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Exclusive-U.S. asks Japan, China, others to consider tapping oil reserves -sources

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November 17, 2021

By Trevor Hunnicutt, Jarrett Renshaw and Timothy Gardner

WASHINGTON (Reuters) -The Biden administration has asked some of the world’s largest oil consuming nations to consider releasing some crude reserves in a coordinated effort to lower prices, according to several people familiar with the matter.

Global oil benchmarks fell in post-close trading on the news. In late October, prices touched seven-year highs as oil demand has rebounded nearly to pre-pandemic levels, faster than the pace of supply.

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President Joe Biden has faced political pressure over gasoline prices which have risen since his election in November 2020, a time when commuting and travel were drastically reduced during the pandemic. Government leaders in Japan and other consuming countries face similar pressures.

The Organization of the Petroleum Exporting Countries and allied producers, led by Saudi Arabia and Russia, have been adding 400,000 barrels per day to the market on a monthly basis but resisted Biden’s calls this month for steeper boosts.

In recent weeks, Biden and top aides have raised the issue with close allies including Japan, South Korea and India, as well as with China, the sources said. Tokyo responded positively to initial outreach, according to one of the sources.

One of the sources, asked why India was included in the batch of countries since it has only a small reserve, said: “We’re talking about the symbolism of the largest consumers of the world sending a message to OPEC that ‘you’ve got to change your behavior.’”

Several people familiar with the matter cautioned that such negotiations have not been finalized nor has any final decision been made about whether to pursue any specific course of action on oil prices.

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The White House declined to comment on the detailed content of conversations with other countries. “No decisions have been made,” said a spokesperson for the White House’s National Security Council.

The White House has said for weeks that it is “talking with other energy consumers to ensure global energy supply and prices do not imperil the global economic recovery, the spokesperson added. “There is nothing to report beyond ongoing conversations and we consider a range of tools for if and when action is needed.”

The U.S. share of any potential release of reserves could be more than 20 to 30 million barrels, saying that much was needed to have an effect on markets, according to a U.S. source who participated in the discussions. The release could be in the form of a sale or a loan from the SPR – or both.

After Reuters reported on the White House discussions, U.S. crude was trading at $78.18 after closing at $78.36 a barrel, while Brent fell to $80.21 after ending at $80.28 a barrel. Prior to the news, both U.S. crude and global benchmark Brent notched their lowest settlement prices since early October, with Brent down 1.7% and U.S. crude down 3% for the day.

OPEC and allies have been wary of boosting output dramatically, concerned the rebound in demand could be fragile and additional supply could overwhelm markets.

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“The surplus is already beginning in December,” OPEC Secretary General Mohammad Barkindo said on Tuesday, when asked if he was sure there would be an excess in oil supply next year.

“These are signals that we have to be very, very careful,” he told reporters.

Rising oil prices have vexed Biden ahead of the 2022 midterm elections which will determine whether his Democratic party maintains its slim majorities in the U.S. Congress.

Several Biden aides attribute his falling public approval ratings in recent months to worsening inflation from energy to food and other areas. The consumer price index is up 6.2% over the last 12 months, with its energy components up 30%.

U.S. gasoline prices are $3.41 per gallon now, according to AAA, more than 60% higher than a year ago as the economy has rebounded from the COVID-19 pandemic.

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The Paris-based International Energy Agency, an energy watchdog which includes some of the largest consumers of oil, including the United States, Japan, and numerous European nations, did not comment. The IEA in the past has coordinated releases involving several countries.

“The IEA monitors the oil market closely and stands ready to act as necessary,” it said in a statement.

(Reporting by Trevor Hunnicutt, Jarrett Renshaw and Tim Gardner; Additional reporting by Valerie Volcovici and Noah Browning; Editing by David Gaffen, Heather Timmons and David Gregorio)

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Arnault-backed group launches second SPAC listing

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December 7, 2021

By Emma-Victoria Farr

LONDON (Reuters) – France’s richest man Bernard Arnault and former UniCredit head Jean Pierre Mustier will publicly list a second blank cheque vehicle in Amsterdam, raising 200 million euros ($226 million), the bookrunners on the deal said.

Earlier this year, the duo raised half a billion euros from their special purpose acquisition company (SPAC), Pegasus Acquisition Company Europe B.V., which is searching for takeover targets in the financial sector.

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On Tuesday, the same group of backers announced they would list a second vehicle with a similar focus, Pegasus Entrepreneurial Acquisition Company Europe, in Amsterdam.

SPACs are listed on a stock exchange by a group of entrepreneurs, who use the money raised to target a private company – allowing the target to get a stock market listing without the arduous process of launching a public listing.

Mustier is working with former Bank of America banker Diego De Giorgi and entrepreneur and investor Pierre Cuilleret in launching the 200 million euro listing.

Several SPACs have listed in Amsterdam, potentially boosting the Dutch financial capital’s credentials as a hub for fast-growing companies. London has only hosted one major SPAC in 2021, after updating its rules to make them easier.

Pegasus is backed by institutional sponsors Tikehau Capital and Financière Agache and by sponsors De Giorgi, Cuilleret and Mustier. Citi, Goldman Sachs and BNP Paribas are the bookrunners on the deal.

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($1 = 0.8860 euros)

(Reporting by Emma-Victoria Farr; editing by John O’Donnell and Louise Heavens)

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Bulls back in charge as Omicron worries wane

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December 7, 2021

By Marc Jones

LONDON (Reuters) – Waning Omicron COVID-19 variant worries and a timely booster shot of Chinese stimulus lifted world stock markets and oil on Tuesday and left traders offloading safe-haven currencies and bonds again.

The FTSEurofirst 300 index was on track for its first back-to-back run of plus 1% gains since February while Asia saw record bounces from some of China’s biggest firms such as Alibaba and Baidu. [.SS][.EU]

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The risk-on mood also helped the dollar climb against safe haven currencies such as the Japanese yen,, which had lost 0.6% overnight, as the confidence-sensitive Australian dollar also found buyers. [FRX/]

Safe-harbour government bonds went the other way with yields – which move inverse to bond prices – up 2.5% on Germany’s benchmark 10-year Bund after falling to a three-month low on Monday. [GVD/EUR]

Reports in South Africa said Omicron cases there had only shown mild symptoms and the top U.S. infectious disease official, Anthony Fauci, told CNN “it does not look like there’s a great degree of severity” so far.

“Good news relating to the severity of Omicron should be taken with a pinch of salt. Faster transmission could offset the benefits of milder symptoms,” researchers at ING said in a note. “More broadly, it is still early days, even if markets are starting to display Omicron fatigue.”

The gains also came after China’s central bank on Monday injected its second shot of stimulus since July by cutting the amount of cash that banks must hold in reserve.

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There was still uncertainty about its property sector as Evergrande teetered on the brink of default again but data showing much stronger import growth was “a positive sign on the strength of domestic demand”, RBC analyst Adam Cole said.

Elsewhere, Australia’s S&P/ASX200 rose 0.95%, while Japan’s Nikkei advanced 2.1% as risk-on sentiment pushed markets higher.

MSCI’s main Asia ex-Japan benchmark has lost about 5% so far this year, with Hong Kong markets figuring among the big losers, while Indian and Taiwan stocks outperformed.

Shares in embattled developer Evergrande edged up 1.7% after hitting a record low on Monday as markets waited to see if the real estate giant has paid $82.5 million with a 30-day grace period coming to an end.

Elsewhere, markets were supported by gains on Wall Street, where economically sensitive stocks outperformed.

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“While epidemiologists have rightly warned against premature conclusions on Omicron, markets arguably surmised that last week’s brutal sell-off ought to have been milder,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, said in a note.

“After all, early assessments of Omicron cases have been declared mild, spurring half-full relief.”

Also supporting the dollar in FX markets was the expectation the Federal Reserve will accelerate the tapering of its bond-buying programme when it meets next week in response to a tightening labour market.

Oil prices jumped another 2% to $74.60 a barrel, adding to a near 5% rebound the day before as concerns about the impact of Omicron on global fuel demand eased. [O/R]

Copper prices also ticked higher while gold was steady at $1,778.5 per ounce on expectations U.S. consumer price data due later this week will show inflation quickening.

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(Additional reporting by Anshuman Daga in Singapore; Editing by Nick Macfie)

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Exclusive: EU antitrust regulator seeks input on Microsoft’s $16 billion Nuance deal

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December 7, 2021

By Paresh Dave

(Reuters) – EU’s antitrust regulator is taking a deeper look into Microsoft Corp’s $16 billion deal for transcription technology company Nuance Communications Inc, asking customers and competitors to draw up a list of concerns, according to a questionnaire from last month seen by Reuters.

The previously unreported outreach is the most extensive by an antitrust authority since the companies announced the acquisition in April, according to a person familiar with the matter.

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Microsoft declined to comment, and Nuance did not respond to a request for comment.

After minimal review, the U.S. Department of Justice in June and the Australian Competition Commission in October said they would not contest the deal. The companies filed for approval from the European Commission’s competition bureau last month, and the regulator has until Dec. 21 to clear the deal or open a bigger investigation.

The companies had expected to close the deal by the end of this year, but said last month the timeline could slip to early next year.

The questionnaire asks whether Microsoft and Nuance are competitors and whether a tie-up could affect clients and rivals, including whether Microsoft could favor Nuance over competing services.

Nuance primarily sells transcription technology that is popular among doctors and call centers that want to automate note-talking. Analysts view the deal as bolstering Microsoft’s presence in the healthcare market, and bringing it new voice and medical data to train artificial intelligence offerings in health, speech and biometric security.

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Like other big tech companies, Microsoft for years has grown its business through acquisitions, such as in advertising and video gaming. But in the last decade, Microsoft has avoided the target that recently has dogged its competitors Alphabet Inc’s Google, Facebook Inc, Apple Inc and Amazon.com Inc, all of which are facing antitrust lawsuits and investigations on numerous issues.

Steven Weber, a University of California Berkeley professor studying the intersection of technology and health care, said possible concerns about the pending deal could include Microsoft forcing its Office suite on Nuance customers by bundling them together.

Nuance has said it serves 77% of U.S. hospitals.

A key to its success has been has ensuring in deals with customers that it could use their data to advance its voice recognition systems, according to former chief executive Paul Ricci and another former employee.

For instance, a Nuance contract with Augusta University Medical Center, obtained by Reuters this year through a public records request, reads, “Customer shall provide Nuance access to voice and text data…and grants Nuance a perpetual, royalty-free license to copy, use and analyze such data for speech recognition research.”

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Big cloud vendors such as Amazon and Microsoft typically do not have unfettered access to customers’ data for research and development. But the opportunity to acquire those relationships and data explains Microsoft’s interest in Nuance, the former employees said.

Other providers of health transcription technologies include 3M Co and Philips.

(Reporting by Paresh Dave; Editing by Kenneth Li and David Gregorio)

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