US STOCKS-Futures off after Goldman loss, overseas risk


* Futures off: Dow 81 pts, S&P 3.7 pts, Nasdaq 5.5 ptsBy Edward KrudyNEW YORK, Oct 18 (Reuters) - U.S. stock index futures fell on Tuesday after a rare quarterly loss at Goldman Sachs, while doubt was cast on France’s triple-A credit rating and growth in China slowed.Goldman Sachs Group Inc , the largest U.S. investment bank, lost $428 million in the quarter, only its second quarterly loss as a public company. hurt by sharp declines in the value of investment securities and customer trading assets. The shares fell 1 percent to $95.99 in premarket trading.Moody’s cautioned it may slap a negative outlook on France’s Aaa credit rating in the next three months if costs from helping to bail out banks and other euro zone members stretch its budget too thin.China’s economic growth slowed in the third quarter to its weakest pace since early 2009. Gross domestic product rose 9.1 percent in the quarter from a year earlier, but was down from 9.5 percent in the previous period.”Growth concerns in China along with renewed euro debt concerns are bringing some hesitation into the futures market,” said Andre Bakhos, director of market analytics at Lek Securities in New York.S&P 500 futures fell 3.7 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures dropped 81 points, but Nasdaq 100 futures dipped 5.5 points.Bank of America Corp , the largest U.S. bank by assets, reported a $5.9 billion third-quarter profit after selling shares of China Construction Bank and recording two accounting gains. The shares fell 0.8 percent to $5.98 premarket.”The headline numbers are dramatically different than reality. I think it would have been flat at best without the adjustments. Revenue was particularly weak,” said Matt McCormick, portfolio manager with Bahl & Gaynor Investment Counsel in Cincinnati.International Business Machines Corp’s quarterly results failed to impress investors used to a robust showing from the technology bellwether. That added to worries over lackluster corporate information technology spending. IBM shares fell 4.1 percent to $178.90.U.S. stocks suffered their worst loss in two weeks on Monday after comments from Germany’s finance minister renewed investor fears over Europe.

IBM’s Q3 disappoints, stock drops


The company’s earnings beat forecasts and it increased its 2011 earnings-per-share outlook but it faced a high hurdle after recent strong reports from Oracle and Accenture, and analysts focused on slower expansion in key regions and businesses.Further stoking worries about IT spending, business software maker VMware Inc posted quarterly profit above expectations but warned of uncertainty among some of its corporate customers in Europe.”We have seen a bit more scrutiny and higher levels of approval required. Particularly with larger deals where they would go for CFO and CEO approval, where in the past we may not have seen those approvals to be necessary,” said VMWare Chief Financial Officer Mark Peeking.IBM, an information technology hardware bellwether with a global clientele, said total services signings — an indicator of future growth — climbed to $12.3 billion in the third quarter, in line with expectations.”The growth rates IBM experienced in each of the regions — Americas, Europe and Asia — are all decelerating and the public sector is exhibiting no growth,” said Shebly Seyrafi, an analyst at FBN Securities. “I wouldn’t say we’re falling off a cliff, but there is a slowing in IT spending.”Revenue rose 8 percent to $26.16 billion, marginally softer than the average forecast of $26.26 billion.Buttressed by recurring revenue that helps keep IBM’s results steady in strong and weak economies, its shares have outperformed the market and hit a record high on Friday. They are up about 28 percent this year versus the Standard & Poor’s 500 index’s 4 percent dip.On Monday, International Business Machines Corp’s stock fell 3.7 percent to $179.70 in extended trade after closing down 2.1 percent on the New York Stock Exchange.”The company exceeded published expectations, but the underlying expectations were even higher,” Annex Research analyst Bob Djurdjevic said. “Investors who have been very bullish on IBM are probably taking some profits now.”RISING CLOUDU.S. economic concerns and a worsening European financial crisis have hurt consumer demand. Companies such as IBM that sell hardware and software for data centers powering the Internet have remained resilient.IBM said revenue from cloud computing in the first nine months of this year was twice as much as in full-year 2010.Adjusted for currency, IBM’s revenue from the Americas rose 6 percent in the quarter, with Europe, Africa and the Middle East flat, and Asia up 1 percent.IBM also derives a major portion of its revenue from government spending and the financial services industry — both hit hard by widening fiscal deficits and crumbling markets, respectively.IBM has consistently beaten Wall Street forecasts. In the second quarter, it trounced expectations with signings of new business surging 16 percent. At the time, that stellar performance raised hopes that 2011 would be a good year for overall tech-spending.On Monday, it raised its full-year diluted earnings forecast to at least $13.35 per share, from its prior estimate of at least $13.25. Analysts had expected $13.32, according to Thomson Reuters I/B/E/S.IBM reported a third-quarter profit, excluding items, of $3.28 per share, up 15 percent year over year and above expectations of $3.22.”Whatever IBM could control, they did a great job. But they are not immune to macro conditions. Financial conditions are tough,” said Global Equities Research analyst Trip Chowdhry.”People don’t want to cancel projects, but projects are getting delayed. Sales cycles are getting elongated. New projects are getting smaller budgets.”Despite uncertainty in the fourth quarter and 2012, some portfolio managers remained confident in IBM’s ability to weather a tougher global environment.”IBM’s business has a degree of resiliency to it. The company has maintenance agreements that generate recurring revenue, giving us more visibility on future results,” Wirtz said.

Rio Tinto retreats from aluminum, $8 billion of assets on block


Rio Tinto (RIO.L) said it planned to sell 13 assets, including smelters and alumina refineries, in a move immediately interpreted as a way of diverting yet more resources to iron ore, which now accounts for nearly 80 percent of group earnings.”It’s all about returns and these big miners, Rio included, are always re-evaluating their businesses. And iron ore is currently a real cash cow for Rio Tinto,” said Gavin Wendt, senior mining analyst for Mine Life in Sydney.The sale, which would leave Rio Tinto’s remaining aluminum business focused mainly on its more profitable Canadian operations, is designed to help the group more than double its aluminum earnings margins to 40 percent by 2015.”The only way they can achieve that is by getting rid of all these assets which can never be world class,” said Peter Chilton, resources analyst at Constellation Capital Management.In Australia, Rio Tinto’s shares jumped as much as 3 percent to a month high of A$70.29 on the news, with fund managers applauding the move away from a poorly performing business with a gloomy outlook compared with its iron ore unit, which enjoys a 70 percent profit margin.Rio’s London shares were ahead 3.6 percent at 34.64 pounds in morning trade on Monday, outpacing the broader mining index .FTNMX1770, which was ahead 2.5 percent.Rio Tinto has been in aluminum since the 1950s and ranks itself as the world’s largest primary producer after the ill-timed Alcan deal in 2007, but it could no longer ignore the business’s big hunger for capital and relatively meager returns.’NO RUSH’ TO SELLRio Tinto was careful not to appear overly keen to sell and made it clear that aluminum remained a core asset, saying global demand was relatively good and that it would consider making further investments in quality aluminum assets.”We’re going to be in no rush (to sell),” Rio Tinto Alcan Chief Executive Jacynthe Cote told reporters in a phone briefing after the announcement. She declined to say whether Rio Tinto was already in talks with potential buyers.The company said it would look at a range of options for divesting the assets, which could include floating them as a separately listed company, spinning off shares in a new company to Rio Tinto shareholders or finding buyers for the assets.”It’s a well thought-out plan to realize value that might not be recognized in the current Rio share price and should deliver benefits to shareholders in the medium to longer term,” said James Bruce, a portfolio manager at Perpetual.Industry analysts said smaller buyers were more likely to be interested in these assets than major producers such as Russia’s UC RUSAL (0486.HK) or Chinese state-owned Chinalco. Like Rio Tinto, the big producers are all chasing higher-return assets.Aluminum prices have tumbled nearly 15 percent in the past quarter. UBS rates aluminum as a “least preferred” commodity and sees prices falling another 8 percent in 2012.Rising Chinese aluminum output has been undermining global prices for the metal. “The aluminum industry has been suffering because of over-capacity coming from China,” said Henry Liu, of Mirae Asset Securities in Hong Kong. “This has led to very thin margins. It’s very difficult to compete with Chinese producers.”Rio Tinto said it would sell assets in Australia, New Zealand, France, Germany, the United States and Britain to focus on its hydro-powered plants in Canada. It also planned to keep its Weipa bauxite mine in Australia.Bauxite is used to make alumina which is in turn used to make aluminum, a light-weight and flexible metal used in a vast array of industrial and consumer products, from packaging and aircraft manufacturing to electrical cables and insulation.The group said a new unit, Pacific Aluminum, would hold the six Australian and New Zealand units being put up for sale, including Australia’s Gove bauxite mine and alumina refinery and Tomago smelter and its New Zealand smelters.Deutsche Bank analysts estimated the Pacific Aluminnium assets were worth $6.5 billion, though some others doubted this, citing uncertainty over Australia’s planned carbon tax. The tax will raise power prices for energy-hungry aluminum smelters.Rio Tinto’s plants in France, Germany, the United States and Britain that would be put up for sale would continue to be managed by Canada-based Rio Tinto Alcan.In 2011, Rio Tinto forecasts its share of bauxite, alumina and aluminum production to be 35.8 million tonnes, 9.2 million tonnes and 3.9 million tonnes, respectively.

UPDATE 5-New iPhone on sale, fans buy in tribute to Jobs


* Critics rave about phone’s voice control, otherwise no revolution* Users report glitches with iOS 5 operating system, iCloudBy Michael Perry and Mayumi NegishiSYDNEY/TOKYO, Oct 14 (Reuters) - Apple Inc’s new iPhone went on sale in stores across the globe on Friday, with fans snapping up the final gadget unveiled during Steve Jobs’ lifetime, many buying the phone as a tribute to the former Apple boss.Hundreds queued around city blocks in Sydney and Tokyo to get their hands on the iPhone 4S, ahead of store sales in Germany, France, Britain and North America.”I am a fan, a big fan. I want something to remember Steve Jobs by,” said Haruko Shiraishi, waiting patiently with her Yorkshire terrier Miu Miu at the end of an eight block queue in Tokyo’s smart Ginza shopping district.The new model looks similar to the previous iPhone 4 but has an upgraded camera, faster processor and highly regarded voice-activated software, which allows users to ask questions.Australian Tom Mosca, the first to buy the phone in Sydney, said he would ask his new white iPhone: “Where’s Steve?” Many Apple fans believe the phone was called iPhone 4S to mean “for Steve”.Apple CEO Tim Cook and his executive team hope the first device sold without their visionary leader at the helm will protect them against a growing challenge from the likes of Samsung Electronics .The South Korean firm, Apple’s arch-rival with smartphones powered by Google’s Android software, expects to overtake it as the world’s biggest smartphone vendor in terms of units sold in the third quarter.The iPhone 4S — introduced just a day before Jobs died — was dubbed a disappointment because it fell short of being a revolution in design, but glowing reviews centred around its “Siri” voice-activated software have helped it set a record pace in initial, online sales orders.In Tokyo, 24-year-old Ryosuke Ishinabe said: “I just wanted the newest iPhone. I want to try out iCloud.”Despite the enthusiasm at Apple stores, the launch was marred somewhat by widespread complaints this week on the Internet about problems downloading iOS 5 — the latest version of Apple’s mobile software.There were also problems with iCloud, Apple’s online communications, media storage and backup service formally launched on Wednesday, with users reporting glitches such as losing their email access.Those concerns pale compared to the problems for rival Research in Motion , which has been grappling with an international outage of its Blackberry email and messaging services for several days.JOBS SHADOW OVER iPHONE LAUNCHThe vast majority of the iPhone 4S buyers at the Sydney store appeared to be existing Apple customers, many having bought the original iPhone and its subsequent upgrades. Only one out of 10 people surveyed by Reuters was a new Apple customer.”I have been waiting for the iPhone 5 for a long time. But since Jobs died, I wanted to make sure I had a new iPhone with some advantages over the old,” said iPhone devotee Mark Du, concerned over future Apple gadgets without Jobs in charge.Apple fans in Sydney and Tokyo made sure Jobs was part of the iPhone 4S launch, with flower, candle and photo shrines to the late Apple boss erected outside the stores.Underscoring the enthusiasm for the new phone, Japanese mobile carrier Softbank Corp had to temporarily stop contract applications after its computer system was overwhelmed with more requests than it had expected.Apple said it did not release sales figures on launch day, so gauging initial sales is difficult. Apple said it had taken more than 1 million online orders in the first 24 hours after its release, exceeding the 600,000 for the iPhone 4, though that model was sold in fewer countries initially.Some analysts expect fourth-quarter iPhone shipments to reach 30 million or more, almost twice as much as a year ago.Apple’s fifth-generation iPhone uses chips from Qualcomm Inc , Toshiba and a host of smaller semiconductor companies, according to repair firm iFixit, which cracked the device open on Thursday.APPLE SOFTWARE CRITICISMApple’s iOS 5 software became available this week and is intended to upgrade older phones and enable new features such as better Twitter integration.But glitches with the new iCloud service and mobile software sparked a chorus of user complaints.”This would be a great time for like, Samsung or something, to take out a sponsored ad,” user Ryan James Kirk tweeted.The iPhone — seen as the gold standard for smartphones — is Apple’s highest-margin product and accounts for 40 percent of its annual revenue.Analysts point to several factors in Apple’s favor: a $199 price that matches up well with rival devices; availability promised on more than 100 carriers by the end of 2011, far more than its predecessors; and glowing reviews.In a sign of how tough the competition is, two doors along from the Sydney Apple store, Samsung has been selling its new Galaxy SII for only A$2 to its first 10 customers each day, prompting Samsung fans to also camp out on the footpath.

Japan PM to ease weapons export ban -Yomiuri


Japan in 1967 drew up its “three principles” on arms exports, banning sales to countries with communist governments, that are involved in international conflicts, or that are subject to United Nations sanctions.But the rules evolved into a blanket ban on arms development and production with any country other than Japan’s chief ally the United States, hurting the competitiveness of the country’s defence industry, which accounts for less than 1 percent of total Japanese industrial production.The easing would allow Japan, with a pacifist constitution, to export weapons and technologies to countries that have agreed to international arms export regulations, the Yomiuri said, citing government sources.Easing the ban would allow Japan’s defence industry to join multinational projects such as the Lockheed Martin-led F-35 joint strike fighter and enable defence contractors such as Mitsubishi Heavy Industries to cut costs.Other major Japanese defence contractors include Kawasaki Heavy Industries and IHI Corp .Chief Cabinet Secretary Osamu Fujimura said he had no knowledge of any planned easing of the ban as reported by the Yomiuri.”Our position is to follow the weapons export ban that has been in place until today,” he told a news conference.The Yomiuri said Noda would convey his plans on the issue to U.S. President Barack Obama in November when they are likely to meet. The United States has sought Japanese technology for use in joint weapons development, the newspaper said.The ruling Democratic Party has called for easing the export ban but Noda’s predecessor Naoto Kan did not alter the rules.Efforts to review the ban have faced domestic opposition in the past.While parliamentary approval is not required to lift the ban, the government and the Democrats aim to discuss their position with the second biggest opposition New Komeito Party, which has been wary about easing the ban but whose help they need to pass bills in the divided parliament, where the opposition controls the upper chamber, the Yomiuri said.

Suzuki: VW breached pact by hiding technology


Suzuki’s action deepens a feud with VW, which accused the Japanese firm of breaching the partnership by procuring diesel engines from Fiat .VW, which bought a 19.9 percent interest in Suzuki for about 1.7 billion euros ($2.3 billion) in January 2009, is demanding it end the cooperation with Fiat.

Analysis: Romney strong but hasn’t locked up nomination


Another reminder of Romney’s shaky standing among the Republican party base came on Thursday in an NBC/Wall Street Journal poll that said businessman Herman Cain had surged past Romney, 27 percent to 23 percent for Romney.This makes Cain the latest alternative to Romney, succeeding Texas Governor Rick Perry and Minnesota Congresswoman Michele Bachmann as the darling of conservatives who have yet to fall in love with Romney.”At the end of the day, conservatives are still looking for an alternative,” said Ed Rollins, a veteran Republican strategist who was Bachmann’s campaign manager.Cain is unlikely to have the staying power to win the nomination despite his down-to-earth style and his simple “9-9-9” plan to scrap the federal tax code and replace it with 9 percent taxes on corporations, income and sales.The former Godfather’s Pizza CEO has little in the way of financing or organization. Rival campaigns and the media are now poring over his new autobiography “This is Herman Cain!” and remarks he made in the past for sticks to hit him with.Among possible weak spots for Cain are comments in 2008 that downplayed the deep economic crisis then unfolding as an “imaginary recession.”Romney’s team will eventually turn on Cain if the businessman continues to stay high in the polls.”I suspect the Romney campaign is going to wait and let the media take its shot at Cain, but I guarantee they have a Plan B ready designed to kill him in the crib if they have to,” said Mark McKinnon, a former campaign adviser to Cain and George W. Bush.The Romney train rolls along, albeit slowly, as the time for actual voting in January draws closer. His poll numbers have not spiked upward as his rivals have faded, but they have remained steady.He has picked up important endorsements of New Jersey Governor Chris Christie, a fiscal conservative, and of former candidate Tim Pawlenty. He has secured major party fundraisers such as Home Depot co-founder Ken Langone.And Romney’s debate performances, including a New Hampshire gathering on Tuesday, showed an agility that he did not possess in his last campaign for president in 2008 when he was outfoxed by wily Senator John McCain, the ultimate nominee.”His performance is much better,” said Charlie Black, who was a McCain adviser. “On the debate stage he looks confident, knowledgeable and even uses a sense of humor. It makes him a much better candidate. He’s learned a lot from the experience from last time.”CONSERVATIVE CONCERNSRomney reinforced conservative concerns at the New Hampshire debate by his refusal to denounce bank bailouts begun in 2008 to stave off a collapse of the U.S. financial system.Tea Party conservatives view the bailouts as government run amok. And they believe Romney violated their anti-government principles by developing a Massachusetts healthcare plan that Obama used as a model for the U.S. overhaul Republicans want to repeal.Among the Romney skeptics is conservative talk show host Rush Limbaugh, who declared to his vast audience that Romney is not a conservative.”He’s not, folks. You can argue with me all day long on that, but he isn’t. What he has going for him is that he’s not Obama and that he is doing incredibly well in the debates because he’s done it a long time,” said Limbaugh.A Time poll on Thursday showed Romney as the Republican who would give Obama the strongest competition in 2012, with Cain trailing way behind.What may be Romney’s saving grace is that conservatives have not settled on a single alternative to the former Massachusetts governor, but instead have lurched from Bachmann to Perry and now to Cain.”If there was some way one of the conservative candidates could essentially collect all the parts of the conservative part of the electorate, I think that person would have the advantage in the primary,” said Ipsos pollster Chris Jackson. “The problem is there are four or five candidates laying claim to that part and they are splitting the vote.”The 2012 Republican nomination battle truly gets under way in January when the Iowa caucuses are held. Iowa is the domain of social conservatives who have been wary of Romney.Still, Romney has held steady in Iowa despite not spending much time there and not participating in an August straw poll won by Bachmann. Iowa watchers believe a strong second-place showing in Iowa would boost Romney to the next campaign battle in New Hampshire, where Romney holds a big lead.”The only thing that can stop Romney now is Romney himself — if he veers to the left, which he’s shown no signs of doing,” said Republican strategist Scott Reed. “But short of that he is marching toward the Republican nomination.”

UPDATE 1-Deutsche could need 9 bln euros to pass new EU test - sources


By Philipp Halstrick and Alexandra HudsonFRANKFURT/BERLIN, Oct 13 (Reuters) - Deutsche Bank would need 9 billion euros ($12.4 billion) in fresh equity if new EU stress tests imposed a 9 percent core tier 1 capital ratio, two people with direct knowledge of the bank’s finances said on Thursday.The bank would pass the latest European Banking Authority test if a 7 percent ratio were to be required, the sources told Reuters.Deutsche Bank declined to comment, but in separate remarks the bank’s chief executive said it would do all it could to avoid a forced recapitalisation.Josef Ackermann said the bank had enough funds of its own to cope with a crisis and added that writedowns of sovereign debt, or haircuts, combined with demands to boost bank capital could lead to a credit crunch in the real economy.The European financial watchdog is going to require banks to hold more capital than previously demanded in order for them to be able to withstand sovereign debt writedowns and a worsening economic situation.Ackermann, Germany’s most high-profile banker, said it was doubtful whether a blanket recapitalisation of European banks — a measure being considered by politicians in Germany and France — would help solve the sovereign debt crisis.”It is not the capital position which is the problem, but the fact that sovereign debt as an asset class has lost its risk-free status,” Ackermann told a conference in Berlin. “The key to the solution is therefore in the hands of governments, to restore confidence in the solidity of state finances.”He said it was key to ensure that banks had access to long-term financing from markets. “At the moment that is close to impossible for any bank,” he said.Before considering further measures to stabilise the euro zone politicians and regulators should consider the cumulative impact of proposals such as forced recapitalisation, a transaction tax and writedowns on bonds.”We need to find the right balance between stricter regulation of the financial sector and the impacts these have on the economy as a whole,” he said.Deutsche Bank’s obligation to retain Greek bonds had cost it 400 million euros this year, he said.Ackermann’s warning comes as Europe’s economic engine faces slowing growth in many of Germany’s top export markets as governments rein in spending to bring down high debt levels.The German government expects gross domestic product growth of 3 percent this year, which would provide vital economic stimulus to a euro zone that has become increasingly dependent on Germany as the debt crisis intensifies.