South Africa's mining industry can ill afford to offer wage rises during talks that are about to start.

London - South Africa's mining industry can ill afford to offer wage rises during talks that are about to start with a new and unpredictable union, so it may well face fresh strikes, Impala Platinum said on Friday.

South African mining companies are due to embark on one of their toughest periods of wage talks in the next one or two weeks, with increasingly radicalised unions.

The world's biggest platinum producing country is hoping to avoid the 2012 wildcat strike action that cost billions in lost revenue and production.

Mining companies are hurting from a nearly 20 percent drop in platinum prices in the last two years, as the supply disruptions failed to offset weakness in demand for the metal used chiefly in motor vehicle catalysts.

Workers are hoping the unions can deliver deals like the 11-to-22 percent pay rise Lonmin gave illegal strikers after 34 were shot dead by police at its Marikana mine.

“I don't think we have a mandate yet for wage levels, I just know from the mines' point of view that any kind of increase is going to be difficult to afford,” Derek Engelbrecht, Impala's group executive marketing, told Reuters in an interview.

“I think there certainly is potential for further industrial action in the form of strikes,” he added.

Over the past year the Association of Mineworkers and Construction Union (AMCU) has poached tens of thousands of members from the once dominant National Union of Mineworkers (NUM), which has been hurt by a view that its leaders had become too close to management.

The AMCU leader, Joseph Mathunjwa, on Friday threatened to bring Africa's biggest economy to a standstill and the rand extended its slide after tumbling to a four-year low against the dollar on Thursday on fears of a strike at Anglo American Platinum (Amplats).

More than 50 people have been killed in more than 12 months of unrest stemming from a turf war between the two unions.

“We are now going into uncharted territory,” Engelbrecht said. “We are going to negotiate with a new union that we have never dealt with before on wages, so trying to predict the outcome would be foolhardy.”

The negotiations will start against a backdrop of jobs cuts and approaching elections.

Impala is looking at plans to cut capital and operational expenses, including staffing numbers, Engelbracht said.

“The whole thing has been reviewed to try and reduce both absolute and unit costs and improve productivity,” he said.

The world's largest platinum miner Amplats plans to cut 6,000 jobs and mothball two unprofitable mines near the platinum belt city of Rustenburg.

However, a protest strike called for Friday by at least two AMCU officials failed to materialise. - Reuters

The percentage of global investment that goes to developing countries should triple in the next two decades.

Washington - The percentage of global investment that goes to developing countries should triple in the next two decades as emerging economies catch up to richer nations and become more integrated into financial markets, the World Bank predicted in a report on Thursday.

These nations and their comparatively younger and bigger populations are also set to become the largest sources of capital, with China and India turning into the world's two biggest investors by 2030, the global development lender said.

The shifting landscape of saving and investment has profound implications for everything from which currencies will dominate global markets to the rise of new financial centres, patterns of capital flows and investment priorities.

But policymakers are still woefully unprepared for the changes, fixating instead on what will happen in the next three to six months, Kaushik Basu, the World Bank's chief economist, said.

“The big question that should concern us all is what will happen to the major drivers of growth and development: namely savings and investment,” Basu told reporters ahead of the report's release.

“In some sense, some of the global economic turmoil that we are seeing today are some of the early indicators of the kind of turbulent period that the world is going into,” he said.

Standard & Poor's earlier this week predicted that Chinese non-financial companies will overtake US companies in their borrowing needs over the next two years.

By 2030, for every dollar invested in the world, 60 cents will flow into developing countries, a dramatic change from 20 cents to the dollar in 2000. China will make up 30 percent of all investment activity, while the United States will have 11 percent and India, 7 percent.

The numbers assume the world will grow on average 2.6 percent to 3 percent a year in the next two decades, while emerging economies will grow 4.8 to 5.6 percent a year.

For a full set of assumptions and figures, see http://www. worldbank.org/CapitalForTheFuture.

As more capital flows from one developing country to another, known as South-South flows, China's yuan currency and its monetary policy will have a greater impact on the rest of the world, reducing the influence of US and euro area policies.

A richer world in 2030 will also have a greater demand for services over manufacturing, meaning countries will face pressure to reduce protectionist barriers to trade in services, the World Bank said.

But shifts in global saving may not be equally distributed in each country, warned lead report author Maurizio Bussolo - a key concern for the poverty-fighting World Bank. In most developing countries, the top segment of the population saves three to four times more than the poorest.

Governments must make an effort to level the playing field in education, which has a strong correlation with higher earnings, savings and future wealth, he said.

“So in terms of our projections, we see the increased importance of developing countries. But behind that, there is a lot of work to do, and very little time,” Bussolo said. - Reuters

Britain's top share index hit fresh five and a half year highs, as banks were buoyed by an upgrade.

London - Britain's top share index hit fresh five and a half year highs on Friday, as banks were buoyed by an upgrade, the prospect of the end of state ownership in the sector and rotation out of defensive stocks.

The FTSE 100 closed up 35.26 points, or 0.5 percent, at 6,723.06, just 0.1 percent off October 2008's closing high and marking the index's fourth successive week of gains.

Banks combined to add 18 points to the index, benefitting from an upgrade by UBS and led up by Lloyds and RBS .

The banks, which both received state help during the financial crisis, gained 3.2 and 5.7 percent respectively after Lloyds broke through the 61.2 pence level which the government regards as breakeven on its 20.5 billion pound ($31 billion) rescue.

“The prospect of both of those banks being released from the taxpayers clutches is helping sentiment in the whole area,” Mike van Dulken, head of research, said.

Friday saw a volatile day of trade as options expired mid-morning, with buying pressure to lift the index above 6,650 and 6,700 levels, where there were a lot of open “call” positions.

As a right to buy the index at a certain level, these positions would be worthless if the index was below that level when the options expired.

Options expiry has seen investors abandon hedges against falls in European indexes, and extend bets on future rises in an asset class which has rallied on the back of easy monetary policy.

Friday's session began on a weaker note after a Federal Reserve official said the central bank could begin to slow its monetary stimulus this summer.

However good US data on Friday was received well by the market, despite the possibility that it will accelerate the Fed's tapering of purchases.

“People are a bit unsure about how to read the Fed yesterday, because this whole market rally is caused by central bank intervention, and they're beginning to hint that it won't be there... but it will only be withdrawn if the economy is good,” Joe Rundle, head of trading at ETX Capital, said.

“The momentum is completely on the upside, and people are just trying to get into this market now... Any little pullback is a great opportunity to get back involved.”

On the down side, Goldman Sachs downgraded food and beverages to underweight and personal and household to neutral. These sectors combined with other defensive plays in utilities and health care to be the biggest weights on the index.

The top individual faller was miner ENRC, which slid 8 percent in afternoon trade after a report that the group's trio of founding shareholders had submitted a letter detailing an offer below 300 pence per share. - Reuters

European auto sales grew in April for the first time since September 2011, ending 18 consecutive months of decline.

Milan - European auto sales grew in April for the first time since September 2011, ending 18 consecutive months of decline, but the improvement was a technical one because of two extra work days last month, the European automaker's association said Friday.

In April, 1.038 million new cars were registered in the European Union, up from the historic low for April of 1.021 million reached in 2012, ACEA said.

In absolute terms, April 2013 sales were the third lowest recorded for the month.

The auto industry has been victim of the region's deepening recession and rising unemployment, and Europe's mass carmakers are looking to see when the bottom will hit.

Already some have raised alarms that the contraction could be greater than 5 percent that many used to base their forecasts.

Many have had to announce factory closures or put off new car launches in bids for survival.

Sales rebounded in Germany, posting a 3.8 percent gain in April after dropping by 13 percent in March.

Sales also were up in Spain, helped by new incentives, and continued strong in Britain.

France and Italy, the No. 3 and No. 4 markets, posted declines of 5.3 percent and 10.8 percent respectively. - Sapa-AP

The dollar soared against a basket of currencies, reaching a nearly three-year peak.

New York - The dollar soared on Friday against a basket of currencies, reaching a nearly three-year peak, and global equity indexes gained as speculation mounted over whether the Federal Reserve would soon begin to rein in its asset-buying program.

Wall Street advanced, with the benchmark S&P 500 rebounding from its worst decline in nearly three weeks.

European equity indexes climbed in sync with a rally in carmakers' shares, which were bolstered by signs of a revival in domestic sales.

US stocks also got a lift from a survey showing a rebound in US consumer sentiment in early May to the highest level in nearly six years as Americans felt better about their financial and economic prospects, particularly among upper income households.

The dollar's strength was largely attributed to the euro, which fell to a six-week low on market talk that the European Central Bank could introduce negative deposit rates, a move that would make banks pay to park their cash overnight with the ECB.

The dollar index, which measures its value against a basket of six major currencies, rose to 84.371, its highest in nearly three years.

Around midday in New York, the dollar index was up 0.8 percent at 84.255.

The euro fell 0.4 percent to $1.2830, while the dollar hit a 4-1/2 year high versus the Japanese yen, up 0.66 percent at 102.91.

“People are positive about the US economic recovery despite recent weak data and today's theme is mostly about the broadly strong dollar,” said Charles St-Arnaud, FX strategist at Nomura Securities.

“Meanwhile, data in the euro zone shows they remain in a recession and raised expectations the ECB will take further action is weighing on the euro,” he said.

A measure of global equity activity, MSCI's all-country world stock index, dipped 0.02 percent, pulled lower by emerging markets.

The Dow Jones industrial average was up 62.48 points, or 0.41 percent, at 15,295.70.

The Standard & Poor's 500 Index was up 8.02 points, or 0.49 percent, at 1,658.49.

The Nasdaq Composite Index was up 15.85 points, or 0.46 percent, at 3,481.10.

Among other indexes, the Russell 2000 index was up 6.96 points, or 0.71 percent, at 992.30.

The FTSEurofirst-300 index of European shares bounced off session lows to rise 0.11 percent to provisionally close at 1,246.79.

In London, the FTSE-100 index gained 0.53 percent to 6,723.06.

Gold fell for a seventh straight session, its longest losing streak in four years, driven by speculation that the Fed may soon ease its asset-purchase program to boost the economy.

Spot gold prices lost $23.69 to $1,362 an ounce.

US stocks and gold prices fell on Thursday, while the dollar rose following comments from John Williams, president of the Federal Reserve Bank of San Francisco, that the Fed could begin easing up on stimulus this summer.

Prices for US Treasuries added to losses after the Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment rose to 83.7 in early May from 76.4 last month, topping economists' expectations for 78.

The May reading was the highest level since July 2007.

The benchmark 10-year US Treasury note fell 15/32 in price to yield 1.9297 percent.

In Europe, German Bunds hit one-week highs, with traders citing talk that the ECB was checking with some banks on whether they were ready for a potential cut in its deposit rate to below zero.

German Bund futures rose as much as 43 ticks on the day to 145.74, before paring gains to trade 14 ticks higher.

Oil pared gains on concern about the strength of global demand.

Brent crude rose 13 cents to $103.91 a barrel. US crude futures rose 24 cents, or 0.25 percent, to $95.40 a barrel. - Reuters

The founding shareholders behind Kazakh miner ENRC have indicated they wish to take it private with a buyout.

London - The founding shareholders behind Kazakh miner ENRC have indicated they wish to take it private with a buyout at or below the current, depressed market price, an approach rejected by the independent directors.

ENRC's independent directors said on Friday they had received an unspecified indicative proposal from a consortium including the trio of founders - Alexander Machkevitch, Alijan Ibragimov and Pathokh Chodiev - the Kazakh government and Kazakhstan's sovereign wealth fund, which together wish to buy out the shares they do not already hold.

“We believe the current proposal materially undervalues ENRC, and we will ... seek an improved and formal proposal,” the chairman of the independent committee of the board, Mohsen Khalil, said.

The board did not, in its statement, detail the offer, but a source with knowledge of the matter told Reuters a letter received by the board on Thursday had detailed a proposal “not materially below” a market price of around 270 pence.

The source said the founders, in a letter requesting more time to formulate a bid, outlined several elements that still needed to be resolved, including an agreement between the members of the bidding consortium and final financing deals.

The board has agreed to the founders' demand for more time, asking the Takeover Panel to grant them until June 3.

The current deadline is 18:00 SA time on Friday.

ENRC's co-founders said last month they were weighing up a buyout of the miner's minority investors, with the support of the Kazakh government, which is also a major shareholder.

At the time, they were given 28 days - until May 17 - to declare a “firm intention” to bid. In the case of a cash offer, under UK rules, this stage requires suitors to lay out details of the bid including confirmation that resources are available.

Earlier this week, however, sources with knowledge of the matter said the bidders were still in the throes of hammering out the terms of financing with lenders and were also still working out a formal agreement to tie together their consortium. - Reuters

Americans felt better about their economic and financial prospects in early May.

New York - Americans felt better about their economic and financial prospects in early May as consumer sentiment rose to the highest level in nearly six years, an encouraging sign after other recent data had suggested broader US growth is cooling.

A gauge of future economic activity released on Friday also suggested the expected slowdown will be temporary, with the index rising in April to a near five-year high.

Economists expect growth will likely slow in the second quarter from the 2.5 percent pace at the beginning of the year as tighter fiscal policy starts to bite. But recent stronger than expected improvement in several areas, including the labor market and retail sales, has suggested the recovery remains resilient.

“We're still definitely on the recovery path. We expect that this is going to be a very long and gradual recovery,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

“Most economists are looking for stronger growth in the second half of the year and into next year.”

The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment rose to 83.7 from 76.4 in April, topping economists' expectations for 78.

It was the highest level since July 2007.

Economists will watch to see if the improvement will be confirmed at the end of the month with the final sentiment reading. There has been some volatility lately between the initial and final reports as government austerity takes effect, Barclays wrote.

The cheery attitudes at the beginning of the month were particularly seen among upper-income households.

More consumers gave a favourable view of their personal finances than in anytime since 2007, with the largest gains among households in the upper third of income levels. More respondents also thought the economy would continue to improve in the year ahead.

Higher earners more frequently reported having less debt and higher asset values, though consumers were still not that much more optimistic they would see higher income in the year ahead.

Upper income households are more likely to be invested and therefore reap the benefits of the stock market rally, which has taken the market to record highs this year. Since the beginning of 2013, the benchmark S&P 500 is up about 16 percent.

The rise in stocks may also be offsetting any hit to consumers following the expiration of the payroll tax holiday at the beginning of the year, which raised taxes for many Americans.

“For (upper income) people, the payroll tax and gasoline prices didn't really matter much, but stock prices and home prices rising, that's a big, big plus,” said Brown.

The barometer of current economic conditions jumped to 97.5 from 89.9, the highest since October 2007, while the gauge of consumer expectations gained to 74.8 from 67.8.

Shopping plans were similarly encouraging, with the gauge of buying attitudes for durable goods rising to 148 from 137. Consumer activity accounts for about two-thirds of the economy.

“Changes in confidence don't always filter through into changes in spending, but the omens are good,” said Amna Asaf, economist at Capital Economics.

Friday's reports gave a boost to stocks with Wall Street trading higher in the late-morning. The dollar rose against the euro and yen shortly after the data, while Treasuries prices fell further.

A separate report from the Conference Board showed its Leading Economic Index increased 0.6 percent to 95.0 last month, the highest level since June 2008. The index had slipped 0.2 percent in March.

Economists polled by Reuters had expected the index to rise only 0.2 percent in April. - Reuters

The US Federal Reserve Board said it has told Bank of Montreal to step up efforts to detect and prevent money laundering..

New York - The US Federal Reserve Board said it has told Bank of Montreal to step up efforts to detect and prevent money laundering at the Canadian bank's Chicago branch.

The warning puts Bank of Montreal in a growing category of financial institutions under pressure to do a better job of adhering to strict US requirements for identifying potentially illegal activity by their customers.

The Fed entered into a written agreement requiring Bank of Montreal to strengthen its compliance after a recent inspection by the central bank's examiners found deficiencies in Bank of Montreal's anti-money laundering program. The Fed made the agreement public on Friday.

A spokeswoman for the Fed declined to describe the problems it found, saying its policy prohibits discussion of specific institutions.

“Our remediation activities are well underway,” said BMO spokesman Paul Deegan. “BMO is fully committed to the highest standards of regulatory compliance with Bank Secrecy Act/Anti-Money Laundering requirements and expectations in each of the jurisdictions in which we operate.”

The agreement said the Fed found Bank of Montreal's Chicago branch “lacked effective systems of governance and internal controls to adequately oversee the activities of Bank of Montreal's US operations with respect to legal, compliance, and reputational risks.”

Banks operating in the United States, whether they are American or foreign, must closely monitor customer activity for signs of money laundering or other illegal acts. They must report unusual behaviour in the form of “suspicious activity reports” to the US Treasury Department.

The Treasury uses the reports - sharing them with the Federal Bureau of Investigation and other law enforcement agencies - to help track down criminals and terrorists.

The US Treasury is currently building a system to more broadly share the banks' reports with US spy agencies as well.

The anti-money laundering rules were first defined by the Bank Secrecy Act and later strengthened by the USA Patriot Act after the attacks of Sept. 11, 2001.

Scrutiny of these programs may get tougher this year, according to an April 5 note by Fitch.

Citing heavy fines the US levied against HSBC and Standard Chartered for lapses in anti-money laundering controls last year, Fitch analysts predicted banks could spend more this year on anti-money laundering compliance.

“For customers of affected banks, tougher AML scrutiny will likely lead to longer transaction times, increased documentation requirements, and potentially higher fees,” the analysts wrote.

JPMorgan Chase & Co and Citigroup have also run into trouble recently with anti-money laundering requirements. JPMorgan is under fire from another regulator, the Office of the Comptroller of the Currency, which expected to issue a “cease-and-desist” order - a more serious citation than the Fed's warning to Bank of Montreal - in the coming months.

The Fed told Citi in March to improve its money-laundering monitoring program. - Reuters

South African stocks ended slightly lower, snapping a four-day winning streak.

Johannesburg - South African stocks ended slightly lower on Friday, snapping a four-day winning streak that took the market to new peaks as technical factors weighed and investors turned their attention to next week's central bank meeting in Pretoria.

Bucking the reversal were shares in Allied Technologies Limited (Altech), which soared 30 percent to 44.60 rand after minority shareholders received a buy-out offer from Allied Electronics (Altron) for 47.50 rand a share.

Johannesburg's Top-40 index ended 0.04 percent lower at 36,771.80 and the wider All-share index was 0.03 percent down at 41,413.44. Both indices hit life-time highs earlier in the session.

Both have also moved into overbought territory on the charts, according to momentum indicators followed by technical analysts, suggesting there could be more pull-back next week.

Globally, investors remain hungry for equities and South Africa's market has been carried on that wave.

European shares lifted off lows on Friday while the dollar held near a 10-month high against a basket of currencies as investors considered the prospect the Federal Reserve might begin easing off on asset buying.

“Equities are the only play in town for investors and even if the Fed becomes less accommodative after the summer, the central banks will still be supportive and interest rates are still low,” said Geoffroy Goenen, head of thematic European equity management at Dexia Asset Management.

On the domestic front, attention will turn to next week's meeting of the South African central bank's Monetary Policy Committee.

Most market players expect it to keep rates steady at four-decade lows.

Faint hopes of a cut may be dashed by this week's performance by the rand, which tumbled to four-year lows against the dollar as labour strife returned to the mining sector. - Reuters

Union rivalry is the key source of instability at SA mines and labour groups should work with companies to resolve disputes.

Johannesburg - Union rivalry is the main source of instability at South African mines and labour groups should work with companies to resolve disputes, said Cyril Ramaphosa, the deputy president of the ruling African National Congress.

At Lonmin, members of the Association of Mineworkers and Construction Union, which represents the most miners at the company, held a two-day strike demanding the closure of a smaller organisation office at the Marikana operation.

Anglo American Platinum employees threatened to strike over its proposal to cut as many as 6,000 jobs as part of a plan to return to profitability.

Ramaphosa has “full confidence” in the departments of mineral resources and labour, which are acting “behind the scenes” to resolve the disputes, he said on Johannesburg-based Talk Radio 702.

The “situation is quite volatile,” he said.

Ramaphosa, who founded the National Union of Mineworkers in 1982 and went on to lead the biggest strike in the gold industry five years later, is now the richest black South African after Patrice Motsepe, according to the Johannesburg-based Sunday Times.

The NUM used to be the biggest representative of employees at platinum mines.

Mines owned by Amplats, as the Johannesburg-based unit of Anglo American is known, are running as usual after a group of workers threatened to strike if the world’s biggest producer of the metal refuses to drop proposals to cut as many as 6,000 jobs, spokeswoman Mpumi Sithole said by phone.

Informal Talks

The company last week pared back plans to cut as many as 14,000 jobs announced on January 15 as it seeks to return to profit.

While leaders of unions representing about three- quarters of Amplats workers have asked employees not to strike, some miners have said they will stay away should the company not abandon the job cuts.

Amplats, unions and government are holding informal talks that may result in fewer job cuts, Franz Stehring, the UASA union’s divisional head for mining, said by phone.

“It’s very positive in terms of more jobs saved,” Stehring said. “We can’t strike because it would be illegal and disrupt the process.”

Producers in South Africa, which has the biggest known reserves of platinum, are struggling with higher costs as strikes drive above-inflation wage increases at a time of waning platinum demand. Mining companies and the government are trying to resolve disputes between unions to restore confidence in the industry and help operations return to profit.The AMCU is the biggest representative of Amplats workers at 41 percent.

No Strike

“We have said time and again that we as AMCU haven’t called any strike at Anglo American Platinum and we are not intending to do so if the strike is illegal,” Treasurer Jimmy Gama said by phone. “We will do everything possible within the ambit of the Labour Relations Act to protect job losses for our members.”

Evans Ramokga, an AMCU member, told Johannesburg-based SAFM radio that a group of workers at a Khomanani mine, one of three that Amplats may close as part of its restructuring plan, will strike if the company doesn’t find an alternative to job losses. Ramokga said he was representing a group of employees that’s not recognised in labour structures.

Any worker representative speaking as an individual “doesn’t reflect the views of AMCU,” Gama said. Disciplining members is a decision of the national executive committee, which will look at the “intent that member has made in putting the name of the organisation into disrepute,” he said.

Can’t Join

Amplats chief executive Chris Griffith on May 10 said the company would take the revised plan to unions, and expects to conclude consultations in two to three months.

“We expect a report today,” Gama said.

The National Union of Mineworkers, which has fallen from being the largest employee representative at Amplats and now has about 35 percent of the workforce, said a committee of workers at the company asked it to support a wildcat strike. Such committees at Amplats and other mining companies consist of both union members and staff who aren’t affiliated to labour groups.

“They have asked us to join, but we can’t do something like that,” NUM spokesman Lesiba Seshoka said by phone yesterday.

Workers in South Africa may strike legally, with their jobs protected, if an independent mediator agrees to a stoppage and after talks between unions and companies fail.

‘Economy Standstill’

The AMCU is writing a “last letter” to President Jacob Zuma’s office seeking a meeting to talk about the situation in Rustenburg, Reuters reported, citing the union’s president, Joseph Mathunjwa. The union “will bring the economy to a standstill,” it said.

Amplats advanced for the first day in six in Johannesburg trading, climbing 1.2 percent to 289.34 rand by the close after reaching the lowest since August 2005 yesterday.

The rand slipped 0.8 percent to 9.3988 per dollar, the weakest level in four years.

At the company’s Tumela mine in the northernmost Limpopo province, workers who had refused to go above ground returned to the surface by last night and were checked by medical staff, Sithole said.

Production was unaffected, she said. - Bloomberg News