China's HSBC preliminary PMI was 49.7 for May(48.1 in April)

The China manufacturing purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics delivered a provisional reading of 49.7 for May, rising from 48.1 in April and beating economists’ estimates. Readings below 50 indicate contraction. China is the world’s biggest exporter and the No. 1 consumer of industrial metals.

Source: Bloomberg

Asia shares rise on firm China PMI, Fed reassurance

Asian shares and the Australian dollar rose on Thursday after an upbeat reading on China's factory sector blunted some of the more pessimistic views on the world's second-biggest economy, supporting risk appetite already burnished by a strong session on Wall Street.

Equities were on the front foot after minutes of the U.S. Federal Reserve's last meeting reassured investors that policy makers will continue to support the economy, depressing the safe-haven yen.

That set up the riskier asset markets for a decent uptick when a private survey showed China's factory sector turned in its best performance in five months in May.

The gains were capped somewhat as overall manufacturing growth still contracted slightly in a suggestion that the outlook remains murky. Still, the positive headline readings assuaged markets braced for a weak outcome.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 percent while Tokyo's Nikkei climbed 1.2 percent.

Chinese shares rose 0.4 percent.

The Australian dollar, which is sensitive to developments in the economy of its major trading partner China, rose about a quarter of a cent to $0.9254.

Medium and long-dated U.S. Treasury yields had climbed overnight, reflecting discussions by the Fed for the eventual tightening of policy though the start of that cycle was some way off.

Source: Reuters

World economy poised to grow moderately, but lower than pre-crisis levels

The global economy is expected to strengthen over the next two years, despite a downgrade of growth prospects for some developing economies and economies in transition, showed a UN report released here Wednesday.

In the mid-year update of UN World Economic Situation and Prospects (WESP), global growth rate was revised down from the forecasts presented in the WESP 2014.

Growth of world gross product (WGP) is now projected at 2.8 percent in 2014 and 3.2 percent in 2015, up from 2.2 percent in 2013, the report said. However, this pace of expansion is still lower compared to the growth level before the 2008 global financial crisis.

"More than five years after the financial crisis, the world continues to struggle with getting the global economic engine back to running at full capacity," Hong Pingfan, chief of the Global Economic Monitoring Unit for the UN Department of Economic and Social Affairs (DESA), said at a press conference here. "Compared to pre-crisis trends, we have not sufficiently boosted output, trade and employment to their potential levels."

The report warned that risks and uncertainties for the world economy include international spill-overs from ongoing adjustment in monetary policies by developing economies, vulnerabilities of emerging economies, remaining fragilities in the euro area, long- term unsustainable public finance for many developed countries and geopolitical tensions.

GROWTH FOR EMERGING ECONOMIES REVISED DOWN

The report's downward revision in growth projection mainly reflects deteriorating situations in several emerging economies due to different challenging economic and political conditions.

With new projected growth rates of 4.7 percent and 5.1 percent for 2014 and 2015, respectively, developing countries, as a group, will keep contributing to a large proportion of global growth, the report said. However, this trajectory is 2 percentage points lower than pre-crisis levels for developing countries.

The crisis in Ukraine and associated geopolitical tensions have largely caused an even more pronounced downward revision for economies in transition with negative 1.7 percent adjustments for the next two years compared to WESP projections in 2013.

GROWTH IN DEVELOPED COUNTRIES TOO WEAK

The report noted developed countries will continue to recover, adding that growth in developed economies is projected at 2.0 percent in 2014 and 2.4 percent in 2015.

For the first time since 2011, the developed economies of North America, Europe and Asia are all aligned toward positive economic growth over the next two years, which should form a positive cycle to reinforce further recovery, said the report.

However, five years after the financial crisis, projected growth rates remain too weak to recover the output and jobs lost in most of these economies, it said.

Many developed countries have managed to curb their financial deficit, but their public debts still increase, Hong said. For example, the winter in North America this year is unusually long, impeding the economic growth in the region, he said.

JOBS GROW AT SLOW PACE

Globally, according to the International Labor Organization, employment grew by 1.4 percent in 2013, a similar pace as in 2012, but stubbornly slower than the rate of 1.7 percent in pre-crisis years.

The global jobs gap -- comparing the number of jobs today with the number of jobs that would exist using the pre-crisis trend -- widened further to 62 million in 2013.

In the outlook, global employment is expected to continue growing at a slow pace.

"As the number of jobs lost in comparison with the pre-crisis employment trend continues to increase and structural unemployment remains a major problem, policymakers need to implement more supportive macroeconomic policies and active labor market policies, " said Matthias Kempf, the UN's team leader for the report.

CAPITAL FLOWS

As the United States Federal Reserve gradually scaled back its monthly asset purchases, or quantitative easing, emerging economies saw a marked reduction in capital inflows in 2013 and early 2014 and remained exposed to sudden change in financial market sentiment, the report said.

Global financial markets have since calmed and capital flows to emerging economies have stabilized, it said.

In the outlook, capital flows to emerging economies are projected to pick up slowly, in line with the expected recovery in global growth. However, significant uncertainties and downside risks remain, as investors continue to be extremely sensitive to the interaction between the U.S. Federal Reserve's tightening path and weaknesses in some emerging markets.

WORLD TRADE

World trade growth was flat in the first quarter of 2014, the report said. However, improvement is expected for the rest time of 2014 as import demand in major developed countries gradually increases. Real exports are forecast to grow by 4.1 percent in 2014, almost twice as fast as in 2013, but still below the pre- crisis trend of twice the global output growth.

The report called for strengthening international policy coordination to support a robust recovery of output and jobs, cooperation in international financial reforms and sufficient development financing resources to the least developed countries.

WESP includes updates to the economic outlooks for all regions of the world, as well as policy recommendations and information on global commodity prices, inflation and exchange rates.

It is produced at the beginning of each year, and updated mid- year, by the DESA in cooperation with the United Nations Conference for Trade and Development and the five United Nations regional commissions.

Source: Xinhua

China, Russia ink long-awaited gas deal

 

China and Russia on Wednesday signed a long-awaited gas deal in Shanghai, ending a decade of natural gas supply talks between the two neighbors.

The 30-year deal came one day after visiting Russian President Vladimir Putin said that "significant progress" had been made over price.

Two documents, China and Russia Purchase and Sales Contract on East Route Gas Project and a memorandum, were signed at a ceremony attended by President Xi Jinping and Putin.

The talks have repeatedly stalled over price. The agreed price in the latest deal is not known.

According to a news bulletin on the website of China National Petroleum Corporation (CNPC), the contract will see the east route pipeline start providing China with 38 billion cubic meters of natural gas annually from 2018.

In 2013, CNPC signed a framework gas supply agreement with Russia's Gazprom, the world's largest gas company, but the divergence in pricing left the purchase and sales contract unsettled until Wednesday.

"The deal...fully embodies the principle of mutual trust and the mutual benefit of China and Russia," said the bulletin.

The agreement will accelerate economic and social development in Russia's far east region. The gas will come from the Kovyktin and Chayandin gas fields in eastern Siberia of Russia and will be piped to China's northeast, the Beijing-Tianjin-Hebei metropolitan area in the north and the Yangtze river delta in the east.

China and Russia have vowed to strengthen cooperation in energy and infrastructure in Russia. According to a joint statement signed by the two leaders after their talks on Tuesday, they will "establish a comprehensive energy cooperation partnership".

CNPC chairman Zhou Jiping, and Wu Xinxiong, head of China's National Energy Administration and deputy head of the National Development and Reform Commission, China's top economic planner, signed the latest deal on the China's behalf.

Li Zhonghai, a researcher with Chinese Academy of Social Sciences, said that the final natural gas deal enhanced energy cooperation and improved the bilateral relationship.

"The deal is a milestone," said Liu Yijun, professor with China University of Petroleum: "The east route pipeline explored natural gas import channels and guarantees energy security."

"The contract reflects the final compromises from the two country's enterprises, especially in the pricing method," Liu explained.

Feng Yujun, an expert on Russia, said that the deal helped Russia realize simultaneous gas supplies to Asian-Pacific and Europe, which will balance the natural gas market in Eurasia.

Importing 38 billion cubic meters will satisfy China's demand for clean energy to tackle air pollution and pursue sustainable development. According to the CNPC, natural gas consumption stood at 167.6 billion cubic meters in 2013, up 13.9 percent year on year, and the annual growth rate was estimated to be 10 percent in the next few years.

The deal will boost the construction of China's pipeline network, as well as fueling the economic growth and increasing job opportunities along the pipelines, Liu added.

Source: Xinhua

China: Explosions at Urumqi market cause deaths, injuries

An unknown number of people were killed and injured after explosions occurred Thursday morning at an open market in Urumqi, capital of northwest China's Xinjiang Uygur Autonomous Region.

All the injured were rushed to several hospitals, police said.

Witnesses said two cross-country vehicles driving from north to south ploughed into people in the market at 7:50 a.m. Explosives were thrown out of the vehicles.

One of the vehicles exploded in the market.

A business runner in the market told Xinhua he heard a dozen of big bangs.

The open air morning market is located near the Renmin Park in downtown Urumqi. Ambulance and police cars are parking at the entrance of Park North Street leading to the market.

Flames and heavy smoke were seen. The scene has been cordoned off.

Source: Xinhua

Russia to veto draft UN resolution on Syrian civil war

Russian UN Ambassador Vitaly Churkin said here Wednesday that he will veto a draft resolution of the UN Security Council which intends to refer theSyrian civil war to the International Criminal Court.

Churkin, Russia's permanent representative to the United Nations, made the remarks as he was speaking to reporters here at the end of a closed-door meeting of the Security Council on the situation of eastern Ukraine.

Asked whether Russia will veto the draft resolution on Syria, Churkin said, "Yes, (I) will do."

Russia has voiced its opposition to the referral of Syria to the International Criminal Court.

The 15-nation Security Council is expected to vote on the draft resolution on Thursday.

Under the UN Charter, Russia is one of the five permanent council members with veto power.

France, another permanent council member, circulated the draft resolution on May 12 in a bid to bring Syria before the International Criminal Court for review of war crimes and crimes against humanity.

Source: Xinhua

WSJ: Qatar Comes to European Banks’ Rescue–With a Twist

     The WSJ reports,"Qatar is again swooping in to help one of Europe’s biggest banks – this time with a twist.

Paramount Holdings Services, a vehicle owned by former prime minister Sheikh Hamad bin Jassim Al Thani, agreed to put 1.75 billion euros into Deutsche Bank this week as part of a capital-raising to help it fare better in banking-system stress tests".

"In one sense, that squares with other Qatari investments in European banks: Qatari vehicles helped prop up Credit SuisseCSGN.VX -0.30% and BarclaysBARC.LN +1.32% PLC in 2008 when those banks came asking for capital at the onset of the financial crisis. Qatar injected billions of dollars in exchange for an 8.9% stake in Credit Suisse and 12.7% of Barclays. It has since reduced those stakes and, in the case of Barclays, made a large profit on part of its holdings.

But while these rescues came via Qatar Holding, the direct investment arm of the country’s main sovereign wealth fund, the new investments are direct by Mr. Al Thani. Also known by his initials HBJ, Mr. Al Thani was until the middle of last year the deputy head of the Qatar Investment Authority and was widely considered the architect of its aggressive strategy.

Mr. Al Thani, a member of Qatar’s royal family, lost his position at the QIA last summer after Qatar’s emir was succeeded by his son. But aided by his own substantial wealth and dealmaking acumen, bankers and analysts say he now appears to be continuing on the path he started at the QIA.

The Deutsche Bank transaction is the biggest evidence to date of Mr. Al Thani’s continuing appetite for big direct deals. Another vehicle controlled by Mr. Al Thani agreed to buy the Jersey-based producer Heritage Oil last month for $1.55 billion.

The Deutsche Bank deal going to Mr. Al Thani wasn’t surprising given that he likely had a strong relationship with the lender dating to his time at the QIA, said Victoria Barbary, the director of Institutional Investor’s Sovereign Wealth Center in London''.

“I suspect the relationship they had was with HBJ, so it ma'kes perfect sense it would be the kind of thing he would be doing,” Ms. Barbary said. “He’s going to be an active investor in his own right rather than using the QIA.”

WSJ: Japan Jockeys with China for Russia's Energy

WSJ: Morning MoneyBeat: M&A Resurgence Bodes Well for Stocks

If 2013 was the year of the buyback, 2014 is the year of the jumbo deal.

Corporations are finally putting their record cash hoards to work amid a resurgence in mergers and acquisitions, a trend that bodes well for the stock market. Deal making is back at pre-crisis levels, with AT&T Inc.T -0.65% being the latest to join the fray following its $49 billion bid over the weekend for satellite-TV provider DirecTVDTV +1.25%.

So far in 2014, companies have announced 19 so-called jumbo deals—acquisitions of at least $10 billion apiece—the most on record at this point in a given year, according to Dealogic, whose data go back to 1995.

Investors have rewarded the latest round of deal making, a trend that analysts at Bank of America Merrill Lynch predict will keep propelling U.S. stocks higher into the second half of the year.

“While cash return factors—share buybacks in particular—have been among the best performers over the last few years, we think the next leg of the market will be driven by corporate spending,” says Savita Subramanian, head of U.S. equity and quantitative strategy at BofA Merrill Lynch. “We see many reasons for a pick-up in spending, but performance may be the biggest catalyst.”

After getting burned during the financial crisis, companies spent the ensuing years hesitant to dip into their cash coffers to undertake riskier strategies. Instead firms boosted buybacks and dividends in an effort to reward shareholders.

That appears to be changing, especially as corporate America’s buyback binge has started to lose its luster.

Ms. Subramanian says companies that increased their spending on capital expenditures and M&A activity have outperformed the market this year, while those that have spent heavily on buybacks have underperformed. The S&P 500 Buyback Index, which measures the 100 stocks with the highest buyback ratios, is up 0.8% this year. That’s less than half the S&P 500’s 2% year-to-date gain. The buyback ratio accounts for the amount of cash paid for common shares over the past four quarters, divided by the market capitalization of the common stock.

“Investors now want growth, not buybacks,” Ms. Subramanian says.

BNN GO The Street, "Rio Alto Mining Swallows Sulliden"

Rio Alto Mining Ltd. (RIO.TO 1.96 -0.17 -7.98%) said it would buy Sulliden Gold Corp. Ltd. (SUE.TO 1.04 0.26 33.33%) in a deal valued at about $300 million ($275 million US), creating a gold miner focused on Peru.

The deal value excludes the stake Sulliden shareholders will get in a new company that will hold Sulliden's share of a East Sullivan prospect in Val-d'Or, Quebec.

Rio Alto will pay 0.525 of one Rio Alto share for each outstanding Sulliden share. The offer values Sulliden at $1.12 per share, representing a 43-percent premium to the stock's Tuesday close of 78 cents on the Toronto Stock Exchange.

Rio Alto shares closed at $2.13.

WSJ: China's JD.com Inc. Faces Tough Tech IPO Market

      
   The WSJ reports,"at a time when investors are still nursing wounds from the massive sell-off in young technology stocks, Chinese online retailer JD.com Inc. is readying a big initial public offering.

The IPO marks a test for the lead investment bankers on the deal, Bank of America Merrill Lynch and UBS AG: in the current adverse environment, can they attract investors to a fast-growing but unprofitable online retailer?

The Beijing-based company and existing shareholders plan to sell 98.7 million American depositary shares for $16 to $18 apiece in the IPO, raising up to $1.69 billion before the potential sale of additional shares to underwriters.

JD.com starts off life as U.S. stock amid strong investor skepticism when it comes to shares of fast-growing technology companies. The Nasdaq Internet Index tumbled 9.6% this year through Tuesday, on the heels of a 65% rally in 2013. Amazon.com Inc., JD.com’s U.S.-based peer, has seen shares slide 24% in 2014. The offering will be the largest U.S. tech IPO since the November debut of Twitter Inc.TWTR -0.06%, which has seen its stock drop 50% year-to-date".

Lukoil: Trends in Global Oil and Gas markets to 2025

Source:  Lukoil Web Page

WSJ: Gold Deals Remain Likely Despite Barrick-Newmont Merger's Collapse

"Despite the Barrick-Newmont merger's collapse several weeks ago.
Gold Scarcity, high extraction costs makes gold mining consolidation inevitable.

Denver-based Newmont has said Mr. Thornton quashed the combination. Barrick and Newmont declined to comment on the collapsed merger.

No matter who killed the deal, gold miners face a troubled landscape.

The depletion of global gold mines, and the resulting increase in extraction costs, is one of the main forces pushing gold miners to combine as they look for efficiencies or to gain access to rivals' high-grade deposits.

"There is every reason to do that deal, and the reasons not to do it weren't geology, but man-made," said Douglas B. Groh, a fund manager at Tocqueville Asset Management LP, which owns Newmont stock. "The nature of geology is such that gold does not occur in large volumes, but the capital exploiting it is robust."

The gold industry ramped up exploration as prices increased by a factor of six from 2001 through 2012 to $1,750 a troy ounce. Prices since have tapered off to around $1,300 an ounce.

Discoveries also have tapered off. In 1995, 22 gold deposits with at least two million ounces of gold each were discovered, according to SNL Metals Economics Group. In 2010 there were six such discoveries, and in 2011 there was one. In 2012: nothing.

Even in Nevada, which mines around three-quarters of all U.S. gold, production has dropped a third since peaking in 1998. Around 40% of Newmont's and Barrick's production comes out of Nevada, with that possible economy of scale a big factor in their proposed merger.

"Deposits are simply harder to discover," said John Muntean, an associate professor of mines and geology at the University of Nevada.

The discovery of gold is influenced by a volatile set of factors, including price and how much companies are willing to spend on exploration. The higher the price of gold, the more economical it is to mine lower-grade deposits.

That was a reason behind the 35% decline in the grade of gold held by miners from 2001 to last year. Lower grades of gold require digging up more earth to find the metal so are more expensive per ounce. The cost of mining an average ounce of gold rose to $745 in 2012 from $280 in 2005, according to BMO Capital Markets".

Commodities: Miner Freeport Pressured by Water Costs as Copper Prices Slide

          The WSJ reports,"two years ago, Freeport-McMoRan Inc. one of the world's top copper miners, paid 69-year-old cowboy Richard Kaler $1.3 million for 280 acres of rocky ranchland in the eastern Arizona desert.

Freeport isn't interested in his minerals. Instead, it wants his rights to fresh water, which it needs to expand production at North America's biggest copper mine, spread across 65,000 acres nearby. Freeport aims to unearth almost one billion pounds of copper a year—37% of current U.S. annual output—at the Morenci, Ariz., mine by 2016.

The success of the Phoenix-based miner, which had profit of $2.7 billion on revenue of $20.9 billion last year, hinges on its ability to secure and maintain water supplies in arid areas where copper is found. It requires heavy spending and delicate negotiations to minimize potential conflicts with local farmers and others who also need water".

"It's not alone. As mining companies probe remote areas for increasingly scarce minerals, they are investing billions of dollars for water. Moody's Investors Service estimates that mining companies spent $12 billion in 2013, three times as much as 2009, on water management, including treatment facilities and pipelines".

"The issue is especially crucial for copper. Around half the world's copper comes from a belt running from Utah to Chile under mountainous, dry areas, and costs for water are expanding. The Chilean parliament is considering forcing mining companies to build desalinization plants, which remove salt from ocean water, rather than use fresh ground and surface water for their operations. BHP BillitonLtd.  , another top copper producer, and its partners agreed to build a $3.43 billion desalinization plant for its massive copper mine in Chile's Atacama desert. Freeport in Chile recently completed a $315 million desalinization plant and pipeline. And in Peru, it is building a $340 million sewage treatment plant.

"Water is a critical issue in places like Northern Chile and Southern Peru, and here in New Mexico and Arizona," Freeport Chief Executive Officer Richard Adkerson said in an interview.

Water management costs are adding to pressure on copper miners amid a slide in prices—down 32% since highs reached in 2011—deflated by weaker demand, especially in China. But at about $3 a pound, prices are still higher than Freeport's extraction costs in North America of $1.87 a pound, and up from prices that hovered around $1.50 a pound in the 1990s. Analysts say copper prices are relatively resilient, because quality deposits are limited and the metal is essential to a wide variety of goods, from water pipes to iPhones. Analysts say Freeport isn't at risk of having to close mines for lack of water, but having to increase spending on water could drive up miners' costs.

China, the world's second-largest copper producer at 1.65 million tons a year in 2013, has tripled production since 2003. The country doesn't have water problems in its copper-mining areas. No. 1 producer Chile, at 5.7 million tons a year, has increased output 17% in that time.

Production growth in the U.S., the world's fourth-largest copper producer with 1.22 million tons in 2013, has been flat in the past decade. Two-thirds of that annual output is pulled from Arizona.

Freeport's Morenci mine and its other four mines in Arizona produce 30% of the company's copper output, and all are at risk of losing currently available water supplies. If they do, Freeport would be forced "to curtail operations, preventing us from expanding operations or forcing premature closures, thereby increasing and/or accelerating costs," the company said in a February SEC filing.

In the U.S., mineral extraction consumes around four billion gallons of water a day. For comparison, industry uses 18.2 billion gallons, all domestic households use 29.4 billion and agriculture uses 128 billion gallons, according to the U.S. Geological Survey's most recent survey published in 2009.

Context is important, though. "It's not that mining companies use a lot of water, but they tend to mine in rocky places without a lot of water," said Mike Lacey, the director of water resources for Arizona.

Water is needed to control dust kicked up during open-pit mining and to extract minerals from rock using various flotation methods in which minerals float or sink".

As most available minerals are taken, what is left tends to be of lower grade, meaning that more rocks must be extracted and more water used to process them. "If you extract 100,000 tons of raw copper with 0.2% instead of 2% grade copper, you need 10 times as much rock and 10 times as much water," said Paul Gait, an analyst at Bernstein. "Water is one of the biggest things mining companies have to worry about, and it's going to get worse."

WSJ Canada Real Time: Green Groups Pressure Hillary Clinton on Keystone XL

A collection of 30 environmental groups is preparing to send Hillary Clinton a letter calling on her to come out against the Keystone XL pipeline project, an illustration of the competing political pressures she faces even before she has even announced whether she will run for president.

A draft of the letter obtained by The Wall Street Journal reads: “Secretary Clinton, will you stand with us against Keystone XL?

“Given your longstanding advocacy for the environment and the importance of battling the climate crisis, your involvement would lend an important voice against this dangerous pipeline and in favor of energy sources that don’t threaten future generations of Americans.”

The draft, dated May 21, shows that signatories include the Center for Biological Diversity, Greenpeace andFriends of the Earth, as well as many small groups. Some well-known groups that aren’t signatories on the draft include the Sierra Club, Environmental Defense Fund, League of Conservation Voters and Natural Resources Defense Council, or NDRC.

The Sierra Club, which has been one of the most active groups fighting the pipeline, won’t be signing the letter, according to its executive director, Michael Brune, who declined to say why.

A spokesman for the NDRC said the letter was circulated to NRDC in late April, but the group at the time was focused on the “decision-making processes” at the State Department and didn’t give attention to the letter. Also, Mrs. Clinton is now a “private citizen” and thus not empowered to make a decision with respect to Keystone, the NRDC spokesman said.

It wasn’t immediately clear whether any of the other groups would sign on.

Mrs. Clinton’s office didn’t immediately respond to a request for comment.

TransCanada’s proposed pipeline has become one of the most divisive environmental issues the Obama administration has confronted. Conservative Democrats in tough reelection bids in November, including Sen. Mary Landrieu of Louisiana, have come out in favor of the project, predicting that it would boost jobs and economic growth.

Deep-pocked Democratic donors and liberal activists want to see the Obama administration scuttle Keystone, warning that it would accelerate the pace of global climate change.

Fed Minutes: "In general, participants continued to view the risks to the outlook for the economy and the labor market as nearly balanced".

        The WSJ reports,"minutes of the Federal Reserve’s April 29-30 meeting showed policy makers are still hoping for stronger economic growth in the second half of the year. The economic assessment of Federal Open Market Committee participants emphasizes the central bank is so far sticking to its forecasts.

“Some participants remarked that it was it was too early to confirm that the bounceback in economic activity would put the economy on a path of sustained above-trend economic growth. In general, participants continued to view the risks to the outlook for the economy and the labor market as nearly balanced. However, a number of participants pointed to possible sources of downside risk to growth, including a persistent slowdown in the housing sector or potential international developments, such as a further slowing of growth in China or an increase in geopolitical tensions regarding Russia and Ukraine.”

“Most participants commented on the continuing weakness in housing activity. They saw a range of factors affecting the housing market, including higher home prices, construction bottlenecks stemming from a scarcity of labor and harsh winter weather, input cost pressures, or a shortage in the supply of available lots.”

“No decisions regarding policy normalization were taken; participants requested additional analysis from the staff and agreed that it would be helpful to continue to review these issues at upcoming meetings.”

WSJ Canada: Canada Stocks to Watch:Rio Alto, Sulliden

Canadian miners Rio Alto Mining Ltd.RIO.T -7.98% and Sulliden Gold Corp.SUE.T +33.33% have agreed to merge, creating a midtier gold producer focused on mining operations in Peru where the companies own adjacent projects. Sulliden shareholders will get 0.525 of a Rio Alto share for each share held, plus 0.10 of a share in spinoff company.

U.S. crude stocks tumble as imports sink to 17-year low

 U.S. crude stocks fell last week as imports slumped to the lowest since 1997, while gasoline and distillate inventories rose, data from the Energy Information Administration showed on Wednesday.

Crude inventories fell 7.2 million barrels in the last week, compared with analysts' expectations for an increase of 750,000 barrels. The drop was smaller than the over-10-million-barrel drop reported on Tuesday by the industry group American Petroleum Institute (API).

"It looks like the drop in imports was the driver," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. "The drop in imports still leaves me wondering: where did the oil disappear to, because the refinery capacity use was basically unchanged."

U.S. crude oil futures were little changed immediately after the data, but later stretched the day's gains to around $1.50 a barrel, up around 50 cents from earlier.

Crude stocks at the Cushing, Oklahoma, delivery hub fell 225,000 barrels, EIA said.

Refinery crude runs rose 282,000 barrels per day, EIA data showed. U.S. crude imports fell last week by 658,000 bpd to just 6.4 million bpd, the lowest level since 1997.

Refinery utilization was little changed nationwide, but rose 4.6 percentage points on the East Coast.

"That’s a very big number and that speaks to some of the crude stocks. They get some crude by rail," said Richard Hastings, a macro strategist at Global Hunter Securities in Charlotte, North Carolina. "That could explain some of the pull-down in commercial crude oil stocks.”

Gasoline stocks rose nearly 1 million barrels, compared with analysts' expectations in a Reuters poll for a 79,000-barrel gain.

Distillate stockpiles , which include diesel and heating oil, rose 3.4 million barrels, the EIA data showed, versus expectations for a 293,000-barrel drop.

Source: Reuters

M&A Peru Gold Producer RIOM and Sulliden Shahuindo Project

Alex Black, President and Chief Executive Officer of Rio Alto, stated, "This transaction represents a logical combination for Rio Alto given the complementary nature and proximity of our respective operations. We are looking forward to expanding upon the excellent work completed to date by the management team of Sulliden and believe the development of Shahuindo leverages our core strengths as an organization and is analogous in many respects to our La Arena mine, which was built on time and on budget and has continuously outperformed expectations. This acquisition positions Rio Alto on solid footing with material current production, substantial growth and a significant resource base able to support a long operating mine life. We have successfully demonstrated through our development and operational track record that our management team is capable of generating solid returns to shareholders and we see the opportunity to do that again with Shahuindo. We already see several opportunities to unlock significant value for shareholders at Shahuindo through potential capital, operational and social synergies, which is very rare in the mining sector."

Rio Alto Mining Press Release

Rio Alto and Sulliden to Combine to Create a Leading Americas Focused Mid-Tier Gold Producer

Rio Alto Mining Limited ("Rio Alto" or the "Company") (TSX:RIO)(NYSE:RIOM)(LMA:RIO)(DBFrankfurt:MS2) and Sulliden Gold Corporation Ltd. ("Sulliden") (TSX:SUE)(LMA:SUE)(OTCQX:SDDDF) jointly announce that they have signed a binding letter agreement (the "Agreement") to combine their respective businesses (the "Transaction") and create a new, leading mid-tier gold producer with operations focused in a world-class gold mining district in Peru.

The Transaction combines Rio Alto's currently producing, low cost La Arena gold oxide mine and adjoining sulphide copper-gold deposit with Sulliden's low cost, scalable Shahuindo gold development project located in Cajabamba, northern Peru. The Transaction will create a leading, mid-tier gold producer with near-term production potential of approximately 300,000 ounces of gold per year and the opportunity to materially expand production in the near-term while maintaining attractive and sustainably low cash costs. Sulliden completed a feasibility study on Shahuindo in September 2012 (based on $1,415/oz gold and $27.00/oz silver) outlining a 10,000 tonnes per day (tpd) open pit heap leach mine that would see annual production of approximately 85,000 ounces of gold over an estimated ten year mine life at cash costs of approximately $550 per ounce, based on mining 40% of the defined measured and indicated gold oxide resource.

Pursuant to the Agreement, Rio Alto will acquire each outstanding Sulliden common share for 0.525 of a Rio Alto common share (the "Exchange Ratio"). In addition, as part of the Transaction, Sulliden shareholders will receive 0.10 of a common share in a newly incorporated company ("SpinCo") for each Sulliden common share held. SpinCo will hold Sulliden's 100% interest in the East Sullivan Property in Val-d'Or, Quebec and will be capitalized with approximately C$25 million in cash which at Rio Alto's option may be provided entirely in cash or C$15 million in cash and C$10 million in common shares of Rio Alto. Following completion of the Transaction, each outstanding warrant and stock option to purchase Sulliden common shares will be exercisable to purchase 0.525 of a Rio Alto common share and 0.10 of a SpinCo common share in lieu of each Sulliden share.

The Exchange Ratio represents consideration to Sulliden shareholders of C$1.12 per Sulliden common share based on the closing price of Rio Alto common shares of C$2.13 per share on the Toronto Stock Exchange as at May 20, 2014. This value implies a 43.4% premium over the May 20, 2014 closing price of Sulliden's common shares of C$0.78 and a 46.8% premium calculated on the 20-day volume weighted average price ("VWAP") of each respective company as of May 20, 2014.

Upon completion of the Transaction, Rio Alto shareholders and Sulliden shareholders will own approximately 52% and 48%, respectively, of the outstanding Rio Alto common shares, on a basic basis. The implied transaction value, before ascribing any value to SpinCo, is approximately C$300 million.

Highlights of the Transaction

--  Creates a leading mid-tier gold producer with a strong portfolio of
    assets in Peru - a world-class mining district: Current gold production
    of between 200,000 and 220,000 ounces from Rio Alto's La Arena gold mine
    based on 2014 guidance with Sulliden's Shahuindo gold project targeted
    to produce first gold by late 2015 / early 2016. 
    
--  Leading production growth profile with attractive and decreasing cash
    costs: Significant production growth of approximately 40% from 2014E to
    2016E based on analyst consensus estimates with clear potential for
    additional expansion at Shahuindo supported by a robust resource base
    with significant exploration upside. 
    
--  Comparable low risk mining operations: Addition of a construction ready,
    long-life gold oxide heap leach project located 30 kilometers from La
    Arena with low capital intensity and attractive cash costs. 
    
--  Proven management team to leverage the strong track record of building
    and operating La Arena: Rio Alto's management team has demonstrated its
    capabilities to successfully build and operate La Arena with a track
    record of consistently meeting or exceeding expectations. 
    
--  Opportunity for significant synergies, creating a unique re-valuation
    opportunity: The proximity of the two companies' operations, located
    only 30 kilometers from one another, provides the opportunity to unlock
    considerable value through capital, operational and other regional
    synergies. 
    
--  Strong financial position: Enhanced market capitalization of $664
    million with approximately $45 million in cash, strong and growing cash
    flow from La Arena and greater access to low-cost capital to fund the
    construction and expansion of the Shahuindo mine. 
    
--  Strong value proposition: New Rio Alto will have an attractive valuation
    compared to its peers on a price to net asset value and price to cash
    flow basis. With low cost production and cash flow, a strong balance
    sheet, superior growth and a proven operating team, the combined company
    supports the potential for a substantial re-rating to a multiple in line
    with or superior to other mid-tier gold producers. 
    
--  Enhanced market presence: The combined company will have increased
    trading liquidity with far greater market and analytical following to
    improve market profile and broadened investor appeal. 

Moscow and Beijing circunspect about details on Natural Gas Deal

Source: Dow Jones Newswire

Putin: Gas Price in China Deal Linked to Crude Oil , Oil Products.

Putin, Gas Price in China Deal Linked to Crude Oil , Oil Products.  Agencies.

WSJ:China and Russia Sign Natural Gas Deal

"Beijing and Moscow said they signed a much-anticipated contract to supply China with hundreds of billions of dollars worth of Russian natural gas following a decade of difficult talks.

Neither side released details about the price, long the major sticking point of a deal. The two sides in the past have announced supply deals but said a final price would be negotiated later.

GazpromCEO Alexei Miller told Russian media that the two sides had signed a contract worth a total of $400 billion over its 30-year life. "This is Gazprom's biggest contract. We don't have a contract like this with any other company," Mr. Miller told reporters in Shanghai, the Interfax news agency reported.

Russian news agencies said the contract called for supplies of 38 billion cubic meters of gas a year, which would imply a price of about $350 per thousand cubic meters, at the low end of what Gazprom currently charges export clients.

Mr. Miller said the price in the China deal "is a commercial secret," Russian news agencies reported.

China's official Xinhua news agency said documents related to the deal were signed in Shanghai by Chinese President Xi Jinping and Russian PresidentVladimir Putin, who had made the multibillion-dollar deal the top item of his two-day visit there.

China National Petroleum Corp. said Gazprom would be responsible for developing natural gas supplies in eastern Siberia, while CNPC would develop transport and storage facilities within China's borders.

A deal would allow Gazprom to make a strategic shift toward Asia, just as theEuropean Union is seeking to extricate itself from Moscow's energy grip.

The EU is accelerating plans to find alternative sources of gas and trying to stymie Gazprom's efforts to boost its presence on the Continent amid fears the Ukraine crisis could lead to disruptions of gas supplies to Europe.

"Russia needs this China deal very badly because it needs to signal to [Brussels] and to some EU nations that it's taking a step that's economically profitable and that it's found a new market for its gas," said Shamil Yenikeyeff, a research fellow at the Oxford Institute for Energy Studies.

Even if Russian and Chinese officials agree on a price to secure future gas supplies, the fortunes of Gazprom are likely to remain deeply interwoven in the European market.

Gazprom provides 30% of Europe's gas, around half of which flows through Ukraine. Gazprom needs the higher price it receives for exports to Europe to compensate for the much cheaper price it charges in its domestic market, where gas is subsidized. Last year Gazprom made 2.1 trillion rubles ($60 billion) from the 174 billion cubic meters it sold to Europe, a far higher price than it charges for domestic sales. It made just 794 million rubles from domestic sales of 243 billion cubic meters of gas.

The initial volume of gas exported, around 38 billion cubic meters a year, would be small compared to the amount currently exported to Europe. Even if capacity were increased to more than 60 billion cubic meters later, as the Russians hope, the volume of gas will still be around a third of what is currently exported to Europe. Gazprom's sales to Europe rose by 15% last year to 174.3 billion cubic meters—the highest since 2008.

In turn, Russia's gas exports account for around 10% of the country's total exports and 6% of government revenues, according to Capital Economics".

Source: WSJ

Irish Bank Permanent TSB sees Progress in reducing Losses

Source: WSJ