Business

ROME — Italy on Friday lobbied EU authorities to approve a long-delayed state rescue of national airline Alitalia, a perennial loss-maker that has almost run out of cash. 

The former flag carrier has not turned a profit since 2002, has been under state-controlled administration for almost four years, and the coronavirus pandemic has aggravated its pre-existing problems. 

Last year, Rome authorities earmarked 3 billion euros ($3.6 billion dollars) for its relaunch, but the plan to transfer Alitalia's assets to a new company free of debts has stalled.

The European Union's competition commissioner, Margrethe Vestager — who could block the rescue plan under the bloc's state aid rules — discussed the issue Friday with Italy's industry, labour and economy ministers. 

It was the first meeting since a new Italian government under former European Central Bank chief Mario Draghi took office last month.

Vestager and the ministers "agreed to work constructively together to find workable solutions on the Alitalia file", a spokesman for the EU commissioner said.

Talks will continue next week at a technical level.

According to Il Messaggero daily, Alitalia would be split in three, with only the aviation side bailed out by the state, while ground handling and maintenance units would be spun off and sold in open tenders.

This would partly address demands set by the European Commission in January, which also included the sale of slots at Milan's Linate Airport and the adoption of a new logo, to mark a clean break with the past. 

According to Il Messaggero, the plan will reduce Alitalia's fleet 45-48 planes and lower staff to 4,500-5,000 employees, versus the status quo of almost 100 planes and around 11,000 employees — many currently furloughed.

But while rescue talks drag on, Alitalia's coffers — filled in the past by state loans and grants and now depleted by the pandemic-era collapse of air travel — are running dry.

The airline has reportedly been late in paying suppliers and wages.

Andrea Giuricin, transport economics professor at Milan's Bicocca university, is sceptical the airline which he estimates has run up losses of 11.4 billion euros over the past two decades can be saved.

"While NASA has spent $2.7 billion to send the Perseverance rover to Mars, in the last three-and-a-half years Italian governments have spent 5 billion euros to keep Alitalia flying," he said.

"With Alitalia, we just keep persevering," said Giuricin.

NEW YORK — Wall Street stocks finished strong on Friday after a roller coaster session, while oil prices closed at their highest level in nearly two years as the US economy appeared within reach of overcoming COVID-19.

Inflation fears had dogged equities throughout the week, but healthy employment data released before markets opened led to a banner session in New York on Friday.

The benchmark Dow Jones Industrial Average closed up 1.9 per cent at 31,496.30, while the broad-based S&P 500 climbed 2 per cent to finish at 3,841.94.

The tech-rich Nasdaq Composite Index gained 1.6 per cent to end at 12,920.15.

The United States added a better-than-expected 379,000 jobs in February and the unemployment rate dipped to 6.2 per cent, with much of the new employment seen in the leisure and hospitality industry, which has been the most vulnerable to the pandemic.

"It was good data but still far away from full employment," Peter Cardillo of Spartan Capital Securities said. 

However, markets are still leery over the possibility inflation will rise as the US economy recovers, which caused an uptick in bond prices this week.

The 10-year Treasury bond is yielding just under 1.6 per cent, but Cardillo said if it stabilises at this rate, "it is safe to say that the pull back could be over."

In oil markets, an announcement from oil-producing countries that they would increase output by less than expected helped prices reach highs that were unthinkable just months ago, when crude briefly slumped into negative territory as the pandemic pummeled global demand.

A barrel of North Sea Brent Crude for delivery in May rose 3.9 per cent in London to $69.36, its highest closing price since April 2019. 

In New York, the barrel price of West Texas Intermediate for April delivery climbed 3.5 per cent to $66.09, its highest closing level in 22 months.

The Thursday decision by the Organisation of the Petroleum Exporting Countries and its allies to raise production only modestly was a show of "remarkable restraint", said Bjornar Tonhaugen, head of oil markets for Rystad Energy.

"That move in itself also helps prices approach $70 per barrel. The speed that prices rose since the doom days of negative levels has been unprecedented," he said.

MOSCOW — Russia's giant state-owned bank Sberbank said on Thursday it recorded a 10 per cent drop in net profit last year as a result of the coronavirus pandemic.

But it was spared additional damage, thanks to Russia not re-introducing a nationwide lockdown when it was struck by a second wave of infections.

After a difficult start to 2020, Sberbank rebounded in the second half to generate a net profit of 760.3 billion rubles (8.5 billion euros, $10.3 billion). 

Sberbank Chief Herman Gref attributed the rebound to the absence of a further lockdown, saying the bank "managed to quickly restore business once restrictions were lifted".

Overall loans grew by 15 per cent as small- and medium-sized businesses, plus individuals borrowed more money to cope with the economic fallout from the health crisis.

Working "with the government and businesses, we became an important player in the collective fight against the consequences of the pandemic," Gref said.

He said Sberbank had "started offering support to individuals and businesses from the beginning of the turmoil."

Sberbank has nearly 100 million customers, mostly in Russia but also in several former Soviet and eastern European countries.

Last year, the group embarked on a major transformation, rebranding itself as a tech company.

It changed its logo and brand, renaming itself as Sber, and presented a range of new products including a virtual voice assistant and an audio-streaming service. 

Gref said the group aims to create an "integrated ecosystem around the client" by 2023.

Last year was also marked by the divorce after 10 years with partner Yandex, ending a joint project with the tech giant to develop a so-called Russian Amazon.

The break-up was accompanied by Sberbank acquiring a major stake in Mail.ru, Yandex's main competitor.

SAN FRANCISCO — Google on Wednesday pledged to steer clear of tracking individual online activity when it begins implementing a new system for targeting ads without the use of so-called "cookies".

The Internet group widely used Chrome browser this month will begin testing an alternative to the tracking practice that it believes could improve online privacy while still enabling advertisers to serve up relevant messages.

"We're making explicit that once third-party cookies are phased out, we will not build alternate identifiers to track individuals as they browse across the web, nor will we use them in our products," Ads Privacy and Trust Product Management Director David Temkin said in a blog post.

"Advances in aggregation, anonymisation, and on-device process and other privacy-preserving technologies offer a clear path to replacing individual identifiers."

The move comes with Google hammered by critics over user privacy, and increased scrutiny of privacy and protecting people's data rights.

Growing fear of cookie-tracking has prompted support for Internet rights legislation such as GDPR in Europe.

Temkin described the new Google system as "privacy-preserving... while still delivering results for advertisers and publishers". 

Safari and Firefox browsers have already done away with third-party cookies, but they are still used at the world's most popular browser, Chrome.

Chrome accounted for 63 per cent of the global browser market last year, according to StatCounter.

Last month, Google unveiled the results of tests showing an alternative to cookies called Federated Learning of Cohorts which identifies groups of people with common interests without individualised tracking.

Some businesses have objected to the Google plan claiming it will force more advertisers into its "walled garden".

LONDON — Britain on Wednesday sharply cut the growth forecast of its virus-ravaged economy, warning the pandemic was still causing "profound damage" in an annual budget centred on safeguarding businesses and jobs.

Finance minister Rishi Sunak said the economy would expand by 4 per cent this year, down from the Conservative government's previous estimate of 5.5 per cent growth but still better than the double-digit contraction of 2020.

Sunak warned parliament that the "coronavirus has done and is still doing profound damage".

"Our economy has shrunk by 10 per cent — the largest fall in over 300 years," he said.

"Our borrowing is the highest it has been outside of wartime."

Sunak said tax on company profits would be hiked to 25 per cent in 2023 from 19 per cent currently.

It comes as the state's emergency support package totals £407 billion ($568 billion, 471 billion euros), resulting in surging government debt.

Britain is the worst-hit country in Europe with more than 120,000 COVID deaths and four million cases.

But its economic recovery hopes have been boosted by its rapid vaccination programme that has seen millions of adults receive a jab.

'We will recover' 

England's third lockdown will start to be lifted from Monday, with the reopening of schools, followed by non-essential shops and hospitality in the coming months.

"It's going to take this country — and the whole world — a long time to recover from this extraordinary economic situation. But we will recover," Sunak said.

He said gross domestic product was expected to expand by 7.3 per cent next year, which marked an upgrade from the prior guidance of 6.6 per cent.

Sunak said that even after tax on company profits is hiked significantly, "the UK will still have the lowest corporation tax rate in the G-7 bloc of wealthy nations. 

"Lower than the United States, Canada, Italy, Japan, Germany and France," he insisted.

Furlough scheme 

On the eve of the budget, Prime Minister Boris Johnson announced that it would extend its furlough scheme paying the bulk of wages for millions of private-sector workers.

The multibillion-pound furlough extension is until the end of September, five months longer than planned.

The budget also confirmed the launch of an Infrastructure Bank with £12 billion in capital.

The lender will be formed to finance projects in the green economy, focusing on areas such as carbon capture and renewable energy.

The economy tanked in 2020 because of the impact of the pandemic, with activity also hampered by turmoil ahead of Britain's eventual exit from the European Union.

Reflecting the problems, UK unemployment has shot up to a five-year high of 5.1 per cent.

LONDON — European stock markets extended gains on Tuesday despite Asian and US losses as investors assessed the outlook for global interest rates, dealers said.

Equities rebounded on Monday from last week's heavy selloff on easing US money market rates as inflation fears faded and investors were encouraged by progress on coronavirus vaccine rollouts and President Joe Biden's $1.9-trillion stimulus package advanced towards passage.

But the rally did not carry over into Asian trading, and Wall Street also fell prey to profit-taking soon after the opening bell.

"Today's session has far been mixed for risk assets, as investors try to weigh the impact of rising yields against the prospects of a strong economic rebound with the ongoing COVID vaccine rollouts," said market analyst Fawad Razaqzada at ThinkMarkets.

The rise in yields on government bonds in the US and other key economies last week sparked a market meltdown which was exacerbated by profit-taking.

Higher yields had prompted worries about a sudden shift in monetary policy toward higher interest rates.

However, a stabilisation in the bond market on Friday and Monday appears to have staunched the bleeding for now and analysts said worries over a surge in inflation and rate hikes have been overdone.

Euro ducks under $1.20

News of steady eurozone inflation sent the European single currency briefly below $1.20 for the first time in three weeks as it too dampened speculation about higher interest rates. 

The Eurostat agency said inflation in the 19 countries that use the euro ran at 0.9 per cent last month, the same as in January.

In Asia, equities sank after a top Chinese regulator raised concerns that bubbles were forming in the financial markets.

US and European markets were not reflective of their underlying economies and would face corrections "sooner or later", said China Banking and Insurance Regulatory Commission chairman and central bank member Guo Shuqing.

Guo's comments come after several observers warned equities were due a retreat following a year-long advance from their March 2020 nadir.

"Asia markets have slipped back today after Chinese regulators warned on the prospect of asset bubbles in overseas markets," said analyst Michael Hewson at CMC Markets UK.

"This is hardly a new phenomenon; there's been talk about bubbles in US markets for months and China's property market isn't immune to these sorts of concerns either."

In commodities, oil prices wobbled ahead of a key OPEC+ producer meeting on Thursday, with the markets watching by how much it will step up output as the global economy appears set to shift up a gear as vaccination campaigns roll out.

"The energy market is bracing for more supply to come into the market, but continued vaccine optimism and global reopening hopes will likely limit most of the downward pressure with oil prices," said Edward Moya at Oanda currency trading platform.