Business

LONDON — European stock markets faltered on Monday after a mainly downbeat Asian session, but London rose on takeover news and rising oil prices before an output decision by the Organisation of the Petroleum Exporting Countries (OPEC).

In early afternoon eurozone deals, Frankfurt stocks dipped and Paris flatlined, as investors eyed poor Chinese data.

With US markets shut for the Independence Day holiday, no momentum was expected from the other side of the Atlantic.

London, however, advanced with sentiment boosted by news of a possible bidding war for British supermarket chain Morrisons.

The energy sector was also buoyed by rising oil prices, as top crude producers struggled to reach a deal on lifting output.

China doubts 

"Risk-off sentiment is dominating the markets at the start of the week," noted analyst Sophie Griffiths at the OANDA brokerage.

"Weaker-than-expected China data is overshadowing signs of economic recovery in Europe," she added.

"The China Caixin services Purchasing Managers' Index [PMI] revealed the sector grew at its slowest pace in 14 months in June."

"The weak print comes following Thursday's manufacturing equivalent, which also revealed that growth was slowing," Griffiths said.

Back in London, Morrisons shares jumped 11 per cent after US private equity firm Apollo Global Management revealed it was mulling a counterbid for the food retailer.

Britain's fourth biggest supermarket on Saturday accepted a separate £6.3 billion 

($8.7 billion, 7.3 billion-euro) takeover from a consortium of investment groups.

That came after Morrisons last month rejected a £5.5 billion offer from US private equity firm Clayton, Dubilier & Rice.

"We have now got confirmation of three parties interested in Morrisons — and fear of missing out could attract further interest," noted Russ Mould, investment director at stockbroker AJ Bell.

OPEC's output row 

Oil markets edged up as the United Arab Emirates battled with OPEC and other producers over the rate and timing of their next output increase.

Saudi Arabia is engaged in a rare public spat with its Emirati allies, escalating tensions before another meeting of the OPEC+ alliance of oil producing countries.

The UAE has bitterly opposed a proposal by the alliance to raise production, causing a stalemate that could derail efforts to curb rising crude prices amid a fragile post-pandemic recovery.

"It's the whole group versus one country, which is sad to me but this is the reality," Saudi Energy Minister Prince Abdulaziz Bin Salman told Bloomberg television, suggesting the UAE were isolated within the 23-member OPEC+ bloc.

Officials have laboured for days over an agreement to pump more as demand picks up with the global recovery and supplies shrink, with fears that failure to find common ground could send prices soaring.

SAN FRANCISCO — A ransomware attack on a US IT company potentially targeted 1,000 businesses, researchers said on Saturday, with one of Sweden's biggest supermarket chains revealing it had to temporarily close around 800 stores after losing access to its checkouts.

Kaseya said on Friday evening it had limited the attack to "a very small percentage of our customers" who use its signature VSA software — "currently estimated at fewer than 40 worldwide".

Cybersecurity firm Huntress Labs said in a Reddit forum, however, that it was working with partners targeted in the attack, and that the software was manipulated "to encrypt more than 1,000 companies".

Ransomware attacks typically involve locking away data in systems using encryption, making companies pay to regain access.

Kaseya describes itself as a leading provider of IT and security management services to small and medium-sized businesses.

VSA, the company's flagship offering, is designed to let companies manage networks of computers and printers from a single point.

"One of our subcontractors was hit by a digital attack, and that's why our checkouts aren't working any more," Coop Sweden, which accounts for around 20 per cent of the country's supermarket sector, said in a statement.

"We regret the situation and will do all we can to reopen swiftly," the cooperative added.

Coop Sweden did not name the subcontractor or reveal the hacking method used against it.

But the Swedish subsidiary of the Visma software group said the problem was linked to the Kaseya attack.

'Precautionary measure' 

Kaseya became aware of a possible incident with VSA at midday Friday on the US East Coast and "immediately shut down" its servers as a "precautionary measure", it said.

It also "immediately notified our on-premises customers via email, in-product notes, and phone to shut down their VSA servers to prevent them from being compromised".

"We believe that we have identified the source of the vulnerability and are preparing a patch to mitigate it," the company said in a statement.

According to the New Zealand government's Computer Emergency Response Team, the attackers were from a hacking group known as REvil.

REvil was also, according to the FBI, behind last month's attack on JBS, one of the world's biggest meat processors, which ended with the Brazil-based company paying bitcoin worth $11 million to the hackers.

The US Cybersecurity and Infrastructure Security Agency put out word that it was "taking action to understand and address the recent supply-chain ransomware attack" against Kaseya VSA and the service providers using its software.

CISA is "closely monitoring the situation", said Eric Goldstein, the agency's cybersecurity manager. 

"We are working with Kaseya and coordinating with the FBI to conduct outreach to victims who may be affected," he added in a message sent to AFP.

'Avoid paying' 

Kaseya lists a US headquarters in Florida and an international headquarters in Ireland. 

The UN Security Council this week held its first formal public meeting on cybersecurity, addressing the growing threat of hacks to countries' key infrastructure — an issue US President Joe Biden recently raised with Russian counterpart Vladimir Putin.

Several Security Council members acknowledged the grave dangers posed by cybercrime, notably ransomware attacks on key installations and companies.

Multiple US companies, including the computer group SolarWinds and the Colonial oil pipeline, have also recently been targeted by ransomware attacks.

The FBI has blamed those attacks on hackers based in Russian territory.

But typically, "cybercriminals operate company by company", said Gerome Billois, a cybersecurity expert with Wavestone consultancy.

"In this case, they attacked a company that provides software for managing data systems, allowing them to simultaneously target several dozen — possibly even hundreds — of companies," he said. 

Determining exactly how many is difficult, since affected companies lose their communications systems at the same time, Billois said. 

 Kaseya, which had urged its clients to shut down servers running its VSA platform, cannot know whether systems were turned off "voluntarily or by force".

"This is one of the largest, most widespread ransomware attacks I've seen in my career," said Alfred Saikali of law firm Shook, Hardy & Bacon.

"I have never seen this many companies hire us in a single day for the same incident. As a general rule, you want to avoid paying the ransom at all costs." 

BRUSSELS — An EU-wide COVID certificate for easier travel came into force on Thursday, just in time for Europe's busy summer vacation period — but the highly infectious Delta variant is already threatening to curtail its use.

The EU document — essentially a QR code available on smartphones or on paper — shows whether the bearer is vaccinated with one of the European Union's approved jabs (from BioNTech/Pfizer, AstraZeneca, Moderna or Johnson & Johnson), or whether they have recovered from an infection or recently tested negative.

Under EU law, the certificate is meant to do away with the need for quarantines or further testing when travelling between the EU's 27 countries or four associated European nations (Iceland, Norway, Switzerland and Liechtenstein).

All EU member states were connected to the digital certificate system on Thursday except Ireland, which was hit by a cyberattack targeting its health service in May and plans to have it operational on July 19.

But a surge in the Delta variant, first detected in India and now quickly gaining ground elsewhere, could trigger an "emergency brake" provision suspending the certificate's acceptance.

Germany already has a ban on incoming travellers from Portugal, where the Delta variant has become dominant. Only its own citizens or residents are allowed in from Portugal, and they must quarantine for two weeks upon arrival. 

Berlin's decision has raised Brussels' ire, with EU Justice Commissioner Didier Reynders saying on Wednesday that "we should avoid travel bans" within the EU and stressing that Germany should have consulted with its partners first.

Germany's health minister, Jens Spahn, said on Thursday that the measure against Portugal could be lifted as the Delta variant becomes dominant in Germany — something he said would happen this month.

Britain's Delta problem 

The startling rise in Delta cases in former EU member Britain, with a rolling two-week infection rate more than seven times that of the bloc's, is generating deep concern on the continent.

This week, Portugal, Spain and Malta all abruptly increased restrictions for travellers from the UK, although the three said they would accept fully vaccinated Britons.

The World Health Organisation added to the unease by warning on Thursday that COVID case numbers in the European region — counting 53 countries including non-EU nations such as Britain and Russia — were up 10 per cent, ending two months of decline, because of a loosening of social restrictions and increased travel.

The darkening context could limit the effects of the EU certificate.

"There is no doubt that the tourist industry could do with a boost in time for the summer season," economic research consultancy Capital Economics said in a note.

But it forecast the EU certificate "will have very little impact on European tourism this year", observing that "most adults are not fully vaccinated and the Delta variant is making people and governments more cautious".

Airlines worry 

Airlines grouped together in an umbrella lobby group, A4E, have expressed worries that an "inconsistent approach" among EU countries in vetting the EU COVID certificate could create lengthy lines in airports with the potential to "create new health hazards".

They called for the certificates to be checked online before travellers even arrive at the airport.

There were scenes of problems at Brussels' airport early on Thursday as the first day of the school summer vacation in Belgium collided with the COVID checks.

"Everything is blocked," one employee said at a Brussels Airlines check-in desk, as a massive line of passengers was directed towards a waiting tent where social distancing was not observed.

"We will miss our flight," one couple with two children complained.

An employee responded: "That is COVID, that is the procedure. If you miss your flight, we get you another one."

Overall, EU governments are weighing the public desire for a much-needed summer break against a race between vaccination and the Delta variant.

AFP statistics collating official health data from across the EU show that 50.4 per cent of the bloc's population has now received at least one vaccine dose, compared with 66 per cent in Britain. 

So far, one person in three in the EU is considered completely vaccinated.

WASHINGTON — The International Monetary Fund (IMF) is bullish on the US economic recovery, predicting growth will hit 7 per cent this year — much stronger than previously forecast and "the fastest pace in a generation," the fund said in a report on Thursday.

The cheery analysis is a boon to President Joe Biden's administration and comes amid data showing an improving job market and on the eve of the all-important official employment report.

The International Monetary Fund's annual review of the US economy put growth at its fastest rate since 1984, and also boosted the 2022 gross domestic product (GDP) forecast to 4.9 per cent, 1.4 percentage points higher than the April estimate.

But while the IMF mostly cheered Biden's policies to support the economy, the report flagged "significant concern" over the fact he has not pulled back on tariffs on goods like steel and aluminum imposed by his predecessor.

The United States has seen a "remarkable recovery", the IMF said, helped by "unprecedented" support from government spending and the Federal Reserve's "highly effective" stimulus measures.

The report notes the potential for growth to be even higher than forecast, but the outlook assumes $4.3 trillion in spending over the next decade from Biden's proposed American Jobs Plan and American Families Plan.

Together those programmes would fuel a more than 5 per cent GDP increase for 2022-2024, the IMF estimated.

"Rather than just offering a short-term boost to demand that then fades away, the Jobs and Families Plans are expected to produce a lasting improvement in income and living standards for many years to come," IMF Managing Director Kristalina Georgieva told reporters.

However, if Congress fails to approve the legislation or sharply curtails the size, that would reduce the growth boost.

Asked about that, Georgieva noted the bipartisan agreement on the physical infrastructure parts of the proposal.

"Size is not everything. What matters more than sizes, what is the composition of the packages," she said.

The IMF report said there is "solid empirical evidence... of the societal payoffs" of programmes like those Biden has proposed, which include access to childcare to allow women to enter and remain in the workforce, and access to higher education and training to ensure younger workers have necessary skills for the jobs available.

A "permanent increase in taxes on corporate profits and on high income households is warranted" to pay for the proposals.

Significant concern

The Washington-based crisis lender reserved its harshest comments for Biden's trade policies, and said removing trade barriers would help support his worker-centric agenda.

"It is of significant concern ... that many of the trade distortions introduced over the past four years remain in place," the report said.

Biden has continued tariffs imposed by former president Donald Trump on imported steel and aluminum, washing machines, solar panels, "as well as a range of goods imported from China". 

The IMF also questioned the tougher requirements set by the Trump administration for US products in government procurement which remain in place.

"These policies should be reconsidered. Trade restrictions and tariff increases should be rolled back and 'Buy American' provisions should be tightly circumscribed," the report said.

Improving jobs market 

The IMF forecast, which downplayed inflation risks, was in line with the Congressional Budget Office and Federal Reserve officials, which see strong government spending and a surge of consumer demand supporting the recovery and hiring as businesses work to return to normal.

New applications for US unemployment benefits fell last week to the lowest since the pandemic lockdowns began, dropping to 364,000, the Labour Department reported Thursday.

After two months of tepid gains that fell short of expectations, the employment report for June due out Friday is expected to show a solid hiring to regain some of the 7.6 million jobs lost during the pandemic.

The consensus forecast is for an increase of 680,000 with the unemployment rate ticking down to 5.7 per cent, however, Oxford Economics sees a much higher increase while Ian Shepherdson of Pantheon Macroeconomics is expecting more than a million hires, which would be the most since August.

Biden is expected to comment on the report Friday, likely to focus on the recovery since he took office in January.

"The President's economic plan is working: Unemployment and COVID-19 are down; and jobs, economic growth, and consumer confidence are up," White House Press Secretary Jen Psaki said on Twitter.

SUNDERLAND, United Kingdom — Japanese auto giant Nissan on Thursday announced plans to build the UK's first car-battery "gigafactory", where it will build a new electric vehicle.

Prime Minister Boris Johnson hailed the post-Brexit investment totalling £1.0 billion ($1.4 billion, 1.2 billion euros), which is set to create 6,200 jobs, as "a major vote of confidence in the UK".

Nissan's Chinese battery supplier Envision AESC will invest £450 million to build the battery plant that will be run on renewable energy and power up to 100,000 Nissan electric vehicles per year.

The facility, which will be built next to Nissan's largest European factory in Sunderland, was hailed as key to the UK's transition away from fossil fuel vehicles.

The news comes just days after Nissan's French partner Renault unveiled plans for a Chinese-owned battery factory in France on Monday, as global carmakers race to meet booming demand for greener transport and governments target net zero carbon emissions by 2050.

Nissan is to spend up to £423 million on an all-electric vehicle, while Sunderland City Council will help to bring the total amount of investment up to £1.0 billion.

"This is a landmark day for Nissan, our partners, the UK and the automotive industry as a whole," Nissan's Chief Operating Officer Ashwani Gupta said at the unveiling of the EV36Zero project in Sunderland.

Nissan, which had warned that a no-deal Brexit would threaten its 35-year-old Sunderland factory, said the new investment represents 6,200 jobs at the Japanese group and its UK suppliers.

There will be 900 new Nissan jobs and 750 new Envision AESC jobs. 

 'Huge step' 

"This is a huge step forward in our ambition to put the UK at the front of the global electric vehicle race," said UK Business Secretary Kwasi Kwarteng.

"The cars made in this plant, using batteries made just down the road at the UK's first at scale gigafactory, will have a huge role to play as we transition away from petrol and diesel cars," he added.

Nissan established Britain's first electric vehicle and battery production at Sunderland in 2013 with its Leaf car. 

The company has more recently faced a series of trials, from weak demand during the pandemic to the fallout from the arrest of former boss Carlos Ghosn, now an international fugitive after jumping bail and fleeing Japan.

Nissan has meanwhile delayed the planned summer launch of its flagship new electric Ariya model to this winter over the global chip shortage plaguing automakers.

Announced in July 2020, the new 100-per cent electric model was initially supposed to go on sale in Japan from mid-2021, before arriving in Europe, North America and China by the end of the year.

In the UK, Lei Zhang, founder and chief executive officer of Envision Group, said Thursday that his company was building on its long-term partnership with Nissan "to make high performance, longer range batteries for electric vehicles affordable and accessible for millions more motorists".

He said growth in demand could bring future investment of up to £1.8 billion and 4,500 jobs by 2030.

SAN FRANCISCO — Amazon on Wednesday petitioned a key US regulatory agency to have its leader left out of any antitrust matters involving the company, arguing she is biased against the company.

The tech and e-commerce colossus contended that newly appointed Federal Trade Commission (FTC) chair Lina Khan's history of criticising Amazon's market clout makes it impossible for her to be fair when it comes to investigating the company.

The prominent advocate of breaking up Big Tech firms was sworn in as chair of the FTC agency in June, ramping up the potential for antitrust enforcement.

Khan has built a career on contending Amazon violates antitrust laws, indicating that the company would not get the kind of impartial scrutiny it is legally entitled to in FTC probes led by her, the company argued.

"Amazon should be scrutinised along with all large organisations," read a copy of the petition obtained by AFP.

"However, even large companies have the right to an impartial investigation."

The FTC did not immediately respond to a request for comment.

The petition came as the FTC was reportedly set to review Amazon's deal to buy the storied MGM studios for $8.45 billion, giving the US tech giant a vast content library to further its ambitions in streaming.

The acquisition would bolster Amazon Prime Video, which competes with Netflix and others in the fast-evolving market, with some 4,000 films - including the James Bond franchise -- and 17,000 television shows.

Amazon has experienced surging growth in online retail and cloud computing, while making a push into entertainment as more consumers turn to streaming media.

Khan authored a 2017 law journal article called "Amazon's Antitrust Paradox" which argued that the current framework for antitrust enforcement pegged to "consumer welfare" is ill-equipped to deal with "market power in the modern economy" of giants such as Amazon.

"Chair Khan has made numerous and highly detailed public pronouncements regarding Amazon," the petition argued.

"These statements convey to any reasonable observer the clear impression that she has already made up her mind about many material facts relevant to Amazon's antitrust culpability as well as about the ultimate issue of culpability itself."

The news comes with Big Tech facing an avalanche of litigation and political pressure from those who say the companies have too much power and should be broken up.

BEIJING — Chinese factory activity stabilised in June, data showed on Wednesday, but output was hit by supply shortages of key commodities and microchips as well as the coronavirus-induced closure of a key port that caused huge delivery delays.

The Purchasing Managers' Index (PMI), a key gauge of manufacturing activity in the world's second-largest economy, came in at 50.9 in June from May's 51.0, the National Bureau of Statistics said.

While the reading has been edging down for three straight months, it appears to be levelling out. It was also broadly in line with forecasts and continued to stay above the 50 point mark that separates growth from expansion.

China's economy is well on the recovery track after overcoming the impact of the virus early by imposing strict lockdowns and mass testing.

But production activities have been hit by "a tight supply of chips, coal and power, as well as equipment maintenance", said NBS senior statistician Zhao Qinghe.

"Factors such as chip shortages have adversely affected the development of the [automobile] industry," Zhao added, even as the new order index rose overall.

Iris Pang, ING's chief economist for Greater China, said: "The chip shortage is a longer term issue that will affect overall production activities... anything that uses electricity nowadays has a chip or more inside it."

Separately, Yantian port in the southern trade hub of Shenzhen stopped accepting new export containers for six days in May after a local infection cluster involving port workers — stifling trade at a key point of the stressed global shipping network.

Shipping giant Maersk warned last week that the backlog would take weeks to clear.

Capital Economics analysts said in a recent report that manufacturing PMIs were likely to have nudged down with demand starting to level off and "supply constraints likely worsened in part due to the closure of the Yantian port during the first three weeks of June".

China's non-manufacturing PMI fell as well to 53.5 this month, although it was still well above the mark separating growth from contraction.

Although the service industry maintained a trend of recovery, boosted by a mid-year shopping festival, business activities were hit by local outbreaks, Zhao from the NBS said.