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Markets

World stocks clamber off 18-month lows, but markets on recession watch

 

  • S&P futures up 1.13%, European stocks gain 0.96%
  • MSCI Asia ex-Japan +1.8%, Nikkei +2.64%
  • Worries over inflation, tightening policy remain
  • Dollar hovers near 20-year highs on safe-haven demand

LONDON/SHANGHAI, May 13 (Reuters) – World stocks rose from the previous day’s 18-month lows and the dollar pulled back from 20-year highs on Friday, though investors remained nervous about high inflation and the impact of rising interest rates.

Markets are becoming anxious about the possibility of recession, with the S&P getting close to a bear market on Thursday, at nearly 20% off its January all-time high.

In an interview late on Thursday, US Federal Reserve Chair Jerome Powell said the battle to control inflation would “include some pain.” Powell repeated his expectation of half-percentage-point interest rate rises at each of the Fed’s next two policy meetings, while pleading that “we’re prepared to do more.” read more

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The war in Ukraine has aggravated supply chain disruptions and inflationary pressures already in place after more than two years of the COVID-19 pandemic, but stocks enjoyed a bounce on Friday.

“There’s an awful lot of negative sentiment out there, we’re looking at a 40% chance of recession,” said Patrick Spencer, vice chairman of equities at Baird Investment Bank.

“A lot of fund managers have cut their equity allocations and raised cash, though we think this is a correction rather than a bear market.”

MSCI’s world equity index (.MIWD00000PUS) rose 0.32% after hitting its lowest since November 2020 on Thursday, though it was heading for a 4% fall on the week, its sixth straight week of losses.

S&P futures bounced 1.13% after the S&P index dropped 0.13% overnight, with the index also eyeing a sixth straight week of declines.

S&P 500 set for a sixth straight week of falls

European stocks (.STOXX) rallied 0.96% and Britain’s FTSE 100 (.FTSE) gained 1.17%.

The US dollar eased 0.22% to 104.54 against a basket of currencies, but remained close to 20-year highs due to safe haven demand.

Russia has bristled over Finland’s plan to apply for NATO membership, with Sweden potentially following suit.

Moscow called Finland’s announcement hostile and threatened retaliation, including unspecified “military-technical” measures. read more

The dollar rose 0.36% to 128.76 yen , while the euro gained 0.3% to $1.0408, recovering from Thursday’s five-year lows.

Cryptocurrency bitcoin also turned higher, cracking through $30,000 after the collapse of TerraUSD, a so-called stablecoin, drove it to a 16-month low of around $25,400 on Thursday. read more

“Some traders may see the sharp fall this month as an opportunity to buy the dip, but given the hugely volatile nature of the coins, the crypto house of cards could tumble further,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown .

The moves higher in equities were mirrored in US Treasuries, with the benchmark US 10-year yield edging up to 2.9221% from a close of 2.817% on Thursday.

The policy-sensitive 2-year yield was at 2.6006%, up from a close of 2.522%.

“Within the shape of the US Treasury curve we are not seeing any particularly fresh recession/slowdown signal, just the same consistent marked slowing earmarked for H2 2023,” Alan Ruskin, macro strategist at Deutsche Bank, said in a note.

German 10-year government bond yields edged up to 0.9250%.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was up almost 2% from Thursday’s 22-month closing low, trimming its losses for the week to less than 3%.

Australian shares (.AXJO) gained 1.93%, while Japan’s Nikkei stock index (.N225) jumped 2.64%.

In China, the blue-chip CSI300 index (.CSI300) was up 0.75% and Hong Kong’s Hang Seng (.HSI) rose 2.71%, encouraged by comments from Shangahi’s deputy mayor that the city may be able to start easing some tough COVID restrictions this month. read more

“We had some pretty big moves yesterday, and when you see those big moves it’s only natural to get some retracement, especially since it’s Friday heading into the weekend. There’s not really a new narrative that’s come through,” said Matt Simpson, senior market analyst at City Index.

Oil prices were higher against the backdrop of a pending European Union ban on Russian oil, but were still set for their first weekly loss in three weeks, hit by concerns about inflation and China’s lockdowns slowing global growth.

US crude rose 0.75% to $106.97 a barrel, and global benchmark Brent crude was up 1.05% at $108.58 per barrel.

Spot gold , which had been driven to a three-month low by the soaring dollar, was up 0.2% at $1,824.61 per ounce.

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Reporting by Andrew Galbraith; Editing by Simon Cameron-Moore, Lincoln Feast and Kim Coghill

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Internet

US joins 55 nations to set new global rules for the internet

WASHINGTON, April 28 (Reuters) – The United States and 55 other nations on Thursday signed a political commitment to push rules for the internet that are underpinned by democratic values, at a time when the US has accused Russia of wielding internet disruptions as a part of its escalating attacks on Ukraine.

The commitment, called the “Declaration for the Future of the Internet” – the first such effort of its kind – protects human rights, promotes free flow of information, protects the privacy of users, and sets rules for a growing global digital economy among steps to counter what two Biden administration officials called a “dangerous new model” of internet policy from countries such as Russia and China.

The United States is witnessing a global trend of rising digital authoritarianism, with countries such as Russia having acted to repress freedom of expression, censor independent news sites, interfere with elections, promote disinformation, and deny their citizens other human rights, the officials said.

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“Look at what…Russia is doing, some of the steps China is taking, and I think we see this as a response to these kind of ‘splinternet’ tendencies by a number of authoritarian countries around the world,” one of the officials said, referring to a characterization of the internet as splintering and dividing due to various factors, such as politics.

Since its invasion of Ukraine, Russia has launched cyberattacks, including hacking into a satellite internet provider’s network at the beginning of the invasion. The administration officials said the new effort is not an attempt to address cyber warfare.

The declaration is a modified version of the White House’s efforts from last year to rally a coalition of democracies around a vision for an open and free web.

The countries joining the US include Australia, Argentina, Belgium, Canada, Denmark, Georgia, Germany, Greece, Israel, Italy, Japan, Netherlands, the United Kingdom and Ukraine.

The effort will be launched virtually at the White House on Thursday by Biden’s national security adviser, Jake Sullivan, at 7:30 am ET (1130 GMT).

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Reporting by Nandita Bose in Washington; Editing by Leslie Adler

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Business

Siemens to leave Russia due to Ukraine war, take hefty charge

  • Siemens to leave Russia after 170 years
  • Russia makes up around 1% of total revenues
  • Shares fall after earnings miss
  • CEO condemns the war in Ukraine

ZURICH, May 12 (Reuters) – Siemens (SIEGn.DE) will quit the Russian market due to the war in Ukraine, it said on Thursday, taking a 600 million euro ($630 million) hit to its business during the second quarter, with more costs to eat.

The German industrial and technology group became the latest multinational to announce losses linked to its decision to leave Russia following the Feb. 24 invasion, which Moscow calls a “special military operation”.

Several companies, from brewers Anheuser-Busch InBev (ABI.BR) and Carlsberg to sportswear maker Adidas (ADSGn.DE), carmaker Renault and several banks have been counting the cost of suspending operations in or withdrawing from Russia. read more

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Siemens Chief Executive Roland Busch described the conflict as a “turning point in history.”

“We, as a company, have clearly and strongly condemned this war,” Busch told reporters.

“We’re all moved by the war as human beings. And financial figures must take a back seat in the face of the tragedy. Nevertheless, like many other companies, we’re feeling the impact on our business.”

During the second quarter Siemens incurred 600 million euros in impairment and other charges mostly recorded in its train-making mobility business subsequent to sanctions on Russia, Siemens said.

Busch said further impacts were to be expected, mainly from non-cash charges related to the winding-down of legal entities, revaluation of financial assets and restructuring costs.

“From today’s perspective, we foresee further potential risks for net income in the low- to mid-triple-digit million range, although we can’t define an exact timeframe,” he added.

Siemens shares dropped 5% in early trading as the company missed analysts’ expectations for second-quarter profit.

The Munich company employs 3,000 people in Russia, where it has been active for 170 years. It first went to Russia in 1851 to deliver devices for the telegraph line between Moscow and St Petersburg.

The country now contributes about 1% of Siemens’ annual revenue, with most of the present day business concerned with maintenance and service work on high-speed trains.

Its sites in Moscow and St Petersburg are now being ramped down, Busch said.

The costs weighed on Siemens’ second quarter earnings, with net income halved to 1.21 billion euros ($1.27 billion), missing analysts’ forecasts of 1.73 billion.

The company posted industrial profit of 1.78 billion euros, down 13% from a year earlier and also missing forecasts.

But demand stayed robust, with orders 22% higher on a comparable basis and revenue 7% higher.

As a result it confirmed its full-year outlook, with comparable revenue growth of 6% to 8% for the full year, with a downturn in mobility expected to be compensated by faster growth in factory automation and digital buildings.

JP Morgan analyst Andreas Willi described the results as “mixed with strong orders, industry leading growth in automation and strong cash conversion.”

($1=0.9508 euros)

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Reporting by John Revill; Editing by Kim Coghill and Clarence Fernandez

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Categories
Business

Stocks in a tailspin, dollar soars as hard landing fears grow

A broker reacts while trading at his computer terminal at a stock brokerage firm in Mumbai, India, February 1, 2020. REUTERS/Francis Mascarenhas

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  • World stocks drop to 1-1/2 yr low, down almost 20% YTD
  • Europe opens down 2% US equity futures struggle
  • Dollar hits 2yr highs on AUD, NZD
  • Bitcoin tumbling, hits new 16-month low
  • Copper buckles to lowest since October

LONDON, May 12 (Reuters) – Shares sank to a 1-1/2 year low on Thursday and the dollar hit its highest in two decades, as fears grew that fast-rising inflation will drive a sharp rise in interest rates that brings the global economy to a standstill.

Those nerves and the still-escalating war in Ukraine took Europe’s main markets down more than 2% in early trade and left MSCI’s top index of world shares (.MIWD00000PUS) at its lowest since late 2020 and down nearly 20% for the year.

The global growth-sensitive Australian and New Zealand dollars fell about 0.8% to almost two-year lows. The Chinese yuan slid to a 19-month trough while the dollar powered to its highest level since late 2002.

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Nearly all the main volatility gauges were signaling danger. Bitcoin was caught in the fire-sale of risky crypto assets as it fell another 8% to $26,570, having been near $40,000 just a week ago and almost $70,000 just last November.

“We have had big moves,” UBS’s UK Chief Investment Officer Caroline Simmons, said referring as well to bond markets and economic expectations. “And when the market falls it does tend to fall quite fast.”

Data on Wednesday had shown US inflation running persistently hot. Headline consumer prices rose 8.3% in April year-on-year, fractionally slower than the 8.5% pace of March, but still above economists’ forecasts for 8.1%. read more

US markets had whipsawed after the news, closing sharply lower, and futures prices were pointing to another round of 0.2%-0.7% falls for the S&P 500, Nasdaq and Dow Jones Industrial later.

“We’re now very much embedded with at least two further (US) hikes of 50 basis points on the agenda,” said Damian Rooney, director of institutional sales at Argonaut in Perth.

“I think we were probably delusional six months ago with the rise of US equities on hopes and prayers and the madness of the meme stocks,” he added.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 2.3% to a 22-month low overnight. Japan’s Nikkei (.N225) fell 1.8%.

Treasuries were bid in both Europe and Asia, especially at the long end, flattening the yield curve as investors braced for near-term hikes to hurt long-run growth – an outcome that would most likely slow or even reverse rate hikes.

The benchmark 10-year Treasury yield had dropped in the US and fell a further 7 bps to 2.8569% on Thursday. The gap between the highly rate-rise sensitive two-year yields and 10-year ones narrowed 4.2 bps .

In Europe, Germany’s 10-year yield, the benchmark for the bloc, fell as much as 12 bps to 0.875%, its lowest in nearly two weeks.

“I think a lot of it is catch up from what happened yesterday, and also there’s still a lot of negative sentiment in the US Treasury curve,” said Lyn Graham-Taylor, senior rates strategist at Rabobank.

SELL IN MAY

The rates outlook is driving up the US dollar and taking the heaviest toll on riskier assets that shot up through two years of stimulus and low-rate lending.

The Nasdaq (.IXIC) is down nearly 8% in May so far and more than 25% this year. Hong Kong’s Hang Seng Tech index (.HSTECH) slid 1.5% on Thursday and is off more than 30% this year.

Cryptocurrency markets are also melting down, with the collapse of the so-called TerraUSD stablecoin highlighting the turmoil as well as the selling in bitcoin and next-biggest-crypto, ether. read more

A weakening growth picture outside the United States is battering investor confidence, too, as war in Ukraine threatens an energy crisis in Europe and lengthening COVID-19 lockdowns in China throw another spanner into supply chain chaos.

Nomura estimated this week that 41 Chinese cities are in full or partial lockdowns, making up 30% of the country’s GDP.

Heavyweight property developer Sunac (1918.HK) said it missed a bond interest payment and will miss more as China’s real estate sector remains in the grip of a credit crunch. read more

The yuan fell to a 19-month low of 6.7631 and has dropped almost 6% in under a month.

The Australian dollar fell 0.8% to a near two-year low of $0.6879. The kiwi slid by a similar margin to $0.6240, though the euro and yen held steady to keep the dollar index just shy of a two-decade peak.

Sterling was at a two-year low of just under $1.22 as well as economic data there caused worries and concerns grew that Britain’s Brexit deal with the EU was in danger of unraveling again due to the same old problem of Northern Ireland’s border. read more

In commodity trade, oil wound back a bit of Wednesday’s surge on growth worries.

Brent crude futures fell 2.3% to $104.93 a barrel, while highly growth-sensitive metals copper and tin slumped over 3.5% and 9% respectively. That marked copper’s lowest level since October.

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Additional reporting by Tom Westbrook in Singapore; Editing by Kim Coghill

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Categories
Business

EXCLUSIVE Google paying more than 300 EU publishers for news, more to come

BRUSSELS, May 11 (Reuters) – Alphabet (GOOGL.O) unit Google has signed deals to pay more than 300 publishers in Germany, France and four other EU countries for their news and will roll out a tool to make it easier for others to sign up too, the company told Reuters.

The move to be announced publicly later on Wednesday followed the adoption of landmark EU copyright rules three years ago that require Google and other online platforms to pay musicians, performers, authors, news publishers and journalists for using their work.

News publishers, among Google’s fiercest critics, have long urged governments to ensure online platforms pay fair remuneration for their content. Australia last year made such payments mandatory while Canada introduced similar legislation last month. read more

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“So far, we have agreements which cover more than 300 national, local and specialist news publications in Germany, Hungary, France, Austria, the Netherlands and Ireland, with many more discussions ongoing,” Sulina Connal, director for news and publishing partnerships, said in blogpost seen by Reuters and expected to be published later on Wednesday. The blog did not say how much publishers were being paid.

Two-thirds of this group are German publishers including Der Spiegel, Die Zeit and Frankfurter Allgemeine Zeitung.

“We are now announcing the launch of a new tool to make offers to thousands more news publishers, starting in Germany and Hungary, and rolling out to other EU countries over the coming months,” Connal said in the blogpost.

The tool offers publishers an extended news preview agreement that allows Google to show snippets and thumbnails for a licensing fee.

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Reporting by Foo Yun Chee; Editing by Lisa Shumaker

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Economy

Why are food prices going up? Key questions answered

Elena Rodriguez cuts vegetables in the soup kitchen where she works in Pamplona Alta, a low-income neighborhood on the outskirts of the Peruvian capital where soaring food prices are placing animal proteins out of reach for the most vulnerable residents, in Lima, Peru April 11 , 2022. REUTERS/Daniel Becerril

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CHICAGO, May 10 (Reuters) – Why are food prices rising?

Global food prices started to rise in mid-2020 when businesses shut down due to the COVID-19 pandemic, straining supply chains. Farmers dumped out milk and let fruits and vegetables rot due to a lack of available truckers to transport goods to supermarkets, where prices spiked as consumers stockpiled food. A shortage of migrant labor as lockdowns restricted movement impacted crops worldwide.

Since then, there have been problems with key crops in many parts of the world. Brazil, the world’s top soybean exporter, suffered from severe drought in 2021. China’s wheat crop has been among the worst ever this year. Concerns about food security, heightened during the pandemic, have led some countries to hoard staples to ward off future shortages, limiting supplies on the global market.

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Russia’s invasion of Ukraine in late February dramatically worsened the outlook for food prices. The UN food agency said prices hit an all-time record in February and again in March. Russia and Ukraine account for nearly a third of global wheat and barley, and two-thirds of the world’s export of sunflower oil used for cooking. Ukraine is the world’s No. 4 corn exporter. The conflict has damaged Ukraine’s ports and agricultural infrastructure and that is likely to limit the country’s agricultural production for years.

Some buyers are avoiding buying grains from Russia due to Western sanctions.

Indonesia banned most exports of palm oil in late April to ensure domestic supplies of cooking oil, cutting off supplies from the world’s largest producer of the edible oil used in everything from cakes to margarine. read more

What food prices are rising the most?

Throughout the pandemic, high vegetable oil prices have helped drive up broader food costs. Cereal prices also hit a record in March, a result of limited shipments of corn and wheat during the Ukraine war. read more

Dairy and meat prices reached a record in April, according to the UN food agency, reflecting continually increasing global demand for protein and high prices for animal feed – mainly corn and soybeans. In addition, bird flu in Europe and North America impacted egg and poultry prices. read more

In US inflation data for March, the index for meats, poultry, fish and eggs increased 14% from a year ago while beef rose 16%.

When will food prices come down?

It is hard to say, given that agricultural production depends on hard-to-predict factors like weather. UN Secretary-General Antonio Guterres said in early May the problem of global food security could not be solved without restoring Ukrainian agricultural production and Russian food and fertilizer output to the world market. read more

The World Bank forecasts wheat prices could rise more than 40% in 2022. The Bank expects agricultural prices to fall in 2023 versus 2022. But that depends on increased crop supplies from Argentina, Brazil and the United States – by no means guaranteed.

The sharp rise in fertilizer prices, as avoid buying from major producers Russia and its ally Belarus, could discourage countries farmers from applying adequate crop nutrients to their fields. That could bring down yields and result in lower production, prolonging the crisis. As the climate warms, extreme weather is becoming more common – posing another risk to crop production. read more

Who is most affected?

Food prices in March accounted for the greatest share of US inflation since 1981, according to Fitch Ratings, while shop prices in Britain emerged in April at the fastest rate in more than a decade. But the people most impacted by higher food prices live in the developing world, where a larger percentage of incomes is spent on food.

The Global Network Against Food Crises, set up by the United Nations and the European Union, said in an annual report that Russia’s invasion of Ukraine poses serious risks to global food security, especially in countries facing a food crisis including Afghanistan, Ethiopia, Haiti, Somalia, South Sudan, Syria and Yemen. read more

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Reporting by Caroline Stauffer in Chicago Editing by Matthew Lewis

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Categories
Business

Tesla exports first cars from Shanghai since reopening plant – average

A Tesla sign is seen at its factory in Shanghai, China, May 13, 2021. REUTERS/Aly Song

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SHANGHAI, May 11 (Reuters) – Tesla Inc (TSLA.O) on Wednesday made its first exports from China since reopening its Shanghai factory on April 19, as a shipment of 4,767 cars left for Slovenia, the government-backed media outlet Shanghai Observer reported.

The Glovis Splendor vehicle carrier left port early on Wednesday, bound for the Slovenian port of Koper, according to the Shanghai-based news outlet.

“Tesla was in a big hurry to load cars freshly off the production lines onto the vessel yesterday afternoon,” Shanghai Observer said, citing a customs official.

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Tesla has also arranged for 4,100 cars to be shipped on Friday, it said, adding that the automaker aims to export 300,000 cars from Shanghai in 2022.

Tesla did not immediately respond to a Reuters request for comment.

The shipment reflects Tesla’s efforts to return operations to normal levels at its Shanghai plant, which makes Model 3 and Model Y for sale in China and for export.

Tesla did not export any China-made Model 3s or Model Ys from the Shanghai plant in April, the China Passenger Car Association said on Tuesday, as China’s zero-COVID-19 policies disrupted production and deliveries.

The company’s sales in China slumped 98% in April from a month earlier, the data also showed.

The factory’s April 19 reopening was carried out with the help of the Shanghai government and widely covered by Chinese state media. It was held up as an example of how the city is trying to keep business open while pursuing a tough COVID policy.

Tesla manufactured 10,757 cars at its Shanghai plant from its reopening on April 19 to April 30, and had set a target to achieve a daily output of 2,600 vehicles a day from May 16, Reuters reported previously. read more

Factories in Shanghai that are trying to return to full swing have had their efforts complicated by authorities in the city tightening a lockdown to stamp out outbreaks of COVID-19.

Tesla’s plant was running well below capacity earlier this week due to logistical and supply line issues.

read more

(This story refiles to fix the spelling of Glovis Splendor in paragraph 2)

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Reporting by Zhang Yan, and Brenda Goh; Editing by Christopher Cushing, Jacqueline Wong & Simon Cameron-Moore

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Economy

Four Russian governors resign as sanctions bite

A general view shows the city center and Stalin-era skyscrapers in Moscow, Russia May 18, 2020. REUTERS/Maxim Shemetov

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May 10 (Reuters) – Four Russian regional governors resigned on Tuesday as the country braces for the impact of economic sanctions.

The heads of the Tomsk, Saratov, Kirov and Mari El regions announced their immediate departures from office, while the head of Ryazan region said he would not run for another term.

Elections are scheduled to take place in all five regions in September.

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Though Russian regional governors are elected, they are politically subordinate to the Kremlin. Several of the outgoing governors represent regions where the ruling bloc United Russia took weak vote shares in parliamentary elections last year.

Unpopular governors are regularly removed from office, often submitting their resignations in clusters in the spring months.

Ilya Grashchenkov, head of the Center for the Development of Regional Politics think tank in Moscow, said the Kremlin was removing weak governors amid a worsening economic outlook for the country, driven by Western sanctions.

Grashchenkov said: “There’s a need to restructure the economy, especially in those regions where Western economic influence had been significant. These governors need to be replaced by younger alternatives.”

The Russian economy is set to contract by 8.8% in 2022, the economy ministry has said. read more

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Reporting by Reuters; Editing by Alison Williams

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Internet

Russia downed satellite internet in Ukraine -Western officials

  • US: Russian hack aimed at disrupting Ukrainian communications
  • UK: Hack was ‘deliberate and malicious’
  • EU: Attack on Viasat caused ‘indiscriminate’ outages
  • Russia routinely denies it carries out cyberattacks

NEWPORT, Wales, May 10 (Reuters) – Russia was behind a massive cyberattack against a satellite internet network which took tens of thousands of modems offline at the onset of Russia-Ukraine war, the United States, Britain, Canada, Estonia and the European Union said on Tuesday.

The digital assault against Viasat’s (VSAT.O) KA-SAT network in late February took place just as Russian armor pushed into Ukraine. US Secretary of State Antony Blinken said the cyberattack was intended “to disrupt Ukrainian command and control during the invasion, and those actions had spillover impacts into other European countries.”

British Foreign Secretary Liz Truss called the satellite internet hack “deliberate and malicious” and the Council of the EU said it caused “indiscriminate communication outages” in Ukraine and several EU member states.

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The Viasat outage remains the most publicly visible cyberattack carried out since Russia’s invasion of Ukraine, in part because the hack had immediate knock-on consequences for satellite internet users across Europe and because the crippled modems often had to be replaced manually.

“After those modems were knocked offline it wasn’t like you unplug them and plug them back in and reboot and they come back,” the US National Security Agency’s Director of Cybersecurity Rob Joyce told Reuters on the sidelines of a cybersecurity conference on Tuesday.

“They were down and down hard; they had to go back to the factory to be swapped out.”

The precise consequences of the hack on the Ukrainian battlefield have not been made public, but government contracts reviewed by Reuters show that KA-SAT has provided internet connectivity to Ukrainian military and police units. read more

The satellite modem sabotage caused a “huge loss in communications in the very beginning of war,” Ukrainian cybersecurity official Victor Zhora said in March. read more

In a statement, Ukraine’s State Service of Special Communications and Information Protection said that Russia “is an aggressor country attacking Ukraine not only on our land, but in cyberspace too.”

The Russian Embassy in Washington did not immediately return a message seeking comment. Moscow routinely denies it carries out offensive cyber operations.

Viasat said in a statement that it “recognized” the announcement and would continue to work with government officials to investigate the hack. The company did not provide an update on a Viasat official’s comments to Reuters in late March that the hackers were still trying to interfere with the company’s operations, albeit to limited effect. L2N2VW2XC

The satellite modem-wrecking cyberattack remains the most visible hack of the war, but many others have taken place since and not all of them have been made public. read more

“That was the biggest single event,” said Joyce. “It certainly had new and novel tradecraft, but there have been multiple attacks.”

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Reporting by James Pearson. Writing by Raphael Satter; Additional reporting by William James in London; Editing by William Maclean, Angus MacSwan, Bernadette Baum and David Gregorio

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Economy

Ukraine to halt key Russian gas transit to Europe, blames Moscow

Gas pipelines are pictured at the Atamanskaya compressor station, facility of Gazprom’s Power Of Siberia project outside the far eastern town of Svobodny, in Amur region, Russia November 29, 2019. REUTERS/Maxim Shemetov.

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KYIV/LONDON, May 10 (Reuters) – Ukraine said on Tuesday it would suspend the flow of gas through a transit point which it said delivers almost a third of the fuel piped from Russia to Europe through Ukraine, blaming Moscow for the move and saying it would move the flows elsewhere.

Ukraine has remained a major transit route for Russian gas to Europe even after Moscow’s invasion.

GTSOU, which operates Ukraine’s gas system, said it would stop shipments via the Sokhranivka route from Wednesday, declaring “force majeure”, a clause invoked when a business is hit by something beyond its control.

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But Gazprom (GAZP.MM), which has a monopoly on Russian gas exports by pipeline, said it was “technologically impossible” to shift all volumes to the Sudzha interconnection point further west, as GTSOU proposed.

GTSOU CEO Sergiy Makogon told Reuters that Russian occupying forces had started taking gas transiting through Ukraine and sending it to two Russia-backed separatist regions in the country’s east. He did not cite evidence.

The company said it could not operate at the Novopskov gas compressor station due to “the interference of the occupying forces in technical processes”, adding it could temporarily shift the affected flow to the Sudzha physical interconnection point located in territory controlled by Ukraine.

Ukraine’s suspension of Russian natural gas flows through the Sokhranivka route should not have an impact on the domestic Ukrainian market, state energy firm Naftogaz head Yuriy Vitrenko told Reuters.

The state gas company in Moldova, a small nation on Ukraine’s western border, said it had not received any notice from GTSOU or Gazprom that supplies would be interrupted.

The Novopskov compressor station in the Luhansk region of eastern Ukraine has been occupied by Russian forces and separatist fighters since soon after Moscow began what it describes as a “special military operation” in February. read more

It is the first compressor in the Ukraine gas transit system in the Luhansk region, the transit route for around 32.6 million cubic meters of gas a day, or a third of the Russian gas which is piped to Europe through Ukraine, GTSOU said.

GTSOU said that in order to fulfill its “transit obligations to European partners in full” it would “temporarily transfer unavailable capacity” to the Sudzha interconnection point.

Gazprom said it had received notification from Ukraine that the country would stop the transit of gas to Europe via the Sokhranivka interconnector from 0700 local time on Wednesday.

The Russian company said it saw no proof of force majeure or obstacles to continuing as before. Gazprom added that it was meeting all obligations to buyers of gas in Europe.

The United States has urged countries to lessen their dependence on Russian energy and has banned Russian oil and other energy imports in retaliation for the invasion of Ukraine.

US State Department spokesperson Ned Price said Tuesday’s announcement does not change the timeline to lessen global dependence on Russian oil “as soon as possible.”

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Reporting by Susanna Twidale and Pavel Polityuk; additional reporting by Nina Chestney in London, Daphne Psaledakis in Washington and and David Ljunggren in Ottawa; Editing by Alexander Smith, Cynthia Osterman and Rosalba O’Brien

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