China to Fund East Africa Standard Gauge Railway Line

      the WSJ reports,"China has agreed to fund the first phase of a standard gauge railway line linking the Kenyan port city of Mombasa to Uganda, Burundi, Rwanda and South Sudan.

Chinese Premier Li Keqiang and three East African presidents witnessed, in Nairobi, the signing of the financing agreement of the project’s first phase, the Kenyan President office said.

China Exim Bank will fund 90% of the $3.6 billion first phase of the project that will cover 609.3 kilometers from the port of Mombasa to Nairobi.

The Kenyan government will provide the remainder of the funding, the Kenyan president office said in a news release".

"Construction of the first phase is estimated to take 42 months to complete and will commence on October 1, the statement said. The contractor will be China Road and Bridge Corp.

The standard gauge railway is is intended to provide efficient and cost-effective rail transport for both freight and passengers. Passenger trains will have a speed of 120 kilometers per hour while those for freight will be designed to move at 80 km an hour.

Kenya, East Africa largest economy, has a single-track railway built when Kenya was a British colony in the 19th century. Currently, goods transported over the railway include coffee from Kenya, Uganda, Rwanda and Burundi and black tea for export through the port of Mombasa".

WSJ: South China Sea Tensions Overshadow Asean Summit

   The WSJ reports, "on Sunday, Vietnam’s Prime Minister Nguyen Tan Dung accused China of “brazenly” triggering a maritime standoff in contested waters in the South China Sea and asked fellow Southeast Asian leaders to object to its latest move to place an oil rig in waters claimed by both Hanoi and Beijing. Six countries currently have competing territorial claims to the resource-rich seas, namely the Philippines and Vietnam, andconfrontations between China and those two countries have grown increasingly tense in recent weeks.

A statement from leaders of the 10-member Association of Southeast Asian Nations, or Asean, whose current secretary general Vietnam’s General Le Luong Minh, attempted to send a strong message about the bloc’s commitment to peaceful dialogue, but that did not appear to appease Hanoi. As The Wall Street Journal’s Chun Han Wong writes:

Although Asean foreign ministers on Saturday jointly expressed “serious concerns” over the latest confrontation, they shied from directly criticizing Beijing, and reiterated calls for restraint and greater urgency in multilateral talks on a code of conduct in the South China Sea.

On Sunday, many Asean leaders also didn’t blame China when discussing the latest tensions, diplomats said. A joint leaders’ declaration issued on the same day urged for peaceful dialogue in resolving disputes, without naming specific countries.

Analysts say the differences in tone underscored divisions between Asean members who prefer a tougher regional response against Beijing’s territorial claims, and others who are reluctant to antagonize a powerful economic partner.

Little progress has been made since Asean and China first signed a declaration in 2002 that set out broad principles on conflict resolution in the South China Sea. While there have been periodic talks on drafting a so-called code of conduct, China says it prefers to dead with territorial disputes on a country-by-country basis. Its Southeast Asian rivals and the U.S. prefer a multilateral approach — though the Asean bloc adheres to a strict philosophy of non-confrontation and decisions are made by consensus".

Reuters: Analysis - Chile tax reform likely to remain intact despite opposition

Chile's Congress will likely tweak President Michelle Bachelet's ambitious new tax reform after it moves to the Senate in the coming weeks, but the heart of the bill will remain intact, those close to lawmakers have said this month.

The bill is designed to fund an overhaul of education and healthcare as Bachelet and her Nueva Mayoria coalition government, who took power in March, seek to tackle inequality in the top copper exporter.

The reform is expected to pass the lower house, with minor changes already made, and will then head to the Senate where more changes are expected. It has sparked the ire of opposition politicians and local business leaders, who are demanding significant changes, arguing those already made are not enough to safeguard investment.

The government insists the core of the reform will not change, but they say they are flexible to discussing other aspects of the bill in order to garner consensus despite having enough votes in both chambers of Congress to pass it.

"Today we have a majority (in Congress) and could approve the reform, but by the same token in the future we might not be the majority and I wouldn't like to see this undone," said Nueva Mayoria senator Ricardo Lagos Weber, head of the Senate Finance Committee that will examine the bill and suggest alterations.

"That's why it's important to generate support that goes beyond the Nueva Mayoria," Lagos Weber told Reuters earlier this month, adding that he expects the bill to receive final approval by late August or early September.

COMPANY CONCERNS

Businesses are especially worried about plans to scrap the so-called 'FUT', a mechanism by which companies can gain tax exemptions on part of their profits, claiming that the move will stem investment in an economy that is already stalling.

The chairman of forestry firm Empresas CMPC Eliodoro Matte, one of Chile's wealthiest men, is one of several business leaders who have said the proposed changes will have a negative effect on investment.

After negotiations in the Lower House, lawmakers have already made some concessions on alcohol and diesel vehicle tax rises.

But sources in the government say plans to eliminate the FUT and to raise corporate taxes to 25 percent from 20 percent are key to the goal of raising Chile's tax haul by 3 percent of gross domestic product, or some $8.2 billion, and probably will not be modified.

"Let there be no question about it, we're going to raise 3 percentage points of GDP," said Finance Minister Alberto Arenas at a meeting with journalists last week.

Source: Reuters

Hundreds of Chinese families seek wartime compensation from Japan

(Reuters) - As relations between China and Japan plumb a new low, the descendants of hundreds of Chinese men forced to work in wartime Japan are taking big, modern-day Japanese corporates to court. They are seeking millions in compensation.

Japan invaded China in 1937 and ruled parts of it with a brutal hand for the next eight years. Chinese historians say nearly 40,000 men were taken to Japan against their will to work in mines and construction. Survivors say living conditions were appalling. Many did not make it back to China.

In possibly the biggest class-action suit in Chinese legal history, about 700 plaintiffs lodged a case against two Japanese firms at a courthouse in eastern Shandong province in April, said Fu Qiang, a lawyer representing the families. Among the plaintiffs are several forced labourers, now in their 80s and 90s, and this might be their last chance to seek redress.

The suit was filed against Mitsubishi Corp (Qingdao) Ltd, a subsidiary of Mitsubishi Corp (8058.T), and Yantai Mitsubishi Cement Co, a joint venture between Mitsubishi Corp and construction firm Mitsubishi Materials Corp (5711.T), Fu said.

The plaintiffs are each seeking 1 million yuan ($160,100) (94902 pounds)in compensation, a public apology in several prominent Chinese and Japanese newspapers, as well as the erection of a memorial and monument in remembrance of the forced labourers, Fu said, adding that they also want the companies to fund their legal expenses.

It is unclear whether the lawsuit, with other smaller cases, will be accepted. But lawyers say there is a good chance they will be heard after a Shanghai court last month impounded a Japanese ship over a dispute that dates back to the 1930s war between the two nations.

The lawsuits could further irritate diplomatic relations. Late last month, China released previously confidential Japanese wartime documents, including some about comfort women forced to serve in military brothels. The files also contain details of the Nanjing Massacre, a major source of debate between the countries. [ID:nL3N0NJ03F]

The number of plaintiffs, including families and surviving forced labourers seeking redress, total at least 940, with combined claims reaching at least 865 million yuan, lawyers say.

That figure could rise further as there were nearly 8,000 forced labourers from Shandong during the war, according to Fu.

The other two Japanese companies involved in the suits are coal producer Nippon Coke and Engineering Industry Co , formerly known as Mitsui Mining Co, and stainless steel maker Nippon Yakin Kogyo , the lawyers say

Reuters: AT&T in advanced talks to buy DirecTV for about $50 billion: source

AT&T Inc is in advanced talks to buy satellite TV provider DirecTV for about $100 per share, or roughly $50 billion, a person familiar with the matter said on Monday.

The two companies are working toward a deal announcement as soon as within the next two weeks and hammering out final terms such as whether to have a break-up fee in place, the person said, asking not to be named because the matter is not public.

The deal price has yet to be finalized and terms could still change, the person added.

AT&T and DirecTV declined to comment. Bloomberg News earlier reported that AT&T was offering to pay around $100 per share for DirecTV, whose management team will continue to run the company as a unit of AT&T. . The Wall Street Journal said a deal could happen in two weeks.

Reuters: As elections near, polls show Europeans feel disconnected from Brussels

With just over a week to go until European Parliament elections, two separate polls on Monday suggested around two-thirds of Europeans feel their voices are not heard in Brussels, although trust in the European Union is rebounding from record lows.

Only 37 percent of Europeans believe their voice counts in Brussels according to a poll by Eurobarometer, a public opinion service of the European Union.

Just 29 percent of those polled by the Pew Research Center said the same thing, a separate poll released on Monday showed.

In a vast May 22-25 election covering 28 countries, as many as 350 million people will be able to vote for members of the European Parliament, the bloc's only directly elected body.

Policymakers in Brussels are trying to democratise the election process, and for the first time, the election results will be linked to the selection of the European Commission president.

But frustration with the European Union is expected to lead to strong showings for anti-EU parties such as Britain's UK Independence Party (UKIP), in the elections.

Sentiment has brightened since the start of this year, however, as the crisis in Ukraine and an improvement in European economies sparks some optimism about the 28-member bloc, according to pollsters.

"Ukraine is a reminder of why we created an integrated Europe to begin with. So as negative as the crisis was, there is still residual idealism," says Bruce Stokes, director at Pew Research Center.

Some 52 percent of Europeans view the EU favourably, up from 46 percent a year ago, the Pew Center poll showed. France and Britain saw the biggest jumps in positive sentiment, up 13 and 9 percentage points respectively since last year.

People also still believe in many of the European Union's original ambitions, such as its role in global diplomacy, although the grip of recession continues to weigh on attitudes regarding the economy.

Eurobarometer carried out its poll from March 15 to 24 and interviewed 28,000 people across the European Union. Pew Research carried out its poll from March 17 to April 9 and interviewed 7,022 adults across seven EU countries: France, Germany, Greece, Italy, Poland, Spain, and Britain.

Nvidia Narrows Focus in Mobile Chip Market

         The WSJ reports,"Nvidia has been jostling with other chip makers to supply key components for smartphones and tablets. That’s a tough market, and the Silicon Valley company has decided to concentrate on where it has the most muscle.

That would be devices that are especially tailored for playing videogames, building on the graphics technology for rendering three-dimensional images that has long been at the core of Nvidia’s business.

Signs of a strategy shift have been increasingly evident in some of the company’s recent statements, including remarks by Nvidia CEO Jen-Hsun Huang at the company’s annual technology conference in Marchz".

Huang amplified his thinking in an interview after the release of first-quarter results Thursday.

Huang said prioritizing graphics-oriented applications in mobile devices mirrors the targeted strategy the company has long used for products like personal computers. “We really focus on visual computing problems,” Huang said.

"The goal seemed broader two years ago. Nvidia’s Tegra chips were selected for some high-profile tablets–including a $249 seven-inch AsusTek model that Huang showed off at the 2012 Consumer Electronics Show–and Microsoft’s original Surface tablet launched that year.

Smartphones were a tougher proposition. Rival Qualcomm, for one thing, has decades of experience in the cellular communications technology that often is combined on the same piece of silicon with calculating functions. (Nvidia spent $367 million to buy the British chip company Icera to add wireless technology.)

The two biggest smartphone makers, Appleand Samsung, have used Qualcomm’s products for communications but favor their own processor chips.

Meanwhile, many other chip makers are targeting the mobile market, including Intel, MediaTek, Broadcom and Marvell.

Not that Nvidia’s broader pitch to the mobile market hasn’t paid some dividends. Last September, the fast-growing Chinese company Xiaomi selected the company’s Tegra 4 processor for a smartphone. In France, Wiko Mobile earlier this year launched a handset with Nvidia’s Tegra 4i chip, which includes LTE wireless capability. Nvidia has also shown success in getting Tegra selected for automotive applications.

Besides just selling chips, Nvidia has tried to spur interest among gamers with Shield, an unusual portable device with a display and game controllers, and a design for a tablet called the Tegra Note 7 being brought to market by hardware partners in several countries.

Yet the company doesn’t seem eager to participate in parts of the market where low prices trump performance.

Rather, Huang is betting that Google's Android software is going to become a major target for game developers. And that should spur the creation of performance-oriented devices where Nvidia chips can shine.

“You are going to see us do some really great things in gaming on top of Tegra,” he said".

____________________________________

WSJ: Facebook Removes Poke and Camera from iTunes Store

           The WSJ reports,"Facebook removed two of its stand-alone mobile apps, Poke and Camera, from the iTunes App Store Friday.

Poke, launched in December, 2012, mimicked the ephemeral messaging app Snapchat, but never caught on with users. Camera, which launched in May, 2012, allowed users to take photos and add filters.

"A Facebook spokesman did not immediately respond to a request for comment".

Facebook acquired Instagram, which also allows users to take and share photos, in April, 2012 for $1 billion. In February, it agreed to acquire mobile-messaging app WhatsApp for $19 billion.

Poke and Camera were released before Facebook launched Creative Labs in January, a department tasked with developing new apps.  The first release from Creative Labs was a mobile newsreader and aggregator called Paper, which Facebook said is catching on with some users.

Late last year, Facebook offered close to $3 billion to acquire Snapchat, which turned down the offer".

Alibaba Unveils Data Center in Hong Kong

Alibaba, which runs online marketplaces hosting millions of merchants, said it launched a data center in Hong Kong on Monday as a first major step to expand its fledgling cloud-computing business outside mainland China.

Revenue at its cloud-computing unit is tiny when compared with that of Alibaba’s mainstay e-commerce operations, which generate revenue through advertising and commission fees. However, as transactions on Alibaba’s sites grow rapidly, analysts say that data management services could become a major business for the company going forward.

Alibaba created its cloud-computing business unit in 2009 to respond to demand from sellers using the company’s shopping sites. Alibaba’s IPO filing last week showed that revenue from the cloud business stood at $90 million, accounting for only 1.4% of its total revenue, in the last nine months of 2013.

        The WSJ reports,"the launch of the Hong Kong data center also comes as Alibaba’s two main shopping sites–Taobao and Tmall– have been trying to expand outside mainland China, beginning with Hong Kong, Taiwan and Singapore. According to Alibaba’s website, the company has data centers in three mainland Chinese cities: Hangzhou, Qingdao and Beijing".

"Investors in the U.S. and globally are watching Alibaba’s every move to decide whether to subscribe for shares in the IPO. Some analysts estimate the listing could value Alibaba between $150 billion and $250 billion, making it one of the most valuable technology companies in the world.

Alibaba said it built the new data center in Hong Kong in cooperation with a unit of Towngas, a Hong Kong gas company. Alibaba didn’t say how much it spent on the facility".

Alibaba Names Jim Wilkinson Head of International Corporate Communications

         The WSJ reports, "In a sign of its global ambitions, Alibaba Group Holding named Jim Wilkinson, a senior PepsiCo executive who also worked for the U.S. government, as its new head of international corporate communications.

Wilkinson is joining Alibaba at a time when global public relations and the company’s relationship with the U.S. is more important than ever. Alibaba last week filed paperwork to list in New York, in what could be one of the largest initial public offerings in history. In addition to more intense scrutiny from U.S. investors and financial regulators, Alibaba also is getting far more international media coverage.

Alibaba currently does the bulk of its business domestically in China but hopes to expand in the U.S., and faces legal and political challenges, it said its IPO filing. For example, its Taobao marketplace, an online consumer retail market in China, and Alibaba.com, its foreign supplier website, have in the past been on the U.S. Trade Representative’s annual list of “notorious markets” for counterfeit and pirated goods, though neither has been since 2011, according to the filing.

Prior to joining Alibaba, where he will start in the coming weeks, Wilkinson was executive vice president for communications at PepsiCo since 2012, where he oversaw global public relations. He had a number of roles in the George W. Bush administration, including senior adviser on foreign affairs to Secretary of State Condoleezza Rice. He also served as a spokesman for Gen. Tommy Franks during the Iraq invasion. During the financial crisis, Wilkinson was chief of staff to U.S. Treasury Secretary Henry Paulson. (In the film “Too Big to Fail,” he was portrayed by the actor Topher Grace.)

Wilkinson first rose to national prominence as a key spokesman for the Republican Party, both during the 1994 takeover of the House and during the contested Florida recount in the 2000 presidential election. While working as a spokesman for former U.S. Republican House Majority Leader Dick Armey, he publicized Armey’s charge that former Vice President Al Gore claimed to have invented the Internet".

WSJ: Is Alibaba Going Into the Movies?

      The WSJ reports,"early last month, the Chinese e-commerce giant registered a company in Hong Kong under the name Alibaba Films Group. Later in the month, it changed the name to the more slick-sounding Alibaba Pictures Group.

What this mysterious company will do isn’t clear, though hints abound".

The two directors of Alibaba Pictures Group listed in the registry documents — Dong Ping and Zhao Chao — are both executives at ChinaVision Media, a television and film-production company in which Alibaba bought a 60% stake in March for $805 million. At the time, Alibaba didn’t elaborate on its plans, only saying it would team up with ChinaVision to “explore future business opportunities as part of Alibaba’s digital entertainment strategy.”

ChinaVision last year was one of the distributors of the action-comedy movie “Journey to the West: Conquering the Demon,” directed by Hong Kong movie star Stephen Chow. The company’s TV series last year included the drama “Left Hand Joins Right Hand.”

"Dong, ChinaVision’s chairman, co-produced the 2000 international hit “Crouching Tiger, Hidden Dragon,” which won an Oscar for best foreign-language film. He has also been involved in several other internationally distributed Chinese movies. Dong also co-founded the popular tabloid Beijing Times in cooperation with the People’s Daily, the official mouthpiece of China’s Communist Party.

So, is Alibaba going into the movies? An Alibaba spokeswoman declined to comment on the registration, while a ChinaVision representative in Hong Kong couldn’t immediately be reached for comment.

But since the beginning of this year, Alibaba has been trying to expand into entertainment and digital-media industries through aggressive acquisitions and newly developed services, as part of its attempt to make its e-commerce and other platforms more attractive".

S&P 500, Dow close at record levels

The U.S. stock market ended Monday with best gains in nearly a month that sent both the S&P 500 and the Dow Jones Industrial Average to record levels. Broad-based gains on the S&P 500 were led by technology and industrial sector stocks. The Nasdaq CompositeCOMP +1.77% gained the most in more than three months, adding 72 points, or 1.8% to 4,143.86, led by gains in momentum names. The S&P 500 SPX +0.97% rallied, gaining 18.17 points, or 1%, to 1,896.65, closing at a record level. The Dow Jones Industrial Average DJIA +0.68% closed near session highs, gaining 112.13 points, or 0.7%, to 16,695.47.

Source: Marketwatch

Brazil's Rousseff drops in new election poll, rivals gain

 May 9 (Reuters) - Support for President Dilma Rousseff among Brazilian voters has fallen and her main rivals have gained ground, reducing her chances of an outright win in the Oct. 5 election, a new poll by Datafolha showed on Friday.

The poll showed support for Rousseff slipped one percentage point to 37 percent, while Aecio Neves added four points to 20 percent and Eduardo Campos increased one point to 11 percent compared with its April poll, Datafolha said.

Rousseff´s comfortable lead at the start of the year has been undermined by concerns over rising inflation in a slow economy and political scandal surrounding management of Brazil´s largest company, state-run Petroleo Brasileiro SA .

Brazil's Congress is expected to open an investigation next week into the controversial purchase of a refinery in Texas and allegations of bribery involving SBM Offshore NV, a Netherlands-based supplier of offshore oil vessels.

Rousseff chaired Petrobras' board at the time and the allegations have hurt her reputation as a good manager. The congressional inquiry is expected to complicate her campaign.

If the vote were held today, Datafolha said, Rousseff´s opponents and other candidates would win enough votes to force a run-off, with a combined voter intention of 38 percent. This outcome is within the poll's margin of error of plus or minus two percentage points.

The left-leaning Rousseff would still win re-election in a second round vote by gaining 47 percent of the votes against 36 percent for Neves, the leader of the main opposition party, the centrist PSDB, the poll showed.

Brazilian stocks, especially shares of state-run companies, have risen in the wake of falling support for Rousseff, as investors critical of heavy-handed government intervention in the private sector hope for a more business-friendly administration in the future.

The decline in support for the president has led factions within the ruling Workers' Party (PT) to call for former president Luiz Inacio Lula da Silva, Rousseff's predecessor and mentor, to run in her place to ensure the party stays in power.

Datafolha said 58 percent of those polled thought Lula should be the PT's candidate. Among PT supporters polled, 75 percent want to see Lula run again.

The poll of 2,844 people was conducted on May 7 and 8 and published by the Folha de S.Paulo newspaper.

Source: Reuters

WSJ: Russia Calls for 'Civilized Implementation' of East Ukraine Referendum Results

        The WSJ reports,"the Kremlin said Monday it respects the secession referendum in eastern Ukraine and hopes for a "civilized implementation" of the results through talks between Kiev and representatives in the east.

Pro-Russian separatists declared victory in Sunday's vote, ratcheting up tensions between the West and Moscow. In its first comments since the referendum, the Kremlin appears to challenge the West and Kiev's standpoint that it was illegitimate. (Read the latest updates on the crisis in Ukraine.)

The Kremlin said in a statement that Moscow welcomes all possible efforts to start negotiations between Kiev and separatist regions with the involvement of the Organization for Security and Cooperation in Europe".

"Moscow views with respect the expression of the will of the people of the Donetsk and Luhansk regions and expects that the practical implementation of the outcome of the referendums will be carried out in a civilized manner without any recurrence of violence, through dialogue between representatives of Kiev, Donetsk and Luhansk," the statement said.

Ukraine's acting president Oleksandr Turchynov said that Moscow is aiming to sabotage May 25 presidential elections and accused the Kremlin of supporting the unrest that has swept the eastern region.

EU foreign ministers were set tomodestly expand sanctions on Russiaon Monday. They were united in condemning the referendum, with Swedish Foreign Minister Carl Bildt calling the ballot outcomes "fake figures from a fake referendum" and German Foreign Minister Frank-Walter Steinmeier saying they "can't be taken seriously."

Soon after the Kremlin statement was released, Russian Foreign Minister Sergei Lavrov read it aloud during a live television broadcast. Mr. Lavrov said that Moscow sees no sense in a new round of four-way meetings akin to the Geneva talks in April between Russia, Ukraine, the U.S. and the EU, saying the Kiev government instead needs to directly negotiate with representatives of its eastern regions.EU diplomats have said in recent days the bloc will add more than a dozen Russian officials and pro-Russia separatists to the bloc's sanctions list and go after several Crimea-based companies that benefited from Moscow's annexation of the region. Speaking on his way into the meeting, U.K. Foreign Secretary William Hague called on the bloc to have ready a new phase of broader economic sanctions on Russia, saying they could be needed after Ukraine's presidential elections.

Bloomberg: Emerging Stocks Rise to Month High on China as India Leads World

Emerging-market stocks rose to a one-month high led by technology shares on bets China will take steps to bolster equities. India’s benchmark gained the most in the world on optimism the main opposition party will win elections.

Samsung Electronics Co. (005930) jumped the most since August in Seoul as its chairman was reported to be stable after surgery. India’s benchmark index rallied to a record as elections drew to a close. Turkish equities gained 0.8 percent on improved earnings. Russia’s stocks fluctuated amid concern the nation will face wider sanctions if it supports secession votes by separatists in eastern Ukraine.

The MSCI Emerging Markets Index climbed 0.6 percent to 1,012.94 at 1:50 p.m. in London, set for the strongest level since April 11. The Sensex has risen 19 percent since Sept. 13, when the Bharatiya Janata Party named Narendra Modi as its prime minister candidate. China will relax foreign-investment limits in listed companies, increase quotas for capital flow, and develop commodities trading tools, the cabinet said May 9.

“Gains in Chinese stocks are being driven by new comments about the further opening up of capital markets,” said Hertta Alava, head of emerging markets at FIM Asset Management Ltd. in Finland, which oversees the equivalent of about $415 million in developing-nation assets.“There are strong hopes that if Modi becomes the next prime minister, he will initiate new reforms to accelerate growth.”

The developing-nation measure has increased 1 percent this year and trades at 10.5 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has risen 1.5 percent in the period, and is valued at a multiple of 14.8.

All 10 industry groups in the emerging-markets gauge gained today, with technology stocks rallying 1.2 percent and Samsung jumping 4 percent. Chairman Lee Kun Hee was operated on early yesterday after being resuscitated the previous night, Rhee So Eui, a spokeswoman for Samsung Group, said in a statement. Tencent Holdings Ltd., Asia’s largest Internet company, soared 5.3 percent in Hong Kong, trimming its slump since reaching a record on March 6 to 21 percent.

Turkey’s gauge rose to the highest since Dec. 2, led by Akbank TAS. (AKBNK) Of the 51 stocks that have announced first-quarter results, 44 reported stronger revenue for the period, data compiled by Bloomberg show. Shares in Dubai, which will be added to the MSCI emerging-market index at the end of the month, surged 1.5 percent, taking a 2014 rally to 55 percent, the steepest gain among 93 global equity indexes tracked by Bloomberg.

The S&P BSE Sensex jumped 2.4 percent to the strongest level since April 1979, led by Coal India Ltd., the world’s biggest producer of the fuel. Votes will be counted on May 16.

“Markets seem to have made up its mind that a Modi-led government will come to power,” Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance Co., said by phone from Mumbai. “Traders are positioning for the results day. There’s an expectation that a change in government will lead to improvement in India’s macroeconomic fundamentals.”

The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong climbed 1.5 percent and the Shanghai Composite Index rallied 2.1 percent, the most since March 21.

Policy makers are seeking to support the stock, bond and commodities markets as growth decelerates. President Xi Jinping said the economy needs to adapt to a “new normal” on growth, according to a state news report.

Lavrov to envoys: watch Russian TV to get truth on Ukraine

 Russian Foreign Minister Sergei Lavrov urged Western ambassadors on Monday to base the reports they write for their countries about the crisis in Ukraine on what they see on Russian television.

Lavrov accused Ukraine of blocking Russian television broadcasts onto its territory and, echoing charges by Kiev about Moscow, said the fellow former Soviet republic's media were broadcasting lies about the crisis.

"They are trying to set up an information blockade and, with unbiased information closed off to viewers and radio listeners, run completely shameless lies," Lavrov told a news conference with the visiting Ugandan foreign minister.

"The ambassadors in Moscow obviously see what Russian TV is showing in live broadcasts and I am sure they are obliged to report to their capitals the facts they see live. Otherwise they would be doing a totally unprofessional job."

Russia denies accusations by the West that it is fomenting separatist unrest in Ukraine and says its neighbour is in the hands of far-right leaders sponsored by the West. Moscow has urged the West to use its influence with Kiev to stop violence in the east which blames on the government in Kiev.

"I have no doubt that in Washington and Brussels and other European capitals they know perfectly well the crux of what is going on in Ukraine," Lavrov said, suggesting Western powers were trying to shift the blame on to Russia.

Lavrov said no new international talks on Ukraine were planned for the moment, and that such discussions would be of little help in defusing the crisis unless there was direct dialogue between the rival sides in Ukraine.

Source: Reuters

Capital account deficit "good" for China -c.bank research head

 A capital account deficit would be a good thing for China, the head of the central bank's research unit said on Monday, because it could be used to offset the current account surplus and China would not need to accumulate foreign reserves continuously.

Jin Zhongxia, director of the Finance Research Institute of the People's Bank of China, made the comments during a business forum in Beijing.

The previous day, Premier Li Keqiang had said China's war chest of foreign currency reserves had become a headache as its continued rise could stoke inflation in the long term. 

Source: Reuters

POLL-ECB unlikely to cut deposit rate at June meeting: traders

The European Central Bank probably will not cut the deposit rate at its June meeting, despite signals from several ECB policymakers that reducing the rate was their preferred measure to tackle a strong euro, a Reuters poll found on Monday.

ECB President Mario Draghi said at a press conference after last Thursday's policy meeting the bank was 'comfortable' with taking action in June. But he stopped short of just what action it would take. 

Only eight of 23 money market traders in Monday's poll expect the ECB to cut the deposit rate from its current zero percent next month - a move that would effectively charge banks for parking their money with the ECB.

Even if the bank were to cut the deposit rate from zero, it would most likely only cut by 10 to 15 basis points, the poll showed.

That is similar to the findings of a Reuters poll conducted before the ECB meeting last week. Only 6 of 58 economists had penciled in a deposit rate cut in the second quarter of 2014. 

"I think this (the next ECB meeting) will once again be a matter of talking and trying to keep expectations alive without any reaction because ... negative rates are still unlikely," said one money market trader.

Monday's survey of 22 money market traders also found banks will return 3.5 billion euros ($4.8 billion) of the two long-term loans they took from the ECB next week, a tad more than the 3.365 billion they will repay on Wednesday.

With their balance sheets set to be put under the microscope in the upcoming Europe-wide bank stress tests, banks in the region are voluntarily offloading the two crisis loans.

But with excess liquidity  below the 100 billion-euro mark, banks could borrow much more at the ECB's weekly refinancing operation than the mean average over the past two months of 113.2 billion euros per week.

Indeed, medians in the poll showed banks were likely to borrow 135.0 billion euros at the ECB's seven-day tender, more than the 129.1 billion euros maturing this week. 

They will also bid for 28 billion euros at the central bank's one-month operation, roughly the same as the amount they took in April.

Source: Reuters

Greece's top court allows far-right party to contest EU vote

 May 11 (Reuters) - Greece's Supreme Court on Sunday allowed the far-right Golden Dawn party to run in European elections this month, despite calls to ban it as its leader waits in jail to be tried for membership of a criminal organisation.

The court routinely permits parties to take part in elections but a private citizen had asked it to exclude Golden Dawn this time because its leadership is under investigation over a string of attacks against immigrants and opponents.

Golden Dawn is expected to perform well due to a wave of anger against economic austerity - the price Greeks have paid for bailouts totalling 240 billion euros ($330 billion) from the European Union and International Monetary Fund to save the country from a debt crisis.

The party is running between third and fifth in opinion polls, and a strong showing would pose a challenge to the fragile coalition government.

Golden Dawn was among a list of 43 parties formally allowed by the court to stand in the May 25 vote, which coincides with Greek municipal elections.

The party sports a swastika-like symbol and its members have been seen giving Nazi-style salutes. Golden Dawn, which rejects the label neo-Nazi, entered parliament for the first time in 2012, tapping into resentment against illegal immigrants and mass unemployment. The jobless rate still stands at nearly 28 percent.

The investigation against Golden Dawn was triggered by the arrest in September of a party supporter who confessed to the fatal stabbing of an anti-fascist Greek musician.

Party leader Nikolaos Mihaloliakos and five other lawmakers have been jailed awaiting trial so far. Party spokesman Ilias Kasidiaris, who is running for Athens mayor, is free on bail pending trial on charges of participating in a criminal group. All have denied any wrongdoing.

The government has resisted calls to ban Golden Dawn outright, which would require a constitutional amendment. Having lived through decades of authoritarian government after World War Two, including a seven-year military dictatorship, Greece now bars only convicted criminals from contesting elections.

Reuters: Rallying miners hoist European shares to six-year high

LONDON, May 12 (Reuters) - European stocks scaled new six-year highs on Monday, boosted by miners on a bullish note from JPMorgan, while investors also welcomed dovish comments from European Central Bank policymaker Ewald Nowotny.

Miners <.SXPP> were the best performers across Europe after JPMorgan upgraded them to "overweight" from "underweight", saying it was shifting funds into the beaten-down mining sector from autos, which have seen strong share price gains.

Rio Tinto <RIO.L> and BHP Billiton <BLT.L>, which the investment bank viewed as the most attractive stocks in the sector, climbed 4 percent and 2.4 percent respectively, against a 2.3 percent rise for the sector as a whole.

"We believe the risk-reward for miners is improving ... We are taking funds from autos, moving them from OW ('overweight') to N ('neutral'). The sector valuations do not look as attractive any more due to exceptional past performance," JPMorgan said in a note.

In the last 12 months, miners have risen about 5 percent, contrasting with a near 40 percent gain for autos.

The mining sector accounted for around a fifth of the FTSEurofirst 300's <.FTEU3> rise on Monday.

The index was up 0.5 percent at 1,362.49 points by 1054 GMT, a whisker away from a fresh six-year high reached earlier on Monday, at 1,363.05. The euro zone's blue-chip Euro STOXX 50 index <.STOXX50E> also rose 0.5 percent, to 3,199.22.

Comments from ECB policymaker Nowotny also underpinned equity markets, traders said. An interest rate cut alone would probably not be enough to combat low inflation in the euro zone, he said, adding he would favour a "package" of measures.

M&A BOOST

A burst of dealmaking and bids alongside some good news on earnings and the possibility of more stimulus steps from the ECB in June has bolstered European equities in recent weeks.

On Monday, France's Alstom <ALSO.PA> rallied after Germany said it would support a takeover by Siemens <SIEGn.DE>.

Alstom - which is reviewing a bid by U.S. giant General Electric <GE.N> for its energy businesses - climbed 2.7 percent after Chancellor Angela Merkel said on Saturday the German government would support a tie-up between Siemens and Alstom if the companies decide that it would make sense. [ID:nL6N0NW08K]

But the market might have reached a ceiling, for now.

Lofty valuations are preventing investors from putting more money to work in equities. The rebound in corporate dealmaking could go some way to offset this situation, but some analysts are taking a bearish short-term view on markets.

The STOXX Europe 600 trades on a 12-month forward price/earnings ratio of about 14 times, against its 10-year average of around 12 times, Thomson Reuters Datastream shows.