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U.S. stocks rallied on Friday, lifted by gains in technology stocks and a retreat in Treasury yields as the Federal Reserve eased concerns about the path of interest rate hikes this year.

The U.S. central bank, looking past the recent stock market sell-off and inflation concerns, said it expected economic growth to remain steady and saw no serious risks on the horizon that might pause its planned pace of rate hikes.

Investors largely expect the Fed to raise rates three times this year, beginning with its next meeting in March, the first under new Chair Jerome Powell. Traders currently see a 95.5 percent chance of a quarter-percentage-point hike next month, according to Thomson Reuters data.

“Certainly bond yields pulling back today is helpful for stocks, at least for the short term, that has been the narrative that is out there — that higher bond yields are weighing on stocks and this preoccupation with three percent,” said Willie Delwiche, investment strategist at Baird in Milwaukee. “So moving away from that, for today at least, provides a bid for equities.”

Powell’s first public outing will be on Tuesday, when he will testify separately before the House and Senate committees.

The Dow Jones Industrial Average rose 347.51 points, or 1.39 percent, to 25,309.99, the S&P 500 gained 43.34 points, or 1.60 percent, to 2,747.30 and the Nasdaq Composite added 127.30 points, or 1.77 percent, to 7,337.39.

Benchmark 10-year U.S. Treasury notes last rose 13/32 in price to yield 2.8714 percent, from 2.917 percent late on Thursday.

The dip in yields helped boost bond proxy sectors such as utilities, up 2.66 percent, and real estate, up 1.72 percent. The sectors have been among the worst performers so far this year on expectations of climbing rates.

Tech shares climbed 2.17 percent led by gains in Hewlett Packard Enterprise, which rose 10.5 percent and HP Inc, up 3.5 percent.

The two companies created from the split of Hewlett Packard Co in 2015, reported strong results and HPE also announced a plan to return $7 billion to shareholders.

For the week, the Dow rose 0.37 percent, the S&P advanced 0.56 percent and the Nasdaq gained 1.35 percent.

Blue Buffalo Pet Products jumped 17.23 percent after General Mills said it would buy the natural pet food maker for $8 billion. General Mills was the biggest percentage decline on S&P 500, falling 3.59 percent.

Advancing issues outnumbered declining ones on the NYSE by a 4.54-to-1 ratio; on Nasdaq, a 2.82-to-1 ratio favored advancers.

The S&P 500 posted 10 new 52-week highs and one new low; the Nasdaq Composite recorded 64 new highs and 57 new lows.

Volume on U.S. exchanges was 6.05 billion shares, well below the 8.38 billion average over the last 20 trading days.

Reporting by Chuck Mikolajczak.
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Leaders of Afghanistan, Turkmenistan, Pakistan and its arch rival India jointly inaugurated construction work Friday on the Afghan section of a long-delayed multibillion-dollar gas pipeline connecting the four nations, raising hopes for regional cooperation and peace.

A ceremony took place in the ancient Afghan city of Herat, attended by President Ashraf Ghani, his Turkmen counterpart, Gurbanguly Berdymukhamedov, Pakistani Prime Minister Shahid Khaqan Abbasi and Indian External Affairs Minister M.J. Akbar.

The long-awaited 1,814 kilometer pipeline, known as TAPI, will transport natural gas from the world’s fourth-largest reserves in Turkmenistan through Afghanistan to growing economies of Pakistan and India, which are facing energy shortages.

TAPI was originally conceived in the 1990s, but differences over terms and conditions, unending Afghan hostilities and regional rivalries are blamed for delays. Turkmenistan took the initiative in December 2015 and has since constructed its portion of the pipeline up to the Afghan border.

President Ghani, while addressing Friday’s ceremony, vowed Afghanistan believes in connectivity and will “not spare any efforts” to implement the project to connect South Asia with Central Asia after a century of separation.

“This is the beginning of confidence in Afghanistan, confidence on national unity and harmony of the state and the people of Afghanistan,” noted Ghani.

Pakistani Prime Minister Abbasi reiterated his country’s commitment to peace and stability in Afghanistan.

“We are turning, by the grace of God, TAPI into a reality. It will provide shared regional prosperity … and it will provide peace dividends,” said Abbasi, whose country is accused of covertly supporting the Afghan Taliban, charges Islamabad denies as baseless.

“I want to tell my Afghan brothers and sisters that your success is our success, your development is our development and peace in Afghanistan means peace in Pakistan,” Abbasi emphasized.

He termed TAPI critical for Pakistan’s energy needs, saying it will provide about 10 percent of his country’s total energy consumption.

Expected cost

Officials say the project, estimated to cost up to $10 billion, will carry 33 billion cubic meters of natural gas annually for 30 years and is extendable.

The final cost, however, is anticipated to be much higher because of an accompanying power transmission pipeline and the fiber optic cable to be laid from Turkmenistan to Pakistan.

Afghanistan will buy about five billion cubic meters of gas once the project is completed. Kabul also will earn up to $500 million in transit fees from the project, which Afghans expect will create about 25,000 jobs in their war-shattered nation.

The Afghan section of the pipeline will run through five provinces in the south and southwest, including Herat, Farah, NImruz, and Helmand, before entering the southern Pakistan city of Quetta.

Security concerns

Taliban insurgents control or contest much of the Afghan territory along the TAPI route, raising security concerns for the pipeline.

In a statement issued Friday, though, the insurgent group dismissed those concerns and pledged to protect the pipeline, reminding skeptics the TAPI was initially negotiated and brought to Afghanistan when the Taliban was ruling the country.

The insurgency, which currently controls or influences about 44 percent of Afghan territory, blamed the 2001 U.S.-led invasion of the country for the delay in TAPI’s implementation.

Groundbreaking for the Afghan section took place at a time when Pakistan’s relations with India have deteriorated and both countries are locked in daily border skirmishes in Kashmir.

TAPI is dubbed by some as a “peace pipeline,” citing the potential the project has to promote regional economic and security cooperation. But analysts remain skeptical about future progress in the wake of Islamabad’s prevailing tensions with Kabul and New Delhi.
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Saudi Arabia will stage more than 5,000 shows, festivals and concerts in 2018, double the number of last year, as it tries to shake off its conservative image in a drive to keep tourist dollars at home and lure in visitors.

The state wants to capture up to a quarter of the $20 billion currently spent overseas every year by Saudis seeking entertainment, lifting a ban on cinemas and putting on shows by Western artists.

U.S. rapper Nelly performed in Jeddah in December, albeit to a men-only crowd, and Greek musician Yanni played to a mixed-gender audience.

The gradual relaxing of gender segregation risks causing a backlash from religious conservatives, but public objections to a wider program of reforms have been more muted in recent months after several critics were arrested.

At an event to launch the 2018 entertainment calendar, Ahmed al-Khatib, chairman of the state-run General Entertainment Authority (GEA), said infrastructure investments over the next decade would reach 240 billion riyals ($64 billion), including an opera house to be completed around 2022.

That will contribute 18 billion riyals to annual GDP and generate 224,000 new jobs by 2030, the GEA said.

“The bridge is starting to reverse,” Khatib said, referring to the causeway linking Saudi Arabia with more liberal Bahrain where many Saudis flock for weekend getaways.

“And I promise you that we will reverse this migration, and people from Dubai, Kuwait and Bahrain will come to Saudi.”

However, on Thursday night, the Minister of Culture and Information said Khatib’s opera plans were an infringement of the role of the General Authority for Culture, a separate government body, the Saudi Press Agency said.

Economic hopes

The entertainment plans are largely motivated by economics, part of a reform program to diversify the economy away from oil and create jobs for young Saudis.

The Vision 2030 plan aims to increase household spending on cultural and entertainment events inside the kingdom to 6 percent by 2030 from 2.9 percent.

“We are bringing the most exciting and famous events to Saudi Arabia this year,” Khatib told Reuters in an interview, adding that state-sponsored entertainment events would be staged in 56 cities.

“We are creating new local events with local content,” he said. “Almost 80 percent of the calendar [events] are for families.”

Saudi Arabia lifted a 35-year ban on cinemas late last year, with plans for regional and global chains to open more than 300 movie theaters by 2030. The first cinemas are expected to start showing films in March.

Last year, the country announced plans to develop resorts on some 50 islands off the Red Sea coast and an entertainment city south of Riyadh featuring golf courses, car racing tracks and a Six Flags theme park.
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The European Central Bank has set a deadline of Friday for Latvia’s third-largest bank to plug a financing hole, the country’s finance minister said, as the Baltic state faced its worst financial difficulties in almost a decade.

Earlier, ABLV said it had asked for a 480 million euro ($591 million) emergency loan from the country’s central bank as part of efforts to reopen for business after being forced to halt all payments in the face of money laundering accusations.

The request for credit comes amid frantic efforts by ABLV’s management to keep the bank afloat after U.S. authorities singled it out for money laundering and moved to block it from doing financial deals in dollars.

ABLV has denied any such wrongdoing. “We want to give an opportunity … for the bank to ensure its short-term liquidity, so that it can continue operating,” the Baltic state’s finance minister, Dana Reizniece-Ozola, told a news website, Delfi.lv.

The ECB has imposed a moratorium stopping savers withdrawing their funds or making payments. It declined to comment about the deadline.

In an interview with Reuters, a senior ABLV executive appealed for the group to be spared closure.

“We believe that the bank has a future, on the basis of a substantially reduced business,” Vadims Reinfelds, deputy chief executive, said.

“What we are looking for here is a medium term or even longer term solution. If that is not possible, then resolution is the alternative,” he said, referring to a possible winding down. “The business can be restructured without resolution,” Reinfelds said, adding the bank was solvent.

He warned the bank was “systemic” — a reference to its significance for the financial system and an indication that its problems could spill over to affect others.

The finance minister, however, played down such concerns.

The crisis at ABLV comes alongside a separate police investigation into whether the head of Latvia’s central bank took a bribe of more than 100,000 euros.

Ilmars Rimsevics has dismissed the allegations and said he is the victim of a smear campaign, while the Ministry of Defense has suggested that disinformation may be to blame.

The ministry did not say who was behind this but drew parallels with campaigns before the U.S. elections in 2016. Russia has denied it was behind those campaigns and says it does not meddle in elections in the West.

The episode has cast a shadow over Latvia, which belongs to the euro zone and whose top officials hold influential posts both at the European Commission and European Central Bank.

Experts have said the events raise questions about the ECB, which is responsible for supervision of ABLV and other banks around the euro zone. The ECB has said it is not its responsibility to police money laundering.

Latvia was one of the hardest hit countries in the global financial crisis, falling into recession as the government sought an international bailout, nationalized Parex Bank and made spending cuts amid a wave of emigration.

($1 = 0.8141 euros)

Reporting by John O’Donnell and Gederts Gelzis.
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Afghanistan will host leaders from Turkmenistan, Pakistan and India on Friday for the ground-breaking ceremony of the Afghan section of a much-delayed multi-billion dollar gas pipeline connecting the four nations.

The $10 billion mega project, known as Turkmenistan-Pakistan-Afghanistan-India, or TAPI, will connect Central Asia with South Asia and is expected to become operational this year.

The 1,814-kilometer pipeline will carry an estimated 33 billion cubic meters of natural gas annually for the next 30 years from the world’s fourth-largest reserves in Turkmenistan.

Officials say India and Pakistan would buy around 14 billion cubic meters each, while the remaining five billion would go to Afghanistan.

Friday’s inaugural ceremony will take place in the western Afghan city of Herat where President Ashraf Ghani, his Turkmen counterpart, Gurbanguly Berdymukhammedov, Pakistani Prime Minister Shahid Khaqan Abbasi and India’s Minister of State for External Affairs MJ Akbar will be in attendance.

Turkmenistan launched construction of its section of the pipeline in December 2015.

Pakistan’s relations with Afghanistan and India have since deteriorated over allegations Islamabad is not doing enough to stop terrorist groups from using its soil for attacks against the neighboring countries.Pakistani officials deny the charges.

But despite the tensions, energy-deficient India is showing renewed interest in TAPI and pushing for its operationalization, according to Indian media reports.

“Today, given the energy requirements in India, there are several gas pipeline proposals before us. We are, however, strongly committed to TAPI pipeline project,” Akbar was quoted as saying.

The project is more than the sum of four nations’ interests and creates a benchmark for regional cooperation, he added during an implementation committee meeting in Turkmenistan.

Economic milestone

The Afghan government and business community also see the pipeline as a milestone in the war-shattered country’s economic development. Kabul is expected to earn up to $500 annually in transit duties and the project will help create as many as 25,000 jobs, local media quoted Afghan analysts.

The pipeline mostly runs through parts of southwestern Afghanistan where the Taliban insurgency controls or influences many districts. But a spokesman for the insurgent group, Zabihullah Mujahid, says it supports the project and will ensure the pipeline’s protection.

Herat Governor Mohammad Asif Rahimi told VOA the Afghan and Turkmen presidents will additionally inaugurate work on the construction of a railway link between the two countries, as well as fiber optic connection along the TAPI route.
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South Korea’s cryptocurrency industry is anticipating much better times as the market regulator changes tack from its tough stance on the virtual coin trade, promising instead to help promote blockchain technology.

The regulator said Tuesday that it hopes to see South Korea — which has become a hub for cryptocurrency trade — normalize the virtual coin business in a self-regulatory environment.

“The whole world is now framing the outline [for cryptocurrency] and therefore [the government] should rather work more on normalization than increasing regulation,” Choe Heung-sik, chief of South Korea’s Finance Supervisory Service (FSS), told reporters.

FSS has been leading the government’s regulation of cryptocurrency trading as part of a task force.

Cryptocurrency operators have drawn a new optimism from Choe’s comments, seeing them clearly indicating the government’s cooperation in their plans for self-regulation.

“Though the government and the industry have not yet reached a full agreement, the fact that the regulator himself made clear the government’s stance on cooperation is a positive sign for the markets,” said Kim Haw-joon of the Korea Blockchain Association.

Wednesday’s news is a stark reversal of the justice minister’s warnings in January that the government was considering shutting down local cryptocurrency exchanges, throwing the market into turmoil.

Instead, South Korea banned the use of anonymous bank accounts for virtual coin trading as of January 30 to stop cryptocurrencies being used in money laundering and other crimes.

Bitcoin, the world’s most heavily traded cryptocurrency, is now changing hands at a three-week high of $11,086 on the Luxembourg-based Biststamp exchange after falling as low as $5,920.72 in early February.

South Korean electronics giant Samsung has already started production of cryptocurrency mining technologies, local media reported in January.
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South Korea said on Wednesday it is signing free trade agreements with five Central American nations aimed at boosting market access for the Korean auto sector and electronics makers.

Trade minister Kim Hyun-chong will meet representatives from Costa Rica, El Salvador, Honduras, Nicaragua and Panama in Seoul on Wednesday to sign five separate bilateral pacts which will eliminate duties on about 95 percent of traded goods and services, Korea’s trade ministry said in an e-mailed statement.

The agreements are subject to parliamentary approval in each country, and is likely to take effect at different times depending on the ratification process.

The five trade pacts open South Korea to key Central American countries after its deals with the U.S., the European Union and China helped boost exports.

“The South Korea-Central America free trade deals will enable the countries to build a more comprehensive, strategic partnerships going forward,” Kim said.

The ministry expects the five deals to accelerate South Korea’s economic growth by an overall 0.02 percent in the next 10 years, by boosting exports of cars, steel, cosmetics products, and auto components.
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President Nicolas Maduro said Tuesday that Venezuela had received $735 million in the first day of a pre-sale of the country’s “petro” cryptocurrency, aimed at pulling the country out of an economic tailspin.

Maduro is hoping the petro will allow the ailing OPEC member to skirt U.S. sanctions as the bolivar currency plunges to record lows and it struggles with hyperinflation and a collapsing socialist economy.

Blockchain experts have warned the petro is unlikely to attract significant investment. Opposition leaders have said the sale constitutes an illegal debt issuance that circumvents Venezuela’s majority-opposition legislature, and the U.S. Treasury Department has warned it may violate sanctions levied last year.

Maduro did not give details about the initial investors and there was no evidence presented for his figure. He added that tourism, some gasoline sales and some oil transactions could be made in petro.

“Today, a cryptocurrency is being born that can take on Superman,” said Maduro, using the comic character to refer to the United States, as he was flanked by mining rigs in a state television address.

The official website for the petro on Tuesday published a guide to setting up a virtual wallet to hold the cryptocurrency.

The cryptocurrency goes public next month.

Venezuelan Cryptocurrency Superintendent Carlos Vargas last week said the government was expecting to draw investors in Turkey, Qatar, the United States and Europe.

The value of the entire petro issuance of 100 million tokens would be just over $6 billion, according to details given by Maduro in recent months, though no new price information was provided Tuesday.

The tokens will each be valued at and backed by a barrel of Venezuelan crude oil, Maduro has said.

Advisers working for the government have in the past recommended that 38.4 percent of the petros should be sold in a private auction at a discount of 60 percent.

Maduro says his government is the victim of an “economic war” led by opposition politicians with the help of the government of U.S. President Donald Trump.

Sanctions levied last year by Washington block U.S. banks and investors from acquiring newly issued Venezuelan debt, effectively preventing the nation from borrowing abroad to bring in new hard currency or refinance existing debt.

The petro will not be a token on the Ethereum network, as was previously disclosed in a whitepaper provided by the government.
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There are no talks between China and the separatists from Pakistan’s Baluchistan province regarding the protection of the China-Pakistan Economic Corridor (CPEC), a senator from the province told VOA.

First reported by The Financial Times, several newspapers in Pakistan said that China has been quietly holding talks with Baluch (natives of Baluchistan) militants for more than five years in an effort to protect the $60 billion worth of infrastructure projects it is financing.

CPEC is a Chinese-funded project. Upon completion, this 3,000-km-long project will connect China with Pakistan through rail, road pipelines and an optical cable fiber network. Through CPEC, China will gain access to the Arabian Sea. 

Pakistan’s Baluchistan province is at the heart of the CPEC because the project stretches between China’s Xinjiang region and Pakistan’s Gawadar port, which is located in the Baluchistan province.

Baluchistan is the poorest and least-developed province in Pakistan, and it has been the scene of a low-level insurgency by Baluch separatist groups that demand a greater share of the province’s resources. There are fears in the country that in an attempt to push for their demands, these separatist groups can target the CPEC project. Some media reports suggest the Chinese government is holding talks with them for the protection of the project.  

“The Chinese have quietly made a lot of progress,” one Pakistani official told The Financial Times. “Even though separatists occasionally try to carry out the odd attack, they are not making a forceful push.”

But Mir Kabir Muhammad Shahi, a member of the Pakistan senate, said it’s not China’s job to hold talks with Baluch separatists.

“I, or other parliamentarians, are not aware of this development, and it’s only Pakistan’s government parliament right to hold talks with Baluch separatists,” he said.

Sher Muhammad Bugti, a representative of the Baluch Republican Army separatist group, also denied having any negotiations with China. Talking to VOA Deewa from his exile in Switzerland, Bugti said separatists cannot hold talks with China.

“We do not know of any talks, nor have we been contacted (by China),” he said.

Groups such as the Baluch Republican Army are against the CPEC, and say the project is aimed at plundering the resources and grabbing the land of their province. But the Pakistani government says CPEC is a game changer in the region, and it will bring prosperity to the whole country. 

Political analyst Zafar Jaspal did not rule out the possibility of China’s involvement with locals, but added that it could not be direct. 

“I do not think China would have directly contacted the insurgents. I believe any contact the Chinese would make would be through the government of Pakistan.” 

The Financial Times claimed that the Pakistani officials welcomed the talks between Baluch rebels and Chinese envoys, even if they do not know the details of what has been discussed.

“Ultimately, if there’s peace in Baluchistan, that will benefit both of us,” said one official in Islamabad.

VOA Deewa’s Aurangzeb Khan contributed to this report.
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President Michel Temer’s decision to throw in the towel on reforming Brazil’s loss-making pension system leaves the unpopular measure as a campaign issue for October’s elections and a major headache for his successor.

Monday’s announcement that Temer was abandoning an overhaul of the social security system — billed as the centerpiece of his efforts at fiscal reform — sparked immediate concern from credit rating agencies that Latin America’s largest economy was failing to put its financial house in order.

Brazil’s generous pension system is at the heart of budget deficit that ballooned from 3 percent of GDP in 2013 to a massive 10 percent in 2015, before edging back to 8 percent last year as the $1.8 trillion economy emerged from recession.

The official reason for dropping the pension bill was a military intervention in crime-plagued Rio de Janeiro state, decreed on Friday after unprecedented violence during Carnival.

Constitutional amendments such as the pension bill are blocked during federal intervention of a state.

Deploying the army in Rio will go down well with voters in a nation where polls show public safety is the top concern. Brazil has 60,000 murders a year and its cities are among the world’s most dangerous.

Temer’s critics, however, said he merely found a pretext to avoid acknowledging an embarrassing defeat.

While Temer, 77, came close to the super majority needed to pass the bill last year, he lost political capital fighting off corruption charges and the government soon discovered it had run out of time, as lawmakers seeking re-election this year refused to back the unpopular legislation.

“Now the government does not have to admit it lost the battle for pension reform,” said Fabio Sousa, a congressman for the centrist Brazilian Social Democratic Party, which backed the reform.

“The next president will have to do the fiscal adjustment, which is fine, because he will have a mandate from voters to do something about it,” Sousa said in an interview. “The good thing is that pension reform will now be an election campaign issue.”

Markets relaxed

Temer, a former vice president, replaced impeached leftist Dilma Rousseff in 2016. But he has single-digit approval ratings that rule out a presidential bid of his own.

Brazilian markets were stable Tuesday, with Sao Paulo’s BOVESPA stock index gaining 1.2 percent in mid-afternoon as investors had largely expected an already watered-down pension reform to sink in Congress.

In an effort to reassure investors, Temer’s cabinet on Monday announced plans to accelerate 15 other policies — ranging from tax breaks to privatizing Brazil’s largest utility and strengthening the central bank’s autonomy.

Yet Moody’s Investors Service promptly warned on Tuesday that the government’s pension decision was credit negative and would restrict its ability to comply with a spending ceiling approved last year.

The government is expected to meet its 2018 deficit target but it is doubtful it can do so in 2019, as a sluggish recovery from Brazil’s worst recession on record has left tax revenues struggling.

According to the main industry lobby, the CNI, the reform would have saved government coffers about 1 trillion reais ($308 billion) over the next decade.

Brazil’s gross public debt already stands at 4.9 trillion reais ($1.5 trillion) or 75 percent of GDP — relatively high for an emerging economy. Without steps to reduce heavy mandatory spending, it will continue climbing, said Felipe Salto, head of the Independent Fiscal Institute, a bipartisan Senate office that aims at transparency in government accounts.

Government projections have the debt stabilizing in 2020 at 80 percent of GDP, but without pension reform that is in doubt.

“You have to show investors it will stabilize. If there is no horizon of stabilization, the market will see a risk of insolvency and higher interest rates will be needed to finance a snowballing debt,” Salto said.
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State-run Kenya Electricity Generating Company (KenGen) plans to add 1,745 megawatts (MW) of electricity from geothermal sources by 2025, part of a government push to end power generation from fossil fuels.

“You are aware that going forward, the government policy which all generators including KenGen and including independent power producers, is to eliminate generation from fossil fuels,” Moses Wekesa, Business Development Director, said during a visit to KenGen’s geothermal plants last week.

Kenya has an installed generating capacity of 2,370 MW and peak demand of about 1,770 MW. Of this, KenGen, which is 70 percent owned by the government, has an installed capacity of 1,631 MW, with 533 MW from geothermal.

Demand for electricity is growing at about 8 percent per year until 2020, and will rise to 9 percent in 2021, after which it will stabilize at 7 percent, according to the government’s transmission and generation plan.

“First as a rule of thumb, your supply must always be ahead of demand. The reason being, that it takes a while to put up a power plant,” Wekesa said.

The East African nation is ramping up electricity production and investing in its grid to keep up with growing demand for power and to reduce frequent blackouts. It relies heavily on renewables such as geothermal and hydro power.

Kenya is ranked at No.37 worldwide by Ernst and Young’s latest Renewable energy country attractiveness index, issued in October.

The Geothermal Resources Council ranks Kenya at no. 8 worldwide in terms of installed capacity from geothermal.
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For the first time in Ukraine’s history, U.S. anthracite is helping to keep the lights on and the heating going this winter following a deal that has also helped to warm Kyiv’s relations with President Donald Trump.

The Ukrainian state-owned company that imported the coal told Reuters that the deal made commercial sense. But it was also politically expedient, according to a person involved in the talks on the agreement and power industry insiders.

On Trump’s side it provided much-needed orders for a coal-producing region of the United States which was a vital constituency in his 2016 presidential election victory.

On the Ukrainian side the deal helped to win favor with the White House, whose support Kyiv needs in its conflict with Russia, as well as opening up a new source of coal at a time when its traditional supplies are disrupted.

Trump’s campaign call to improve relations with the Kremlin alarmed the pro-Western leadership in Ukraine, which lost Crimea to Russia in 2014 and is still fighting pro-Moscow separatists.

However, things looked up when President Petro Poroshenko visited the White House on June 20 last year.

“The meeting with Trump was a key point, a milestone,” a Ukrainian government source told Reuters, requesting anonymity.

The Americans had set particular store by supplying coal to Ukraine. 

“I felt that for them it is important,” said the source, who was present at the talks that also included a session with Vice President Mike Pence.

Despite Trump’s incentives, U.S. utilities are shutting coal-fired plants and shifting to gas, wind and solar power.

Ailing U.S. mining companies are therefore boosting exports to Asia and seeking new buyers among eastern European countries trying to diversify from Russian supplies.

Trump, who championed U.S. coal producers on the campaign trail, pressed the message after meeting Poroshenko. 

“Ukraine already tells us they need millions and millions of metric tons right now,” he said in a speech nine days later. “We want to sell it to them, and to everyone else all over the globe who need it.”

The deal with Kyiv was sealed the following month, after which U.S. Commerce Secretary Wilbur Ross said: “As promised during the campaign, President Trump is unshackling American energy with each day on the job.”

The deal helped to “bolster a key strategic partner against regional pressures that seek to undermine U.S. interests,” Ross added, referring to past Russian attempts to restrict natural gas flows to its western neighbors.

A matter of necessity

Ukraine was once a major producer of anthracite, a coal used in power generation, but it has faced a shortage in recent winters as it lost control of almost all its mines in eastern areas to the separatists.

Along with South Africa, Ukrainian-owned mines in Russia have been the main source of anthracite imports but this is fraught with uncertainty. In the past Moscow has cut off gas supplies to the country over disputes with Kyiv, while the Ukrainian government considered forbidding anthracite imports from Russia in 2017 although no ban has yet been imposed.

Overall anthracite imports shot up to 3.05 million tons in the first 11 months of 2017 from just 0.05 million in all of 2013 — the year before the rebellion erupted.

Neighboring Poland, which Trump visited in July, is also turning increasingly to U.S. coal. Its imports from the United States jumped five-fold last year to 839,000 tons, data from the state-run ARP agency showed.

In July Ukrainian state-owned energy company Centrenergo announced the deal with U.S. company Xcoal for the supply of up to 700,000 tons of anthracite.

Centrenergo initially said it would pay $113 per ton for the first shipment, a price industry experts and traders told Reuters was expensive compared with alternatives.

However, chief executive Oleg Kozemko said the cost varied according to the quality of the coal delivered, so Centrenergo had paid around $100 per ton on average for the 410,000 tons supplied by the end of 2017.

Kozemko said in an interview that the U.S. deal was Centrenergo’s only viable option after three tenders it launched earlier last year had failed.

“The idea to sign a contract with Xcoal was a matter of necessity,” he said. “We had agreements but they didn’t work out, because the pricing that they discussed with us and that we signed an agreement on didn’t work out.”

Data on the state tenders registry and documents seen by Reuters show that two of the tenders failed due to a lack of bids, while the results of the third were cancelled.

If that contract had worked out, Centrenergo would have paid around $96 per ton, according to Reuters calculations based on the exchange rate at the time of the tender in April.

Energy expert Andriy Gerus told Reuters the Xcoal deal “probably helps Ukraine to build some good political connections with the USA and that is quite important right now.”

 

Mutual desire 

The anthracite for Centrenergo is mined in Pennsylvania, which backed Trump in 2016. This marked the first time a Republican presidential candidate had won the state since 1988, and followed Trump’s pledge to reverse the coal industry’s history of plant closures and lay-offs in recent years.

Centrenergo says it and Xcoal agreed the contract independently of their governments and without any political pressure. However, Kozemko said: “If talks between the heads of our countries helped in this, then we can only say thank you… It was a mutual desire.”

For the Ukrainian authorities, the diplomatic benefit is clear. When the first shipment of U.S. anthracite arrived in September, Poroshenko tweeted a photo of himself shaking hands with Trump in Washington. 

“As agreed with @realDonaldTrump, first American coal has reached Ukraine,” he wrote.

Poroshenko’s press service said the deal “is an exact example of when the friendly and warm atmosphere of one conversation helps strengthen the foundations of a strategic partnership in the interests of both sides for the future.”

The Washington meeting also discussed U.S.-Ukrainian military and technical cooperation. Soon after, the Trump administration said it was considering supplying defensive weapons to Ukraine to counter the Russian-backed separatists.

In late December the U.S. State Department announced that the provision of “enhanced defensive capabilities” had been approved.

Kozemko said the Xcoal deal was likely to be only the beginning of Centrenergo’s trade relations with the United States as it is currently holding talks on supplies of bituminous coal, a poorer quality variety.

“It’s good that we studied the U.S. market because we had never looked at it before. We see big prospects for bituminous coal,” he said, adding that other Ukrainian firms were thinking similarly. “We showed how to bring coal from America and they are following our lead.”
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Brazil’s political affairs minister Carlos Marun said on Monday that passage of a bill to overhaul the country’s costly social security system has effectively ground to a halt in Congress and would become a campaign issue in this year’s election.

Marun spoke to reporters after the head of the Senate, Eunicio Oliveira, said the federal government’s military intervention in Rio de Janeiro would, by the rules of the country’s constitution, block any vote on pension reform or any other measure requiring a constitutional amendment.

But Marun acknowledged what President Michel Temer’s critics believe is the real reason for holding up a pension vote: the unpopular bill never gained enough support and the government faced certain defeat.

“We don’t have the votes. I couldn’t guarantee we would have the votes by the end of February,” he said. That was the government’s deadline for passing the bill before lawmakers turned their attention to securing their seats in the October general election.

Pension reform is the cornerstone policy in Temer’s efforts to bring a bulging budget deficit under control. Generous pension benefits and early retirement have turned social security into the main driver of a deficit that cost Brazil its investment grade.

Marun, the cabinet minister charged with mobilizing coalition support in Congress, said pension reform would become a key issue in the election campaign if Congress did not take it up again.

The legislation to streamline social security, which required amending the constitution, was lined up for a first vote in the lower house of Congress this week.

But on Friday the government ordered the army to take over command of police forces in Rio de Janeiro state in a bid to curb violence driven by drug gangs, an intervention that blocks any constitutional changes during its duration.

Temer decreed the Rio intervention through Dec. 31, his last day in office.
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Latvia’s ABLV Bank sought emergency support Monday after U.S. officials accused it of helping breach North Korean sanctions while the country’s central bank chief faced bribery allegations, turning up the spotlight on its financial system.

The Baltic country, which is a member of the euro zone and shares a border with Russia, has come under increasing scrutiny recently as a conduit for illicit financial activities.

Last year, two Latvian banks were fined more than 2.8 million euros ($3.26 million) for allowing clients to violate sanctions imposed by the European Union and United Nations on North Korea. Three others received smaller fines.

ABLV said it had sought temporary liquidity support from the central bank after depositors withdrew 600 million euros, about 22 percent of total deposits, following a warning by the United States that it was seeking to impose sanctions on the bank.

Latvia’s third-biggest lender denied wrongdoing.

“We don’t participate in any illegal activities,” ABLV Bank Deputy CEO Vadims Reinfelds told a news conference. “There are no violations of sanctions.”

The bank said it would not look for a bailout from the government and that it had adequate liquidity and capital.

The European Central Bank had earlier stopped all payments by ABLV, citing the sharp deterioration in its financial position in recent days and saying a moratorium was needed to allow the bank and Latvian authorities to address the situation.

A source close to the matter said the moratorium would be short, giving ABLV just a few days to assess its situation.

Only solvent institutions may receive emergency liquidity support and should the ECB determine that ABLV cannot meet its financial, liquidity and capital obligations, it could start proceedings that may lead to the bank being wound down.

Latvia’s own central bank said it had agreed to provide 97.5 million euros worth of funding to ABLV but that the bank has yet to receive the money.

The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) said on Feb. 13 that ABLV “had institutionalized money laundering as a pillar of the bank’s business practices.”

It linked some of the alleged activities to North Korea’s ballistic missiles program, saying bank executives and management had bribed Latvian officials to cover up their activities.

​Central bank governor

Separately, Latvia’s anti-corruption authority released central bank Governor Ilmars Rimsevics, an ECB policymaker, who was arrested Saturday on suspicion of having solicited a 100,000 euro bribe. Rimsevics denied the allegations.

The Corruption Prevention and Combating Bureau said its investigation was not connected to the probe into ABLV.

“[Rimsevics’ arrest] … is about demanding a bribe of no less than 100,000 euros,” the bureau’s head, Jekabs Straume, told reporters at a news conference Monday.

Neither the police nor the anti-corruption authority gave details of the alleged request for a bribe.

A lawyer for Rimsevics, who was arrested after police searched his office and home, said he would hold a news conference at 11:00 a.m. (1000 GMT) Tuesday.

“I disagree with it categorically,” Rimsevics told Latvian news portal Delfi following his release, referring to the bribery allegations.

Prime Minister Maris Kucinskis had earlier called on the central bank chief to quit, saying: “I can’t imagine that a governor of the Bank of Latvia detained over such a serious accusation could work.”

Latvia joined the European Union in 2003 and adopted the euro currency at the start of 2014, a move that gave its central bank governor a seat on the ECB’s interest-rate-setting Governing Council.

The European Commission said Monday that Rimsevics’ detention was a matter for Latvian authorities.

Boom time

The economy of Latvia, which gained independence from the Soviet Union in 1991, has boomed in recent years. Its commercial banking sector is dominated by Nordic banks alongside a number of privately-owned local lenders.

In its document detailing the allegations against ABLV, the FinCEN said the reliance of some parts of the Latvian banking system on non-resident deposits for capital exposed it to increased illicit finance risk. It said such deposits amounted to roughly $13 billion.

“Non-resident banking in Latvia allows offshore companies, including shell companies, to hold accounts and transact through Latvian banks,” FinCEN said, adding that criminal groups and corrupt officials may use such schemes to hide true beneficiaries or create fraudulent business transactions.

“[Former Soviet Union] actors often transfer their capital via Latvia, frequently through complex and interconnected legal structures, to various banking locales in order to reduce scrutiny of transactions and lower the transactions’ risk rating.”
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New Zealand Prime Minister Jacinda Ardern said on Tuesday the final text of a revised Trans-Pacific trade pact would be released on Wednesday when her government publishes its own assessment of the deal.

“We now have confirmation that we’ll…be able to release the text,” Ardern told reporters at Parliament. “…We should be in a position to do that tomorrow.”

Eleven nations, led by Japan, announced in January that the new Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) would go ahead with some adjustments after the United States pulled out of an earlier version at the start of 2017.

More than 20 parts of the original pact had been suspended or changed, Ardern said.

The New Zealand leader had said the previous day that her government was frustrated that publication of the text had been delayed by translation issues.

The deal is set to be signed by all 11 nations at a ceremony in Chile in March with the possibility of more members joining at a later stage.

Despite initially opposing the deal, U.S. President Donald Trump said in January that Washington might yet sign up.

Australia said on Monday it would be open to the idea of Britain joining the regional trade group after it left the European Union.
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Latvian Prime Minister Maris Kucinskis assured the country and Europe “there is no sign of danger,” after anti-corruption police arrested the head of the Latvian central bank Saturday.

“For now, neither I, nor any other official, has any reason to interfere with the work of the Corruption Prevention Bureau,” Kucinskis said.

Neither Kucinskis nor the police gave any reason why central bank governor Ilmars Rimsevics was arrested. But a police spokeswoman said there will be an announcement “as soon as possible.”

The Latvian government plans an emergency meeting Monday.

Along with heading the Baltic nation’s central bank, Rimsevics is also one of 19 governors on the European Central Bank.

The U.S. Treasury Department has proposed sanctions against a major Latvian bank for alleged money laundering linked to North Korea’s weapons program.
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The Commerce Department is urging President Donald Trump to impose tariffs or quotas on aluminum and steel imports from China and other countries.

Unveiling the recommendations Friday, Secretary Wilbur Ross said in the case of both industries “the imports threaten to impair our national security.”

As an example, Ross said only one U.S. company now produces a high-quality aluminum alloy needed for military aircraft.

Raise US capacity

The measures are intended to raise U.S. production of aluminum and steel to 80 percent of industrial capacity. Currently U.S. steel plants are running at 73 percent of capacity and aluminum plants at 48 percent.

Ross emphasized that the president would have the final say, including on whether to exclude certain countries, such as NATO allies, from any actions.

China’s Commerce Ministry said Saturday that the report was baseless and did not accord with the facts, and that China would take necessary steps to protect its interests if affected by the final decision.

Last year, Trump authorized the probe into whether aluminum and steel imports posed a threat to national defense under a 1962 trade law that has not been invoked since 2001. He has to make a decision by mid-April.

Three options

Ross is offering the president three options:

To impose tariffs of 24 percent on all steel and 7.7 percent on aluminum imports from all countries.

To impose tariffs of 53 percent on steel imports from 12 countries, including Brazil, China and Russia, and tariffs of 23.6 percent on aluminum imports from China, Hong Kong, Russia, Venezuela and Vietnam. Under this option, the U.S. would also impose a quota limiting all other countries to the amount of aluminum and steel they exported to U.S. last year.

To impose a quota on steel and aluminum imports from all sources, limiting each country 63 percent of the steel and 86.7 percent of the aluminum they shipped to the U.S. last year.
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The uncovering of one of the biggest frauds at a state-owned bank in India has rocked the country’s financial sector and brought scrutiny to a billionaire jeweler who counted Hollywood stars among his customers.

The nearly $1.8 billion fraud reported at India’s second-largest state-owned bank is a blow to the government’s efforts to revive the state-owned banking sector, which is already staggering under a mountain of bad debt.

Nirav Modi, whose jewelry boutiques span high-end streets from Hong Kong to London to New York and whose diamonds have been worn by Hollywood stars such as Dakota Johnson and Kate Winslet, is being investigated for the fraudulent transactions. His brand ambassador is Bollywood star Priyanka Chopra, who has also carved a niche in the United States.

The fraud, which officials say had been going on from a single branch of Punjab National Bank in Mumbai, went undetected since 2011. Calling it a “cancer,” the bank’s chief executive, Sunil Mehta, told a news conference earlier this week that it had been removed. “We will resolve it and we will honor all our bona fide commitments.”

Officials at the bank have accused Modi and his companies of obtaining unauthorized letters of undertaking from junior employees to secure credit from overseas branches of Indian banks. 

Modi has not responded to the allegations and, according to some reports, left the country last month. His home, stores and offices were raided by Indian investigators. His passport is being revoked, according to the Law and Justice Minister, Ravi Shankar Prasad.

“No one will be spared,” he said. “The taxpayers’ money will not be allowed to be lost. The investigation is proceeding with great speed and pace.”

Modi, whose worth is estimated at about $1.74 billion, is the 85th richest man in India, according to Forbes. Belonging to a family of diamond traders, the soft-spoken businessman founded a company called Firestone Diamond in 1999 — later rechristened Firestar Diamond — and quickly made a name in the business. He later set up his own jewelry design brand and won the rich and famous among his customers.

In January, he attended the economic summit in Davos, where a large Indian business delegation was present, along with Prime Minister Narendra Modi. The two are not related. 

The fraud, which went undetected for years, has reignited concerns about governance standards at Indian banks and norms that are used for lending to corporate customers. Questions have been raised as to why audits failed to detect the fraud for years.

It came to light weeks after the government announced a $14 billion bailout for state banks. These banks, which account for about two-thirds of all bank assets in the country, are the backbone of the financial system, but are saddled with bad debt estimated at $147 billion.

Economists have warned that this mountain of bad loans threatens India’s efforts to accelerate its economy as it slows down efforts by banks to lend to potential investors.
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Iraq’s prime minister was in Kuwait this week, selling his country as a promising investment opportunity. After years of war and sectarian violence, Iraq is moving toward stability and wants to attract the private sector to help fund its $88 billion reconstruction and recovery effort. From the Kuwaiti capital, VOA’s Margaret Besheer reports investors are interested.
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Top U.S. and Mexican officials on Thursday expressed cautious optimism that the North American Free Trade Agreement will be renegotiated, speaking ahead of the next round of trade talks later this month.

Asked on local television whether it was more likely the $1.2 trillion trilateral trade pact would survive or die, Mexico’s Foreign Minister Luis Videgaray said there was cause for optimism, though Mexico should be prepared for all eventualities.

“We should be prepared for a future with or without NAFTA,” he said.

In Washington, U.S. Treasury Secretary Steven Mnuchin said it was a priority for the Trump administration to renegotiate NAFTA, declining to speculate on the consequences if the United States withdraws from talks.

The seventh round of negotiations in Mexico City will take place Feb. 25 to March 5, starting and ending a day earlier than initially planned.

There is a “window of opportunity” for concluding the talks in March or April, said Moises Kalach, head of the international negotiating arm of Mexico’s CCE business lobby.

“That’s the objective,” Kalach told reporters.

Talks to renegotiate the 1994 pact have stalled as Canada and Mexico are at loggerheads with the United States over some of the most contentious proposals its negotiators have put on the table.

“I am cautiously hopeful that [U.S. Trade Representative] Ambassador Lighthizer will be renegotiating this deal,” Mnuchin told the House Ways and Means Committee, which has jurisdiction over trade matters in the U.S. Congress.

“It is a major priority of ours,” he added U.S. President Donald Trump has called NAFTA one of the worst deals in history, blaming it for U.S. manufacturing job losses, and has threatened to quit the agreement unless he can rework it to better suit U.S. interests. His remarks have unsettled financial markets.

At the last round in Montreal, Canada made several proposals to address the U.S. insistence on raising the North American content of autos. Washington also wants a clause that would allow any member to withdraw after five years.

The early March deadline for concluding talks has been extended to at least early April, officials have said. But participants have conceded privately it could take months longer.

If talks run past Mexico’s July presidential election, Mexico’s private sector will work with the president-elect to update NAFTA, Kalach said.

The current frontrunner, leftist contender Andres Manuel Lopez Obrador, has said Mexico should suspend talks until after the election.
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Shares in European plane maker Airbus flew higher on Thursday after the company reported improved earnings and was more upbeat about the future following problems to several of its key aircraft programs.

 

The company said that it surged to a net profit of 1 billion euros ($1.25 billion) in the fourth quarter, from a loss of 816 million euros a year earlier, while revenue was stable around 23.8 billion euros. Airbus delivered a record 718 aircraft last year and expects that figure to rise further in 2018, to 800.

 

CEO Tom Enders credited “very good operational performance, especially in the last quarter.”

 

Shares in the company jumped about 10 percent on Thursday in Paris. Investors seem optimistic that the company is putting behind it the worst of its troubles with three airplane production programs.

Airbus, which is based in Toulouse, France, said it took another charge of 1.3 billion euros on its A400 military plane, which has had cost overruns for years. It said, however, that it had reached a deal with the governments that are buying the planes on a new delivery schedule that should rein in any new charges on the program.

 

The company also acknowledged that it had had more struggles with engines supplied by Pratt & Whitney for the A320neo, a narrow-body plane that’s popular with regional airlines. The supplier had had problems with the engines last year, which it fixed, but reported a new issue more recently that could affect 2018 deliveries, Airbus said.

 

Another of Airbus’ troubled plane models, the A380 superjumbo jet, now has a more stable outlook after the company reached a deal with Emirates airline that will cover the cost of production for years.

 

The various problems with these production programs risked overshadowing what was otherwise a strong year for Airbus in terms of earnings, as global demand for commercial aircraft grows. Airbus raised its dividend by 11 percent and said it expects one of its key earnings metrics — earnings before interest and tax — to rise 20 percent in 2018.

 

 

 
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A key to any successful business is to provide customers with what they want. For automakers at the 2018 Chicago Auto Show, they say their customers want sport utility vehicles, or SUVs.

“2017 was a record year for Ford SUV sales,” said Dan Jones, Ford’s SUV communications manager for North America. “We sold almost 800,000 SUVs in the year alone. We are actually growing our SUV portfolio 25 percent in the last four years. So, all the signs are there that the Ford SUV portfolio is really booming, and we’re going to capitalize and ride that wave.”

Ford isn’t alone.

“Trucks, SUVs and crossovers — we have grown 15 percent,” said Tiago Castro, Nissan’s director of trucks and commercial vehicles.

His company’s Rogue SUV promotional tie-in with Disney’s Star Wars film franchise comes at a time when the model, with versions equipped with some self-driving features, is one of Nissan’s best-selling vehicles overall.

“Over 400,000 units last year for the Rogue lineup,” Castro said.

High gas prices and poor fuel economy contributed to the dramatic decline of SUV sales in the United States in the mid-2000s. At the time, those customers buying new vehicles opted for smaller, more fuel-efficient sedans, including vehicles with new electric motors and technology.

But today, SUVs dominate the American automobile market, which is easy to see on the floor of the 2018 Chicago Auto Show, billed as the nation’s largest auto show.

“The SUV segment is incredibly hot,” said Trevor Dorchies, product manager for Jeep and Dodge, two brands under the Chrysler/Fiat company with a variety of options in the medium and large-size SUV ranges — which weren’t just on display at the Chicago Auto Show. Potential customers have an opportunity to ride in them on an indoor obstacle course that demonstrates their performance in challenging terrain.

“I think gas prices, where they are at right now, have helped Jeep and Grand Cherokee and Durango sales,” Dorchies said. Gas prices in many parts of the United States remain below $3 a gallon (79 U.S. cents per liter). 

“Cheap gasoline means folks want to get a bigger SUV,” he said.

But aside from affordable fuel prices, today’s offerings are a far cry from the gas-guzzling SUVs of the past.

“One thing that has really changed in the last few years is the competitiveness of fuel economy of SUVs compared to cars,” explained Ford’s Jones. “So, people aren’t seeing a huge warp now, in terms of MPG improvement or a range improvement in a car to an SUV. It’s less of a compromise. So, people are liking the high seating position, more space, the utility to go off road.”

Overall, sedan sales are down in the U.S. by more than 30 percent for some manufacturers as customers flock to SUVs.

But Jones said evolving needs and taste factor as much for customers as gas prices.

“The millennials, the biggest cohort of consumers, were coming to the age where they were having children, starting to have a little more money, wanting to have a higher seating position, preferring all-wheel drive. So, SUVs have really just taken off.”

Jones said he doesn’t see the SUV trend cooling off for Ford either.

“We think 2018 should be another record year for us,” he said.

While automakers retool and shift production lines to keep up with increased SUV demand, the National Automobile Dealers Association predicts overall new vehicle sales for 2018 will trend slightly downward.
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Is that love in the air or french fries? White Castle, KFC and other fast-food restaurants are trying to lure sweethearts for Valentine’s Day.

It’s an attempt to capture a bit of the $3.7 billion that the National Retail Federation expects Americans to spend on a night out for the holiday. Restaurant analyst John Gordon at Pacific Management Consulting Group says it appeals to people who don’t want to splurge on a pricier restaurant. And some customers enjoy it ironically.

White Castle, which has been offering Valentine’s Day reservations for nearly 30 years, expects to surpass the 28,000 people it served last year. Diners at the chain known for its sliders get tableside service and can sip on its limited chocolate and strawberry smoothie. KFC is handing out scratch-and-sniff Valentine’s Day cards that give off a fried chicken aroma to diners who buy its $10 Chicken Share meals or a bucket full of Popcorn Nuggets.

Panera Bread wants couples to get engaged at its cafes; those who do can win food for their weddings from the soup and bread chain. And Wingstop sold out of its $25 Valentine’s Day kit, which came with a gift card and a heart-shaped box to fill with chicken wings. The company says 1,000 of the kits were gone in 72 hours.
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The U.S. on Wednesday reported its biggest increase in consumer prices in a year, pushing stocks lower in early trading.

The consumer price index, which follows the costs of household goods and services, advanced by a half percentage point in January, up from two-tenths of a point in December.

The January increase pushed the year-over-year inflation rate up by 2.1 percent. It was the same 12-month rate recorded in December, increasing fears among investors that firming inflation, along with increasing wages paid to American workers, could lead policymakers at the country’s central bank, the Federal Reserve, to boost interest rates at a faster pace.

The Labor Department said consumer prices, minus the volatile changes in food and energy costs, rose three-tenths of a percentage point in January, the largest increase since January 2017. Analysts had been expecting an increase of 0.2 percent.

Stock indexes were lower at the start of Wednesday, with the key Dow Jones industrial average falling about a third of a percentage point after a string of recent days with massive swings between losses and gains.
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