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Archive for 08/07/12

Monti warns markets, touts reforms ahead of Draghi

HELSINKI | Thu Aug 2, 2012 6:37am EDT

HELSINKI Aug 2 (Reuters) - Italy's prime minister warned markets to give his country more credit for its fiscal reforms and said he favoured bold measures to tackle Europe's debt crisis, outlining a possible future policy path for the region as a key ECB meeting got under way.

Mario Monti, a technocrat drafted in after Silvio Berlusconi resigned as premier last year, said continued high borrowing costs for Italy could usher in a eurosceptic government that would renege on fiscal targets.

"I can assure you that if the (bond yield) spread in Italy remains at these levels for some time ... then you are going to see a... non euro-oriented, non fiscal discipline-oriented government taking power in Italy," he told a conference.

Italy's bond yields have stayed stubbornly high despite budget reform efforts steered by Monti, contributing to the pressure to match words with bold actions that European Central Bank President Mario Draghi is under after he pledged last week to do whatever it takes to save the euro.

Markets believe the main option on the table for the ECB is a resumption of its bond-buying programme, which would ease Spanish and Italian borrowing costs, though Reuters reported on Monday that that action could be weeks away.

Italy is due to hold elections next spring, which Monti has said he will not contest, but disagreements within the ruling coalition - in part over the cost of implementing tough austerity measures during a recession - have prompted speculation the government could fall this year.

Centre-right leader Berlusconi, who has hinted he may run again for prime minister, has made several comments in recent months suggesting that Italy could consider quitting the euro zone.

Running the rule over further options for strengthening the single currency bloc, Monti said he strongly favoured jointly issued bonds but admitted other measures in support of a European fiscal union would have to be introduced first.

On Wednesday, he predicted the euro zone's ESM rescue fund would eventually be granted a banking licence, allowing it to tap unlimited resources through the ECB's liquidity operations.

Euro zone paymaster Germany is strongly opposed to both measures. Finland has also said it opposes common euro zone bonds.

Monti was visiting Finland as part of a campaign for concerted action by euro zone governments and the ECB to help bring down peripheral sovereign borrowing costs.

Italian 10-year bond yields were 14 basis points lower on the day at 5.94 percent.


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Cigna profit beats estimates, raises full-year forecast

n">Aug 1 (Reuters) - Insurer Cigna Corp reported a better-than-expected profit, as its takeover of Medicare specialist HealthSpring helped boost premiums and fees, and the company raised its 2012 earnings forecast.

Cigna on Thursday reported second-quarter net income of $380 million, or $1.31 per share, compared with $391 million, or $1.43 per share, in the year-earlier period.

Excluding special items, Cigna earned $1.52 per share. Analysts, on average expected $1.42 per share, according to Thomson Reuters I/B/E/S.

The company bought HealthSpring for $3.8 billion earlier this year.


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UPDATE 1-Beiersdorf sees swift return to profit in China

* H1 sales 3.06 bln eur, up 2.6 pct

* H1 adj EBIT up 11.6 percent to 390 mln

* Sees 2012 sales up 3 pct

* Says China to return to profit ahead of schedule

* Shares rise 5 pct, top Dax gainer

FRANKFURT, Aug 2 (Reuters) - Beiersdorf, the maker of Nivea skin care products, said it would return to profit in China a year earlier than scheduled after a haircare buy failed to deliver while announcing a slightly disappointing outlook for 2012 sales growth of 3 percent.

Like rivals Henkel and Unilever, Beiersdorf on Thursday said emerging markets had helped mitigate a 4 percent fall in second-quarter sales at its main consumer products division in western Europe.

But its new forecast for 2012 sales growth of 3 percent fell short of the average expectations for growth of 5 percent, according to a Reuters poll.

In China, Beiersdorf had fallen behind rivals' expansion and last year took a 140 million euro ($172 million) writedown and replaced management.

"We see a much improved situation in China and we are approaching breakeven in the foreseeable future," new Chief Executive Stefan Heidenreich told analysts.

Its shares were up 4.20 percent at 55.80 euros at 1027 GMT, the top gainer on the Dax index of leading German shares .

Beiersdorf shares already trade at a premium because of speculation the controlling Herz family could sell out to Procter & Gamble, and have a price to forward earnings ratio of 24.28. That compares with 19.31 for L'Oreal, 15.3 for Henkel, and 14.13 for Reckitt Benckiser.

"The specified outlook for sales growth is below consensus for both the Consumer and the Tesa (adhesives) division and may require a downward revision of consensus," said DZ Bank analyst Thomas Maul.

Heidenreich admitted Beiersdorf, which also makes Labello lip balm and La Prairie luxury skin creams, had fallen behind in terms of innovative creams and lotions and vowed to bring more new products to the market.

"The innovation did not come out in the previous year and that is why we are not growing enough," Heidenreich said. "The pipeline looks a lot better for 2013, I believe some real hits will come through."

Procter & Gamble, the world's largest household products maker, warned on profits after failing to deliver enough new products and cost cuts to make up for weak demand in Europe, the United States and China.

Beiersdorf said on Thursday that first-half sales rose 2.6 percent to 3.06 billion euros and adjusted earnings before interest and tax (EBIT) rose 11.6 percent to 390 million.

It forecast a 2012 operating margin of 12 percent, compared with a previous range of between 11 and 12 percent.


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Analysis: Evidence for climate extremes, costs, gets more local

A pedestrian walks across a bridge above a main road on a day with high air pollution in Beijing June 6, 2012. REUTERS/David Gray

A pedestrian walks across a bridge above a main road on a day with high air pollution in Beijing June 6, 2012.

Credit: Reuters/David Gray

By Environment Correspondent Alister Doyle

OSLO | Fri Jul 27, 2012 10:23am EDT

OSLO (Reuters) - Scientists are finding evidence that man-made climate change has raised the risks of individual weather events, such as floods or heatwaves, marking a big step towards pinpointing local costs and ways to adapt to freak conditions.

"We're seeing a great deal of progress in attributing a human fingerprint to the probability of particular events or series of events," said Christopher Field, co-chairman of a U.N. report due in 2014 about the impacts of climate change.

Experts have long blamed a build-up of greenhouse gas emissions for raising worldwide temperatures and causing desertification, floods, droughts, heatwaves, more powerful storms and rising sea levels.

But until recently they have said that naturally very hot, wet, cold, dry or windy weather might explain any single extreme event, like the current drought in the United States or a rare melt of ice in Greenland in July.

But for some extremes, that is now changing.

A study this month, for instance, showed that greenhouse gas emissions had raised the chances of the severe heatwave in Texas in 2011 and unusual heat in Britain in late 2011. Other studies of extremes are under way.

Growing evidence that the dice are loaded towards ever more severe local weather may make it easier for experts to explain global warming to the public, pin down costs and guide investments in everything from roads to flood defenses.

"One of the ironies of climate change is that we have more papers published on the costs of climate change in 2100 than we have published on the costs today. I think that is ridiculous," said Myles Allen, head of climate research at Oxford University's Environmental Change Institute.

"We can't (work out current costs) without being able to make the link to extreme weather," he said. "And once you've worked out how much it costs that raises the question of who is going to pay."

Industrialized nations agree they should take the lead in cutting emissions since they have burnt fossil fuels, which release greenhouse gases, since the Industrial Revolution. But they oppose the idea of liability for damage.

Almost 200 nations have agreed to work out a new deal by the end of 2015 to combat climate change, after repeated setbacks. China, the United States and India are now the top national emitters of greenhouse gases.

Field, Professor of Biology and Environmental Earth System Science at the University of Stanford, said that the goal was to carry out studies of extreme weather events almost immediately after they happen, helping expose the risks.

"Everybody who needs to make decisions about the future - things like building codes, infrastructure planning, insurance - can take advantage of the fact that the risks are changing but we have a lot of influence over what those risks are."

FLOODS

Another report last year indicated that floods 12 years ago in Britain - among the countries most easily studied because of it has long records - were made more likely by warming. And climate shifts also reduced the risks of flooding in 2001.

Previously, the European heatwave of 2003 that killed perhaps 70,000 people was the only extreme where scientists had discerned a human fingerprint. In 2004, they said that global warming had at least doubled the risks of such unusual heat.

The new statistical reviews are difficult because they have to tease out the impact of greenhouse gases from natural variations, such as periodic El Nino warmings of the Pacific, sun-dimming volcanic dust or shifts in the sun's output.

So far, extreme heat is the easiest to link to global warming after a research initiative led by the U.S. National Oceanic and Atmospheric Administration and the British Meteorological Office.

"Heatwaves are easier to attribute than heavy rainfall, and drought is very difficult given evidence for large droughts in the past," said Gabriele Hegerl of the University of Edinburgh.

Scientists often liken climate change to loading dice to get more sixes, or a baseball player on steroids who hits more home runs. That is now going to the local from the global scale.

Field said climate science would always include doubt since weather is chaotic. It is not as certain as physics, where scientists could this month express 99.999 percent certainty they had detected the Higgs boson elementary particle.

"This new attribution science is showing the power of our understanding, but it also illustrates where the limits are," he said.

A report by Field's U.N. group last year showed that more weather extremes that can be linked to greenhouse warming, such as the number of high temperature extremes and the fact that the rising fraction of rainfall falls in downpours.

But scientists warn against going too far in blaming climate change for extreme events.

Unprecedented floods in Thailand last year, for instance, that caused $45 billion in damage according to a World Bank estimate, were caused by people hemming in rivers and raising water levels rather than by climate change, a study showed.

"We have to be a bit cautious about blaming it all on climate change," Peter Stott, head of climate monitoring and attribution at the Met Office's Hadley Centre, said of extremes in 2012.

Taken together, many extremes are a sign of overall change.

"If you look all over the world, we have a great disastrous drought in North America ... you have the same situation in the Mediterranean... If you look at all the extremes together you can say that these are indicators of global warming," said Friedrich-Wilhelm Gerstengabe, a professor at the Potsdam Institute for Climate Impact Research.

(Additional reporting by Sara Ledwith in London; Editing by Louise Ireland)


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Space weather and the coming storm

By Chris Wickham

LONDON | Sun Aug 5, 2012 5:39am EDT

LONDON (Reuters) - The delicate threads that hold modern life together are dramatically cut by an unexpected threat from outer space, with disastrous effects.

It's the stuff of science fiction usually associated with tales of rogue asteroids on a collision course with earth.

But over the next two years, as the sun reaches a peak in its 10-year activity cycle, scientists say there is a heightened risk that a whopping solar storm could knock out the power grids, satellites and communications on which we all rely.

"Governments are taking it very seriously," says Mike Hapgood, a space weather specialist at the Rutherford Appleton Laboratory in the UK. "These things may be very rare but when they happen, the consequences can be catastrophic."

Hapgood said that solar storms are increasingly being put on the national risk registers used for disaster planning, alongside other rare but devastating events like tsunamis and volcanic eruptions.

The statistics support this, he said. There is a roughly 12 percent chance of a major solar storm every decade, making them a one-in-a-hundred-year event. The last major one was over 150 years ago.

SECRETIVE SATELLITE INDUSTRY

The threat comes from the magnetically-charged plasma which the sun belches out in so-called coronal mass ejections. Like vast bubbles bursting off the sun's surface, they send millions of tonnes of gas racing through space that can engulf the earth with as little as one to three days warning.

The geomagnetic storms they stoke can induce strong currents in national power grids that literally melt the expensive transformers that form the cornerstones of the system.

The failure of a large part of India's fragile power grid this week was not related to geomagnetic storms but it does give a taste of the chaos that can ensue. Trapped miners, stranded trains and hospitals plunged into darkness, and this is a country where up to 40 percent of the population is not connected to the national grid.

Scientists say satellites can also be damaged or destroyed, as charged particles rip through them at hundreds of miles per second. It's an issue the satellite industry is not keen to talk openly about.

"A few will still publicly deny that there is a problem," said Hapgood, blaming the fear that being first to admit the problem could put a company at a commercial disadvantage.

"We have a way to go before we reach the point where the market accepts that this is a universal problem and gives the advantage to the guys who make a virtue of their ability to deal with space weather."

Radio communications with jetliners can also be knocked out as the solar storm messes with the ionosphere, the region of the earth's upper atmosphere through which long-range radio waves travel.

When there is a threat, airlines re-route planes to lower latitudes where they are less exposed. It's not quite routine but it isn't that rare either, and it adds to the fuel bill.

CHEER UP, IT MIGHT NEVER HAPPEN

It's a threat that is 'low frequency, high severity' in insurance industry jargon, which governments have only recently started taking seriously.

"Politically, it started to get some purchase about three years ago," says Andrew Richards, a severe risk analyst at National Grid, which runs the UK electricity network. "We know they are real effects but we are nowhere near there, in terms of our understanding."

Teams of scientists in North America and Europe spend their days and nights monitoring the sun and issuing warnings to governments, power companies, satellite operators and airlines.

But exactly how much to worry is unclear because proper scientific understanding about space weather is based on incidents and work done only in the last 20 to 30 years, the blink of an eye in solar terms.

In 2003, a magnetic storm triggered malfunctions in 47 satellites and led to the complete loss of one worth $640 million, according to the British Antarctic Survey, which this year launched an EU-funded space weather forecasting service for the satellite industry.

Before that, a 1989 storm was blamed for taking out the entire power network in Quebec, Canada, within 90 seconds that left millions of people without electricity for nine hours.

But the only really big storms that provide any meaningful reference point for how bad it could be, happened long before the development of nationwide power grids, the internet and mass air travel.

In 1921, a magnetic storm was blamed for putting the New York Central Railroad out of action and disrupting telegraph and telephone networks across Europe.

But the big one is known as the Carrington event in 1859, when British astronomer Richard Carrington observed and recorded a very large solar eruption that reportedly took just 17 hours to show up in the earth's atmosphere. The aurora borealis - or North Lights - were seen as far south as the Caribbean.

Local news reports carried accounts of people in the northeast United States being able to read a newspaper in the middle of the night by the light of the aurora, and miners in the Rocky Mountains waking up and preparing breakfast because they thought it was morning.

The accounts are entertaining, but with about a thousand active satellites now in orbit around the earth, including the International Space Station, the damage from solar storms could present private operators like SES Global and governments with a bill in the billions of dollars.

NO RETURN TO THE STONEAGE

It is hard to quantify how serious and pervasive a sudden and complete loss of electrical power could be for a modern economy, but this is precisely what a 2008 report from the U.S. National Academy of Sciences tried to do. The result was alarming.

The effects of an extended outage lasting more than a few hours would include, it said, "disruption of the transportation, communication, banking, and finance systems, and government services; the breakdown of the distribution of potable water owing to pump failure, and the loss of perishable foods and medications because of lack of refrigeration."

A separate NASA-backed report in 2007 estimated a Carrington-scale solar storm would cost the satellite operators a minimum of $30 billion.

That's without the loss of revenues to the telecoms and broadcasting companies that rely on them and the hole it could leave in military security networks.

Andrew Richards said National Grid started commissioning research on the threat around 1996 and the company now monitors solar activity on a daily basis.

"We want to be prepared if something did happen," he said. "There is a human tendency that if it hasn't happened for a long time, to forget all about it."

That rarity makes the risk hard to quantify. "It's very hard to say how bad it could possibly be," he says. "The sun could explode and we would all die, but modeling based on the most extreme events that we know of says we do not believe a catastrophic return to the stone age is on the cards."

WATCHING AND WAITING

Based on that modeling, Richards says the worst-case scenario is that the voltage fluctuations get bad enough to cause a local or national blackout.

To guard against this, National Grid has opted for a more resilient transformer design since 1997 and has increased the number of spares it keeps.

This is no small task. The transformers have a 30-year lifespan, cost 2 to 3 million pounds each and there are 1,500 of them in Britain alone. They are made by just a few global engineering groups, companies like Siemens and General Electric.

They run hot under normal circumstances but when a geomagnetic storm triggers an extreme voltage fluctuation the oil that insulates them can start to boil.

Richards said the record for replacing one of them is four weeks. "Imagine demolishing a family house, re-laying the foundations and then closing roads and bringing in a ready-made one on the back of a lorry. You can't do it overnight."

If the scientists raised the alarm, Richards and his sun-watchers would have a few days to get as many of the network's transformers into action as possible in order to spread the electrical load as thinly as possible when the storm hits.

Other than that, he said, "it would give us five or six days to sit and think, and worry about what might happen."

Aside from earth-based observation of the sun, one of the few detectors monitoring the 'solar wind' is NASA's Advanced Composition Explorer, which sits like a lonely sentinel about 1.5 million miles away in an orbit that keeps it directly between the earth and the sun.

Its detectors continually monitor the direction and speed of the solar wind, feeding data back to the Space Weather Prediction Centre in Boulder, Colorado, to give 15 to 45 minutes warning of any solar onslaught.

The insurance industry, which would take a hit, if satellites started dropping out of the sky, admits that the risk is a hard one to price.

Ludovic Amoux is a specialist underwriter at the world's leading space insurer, Paris-based SpaceCo, which is owned by Allianz.

"We have tried to analyze the probability... Our only concern is that although the probability is low, the impact would be huge," he said.

(Additional reporting by Myles Neligan; Editing by Anna Willard)


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Mitt Romney’s Olympics outlook, after meeting with David Cameron

About Reuters TV

Hard-edged reporting, insight and analysis, Reuters TV breaks ground creating informative news and financial videos. Showcasing Reuters’ 3000 award-winning journalists, Reuters TV delivers high-energy investigative journalism with concise explanations. Check it out and let us know what you think.


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India plans space mission to send a satellite to Mars

By Satarupa Bhattacharjya

NEW DELHI | Fri Aug 3, 2012 9:29am EDT

NEW DELHI (Reuters) - India plans to send a satellite via an unmanned spacecraft to orbit Mars next year, joining a small group of nations already exploring the red planet, a government scientist said on Friday.

A rocket will blast off from the southeastern coast of India, dropping the satellite into deep space, which will then travel onto Mars to achieve orbit, the senior scientist said, asking not to be named because the project is awaiting final approval.

A spokesman for the Indian Space Research Organisation (ISRO) based in the southern city of Bangalore would not confirm the mission, but commented generally on the ambitions of India's space program.

"After the Moon, worldwide attention is now focused on finding out if there (are) habitable spots on Mars," ISRO's Deviprasad Karnik said.

ISRO scientists expect the satellite to orbit at less than 100 km (62 miles) above Mars.

India's federal cabinet is expected soon to clear the mission, according to media reports this week that said the program will cost about $80 million.

The plan has drawn criticism in a country suffering from high levels of malnutrition and power shortages. But India has long argued that technology developed in its space program has practical applications to everyday life.

India's space exploration program began in 1962. Four years ago, its Chandrayaan satellite found evidence of water on the moon. India is now looking at landing a wheeled rover on the Moon in 2014.

Separately, the United States expects to land NASA's $2.5 billion Mars Science Laboratory vehicle at 1:31 a.m. EDT on Monday (0031 EDT) next to a mountain that may harbor life-friendly environments.

Last year, a Chinese Russian probe failed in a bid to send a satellite to Mars.

(Editing by Frank Jack Daniel and Ed Lane)


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Mitt Romney meets Polish leader Donald Tusk

About Reuters TV

Hard-edged reporting, insight and analysis, Reuters TV breaks ground creating informative news and financial videos. Showcasing Reuters’ 3000 award-winning journalists, Reuters TV delivers high-energy investigative journalism with concise explanations. Check it out and let us know what you think.


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