaking after the BOJ kept its massive stimulus programme in place, Governor Haruhiko Kuroda said the structure had helped bring stability to financial markets and the move to make it permanent did not denote any new alarm about liquidity.

"We decided to make them permanent to avoid uncertainty as they were due to expire next February," Kuroda told a news conference. "We have no plan to extend the swap arrangements beyond the six central banks."

(Writing by Mike Peacock; Editing by John Stonestreet)

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Asia factory sector upbeat, led by China

BEIJING (Reuters) - Asian manufacturing activity picked up in October led by China, where factory sector growth hit its fastest pace in 18 months off the back of new orders, purchasing managers' reports showed on Friday.

The surveys provide a more upbeat view of world demand following a month in which a political standoff in Washington over the U.S. debt ceiling and the sixth straight cut in IMF global economic forecasts had raised fresh concerns about the health of the global economy.

China's official purchasing managers index (PMI) rose to 51.4 in October, up from 51.1 in September and above expectations for a reading of 51.2. A PMI reading above 50 suggests expansion from the previous month, while a figure below 50 points to contraction.

"With global demand momentum likely to pick up gradually and domestic demand growth remaining solid, we expect GDP growth to comfortably exceed the government's bottom line in the coming quarters," Louis Kuijs, an economist at RBS, said of the China PMI in a client note.

The China PMI offered some support to weak Asian markets on Friday and data elsewhere in Asia also pointed to brighter economic prospects.

The HSBC/Markit PMI for South Korea showed factory activity expanded for the first time in five months and separate data showed the country's exports in October handily beat expectations to hit a record high of $50.5 billion.

Factory activity in major exporter Taiwan, key to many global tech supply chains, was running at its fastest pace since March 2012, an HSBC/Markit PMI showed.

Japan reported on Thursday that its factory activity grew at the fastest pace in more than three years as the Markit/JMMA PMI rose to a seasonally adjusted 54.2, adding to hopes that the world's third-largest economy and home to big brand names like Sony and Toyota is pulling out of two decades of stagnation.

PMI reports from India and the United States are expected later in the day. A euro zone PMI is due on Monday.

The rise in China's official PMI offered some relief to the growth outlook for the economy after a disappointing run of data last month, which included an unexpected slide in exports.

A breakdown of the sub-indexes showed that new orders in large industries reached 53.8, while for small industries the number was just 48.8, suggesting larger firms are benefiting more from the stabilising economy.

"The PMI data for October shows a continued increase, indicating a preliminary stabilisation in the economy," Zhang Liqun, an economist at the cabinet think-tank Development Research Center, said in a statement released with the PMI.

"The foundation for a recovery is not yet solid."

The HSBC/Markit PMI for China rose to 50.9 in October from 50.2 in September, suggesting factories were humming at their strongest pace in seven months.

The figures showed a surprise jump in new export orders, with many factories reporting stronger demand from the United States. (Additional reporting by Stanley White in TOKYO, Natalie Thomas in BEIJING, Faith Hung in TAIPEI and Se Young Lee in SEOUL; Writing by Neil Fullick; Editing by Kim Coghill)

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Sony suffers TV relapse as Japan peers change channel

By Sophie Knight

TOKYO (Reuters) - Sony Corp CEO Kazuo Hirai's determination to stick to the consumer electronics that made the company's fame will be put to the test in the months ahead as domestic rivals step up a shift to more profitable industrial technology.

On Thursday the home of gadgets from the Walkman music player to the Cybershot camera warned it won't meet previous full-year profit targets after sliding to a net loss of 19.3 billion yen for July to September. Its TV operation relapsed into the red on weak sales.

Meanwhile Panasonic Corp raised its earnings forecast on strong sales of products like batteries to industry clients, and Sharp Corp bounced to its first quarterly net profit in two years, helped by sales of solar panels.

The big three in Japan's electronics have been forced to review their strategy choices after racking up combined aggregate net losses of about $38 billion in the five years up to March this year. While they struggled to rein in fixed costs in Japanese manufacturing that eat away at revenue, nimbler foreign companies like Apple Inc , Samsung Electronics Co and Asian rivals grew richer and stronger.

Since Chief Executive Kazuo Hirai took the helm last year, Sony has promised a rebound in hardware with a three-pronged strategy focused on mobile devices, imaging technology and gaming. But the below-expectations performance in the second quarter stirred doubts about how Sony can anchor a turnaround by reviving fervour among consumers who now covet goods like Apple's iPad and Samsung's Galaxy smartphone.

"I still cannot see any fundamental and believable strategy for the rebirth of Sony's electronics business," said Makoto Kikuchi, CEO of Myojo Asset Management based in Tokyo, speaking after Sony announced its earnings.

"On the other hand Panasonic, which is shifting its business away from consumer electronics, is reporting better-than-expected results. The contrast is like night and day."

Just two of Sony's units, music and financial services, boosted operating earnings compared with a year ago while its movie business also lost money. The Tokyo-based company has come under pressure from major shareholder and hedge fund manager Daniel Loeb to generate more value from its entertainment division - pressure that could intensify after the weak earnings.

Officials representing Loeb weren't immediately available to comment.

Sony shares sank 12 percent in Tokyo trading on Friday morning, heading for their biggest one-day percentage drop since October 2008.

STRATEGIC CHOICES

In contrast, Osaka-based Panasonic raised its forecast for operating profit in the year through March by 8 percent to 270 billion yen, more than had been expected, on strong sales of its automotive systems and eco-friendly technology.

Panasonic shares rose as much as 5.9 percent, hitting a 2 1/2-year high.

At Sharp, a supplier of panels for the iPhone, a surprise net profit of 13.6 billion yen in its fiscal second quarter was helped by strong demand for solar cells and a weaker yen. While it is still struggling to shore up its finances, recently issuing $1.7 billion in new shares, it's a significant turnaround from a 545 billion yen net loss a year earlier.

Sharp's shares rose 2.8 percent on Friday morning.

Panasonic's earnings statement came amid an appraisal of its strategic choices. A day after saying it would ramp up supply of lithium ion batteries to U.S. carmaker Tesla Motors Inc to nearly 2 billion cells in the four years to 2017, Panasonic formally confirmed it will exit plasma TV manufacturing.

Its TV and panel division lost 25.6 billion yen in the second quarter, a wider loss than at Sony. Mopping up the red ink comes at a cost, however: Panasonic raised its restructuring budget for this year to 170 billion yen from a previous figure of 120 billion yen.

At Sony, the commitment to build a healthy TV business lives on. On Thursday, it said its TV operation flipped from a 5.2 billion yen operating profit in April-June - its first quarterly profit in three years - to a 9.3 billion yen operating loss.

The smartphone business at Sony was one of few to show signs of holding up in the latest quarter. Sony said it still expects to sell 42 million smartphones this fiscal year, unchanged from previous guidance, after selling 10 million in the three months between July to September.

But with weak sales of video cameras and cameras, as well as a slump in personal computers that has it racing to restructure its Vaio division, the pillars of Hirai's future development strategy look weak right now.

"We plan to revise our product, sales and manufacturing strategy for our Vaio unit. We realise that we don't have much time so we plan to implement our decisions in the next fiscal year," Shiro Kambe, Sony's senior vice president, told reporters.

Sony is still aiming to get its electronics division in the black this year, although Chief Financial Officer Masaru Kato said it would likely miss a previous target of 100 billion yen in operating profit.

One business for which Sony does retain high hopes is its video games divisions.

There have been signs of a strong debut next month in the U.S. and other key markets for Sony's new PlayStation 4 game console, based on preorders. As with previous consoles, development and rollout costs have been steep, although Sony has pledged to turn a profit much faster than the four years it took for the previous iteration of the console to make money.

"I think we're at a stage where they really should be reconsidering their (three-pronged) strategy but the company is not going there yet," said Myojo Asset's Kikuchi. (Additional reporting by Mari Saito; Editing by Edmund Klamann, Ryan Woo and Kenneth Maxwell)

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