>>> Commerzbank Newsletter Cites Takeover Talk for Stock Gai

Commerzbank Newsletter Cites Takeover Talk for Stock Gain: FAZ A Commerzbank internal newsletter called "Investor’s Daily" attributed a 5.9% increase in the bank’s share price on Oct. 10 to speculation it was the subject of a takeover bid, Frankfurter Allgemeine Zeitung reported. * UBS, Unicredit, BNP Paribas and Santander have all been interested in a bid at various stages: FAZ * A Commerzbank spokesman declined to comment and was unable to provide a copy of the newsletter when contacted by Bloomberg News * NOTE: Germany owns 17% of Commerzbank * NOTE: UniCredit CEO Says He Isn’t Interested in Buying Commerzbank * NOTE: Schaeuble In No Rush to Sell Commerzbank Stake as Shares Wilt

>>> EU to Invest EU5.7b in Energy Infrastructure Projects: S

EU to Invest EU5.7b in Energy Infrastructure Projects: Spiegel

EU Energy Commissioner Guenther Oettinger will announce investments in >200 infrastructure projects on Oct. 14, Spiegel reports, citing unidentified documents. * 22 big projects in Germany will benefit: Spiegel * Projects include energy connections to move excess power from the north to the south * 100 gas projects are on the list * EU wants the top projects to receive planning approval within 3 1/2 yrs * NOTE: EU’s Oettinger Against New Subsidies for Energy Firms, FAZ Says * NOTE: RWE Gains on Report EU Seeks Green-Tariff Shift

(RTR) PSA Peugeot Citroen Plans 3b Euro Capital Increase

PARIS (Reuters) - PSA Peugeot Citroen is preparing a 3 billion euro ($4.1 billion) capital increase in which Chinese partner Dongfeng and the French government would take matching stakes in the carmaker, people with knowledge of the matter said Friday.

A French delegation of executives, government officials and bankers is heading to China for talks to prepare an outline for a deal that could be signed within weeks, three sources said.

They asked not to be identified because the negotiations are confidential.

Under the draft agreement, which Peugeot hopes to conclude this year, state-owned Dongfeng Motor Co Ltd and the French government would each contribute 1.5 billion euros and acquire 20 to 30 percent of the carmaker, the people said.

The Peugeot family would lose control of the company because the cash injection would dilute its 25.4 percent stake and 38.1 percent in voting rights.

The capital increase would be accompanied by an expansion of DPCA, the Peugeot-Dongfeng joint venture in China, adding more Peugeot vehicles and technology to target other markets in the region, the sources said.

Peugeot, among the worst casualties of a six-year European car sales slump, is seeking more cooperation with Dongfeng or another automaker as it struggles to cut costs and losses that have threatened its survival.

"Peugeot confirms it is studying new industrial and commercial projects with different partners, as well as the financing to accompany them," a company spokesman said, declining to elaborate. "None of these plans have yet reached an advanced stage."

The French finance ministry declined to comment. Dongfeng officials were not immediately available out of office hours.

Part of the new capital would be raised through a rights issue in which the Peugeot family would sell new stock to the French government, the sources said. The remainder would be raised in a reserved capital increase.

The 3 billion euro cash injection would amount to 68 percent of the French carmaker's 4.39 billion euro market value. It would be worth about 40 percent of the new share capital and also dilute the 7 percent stake held by General Motors Co .

Paris-based Peugeot, which is slashing jobs and plant capacity, entered an alliance with GM last year and sold a stake to the U.S. carmaker in a 1 billion euro capital increase.

The Peugeot family indicated it was ready to give up control as the company carried out initial soundings on a Dongfeng tie-up, while attempting to revive talks on a deeper alliance with GM [ID:nL5N0F32U2].

The future of that pairing could be affected by Dongfeng's level of influence over Peugeot in any expanded partnership, GM Vice-Chairman Steve Girsky told Reuters last month.

Earlier this week, China Business News reported that Dongfeng might pay 1.2 billion euros for a 30 percent Peugeot stake.

Chief Executive Philippe Varin said in July that Peugeot was on track to beat its 2013 goal of halving its industrial cash burn to 1.5 billion.

>>> Weekly Update

Weekly Market Update: US Fiscal Crisis Moves Toward Endgame

- After reacting calmly to the fiscal train wreck underway in Washington, DC last week, financial markets began to display a certain degree of discomfort through the first half of this week. On Monday, the US Treasury's $35B four-week bill sale went very poorly, with the rate hitting its highest level since March 2008, triple the rate of the last four-week auction, as traders continue to shy away from holding short-term US paper. Both Japan and China (the first- and second-largest foreign holders of USTs) demanded that Congress ensure the stability of their very substantial investments, while ratings agencies warned they would reconsider US sovereign ratings if there were no debt limit solution. By Friday, the House Republican leadership looked ready to resolve the crisis and undertake serious negotiations with the White House. Because of the government shutdown there was a dearth of US economic data, and the data that was reported disappointed expectations. The weekly jobless claims hit six month highs on more claims processing issues in California and as government furloughs started to impact the data, and preliminary October University of Michigan confidence fell to its lowest level since January. Minutes of the last FOMC meeting confirmed that the "close" decision not to taper in September was largely based on concerns the debt ceiling debate could hurt the economy, and several Fed Governors and Presidents this week said the government shutdown showed they made the right call. With little fanfare, President Obama nominated Janet Yellen for the Fed Chairman post, making the safe and expected choice for continuity of the Bernanke legacy. Earnings season began with Alcoa, which did very well, and JPMorgan, which saw its first quarterly loss under the leadership of CEO Jamie Dimon. For the week, the DJIA gained 1.1%, the S&P500 rose 0.7% and the Nasdaq tacked on 0.4%.

- The House spent the first half of the week passing piecemeal funding bills while continuing to demand negotiations begin before raising the debt ceiling or funding the government - while the White House demanded both to be resolved before negotiations could begin. Under pressure from polls, the business community, ratings agencies, overseas creditors and party elders, the House GOP leaders began giving up ground on Thursday, at first proposing a 'clean' six-week debt ceiling hike and then on Friday a combined debt ceiling increase and an end to the shutdown in exchange for a package of spending cuts. The new Republican offer would set up negotiations on two tracks: the first to reopen the government and the second to craft a broader budget deal that would fund the government through 2014 and raise the debt ceiling. Reports suggested that if the president accepts the framework, the House could vote Friday on a six-week short-term debt ceiling hike.

- The September FOMC minutes were keenly dissected for any insight into the Fed's taper strategy, although there was little new to be found. The decision not to scale back QE was a close call for some members but many of those members have already said as much in their public statements. Another big focus was the importance of maintaining the distinction between QE taper and low interest rate guidance. There was some discussion of possibly linking a taper decision with expanded forward guidance, with the latter potentially including an inflation floor (no rate hikes until inflation is above 1.5%) or additional information about the Fed's rate hike plans after unemployment reached 6.5%.

- The IMF reduced forecasts for global growth in its World Economic Outlook, warning that emerging economies have cooled off, Europe remains in the doldrums, the US is facing fiscal uncertainty and global ramifications of QE tapering are becoming clear. The IMF cut its 2013 global GDP outlook to +3.1% from +3.3% prior and its 2014 outlook to +3.8% from +4.0% prior. G20 finance ministers also noted the slowdown in emerging markets and told Washington to take urgent action to resolve short term fiscal uncertainties.

- JP Morgan reported its first loss under CEO Jamie Dimon: after adjusting for a titanic $9.2B item for the legal defense fund, the firm lost $308M in its third quarter. The company continues to strive for an umbrella settlement of its outstanding legal issues with the government, but also warned that legal expenses would remain elevated for the next year or two. Wells Fargo's headline earnings and revenue met expectations, but shares declined as investors focused on lower net interest margins, lower loan originations and the end of earnings bumps from loan loss reserves.

- September same store sales showed some improvement, though many apparel and mall chains experienced y/y comp declines or very low gains. The Gap missed expectations by a wide margin, knocking shares down 6% on Friday. JC Penny disclosed September comps only declined 4%, which is a huge improvement over the double-digit declines seen earlier in the year. The firm also made other reassuring comments about a return to more normal business conditions.

- BlackBerry gained 6% this week on various reports detailing how the firm might be divided up and sold. Reports suggest that Google, Cisco, SAP, Intel and others are considering bids for parts of the company, and it appears that Fairfax's tentative offer of $9/share for the whole company won't work. The firms are said to be most interested in Blackberry's secure server network and its patent portfolio. Note that co-founder Lazaridis hiked his stake to 8% from 5.7% prior as rumors swirled he might submit a bid.

- In M&A news, Joseph A Bank offered to buy Men's Wearhouse for approximately $2.3B in cash, or $48/share, a 42% premium to the closing price the day before the offer was made on Sept 17th. Men's Warehouse rejected the deal, claiming it did not fully value the company and did not remedy potential anti-trust concerns. Cooper Tire won a victory in Delaware Chancery Court in a bid to compel India's Apollo Tyres to stop stalling and close on its deal to acquire Cooper. Recall that back in September, an arbitrator blocked the deal unless Apollo could reach an agreement with UAW workers at certain US plants.

- The EUR/USD pair was contained within its 1.3400-1.3700 consolidation range all week. Some dealers believe the pair will run out of steam and head lower, although a retest of the 1.3645 and 1.3710 peaks cannot be ruled out in the near term. The yen lost altitude all week and dropped to eight-week lows against the dollar by early on Friday, around 96.60, and briefly traded below its 200-day moving average for the first time since mid-November 2012. With the glimmers of hope seen in the US fiscal battle, USD/JPY moved higher and closed out the week around 98.50.

- GBP/USD had been driven by the recent stream of positive economic data surprises, though positive data is starting to see diminishing returns as market expectations have risen ahead of the data. The pair saw some volatility and hit session lows after confusion over a Bank of England repo announcement. Initial headlines suggested the operation would be an LTRO, indicating the BOE would follow the lead of the ECB, but was then corrected to say the BOE would hold a Long Term Variable Rate Repo on Wednesday, a standard operation. At its monthly policy meeting, the BOE left both Interest Rates and Asset Purchase Target unchanged at 0.50% and £375B respectively (as expected).

- In other forex news, the Brazil Central Bank raised its SELIC target rate by 50bps, as expected, in a unanimous decision. The Bank of Korea left rates on hold at 2.50% and maintained its 2013 GDP forecast at 2.8% while lowering its 2014 forecast by two-tenths to 3.8%.

>>>US Close Dow+0,73% S&P+0,63% Nasdaq+0,83%

Closing Market Summary: Stocks Climb While Debt Ceiling Battle Continues

The S&P 500 added 0.6% to extend its weekly gain to 0.8%. The Nasdaq outperformed with an advance of 0.8%, but finished the week with a loss of 0.4%. Stocks climbed amid morning reports indicating a new proposal has been put forth by Republicans that would end the government shutdown and avoid a Treasury default. However, the subsequent White House meeting failed to produce a concrete agreement and Senator Orrin Hatch, who took part in the meeting, said the president expressed some concern over the duration of the proposed debt limit extension. Senator Hatch also said President Obama articulated the need for new revenues to be part of a long-term deficit reduction. In the end, the two sides did not appear to be much closer to an agreement as the shutdown is set to enter its third week. Even though a solution to the deadlock has yet to be found, equities cheered the mere presence of some form of discussion. All ten sectors registered gains with energy (+1.0%) ending in the lead. The sector posted a solid gain even as crude oil fell 1.0% to $101.92 per barrel. Meanwhile, the other commodity-related sector—materials--underperformed as miners weighed. The Market Vectors Gold Miners ETF (GDX 23.05, -0.50) fell 2.1% while gold futures tumbled 2.1% to $1269.80 per troy ounce. Most of the decline in gold took place about an hour before the opening bell with the yellow metal falling more than $20 in under two minutes.

Elsewhere among cyclical sectors, discretionary shares (+0.8%) finished ahead of the broader market with homebuilders contributing to the strength. The iShares Dow Jones US Home Construction ETF (ITB 21.91, +0.37) advanced 1.7% as all major builders rallied. Also of note, the financial sector (+0.6%) ended in-line with the S&P after JPMorgan Chase (JPM 52.51, -0.01) and Wells Fargo (WFC 41.43, -0.01) reported their quarterly results. JPMorgan Chase beat on earnings and revenue while Wells Fargo reported a bottom-line beat on below-consensus revenue. Treasuries ended unchanged with the benchmark 10-yr yield at 2.69%.

Trading volume was on the light side as 634 million shares changed hands on the floor of the New York Stock Exchange. Looking back at today's economic data, the University of Michigan Consumer Sentiment Index dropped to 75.2 in the preliminary October reading from 77.5 in September. The Briefing.com consensus expected the index to fall to 74.5.

The drop in the index was most likely due to negative feedback from the government shutdown and the debate over the debt ceiling. If the government reopens soon and the debt ceiling is not breached, consumer sentiment is likely return to its September levels by the end of the month.

There is no economic data scheduled to be reported on Monday.

FT Government tried to raise Royal Mail IPO price

Government tried to raise Royal Mail IPO price Strong demand for the controversial privatisation of Royal Mail prompted the government to explore whether it could extract a higher price for the postal operator, but key institutional investors signalled they would drop out if they had to pay more than 330p a share. The government’s concern that it was selling the 500-year-old company too cheaply emerged as the shares soared 38 per cent on the first day of conditional trading on Friday. The premium is higher than the big privatisations of the 1980s and 1990s, provoking renewed claims that the postal operator had been undervalued.

A Whitehall official told the Financial Times that the government had asked Lazard, the investment bank advising it on the deal, to review the price range in the past couple of weeks amid exceptionally high demand. However, it was decided that the range was pitched correctly after a number of large institutional investors indicated they would drop out if it went higher. The official pointed out that hundreds of potential shareholders had dropped out even at 300p-330p. “If we had pitched too high and the float had not got away, that would have been a disaster,” the official said. The government also did not want the share price to crash and leave small investors sitting on losses, they said. After hitting an initial high of 459p, as institutions sought to top up their holdings, the shares closed at 455p on Friday. That valued the company at £4.5bn, or £1.2bn above the level implied by the offer price. The government, which is selling up to 60 per cent of Royal Mai, will raise £1.7-£2bn depending on whether an overallotment option is exercised.

It could have raised £650m-£750m more had it been able to sell the company at Friday’s closing price. The first-day mark-up was bigger than that seen in 1980s privatisations such as Rolls-Royce (37 per cent), British Airways (35 per cent), British Telecom (32 per cent) and British Gas (9.5 per cent). Vince Cable, business secretary, defended the pricing, saying the “froth and speculation” would die down. Ministers believe the market price is likely to fall to something like the offer price in about a month. But Ed Miliband, Labour leader, said: “It’s a fire sale of a great institution at a knock-down price. It has been undervalued for taxpayers and undervalued for customers.” Some big UK institutional investors criticised the way the sale was handled by the government and banks. They questioned the need for a global roadshow to sell the shares, saying this was unnecessary as there was clearly demand at home. There were also complaints that shares were allocated unfairly. One head of equity at a large European asset management group said: “I would like the Electoral Reform Society or a body like that to allocate shares rather than the banks.” Private investors moved quickly on Friday morning to take profits. Broker TD Direct Investing reported that close to 90 per cent of clients trading on Friday chose to sell their stake. The high levels of demand led one intermediary’s website to crash, leaving angry Hargreaves Lansdown customers complaining on social media. Brokers including Interactive Investor said that trading on the first day exceeded all expectations, and speculated that many of those selling were investors unimpressed with the £750 per person allocation of shares. “I think future government privatisations might be a harder sell to wealthy investors who tried to invest more than £10,000 this time around and were turned away completely,” said Tom McPhail at Hargreaves Lansdown. Additional reporting by Elaine Moore and Kiran Stacey Copyright The Financial Times Limited 2013. You may share using our article tools.

WSJ : Électricité de France Nears U.K. Nuclear Deal

Électricité de France Nears U.K. Nuclear Deal

Hinkley Point Project Seen as Litmus Test for European Nuclear Sector

The U.K. government and Electricité de France SA EDF.FR -0.53% are nearing a £14 billion ($22.4 billion) deal that would see the French power giant build and operate a pair of nuclear reactors on the west coast of England, a person familiar with the matter said Friday.

Although some final details must be hammered out, the two parties are willing to clinch a deal, and a contract for a first reactor could be announced as early as this month, the person said. "It's going to happen finally, both sides want this to happen," the person said. Talks between the U.K. and EDF are seen as a litmus test over whether the nuclear industry has a future in Europe at a time of lower gas prices and sluggish economic growth. The U.K. government has supported EDF's project to build two nuclear reactors at Hinkley Point in the county of Somerset, saying the country must modernize its power-generation capacity while curbing its carbon emissions. Negotiations have dragged out over the issue of the "strike price", or the guaranteed price at which EDF would sell the electricity generated by the new nuclear plant. EDF has been asking for a price of about £95 per megawatt while the British government rather sought a price between £80 to £85 a megawatt, according to people familiar with the matter. "Negotiations remain ongoing," said a spokesman for the British Department of Energy and Climate Change. "No agreement has as yet been reached." A contract will only be offered if it is value for money, fair and affordable, in line with government policy on no public subsidy for new nuclear and consistent with state aid rules, the spokesman said.