>>> US Gapping up

Gapping up

In reaction to strong earnings/guidance: MSO +13.1% (light volume), ZU +11.3%, ARCI +10.9%, VSI +9.6%, AREX +7.2%, (light volume), CRH +5%, MMSI +4.8% (light volume), INFI +4.4%, HVT +3.9%, TTEC +3.6% (also announces intention to acquire Sofica Group; announces increased authorization of $25 mln for share repurchases), ARIA +3.4%, PPO +3.3%, (light volume), XPO+2.9%, HD +2.7%, FTR +2.4%, VC +2.2%, FI +1.8% (light volume), NLS +1.8% (light volume), EOG +1.4% (also announced stock split), HFC +1.3% (light volume), KONG +1.2%.

Other news: DARA +41.8% (confirms KRN5500 Receives Orphan Drug Designation From FDA), IMUC +22.3% (receives orphan drug status for ICT-107 in glioblastoma in the European Union), SPNC +9.8% (achieves statistical endpoints of EXCITE ISR Adjunct Analysis ), XOMA +5.1% (confirms receipt of orphan drug designation from FDA for pyoderma gangrenosum), EGHT +4.8% (to Join S&P SmallCap 600), BCRX +3.4% (BioCryst Pharm announces peramivir NDA acceptance by the FDA), BBRY +3.3% ( introduces new products and services), NVO +3% (following yesterday's JPMorgan upgrade), KNDI +2.8% (WantChinaTimes discusses that China's promotion for new energy cars is not going well), UVE +2.7% (to Join S&P SmallCap 600), TSCO +2.1% (authorized a $1 bln increase to its existing share repurchase program, bringing the total amount authorized to date under the program to $2 bln ), YGE +1.6% (Yingli Green Energy to supply 54 MW of solar modules for seven projects in the United Kingdom), JNPR +1.5% (Board of Directors to nominate Elliot's Kevin DeNuccio and Gary Daichendt), LNKD +1% ( planning new China language service, according to reports ), KMP +0.7% (COO disclosed buying 6.6K shares at $75.50 on 2/24 worth ~$500), CIM +0.6% ( Leon Cooperman discloses 7.6% active stake in 13D filing; engaged in communications with members of the Board).

Analyst comments: TSLA +4.8% (target raised to $320 from $153 at Morgan Stanley ), BLOX +1.6% (Infoblox initiated with a Buy at Deutsche Bank)

>>> US Early premarket gappers

Early premarket gappers

Gapping up: DARA +53.8%, ARCI +12.5%, IMUC +11.6%, ZU +11.3%, SPNC +9.8%, AREX +7.2%, XOMA +6.2%, CRH +5.9%, EGHT +4.8%, MMSI +4.8%, HVT +3.9%, TSLA +3.8%, TTEC +3.6%, PPO +3.3%, NVO +3%, XPO +2.9%, KNDI +2.8%, UVE +2.7%, FTR +2.4%, TSCO +2.1%, FI +1.8%, BBRY +1.7%, TOL +1.7%, JNPR +1.5%, EOG +1.3%, KONG +1.2%, LNKD +1%

Gapping down: RP -22.1%, PERY -20.3%, SDRL -7.1%, FMS -7.1%, AIXG -6.2%, ACO -5.5%, CCIH -4.7%, AINV -3.8%, THC -3.8%, RIO -3%, SCTY -2.9%, ALSN -2.6%, VVUS -2.5%, HSOL -1.7%, BBL -1.7%, HTZ -1.5%, SINA -1.4%, WU -1.2%, GOLD -1.1%, SLV -1.1%, TXRH -1%, TTM -0.9%

>>> (GS) Goldman Sachs Securities Lending

PDF attached

Summary:

  • Overall shorts were up 1.01% week on week. We saw an increase in short interest in Government Bonds up by 4.19% and Equities Short Interest increased by 0.11% on the week.
  • Europe was net bought on the week
  • Telco, most net bought sector (long buying and short covering). Telco weighting vs MSCI Europe most o/w in over 4 years +9.4pts O/W
  • Consumer Staples net selling (long and short selling) and now U/W -8.6pts, just off 1yr lows of -8.8pts.
  • Capital Good shorts +2.3% WoW (30% rise in the last 3 months) outpacing Industrial shorts and EMEA short book. Europe: Capital Goods: One small step forward, one step back {NSN N1A9CT3PR6RL <go>}
  • Consumer Staple shorting seen in both food and beverage – names include UNA NA, ABI BB and DGE LN

Europe OVERVIEW
  • Equities short interest saw an increase of 0.11% on the week.
  • Consumer staples (3.8%) was the main sector showing an increase in Equity shorts. Telecoms (-2.7%) was the main sector covered.
  • Government bonds saw an increase of 4.19% week on week, Government bonds still account for approx. 18.5% of EMEA short book.

STOCK HIGHLIGHTS

Deal related

OUT1V FH - Outokumpu Shareholders Approve Issue of Max 65 Bln New Shares ( BBG) Borrow is tapped out currently both due to short interest and demand for excess borrow. Last levels 12%, shorts up 2.7% YTD at 12 month highs

SEV FP - Eur 350mil CB due 2020 issued. GS, MS, RBS and Scvaloc Gen leads. - GC borrow and expect it to stay that way. Have mainly seen buy covering over the last 2 weeks. SI is low vs historicals. SI estimate 1mm shs mkt wide.

SAS SS - SAS Launches SEK1.6b Guaranteed Convertible Bond Due April 2019. Availability was illiquid prior to news and borrow last traded at 8% fee, please call desk for latest availability.

Directional

GTO NA – Gemalto Drops as Visa Supports Additional Mobile Payment Systems (BBG). Demand seen today on the back of the news. Supply in the name now tapped out and with ongoing interest and short base over 25% of the float, up 2.25% on the week. We think we will start to see pressure from lenders on rates on this. Borrow last traded at 2.5% fee and nothing available currently.

BELG BB – reporting 4Q13 results on 26 Feb. Leading into numbers we have seen a 14% rise in shorts in the last month. Estimate market wide shorts around 25-30mn shs, approx. 8-9% of the company but worth noting short base is over 40days to cover based off 30d average , orrow still GC but worth highlighting recent short trends and high short base leading into numbers .th


RSA LN: RSA is considering a rights offering to replenish capital following a scandal at its Irish unit and losses related to flooding in towns along the River Thames and southwest England. A share sale is one of a number of measures being considered and no final decision has been taken, the London- based insurer said in an e-mailed statement yesterday. The company may seek to raise as much as 800 million pounds ($1.33 billion), the Sunday Times reported. Telegraph reports that RSA to cancel div and raise between £300-450m citing unidentified people and a broker research report. SI is at the year high. 250mm shs mkt wide.


EKTAB SS Elekta Cuts FY Sales, Ebita Forecast, Due “to lower-than-expected delivery volumes of Leksell Gamma Knife and delays in expected deliveries to emerging markets, the outlook for the full year has been revised,” Elekta says in statement (BBG) Estimated short interest 21% shs outstanding, up 10% on the month and up 12% YTD. Borrow is GC currently

IM NA - Imtech Says Fully Cooperating With Swiss Justice Department, Imtech says investigation started, will publish results when available, commeting in e-mailed statement. Rejects any unethical business behavior (bbg) IM NA - shorts increased 3% on the day and estimated short interest is now estimated at 10% of free float, approx 46mm shs, we currently tapped out.

UG FP - Net debt at end of 2013 was 4.14 bn vs. consensus 4.5 bn. Operating loss of e177 mm is better than consensus above 200 mm. Agreed to bring in Chinese partner Dongfeng Motor Corp. and France as investors as part of a 5.27 billion-euro ($7.26 billion) rescue plan to fund new vehicles. Peugeot will shore up financing by selling new stock and warrants and setting up auto-loan joint ventures with Banco Santander..The carmaker also renewed a 2.7 billion-euro credit line with banks (BBG) Estimated short interest is 7.3% of free float, down 28% on the month, borrow now extremely illiquid with last levels 7.5% fee.

POP SM - BANCO POPULAR: 88.1% of shareholders have chosen to collect new shares on the last scrip dividend while 11.9% have chosen to sell their rights to POP under guaranteed purchase price. Therefore POP will issue 14,399,623 new shares that are expected to start trading in the coming days. (CNMV). We have mainly seen buy covering over the last month. Short interest estimate is 25mm shs mkt wide (just over a days volume). This is medium vs historicals.

(Makor) Special situations: Brazil

Top Trading Ideas/Special Situations: BRADEAL

February 24, 2014 Our model portfolio Top Trading Ideas is performing very well in Brazil amid a weak market. This is because we highlighted six takeover situations in this market of which three have already received offers - the latest being America Latina Logistica today at a 50%+ premium, and one is going through a significant restructuring which in our view will lead to a sell-out. We expect to see a lot more deals in Brazil given the undervaluation of this market and remain very positive on the special situations that we recommend or have been recommending (below): Brookfield Inc SA (BISA3): Recommended 12/31/2013 at BRL 1.10 on the expectation of a minority buyout which was announced on 02/14/2014 - the shares are currently trading at 1.48, +35%. We expect that fair value will be set above the maximum offer price range of 1.60. We think the shares are worth in excess of 3.00 and we do not expect the offer to succeed at the indicated range. Fleury (FLRY3): Recommended 01/15/2014 at BRL 18.91 on the expectation of an LBO following the Diagnosticos de America acquisition. The controlling shareholder is currently negotiating the sale of its stake which would lead to a mandatory offer to minorities. Expectations are for an offer in the 20-22 range. We pegged fair value at around 22/share. We would not advise to tender at this level and would remain shareholder along with the private equity group. The shares are currently trading at BRL 19.05. America Latina Logistica (ALLL3): Recommended 12/31/2013 at BRL 6.56 on the expectation of a takeover. The company received after the close today an offer from Cosan SA at 10.184/share (+55%). Gafisa (GFSA3): We first initiated a buy on Gafisa in our 06/10/2013 report at BRL 3.14 with a target of 5.00 justified by the balance sheet restructuring at the company following the sale of a 70% stake in its Alphaville subsidiary for BRL1.4bn (Gafisa's market cap is only 1.3bn). The company announced two weeks ago it will consider to split in two by spinning off its Tenda unit. The company is in flux and may soon be in play. Our target remains unchanged at 5.00. The stock is currently trading at 3.00. We also continue to expect offers on PDG Realty (PDGR3) and Rossi Residencial (RSID3), two other troubled real estate development companies. PDG has a market cap of BRL 2.1bn compared to equity in excess of 5bn. The company counts a number of value/activist shareholders as its biggest shareholders. Rossi has a market cap of BRL 740m vs. equity capital of 2.5bn. Some of the same shareholders in PDG are also large and recent shareholders in Rossi. In fact we believe the Brazilian real estate sector will significantly consolidate given its very fragmented nature while having collapsed (only in the stock market - physical property in Brazil is going through the roof) in the last 3 years. We would not be surprised also to see take-private offers for BR Malls (BRML3) and especially BR Properties (BRPR3), two major REITs selling at significant discounts to NAV.

>>> US Gapping down

Gapping down

In reaction to disappointing earnings/guidance: HSBC -3%, DDS -1.7% (light volume) .

Select managed healthcare stocks trading lower following CMS proposals and subsequent cautious analyst comments: HUM -4.7%, UNH -1.8%, CYH -1.7%, AET -1.3%, WLP -0.6%.

Other news: WCG -2.9% (Tom Tran to step down as Chief Financial Officer), OCLS -1.8% (to raise $1.35 mln in registered direct offering), KMP -1.8% and KMI -0.8%(Barron's profiles cautious view on Kinder Morgan and its partnerships), RIO -1.2% (still checking), NFLX -1.2% (Comcast and Netflix announce a mutually beneficial interconnection agreement that will provide Comcast's U.S. broadband customers with Netflix videos), (Barron's profiles cautious view on Kinder Morgan and its partnerships), AAPL -0.6% (Apple & Samsung mediation talks have failed, also Apple to fix encryption issue with Macs soon, according to reports; downgraded to Strong Sell from Sell at Standpoint Research ), JNPR -0.5% (Nokia considering smaller JNPR alliance, according to reports).

Analyst comments: DDD -4.6% (downgraded to Underperform from Buy at BofA/Merrill), X -1% (downgraded to Hold from Buy at KeyBanc Capital Mkts ), AMZN -0.5% (downgraded to Strong Sell from Sell at Standpoint Research), TCS -0.5% (downgraded to Underperform from Neutral at BofA/Merrill ), FRX -0.4% (downgraded to Neutral from Outperform at Credit Suisse; tgt raised to $96 from $85 )

>>> US Gapping up

Gapping up

In reaction to strong earnings/guidance: ATHM +7.3%, MHR +6.4%, PANW +4.6%, GTAT +1.2%.

M&A news:TQNT +20.8% and RFMD +17% (TriQuint Semi and RFMD announces merger of equals; represents an implied price of $9.73 for each TriQuint share), GAME +12.3% (Shanda may sell main business to ALBCF.PK to $3.2 bln, according to reports), JOSB +7.7% and MW +4.2% (Men's Wearhouse increases cash offer for Jos. A. Bank to $63.50 Per Share).

Select financial related names showing strength: IRE +1.8% DB +1.2% (Deutsche Bank to cut US assets by $100 bln, according to reports), BBVA +1.2%, SAN +1.1%, C +0.7% (Citigroup's OneMain attracting interest, according to reports out).

Metals/mining stocks trading higher: HL +3.9%, AG +2.6%, PAAS +2.5%, GG +2.2%, ABX +2.1% (Midway Gold formalizes JV with Barrick Spring Valley, Nevada), EGO +1.8% (announces CDH Investments is to acquire a 20% interest in the Eastern Dragon project in Heilongjiang Province, China, for cash consideration of $40 ml), GDX +1.8%, SLV +1.1%.

Select oil/gas related names showing strength: CHK +2.4% (announces it is pursuing strategic alternatives for its Oilfield Services Division), SDRL +1.5%, TOT +1.2% ( upgraded to Overweight from Equal Weight at Barclays), SLB +1%, BP +0.8%.

Other news: SINA +6.2% (SINA has hired banks for Weibo IPO, according to reports), AMRN +4.8% (confirms FDA Award of three-year exclusivity for Vascepa Capsules), KNDI +4.8% (following reports of rental expansion), CLSN +4.4% (announces FDA Clearance of the OPTIMA Study), NQ +4.3% (NQ Mobile and Samsung confirm global distribution deal for Samsung KNOX on device security service), BBRY +3.9% (BlackBerry announce BBM for Windows Phone and Nokia X platforms), LVS +2.6% (still checking), PFE +2.5% (Pfizer announces positive top-line results of landmark community-acquired pneumonia immunization trial in adults (CAPiTA) evaluating efficacy of Prevenar 13), GRPN +1.6% (still checking), WAC +1.5% (late move higher on OCN / WFC news,CMCSA +1.5% (Comcast and Netflix announce a mutually beneficial interconnection agreement that will provide Comcast's U.S. broadband customers with Netflix videos; CMCSA upgraded to Outperform from Sector Perform at Pacific Crest), MD +1.5% (announces acquisition of Great Lakes Anesthesia Associates, a private practice physician group based in Grand Blanc, Michigan; expected to be immediately accretive to earnings), OCN +1.2% and ASPS +0.4% (late move higher on OCN / WFC news).

Analyst comments: AGEN +5.7% ( initiated with a Buy at H.C. Wainwright ), GNVC +4.9% ( initiated with a Buy at H.C. Wainwright ), PPC +2.6% (upgraded to Buy from Hold at BB&T), CSIQ +1.9% (Canadian Solar initiated with an Overweight at JPMorgan), TWO +1.1% (upgraded to Buy at Wunderlich), JWN +0.9% (upgraded to Neutral from Underweight at Atlantic Equities)

>>> US Early premarket gappers

Early premarket gappers
Gapping up: SINA +6.2%, BBRY +3.9%, HL +3.9%, AG +2.6%, LVS +2.6%, GG +2.2%, ABX +2.1%, GDX +1.8%, CHK +1.6%, GTAT +1.6%, WAC +1.5%, CMCSA +1.5%, OCN +1.2%, BKS +1.2%, DB +1.2%, SLV +1.1%, SLB +1%, C +0.7%

Gapping down: HUM -4.7%, DDD -3.8%, HSBC -3%, WCG -2.9%, OCLS -1.8%, UNH -1.8%, SSYS -1.7%, AET -1.3%, RIO -1.2%, NFLX -1.2%, FB -0.9%, AAPL -0.6%, WLP -0.6%

>>> What to look at today : 22/23/24 Feb. 2014

US Market Closed lower on Friday, closing the week on negative performance, Tech opened on the highs but slipped all day...Financials were trading better during the all session...volumes were above average because of options expiration...VIX @ 14,68 -0,75%...- Shanghai Composite and Hong Kong's Hang Seng are leading the regional indices lower; Property sector-related turmoil started with a press report that some of
the China banks tightened their loans to property developers. Later in the day, China reported January home sales data that saw some pronounced slowing in pricing. Existing home price trends were particularly troubling, falling 0.1% m/ m in Beijing (vs 0.5% prior) and rising just 0.1% in Shanghai (vs 0.6% prior).
China's all-70 new home prices are up 9.6% y/y, down from 9.9% rate of growth in Nov and Dec. Vanke, Poly, and Gemdale - some of the top property development names in the industry - are down by at least 5% on the day.


Eur$1,3744 S&P Fut -0,06% European Fut -0,26%

Keep an eye on :
- ALO FP : Alstom CEO Kron Seeks Industrial Partnerships, JDD Says
- ALU FP : Alcatel-Lucent SA Announces global collaboration with Intel; terms not disclosed
- BKIA SM : Bankia Weighing Sale of Metrovacesa Stake, Expansion Reports
- BNZL LN : Bunzl 2013 Rev., Adj. EPS, Div. Beat; Sees Growth in 2014
- DBK GY : Deutsche Bank to Reduce U.S. Assets by $100b: FT
- HEN3 GY : Henkel has EUR 4.5bn M&A war chest; targets too expensive, no details about which branch, Henkel Family Extends Share-Pooling Agreement
- KPN NA : KPN CEO Unsure If Co. Will Still Be Independent in 5 Years: NRC
- MVC SM : Bankia Weighing Sale of Metrovacesa Stake, Expansion Reports
- NOK1V FH : Nokia Wins Contract to Finish EE’s U.K. High-Speed Mobile System
- NOVN VX : Novartis Says FDA Grants Special Use of Bexsero for UCSB
- NUM FP : Numericable Investor Probably Had SFR Talks With Vivendi: Figaro
- REP SM : Repsol Compensation to Include ~$3b New-Issue Bonds: Economista
- RHK GY : Rhoen-Klinikum 2013 Profit 24% Less Than It Targeted: Spiegel
- RSA LN : RSA Mulls Rights Issue Among Measures to Bolster Balance Sheet (800m )
- SFR IM : Ferragamo Confident for 2014, Sees Year of Growth, CEO Says
- SCVB SS : Scania Shareholder Skandia to Reject VW Bid, DI Says
- THR BB : ThromboGenics Mandates Morgan Stanley for Strategic Review
- TKA AV : Telekom Austria CEO: Not Aware of Govt Talks With America Movil
- VIE FP : Veolia CEO Said to Face Challenge at Board Meeting Within Days
- VIV FP : Numericable Investor Probably Had SFR Talks With Vivendi: Figaro
- VOD LN : Vodafone Germany Expects to Lose EU500m in Sales Next Year: WiWo
- VOD LN : Vodafone Cash Distribution Confirmed at 29.5p/Share
- ZIGGO NA : Liberty Global to Submit AFM Request Shortly, is Making Progress

>>> Asian Update

Asian Market Update: Shanghai dives over 2% amid property sector worries

***Economic Data*** - (CN) CHINA JAN NEW HOME PRICES M/M: PRICES RISE IN 62 OF 70 CITIES V 65 PRIOR; Y/Y: PRICES RISE IN 69 OF 70 CITIES V 65 PRIOR - (NZ) NEW ZEALAND JAN CREDIT CARD SPENDING M/M: +1.0% V -0.7% PRIOR; Y/Y: +9.2% V +4.7% PRIOR (6-year high) - (SG) SINGAPORE JAN CPI M/M: % V -0.3% PRIOR; Y/Y: 1.4% V 1.5% PRIOR - (VN) VIETNAM FEB CONSUMER PRICE INDEX (CPI) M/M: 0.6% v 0.7% prior; Y/Y: 4.7% V 5.1%E

***Highlights/Observations/Insights*** - Ukraine opposition celebrated victory this weekend, toppling Yanukovych govt on Saturday and voting him out of office in a Parliament session later that night. Snap elections are called for late May - in the mean time, opposition named the newly appointed Parliament leader as interim president. Yanukovych fled the capital and his whereabouts remain unknown. - G20 communique from Sydney broke new ground in terms of specifically targeting 2%+ increase in global GDP over the next 5 years through "ambitious but realistic" policies. G20 also noted growth in China was still solid and monetary policy in many advanced economies "needs to remain accommodative." Some of the emerging market representatives hinted about the impact of the start of US Fed taper, but for the most part Fed Chair Yellen dodged the criticism that many felt she may face for not acknowledging the global impact of the US monetary policy in her recent remarks. - Shanghai Composite and Hong Kong's Hang Seng are leading the regional indices lower; Property sector-related turmoil started with a press report that some of the China banks tightened their loans to property developers. Later in the day, China reported January home sales data that saw some pronounced slowing in pricing. Existing home price trends were particularly troubling, falling 0.1% m/m in Beijing (vs 0.5% prior) and rising just 0.1% in Shanghai (vs 0.6% prior). China's all-70 new home prices are up 9.6% y/y, down from 9.9% rate of growth in Nov and Dec. Vanke, Poly, and Gemdale - some of the top property development names in the industry - are down by at least 5% on the day.

***Fixed Income/Commodities/Currencies*** - (JP) BOJ offers to buy ¥250B in 1-3 yr JGB, ¥250B in 3-5 yr JGB and ¥400B in 5-10 yr JGB - (CN) China Qinhuangdao coal price falls to CNY555-565/t (6th consecutive decline; lowest since late Nov) - update - (VE) Venezuela Pres Maduro: Venezuela would not send oil to US if he is defeated - USD/CNY: (CN) PBoC sets yuan mid point at 6.1189 v 6.1176 prior setting (weakest setting since Dec 19th)

- Risk off flows supported the funding JPY currency at the expense of China-exposed AUD as well as NZD. NZD/USD traded down 25pps to $0.8260, AUD/USD fell about 50pips as low as $0.8940, and AUD/JPY pair declined nearly 60pips below ¥91.60. USD/JPY traded as low as 102.15, also about 50pips off its best levels on the day. EUR/USD traded sideways in a 15-pip range around $1.3730 amid the non-committal comments from ECB Pres Draghi. Chinese Yuan was also in the spotlight, with onshore trade sending CNY to its weakest level against the greenback in 3 months around 6.10 level.

***Speakers/Political/In the Papers*** - (CN) Some China banks said to have tightened loans to property developers - Chinese press - (CN) Oversupply in China housing starts to plague larger cities - Chinese press - (CN) PBoC: To narrow onshore and offshore Yuan rate to curb speculation; Believes in weaker Yuan to reduce "abundant liquidity" - financial press - (CN) China Ministry of Commerce (MOFCOM): China may see volatility in Q1 exports; Confident to maintain around same pace of growth in foreign trade in 2014; Not optimistic on outlook of China-Japan trade - (CN) China Electricity Council: sees power use growth to slow; may rise 6.5-7.5% in 2014 - Chinese press - (CN) Almost all provinces in central and east China face serious air pollution since last Friday; Teams of inspectors have been dispatched - financial press - (CN) China Fin Min Lou: Tapering of easy policy by the Fed is positive for China; Shows world's biggest economy is improving - Xinhua - (CN) China Academy of Social Sciences (CASS) researcher: China should loosen intervention on currency; Shadow banking possess significant risk - China Daily - (JP) Japan PM Abe: Japan Pension Fund (GPIF) should find ways for flexible and diversified management; restoring nominal GDP to ¥500T within sight - Japanese press - (JP) Japan PM Abe cabinet approval rating at 53.9%, -2.0% from late-Jan - Kyodo News - (JP) According to a Nikkei Inc survey, 44% of Japan's households are in favor of govt cutting corporate tax rates; 51% still insist on lowering reliance on nuclear power to zero - Nikkei - (KR) South Korea Ministry of Land, Transport, Maritime Affairs (MLTM): Jan home construction rose 2.7% y/y to 24.6K permits for housing units - Korean press - (NZ) New Zealand govt to increase adult minimum wage to NZ$14.25/hr; effective Apr 1st

**Ukraine** - (UR) Ukraine Parliament votes to remove Pres Yanukovych from power and hold early presidential elections on May 25th; Opposition takes full control of capital of Kiev and the presidential office - (UR) Ukraine's new parliament speaker Turchynov (ally of former PM Tymoshenko) appointed interim president

**Europe** - G20 releases communique: Welcome recent signs of improvement, particularly in developed economies; Tail risks have diminished - (EU) ECB Pres Draghi: March ECB meeting will be critical in its assessment of eurozone economy; Will have suffcient information on whether to add to stimulus - financial press - (UK) BOE Gov Carney: Latest shift in forward guidance statement intended to assure that the central bank will support economic rebound - financial press - (GR) Greece govt to resume talks with troika inspectors on Monday; Hopeful of a deal unlocking the next tranche of funds without further austerity demands - press - (CY) Cyprus junior coalition party Diko withdraws support for the govt; May jeopardize Cyprus pledge to international creditors - financial press

***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 -1.2%, S&P/ASX -0.1%, Kospi -0.4%, Shanghai Composite -2.0%, Hang Seng -1.3%, Mar S&P500 -0.2% at 1,830, Apr gold -0.2% at $1,321, Apr crude oil +0.3% at $102.46/brl

US markets: - NFLX: Said to have agreed to pay Comcast for direct access to film, TV shows - financial press - MSFT: Said to be lowering the price of Windows 8.1 for manufacturers of low-cost computers and tablets by 70% - financial press - AMZN: Said to raise price for Prime service in Germany on Feb 26th - press

Notable movers by sector: - Consumer Discretionary: Belle International Holdings 1880.HK +3.0% (H1 results); Patties Foods PFL.AU +6.5% (H1 results) - Financials: China Vanke 000002.CN -6.2%, China Merchants Property Dev 000024.CN -7.7%, Poly Real Estate Group 600048.CN -8.2%, Evergrande Real Estate 3333.HK -5.6% (China banks to tighten loans to property developers) - Materials: Spark Infrastructure SKI.AU +1.1% (FY13 results) - Energy: Caltex Australia CTX.AU +2.2% (FY13 results); Beach Energy BPT.AU +7.7% (H1 results) - Industrials: Doosan Heavy 034020.KR +0.4% (FY14 guidance); Boart Longyear BLY.AU -13.5% (FY13 results) - Technology: Shenzhen Laibao Hi-Tech 002106.CN +0.5% (Taiwan's TPK awarded touch panel order from Amazon) - Healthcare: Zhejiang Jingxin Pharmaceutical 002020.CN +3.5% (prelim FY13 results) - Telecom: M2 Telecommunications Group -2.0% (H1 results)

FT : Telecoms Step Up Fight Over Net Neutrality

Telecoms Step Up Fight Over Net Neutrality

BARCELONA—Telecommunications companies in Europe and the U.S. are escalating a battle with technology companies over requirements to treat all Internet traffic equally, as growth in data-hungry Web services explodes.

A group of Europe's biggest telecoms, including Deutsche Telekom AG DTE.XE +0.57% and France's Orange SA, ORA.FR +0.53% is fighting provisions in a proposed European law aimed at enforcing net neutrality, or the open Internet, a principle that Internet providers shouldn't discriminate against traffic from particular sources.

"We fear that, if the most restrictive views on open Internet prevail, there will be a significant reduction of users' choice," said Luigi Gambardella, head of European telecom trade group ETNO, whose members have been lobbying ahead of a vote in Europe's Parliament on Monday. European telecom executives fear that some amendments to the proposed law would cripple efforts to roll out new services.

In the U.S., telecoms are likely to push the Federal Communications Commission to allow them to charge some websites to deliver content at higher quality. The regulator is expected to propose new net-neutrality rules this year, after a federal appeals court in January tossed out the bulk of the commission's net-neutrality rules.

Friction between tech and telecom companies on both sides of the Atlantic is rising, as they wrangle over how to divide responsibility—and profits—from the vast amounts data coursing through the world's networks. The question of who will pay for upgrades is becoming more acute as a tsunami of mobile devices, from phones to cars, threatens to swamp mobile networks.

The tension is on display this week here, where the telecom and tech worlds are gathering for the annual Mobile World Congress exhibition. Telecom executives are expected to discuss their concerns about proposed net-neutrality rules in closed-door meetings on Monday.

The rest of the gathering is more of a showcase for Silicon Valley. One of the most-anticipated events, is Monday's address by Facebook Inc. FB -1.49% Chief Executive Mark Zuckerberg. Just last week, his company agreed to buy mobile-messaging application WhatsApp for $19 billion—more than the market value of Dutch telecom Royal KPN KKPNY +0.27% NV.

A central issue in the net-neutrality dispute is where to draw the line between the broader Internet and private services that telecom operators offer.

Telecom providers say they should be free to set aside part of their infrastructure to sell advanced services, such as high-quality video, from particular technology or content companies. The telecoms say doing so wouldn't mean blocking other providers and that the phone companies have no interest in keeping their subscribers from content they want.

But tech companies and public-interest groups say that such plans could lead to a two-tiered Internet, with some types of content available at top speed, but other content getting slow service if providers are unable to pay up.

"Skype and other online apps have been experiencing arbitrary restrictions of use for some time now," said Jean-Jacques Sahel, policy director for Europe, Middle East and Africa at Microsoft Corp. MSFT +0.61% , which owns the video-chat app. "To ensure that these bad practices stop and the Internet does not become a dirt road, we need clear rules."

In recent years, the telecom industry has pushed for companies that generate large amounts of traffic, such as Google Inc. GOOG -0.03% 's YouTube, to pay for carrying traffic above a certain level.

Netflix Inc. NFLX -0.63% recently struck a deal with Comcast Corp. CMCSA -1.37% to pay the cable company to ensure that Netflix's content streams smoothly. The deal allows Netflix to connect directly with the cable company's network, instead of through middlemen. The so-called paid-peering arrangement with Comcast, which isn't subject to net-neutrality rules, shows that carriers are getting traction in their efforts to get paid for handling the growing Internet traffic.

Now the mobile Internet is becoming more of a hot spot in the net-neutrality debate. In the U.S., wireless has been largely excluded from net-neutrality rules because bandwidth is more limited and the networks are more fragile. But the mobile Web is becoming more important. Europe's proposed rules would make no distinction between mobile and fixed Internet.

Wireless data traffic is skyrocketing. Mobile data traffic increased 81% world-wide last year to 18 times the size of the entire Internet in 2000, according to Cisco Systems Inc. CSCO -0.76% By 2018, global mobile data traffic is expected to increase by more than a factor of 10, Cisco said.

Telecoms in Europe and the U.S. are tiptoeing toward offering advanced services from some tech and content companies, saying it shouldn't raise net-neutrality concerns. In Germany, Deutsche Telekom offers to bundle music-streaming service Spotify for €10 ($14) a month on users' bills, exempting the service from caps on wireless data usage, after which users would face reduced speeds.

"I think it is correct that we should be able to give to certain customers or certain services which have a higher level of urgency or performance need, a better service than others," said Vodafone Group VOD.LN +3.01% PLC CEO Vittorio Colao.

In the U.S., AT&T Inc. T -1.15% this year became the first telecom to offer a sponsored data service that would allow content companies to pay for the data consumed by users accessing their websites or mobile apps, although no major content producers have signed up.

A T-Mobile US Inc. TMUS +1.46% venture, GoSmart Mobile, last year said it would allow customers to access Facebook free even if they weren't paying for a data plan. And FreedomPop, which resells Sprint Corp.'s S +0.24% service, says it is assembling a "walled garden" of mobile apps that subscribers can access free. Seven companies have agreed to pay FreedomPop to participate in the service, which is expected to be available this year.

Many people in the business expect that, despite the battles, a two-speed Internet is likely to become a reality—as will capacity concerns.

"You're going to see more fights over this," said David Heard, head of the mobile business for network-testing firm JDS Uniphase Corp. "But when someone's willing to pay for something, how can you hold that back?"