Business

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. employers likely continued to hire workers at a strong clip in August while steadily raising wages, signs of persistent labor market strength that could encourage the Federal Reserve to deliver a third 75 basis point interest rate hike this month.

The Labor Department’s closely watched employment report on Friday would come a week after Fed Chair Jerome Powell warned Americans of a painful period of slow economic growth and possibly rising unemployment as the U.S. central bank aggressively tightens monetary policy to quell inflation.

The anticipated solid job growth last month would be further evidence the economy continues to expand even as gross domestic product contracted in the first half of the year. It is also a sign the Fed still needs to cool the labor market despite the front loading of rate hikes.

“If we’re still talking about job growth of 300,000, and an unemployment rate of around three-and-a-half, or 3.6%, I think the Fed really thinks that the labor market can absorb more aggressive tightening,” said Will Compernolle, a senior economist at FHN Financial in New York. “We’re pretty far from any pain as far as the labor market is concerned.”

Nonfarm payrolls likely increased by 300,000 jobs last month after surging 528,000 in July, according to a Reuters survey of economists. That would mark the 20th straight month of job growth. While that would be the smallest increase in 16 months, it would still be way above the pre-pandemic average.

Estimates for payrolls growth ranged from as low as 75,000 to as high 450,000. The unemployment rate was forecast unchanged at a pre-pandemic low of 3.5%.

Despite the uncertain economic outlook, demand for labor remains strong. There were 11.2 million job openings on the last day of July, with two job openings for every unemployed person.

First-time applications for unemployment benefits remain low and the Institute for Supply Management’s measure of factory employment rebounded in August after three straight monthly declines. Comments from factories surveyed by ISM showed they “continued to hire at strong rates in August, with few indications of layoffs, hiring freezes or head-count reductions through attrition.”

WORKER HOARDING

But the response rate to the Labor Department’s establishment survey, from which the nonfarm payrolls count is derived, has historically tended to be low in August, resulting in initial job gains arriving below expectations.

“Over the past five years the average upward revision between the first and third estimates is nearly 120,000,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

“Another factor is that July job growth got juiced by an additional week between payroll reference periods. Therefore, some hiring that would normally have occurred in late July or early August may have been pulled forward.”

The government surveys businesses for payrolls during the week that includes the 12th of the month. The Fed has twice raised its policy rate by three-quarters of a percentage point, in June and July. Since March, it has lifted that rate from near zero to its current range of 2.25% to 2.50%.

Financial markets are pricing a roughly 78% probability of a 75 basis point increase at the Fed’s Sept. 20-21 policy meeting. August consumer price data due mid-month will also be a major factor in determining the next rate increase.

The labor market has continued to charge ahead, with economists attributing the resilience to businesses hoarding workers after experiencing difficulties in the past year as the pandemic forced some people out of the workforce in part because of prolonged illness caused by the disease.

There is also pent-up demand for workers in service industries like restaurants and airlines. The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, remains 1.3 percentage points below its pre-pandemic level.

Other economists said while layoffs by major companies were getting media attention, small companies were hiring. They also argued strong hiring in the services sector, which was hugely affected by the pandemic, was needed to fight inflation.

“We’re still catching up and this is where I am completely a contrarian,” said Brian Bethune, an economics professor at Boston College. “The more people that businesses can hire, the more services they can provide, which means more production and that will reduce inflation. That’s what is critical now.”

Falling commodity prices have slowed the pace of inflation, with the annual consumer price index rising 8.5% in August. But rising wages are likely to keep inflation elevated for a while.

Average hourly earnings are forecast rising 0.4% after a solid 0.5% increase in July. That would lift the annual increase in wages to 5.3% from 5.2% in July. Strong wage gains are keeping the income side of the economic growth ledger expanding, though at a moderate pace, and a recession at bay for now.

“If there is a recession, it’s going to be mild,” said Christopher Kayes, a professor of management at the George Washington University School of Business in Washington. “It will be a recession with almost full employment. We haven’t seen that in our lifetime.”

(Reporting by Lucia Mutikani; Editing by Josie Kao and Andrea Ricci)

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By Alexander Marrow

MOSCOW (Reuters) -Russia’s benchmark MOEX stock index surged to its highest in more than three months on Thursday, led by a sharp rise in oil major Lukoil, while the rouble strengthened past 60 against the euro and edged higher versus the dollar.

The rouble-based MOEX Russian index was 1.8% higher at 2.440.6 points by 1521 GMT, reaching its strongest mark since May 20, with Lukoil shares leading the way, up 9.9%.

The stock market got a boost this week from gas giant Gazprom’s board recommending paying 51.03 roubles ($0.8484) per ordinary share in dividends on the first half of 2022. Its shares, which leapt around 25% on Wednesday, were down 2.4%.

“Gazprom’s dividend payout could become a trigger for growth of the Russian stock market,” said Dmitry Skryabin, a portfolio manager at Alfa Capital. “The example of Gazprom may encourage dividend payments by other companies that have not paid out, but have the financial capacity to do so.”

Promsvyazbank analysts singled out Lukoil as an example of a company that may return to paying dividends.

The dollar-denominated RTS index, which had surged to a near two-month high in the previous session, was up 1.8% at 1,280.6 points, its strongest point since July 4.

ROUBLE STRENGTHENS

The rouble was firming towards 60 against the dollar and surpassed that threshold to the euro. It was 0.3% stronger against the dollar at 60.05 and had gained 1.1% to trade at 59.81 versus the euro.

The rouble spent most of August near 60 per dollar. Volatility has subsided since it hit a record low of 121.53 per dollar in Moscow trade in March, soon after Russia sent tens of thousands of troops into Ukraine. It then rallied to its strongest in seven years of 50.01 per dollar in June.

So far this year, the rouble has been the world’s best-performing currency https://emea1.apps.cp.thomsonreuters.com/Apps/NewsServices/mediaProxy?apiKey=6d416f26-7b24-4f31-beb6-1b5aa0f3fafb&url=http%3A%2F%2Ffingfx.thomsonreuters.com%2Fgfx%2Frngs%2FGLOBAL-CURRENCIES-PERFORMANCE%2F0100301V041%2Findex.html, buoyed by emergency capital controls rolled out by the central bank in a bid to halt a mass sell-off. This helped to avoid economic meltdown that many had predicted.

Moscow Exchange on Thursday said it would relaunch the evening session on its stock market, running until 2050 GMT and morning trading on the currency market, starting at 0350 GMT, from Sept. 12.

The country’s largest bourse is seeking to gradually return some sense of normalcy to Russian financial markets after severe disruptions in February and March as Western sanctions over Russia’s actions in Ukraine began to bite.

($1 = 60.1500 roubles)

(Reporting by Alexander Marrow; Editing by Christopher Cushing and Bernadette Baum)

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By Ahmad Ghaddar

LONDON (Reuters) -Oil prices tumbled 3% on Thursday, as new COVID-19 lockdown measures in China added to worries that high inflation and interest rate hikes are denting fuel demand.

Brent crude futures fell $1.95, or 3.2%, to $92.64 a barrel by 1134 a.m. ET (1535 GMT). U.S. West Texas Intermediate (WTI) crude futures slid $2.81, or 2.9%, to $86.84 a barrel.

“Western-world oil demand, as well as China’s, is stagnant, while supplies are expanding incrementally, largely on the back of the U.S. shale boom,” said Julius Baer analyst Norbert Rucker.

Asia’s factory activity slumped in August as China’s zero-COVID curbs and cost pressures continued to hurt businesses, surveys showed on Thursday, darkening the outlook for the region’s fragile recovery.

Southern Chinese tech hub Shenzhen tightened COVID-19 curbs as cases kept increasing. Large events and indoor entertainment were suspended for three days in the city’s most populous district, Baoan.

The main European stocks index fell to seven-week lows as worries deepened about aggressive rate hikes to fight record inflation.

The dollar index hit a 20-year high after U.S. data showed a resiliently strong economy, giving the Federal Reserve more room to raise interest rates. A stronger greenback makes dollar-priced oil more expensive for holders of other currencies.

“China doing another round of COVID lockdowns at major export terminals,” said Dennis Kissler, senior vice president of trading at BOK Financial, which along with the “super strong U.S. dollar is causing further fund liquidation in crude futures,”

A possible revival of a 2015 Iran nuclear deal which would allow the OPEC member to boost its oil exports also weighed on prices.

French President Emmanuel Macron said he hoped a deal would be concluded in coming days.

Oil market volatility grew this year on concerns about inadequate supply in the months after Russia sent military forces into Ukraine and as OPEC struggles to increase output.

OPEC’s output hit 29.6 million barrels per day (bpd) in the most recent month, according to a Reuters survey, while U.S. output rose to 11.82 million bpd in June.

Both are at their highest levels since April 2020.

Still, the oil market will have a small surplus of just 400,000 bpd in 2022, much less than forecast earlier, according to OPEC and its partners – known as OPEC+ – due to underproduction of its members, data from the group showed.

The group expects an oil market deficit of 300,000 bpd in 2023.

Meanwhile, U.S. crude stocks fell by 3.3 million barrels, the U.S. Energy Information Administration said on Wednesday, while gasoline stocks were down 1.2 million barrels.

Finance ministers from the Group of Seven group of wealthy nations will discuss the U.S. Administration’s proposed price cap on Russian oil when they meet on Friday, the White House said.

(Additional reporting by Ahmad Ghaddar in London, Yuka Obayashi in Tokyo; editing by Jason Neely, Kirsten Donovan and David Gregorio)

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By Dan Williams

JERUSALEM (Reuters) -Israel will buy four Boeing Co KC-46A refuelling tankers for its air force, the Israeli government and the U.S. defence contractor said on Thursday, a $927 million deal with delivery of the first planes expected in 2025.

The tankers would replace the decades-old, repurposed Boeing 707s that Israel currently uses for mid-air refuelling and may help it signal seriousness about the possibility of a long-threatened strike against Iran’s nuclear facilities.

Thanking the Pentagon for what he described as its expedited approval of the KC-46A purchase, Israeli Defence Minister Benny Gantz said the tankers would “enable the IDF (Israel Defence Forces) to face security challenges near and far”.

In 2020, the U.S. State Department approved a potential sale to Israel of up to eight of the Boeing tankers and related equipment for an estimated total cost of $2.4 billion. Israel has called for expediting the delivery schedule if possible.

Israel welcomed former U.S. President Donald Trump’s withdrawal from a 2015 Iranian nuclear deal it deemed insufficient for denying its arch-foe the means to make a bomb.

With the current U.S. administration and other world powers trying to renew the deal, Israel has signalled it may eventually resort to preemptive action.

Some independent experts, however, believe Iran’s nuclear sites are too distant, dispersed and defended for Israel to be able to deliver lasting damage.

Iran denies seeking nuclear arms.

The Israel Air Force (IAF) describes its Boeing 707 tankers as more than 45 years old, with scarce replacement parts.

The KC-46As will be able to carry some 30% more fuel while consuming 30% less, the IAF journal said in a March 2021 article. “This (will) enable us to significantly enhance our flight ranges,” it quoted an IAF major as saying.

“Also, this aircraft can refuel other aircraft while being simultaneously refuelled by another KC-46, a capability the (Boeing 707 refuelling plane) doesn’t have. This theoretically stretches its range to infinity”.

(Writing by Dan WilliamsEditing by Steven Scheer and Jonathan Oatis)

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By Bianca Flowers

CHICAGO (Reuters) -More farm equipment dealers are going out of business, leaving a handful of companies with control of a large swathe of the market and greater ability to set prices for selling and repairing equipment, according to interviews with farmers, equipment dealers and analysts.

Buyouts of local mom-and-pop dealers have reduced farmers’ options for purchasing machinery and repairing aging equipment.

In Montana, a state the size of Germany, only three Deere & Co. dealerships remain compared to around 30 two decades ago, according to the state Farmers Union. Local barley farmer Erik Somerfeld said one dealer network dominates all sales and repairs for rival equipment maker CNH Industrial.

Somerfeld has had to travel out of state to get parts for his equipment when they aren’t in stock at his local dealership 25 miles (40 km) from his home.

“The dealership that’s 110 miles away normally has anything I want at a lower price,” Somerfeld said.

Just two dealer groups, Ag-Pro and Titan Machinery, own the bulk of stores in North America selling farm equipment made by Deere — the largest U.S. farm equipment maker — and CNH Industrial, according to Ag-Pro and Titan Machinery websites.

Larger dealers’ pursuit of regional dominance began in the 1980s. Merger momentum increased during the COVID-19 pandemic, when supply chain snarls limited parts and labor available and smaller dealers were unable to compete with larger rivals, said John Schmeiser, chief operating officer of the North American Equipment Dealers Association, a trade group.

Fewer dealers to service millions of acres of farmland means U.S. farmers are paying more for equipment and gas at a time they also face higher costs https://www.reuters.com/markets/commodities/off-charts-chemical-shortages-hit-us-farms-2022-06-27/ of seeds, fertilizer, and other crop care chemicals. Increased costs are threatening their profits and ability to expand plantings next season at a time of growing concern over global food security.

Roughly 65% of farmers in the United States have access to fewer equipment dealerships than they did five years ago, according to a survey https://uspirg.org/feature/usp/deere-headlights-ii conducted in late 2021 by the U.S. Public Interest Research Group (PIRG) and the National Farmers Union, based on interviews with 74 farmers.

For Deere, more than 80% of authorized dealer locations are now part of larger chains, defined as owning seven or more stores, according to the survey and dealership location data analyzed by Reuters. CNH and AGCO Corp have a smaller percentage of their dealerships owned by larger chains — at 37% for CNH’s Case IH brand and 22% for AGCO as of December 2021.

Deere, best-known for its green tractors that have been the workhorse of agriculture for decades, CNH, and AGCO declined to comment on dealership consolidation.

Ag-Pro, Deere’s largest privately owned dealer chain, added 59 dealerships to its portfolio through 20 acquisitions since 2017, according to data from the company’s website.

Ag-Pro and Titan Machinery also declined to comment.

Farmers say the scarcity of local dealers, on the other hand, has cost them time and money hauling in machinery.

An oil pressure issue with Tony Lourey’s 20-year-old tractor put him out of commission at the beginning of hay bailing season last July.

With the only independent repair shop near him estimating a three-week wait to get the tractor up and running, the Duluth, Minnesota, farmer ended up driving over 150 miles to a Wisconsin-based AGCO dealer to purchase a brand-new $75,000 tractor. The delivery fee added another $1,200 to the bill.

After getting the new machine onto his field, the high-horsepower tractor malfunctioned minutes after he put it into gear.

“At this point, I’m pulling my hair out,” Lourey said.

RIGHT TO REPAIR

At the same time farmers lack bargaining power to get better purchase prices on equipment due to fewer dealers, they are also facing higher prices to repair equipment. As the industry accelerates its adoption of technology, high-tech machinery has made it nearly impossible for them to fix their own equipment, or go to independent technicians.

U.S. President Joe Biden’s administration has tried to address the so-called right-to-repair with machinery-makers through a sweeping executive order signed last summer aimed at promoting more competition in the economy amid rising inflation, and manufacturers have made some concessions in response to lawsuits from consumers.

Until recently, Deere only gave authorized dealers the gateway to access the complex computerized systems of their tractors and other machinery. This has translated into a solid bottom line for its parts and services business. Financial filings from the Moline-based company showed that annual sales of parts have increased from $4.5 billion in 2011 to $6.8 billion in 2020.

In March, the company announced that it would make a diagnostics software tool available to farmers and independent repair shops that could be purchased online.

Other machinery makers are also raising prices for repairs after consolidating dealership ownership in an effort to boost sales, mechanics and farmers said.

An independent technician, who declined to be named and used to work at a dealership that was bought by Titan Machinery, the largest dealer chain for CNH Industrial, said he often gets calls from customers he believes are being overcharged.

For example, he said changing gear fluids on a quadtrac tractor, a machine used for planting and harvesting in muddy conditions, should cost around $2,000.

“I would get calls from farmers telling me that Titan has billed them $12,000,” he said.

Titan Machinery did not respond to request for comment.

The pressure from machinery makers for dealers to grow their market share has increased, meaning further consolidation in the industry is likely, said Ken Wagner, president of Kansas-based Heritage Tractor Inc, which sells Deere equipment.

“Deere demands performance from their dealers – it’s all about size and scope now,” he said.

(Reporting by Bianca Flowers; Editing by Caroline Stauffer and Nick Zieminski)

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ZURICH (Reuters) – Credit Suisse is weighing plans to eliminate around 5,000 jobs across the group — around one job in 10 — as part of a cost-cutting drive at the bank, a source with direct knowledge of the matter told Reuters.

The discussions are ongoing and the number of reductions could still change, the person said.

The bank declined to comment beyond its previous remark that it would give an update on its comprehensive strategy review with third-quarter earnings and that any reporting on potential outcomes before then was speculative.

Credit Suisse in July named asset management boss Ulrich Koerner as its new CEO, who is tasked with scaling back investment banking and cutting more than $1 billion in costs to help the bank recover from a string of scandals and losses.

Switzerland’s second-biggest bank has dubbed 2022 a “transition” year with a change of top management, restructuring aimed at further trimming investment banking and bulking up its flagship wealth management business.

A new strategic review announced in July, the bank’s second in less than a year, will evaluate options for its securitised products business to attract third-party capital while reaffirming its commitment to asset management.

Credit Suisse shares, which have fallen by more than 40% this year, were down 3.5% in late trading after touching an all-time low amid a selloff in the banking sector.

(Reporting by Oliver Hirt, writing by Michael Shields; editing by Elisa Martinuzzi and John O’Donnell)

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By Sheila Dang

(Reuters) -Snap Inc said on Wednesday it will lay off 20% of all staff and shut down projects, including mobile games and novelties like a flying drone camera, as high inflation and a deteriorating economy ravage the advertising industry.

The cuts will help the company save an estimated $500 million in costs annually, Snap said.

Snap shares rose 15% in morning trading, which reverberated across the sector. Shares in Facebook parent Meta Platforms Inc were up 5% and Pinterest Inc rose 6%.

The company said it will focus on improving sales and the number of Snapchat users.

The “clear and defining action” to refocus its business has reassured investors, said Paolo Pescatore, an analyst at PP Foresight.

Analysts and investors have viewed Snap as an early indicator for trends affecting other social media platforms, as Snap is usually first to report quarterly earnings or provide business updates.

Snap’s warning in May that it would miss its revenue targets due to worsening economic conditions sparked a sell-off in social media stocks.

Shares in Santa Monica, California-based Snap closed down 2.5% at $10 on Tuesday after The Verge first reported Snap’s plans for layoffs, and AdAge reported the departure of two top advertising executives.

Revenue growth so far in the third quarter is up 8% from the previous year, which is “well below what we were expecting”, Chief Executive Evan Spiegel wrote in a memo to employees that was also released publicly on Wednesday.

If that growth rate holds, it would be the slowest revenue growth Snap has had since becoming a public company in 2017 – a far cry from triple-digit growth rates it has recorded in previous quarters.

Two of Snap’s top ad sales executives – Chief Business Officer Jeremi Gorman and Vice President of ad sales Peter Naylor – are leaving to join Netflix Inc and build the streaming service’s ad business.

Gorman, a longtime advertising executive who previously worked at Amazon, was instrumental in building Snap’s ad business, said Jasmine Enberg, principal analyst at research firm Insider Intelligence.

Gorman and Naylor’s departures come after Snap reported a disappointing second quarter, and it is facing more competition from TikTok, she said.

“Snap is clearly going through a tough time,” Enberg said.

‘FACE THE CONSEQUENCES’

Despite reducing spending in some areas, Snap must now “face the consequences of our lower revenue growth and adapt to the market environment”, CEO Spiegel wrote in the memo.

Senior vice president of engineering Jerry Hunter will be promoted to chief operating officer and will be responsible for improving coordination between engineering, ad sales and product teams, Spiegel said.

Snap and other social media platforms including Meta have all suffered from privacy updates that Apple Inc introduced on iPhones last year.

These have made it difficult for digital ad sellers and advertisers to target ads to relevant audiences and measure their sales results.

Closer collaboration between engineering and sales could potentially help Snap improve targeting and measurement of its ads.

The restructuring of the ad sales division also includes three new president roles that will oversee the Americas, Europe, Middle East and Africa, and Asia-Pacific regions.

Snap will also discontinue investment in its Pixy flying drone camera, just a few months after its debut in May.

(Reporting by Sheila Dang in Dallas; additional reporting by Tiyashi Datta; Editing by Kenneth Li, Kenneth Maxwell and Jan Harvey)

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By Huw Jones and Koh Gui Qing

NEW YORK/LONDON (Reuters) -World stock markets staged a tepid recovery on Wednesday after a three-day losing streak, but stubborn inflation that has central banks on both sides of the Atlantic preparing to raise borrowing costs again next month kept investors on edge.

Wall Street was mixed in early trade as U.S. crude oil prices sank for a second day, as worries that tightening monetary policy around the world will hurt demand and drag on the global economy.

The MSCI all-country stock index was little changed on the day and was down 18% for the year as war in Ukraine, surging energy prices and rising interest rates take their toll on risky assets.

The U.S. S&P 500 index and the Dow Jones Industrial Average were also flat, while the Nasdaq Composite rose 0.49%.

Europe’s STOXX share index of 600 companies dropped 0.6% to a six-week low, leaving it down about 14.5% for the year.

Economic news remained grim with overnight data showing that economic activity in China, the world’s second-largest economy, extended its decline this month after new COVID-19 infections, the worst heatwaves in decades, and struggles in the property sector.

Headline euro zone inflation for August rose to another record high, beating expectations and solidifying the case for a hefty rate hike by the European Central Bank on Sept. 8.

Russia halted gas supplies via a major pipeline to Europe on Wednesday for three days of maintenance amid fears it won’t be switched back on, adding to worries of energy rationing during coming winter months in some of the region’s richest countries. The energy crunch has already created a painfulcost-of-living crisis for consumers and businesses and forcedgovernments to spend billions to ease the burden.

German bonds were set for their worst month in over 30 years as euro zone inflation hit a record high.

Markets are betting that the U.S. Federal Reserve and the ECB will both raise their key borrowing costs by 75 basis points when they meet next month.

Jamie Niven, a senior bond fund manager at Candriam, said rate hikes anticipated for this year had been largely priced into markets, especially in the United States.

Investors have begun pricing out previously anticipated rate cuts next year following Fed Chair Jerome Powell’s hard-hitting speech last week.

“I think there is more pain to come in credit markets and in equity markets before we see a brighter outlook. I don’t think central banks are going to be in a state where they can cut to kind of soften the blow of recession,” Niven said.

While there may be occasional quick flips or dramatic rallies back into riskier assets like stocks at times, they will ultimately be lower towards the end of the year, Niven said.

U.S. non-farm payrolls data due on Friday could make the case for a big rate hike, analysts said.

U.S. CRUDE BELOW $90 A BARREL

In Asia overnight, Japan’s Nikkei sagged 0.4% and Chinese blue chips were little changed. Hong Kong’s Hang Seng was down 0.16%, recovering from steep early declines.

The two-year U.S. Treasury yield, which is relatively more sensitive to the monetary policy outlook, hit a 15-year high at 3.497% overnight, but eased back to 3.4357%.

The 10-year Treasury yield, which hit a two-month high of 3.153% on Tuesday, stood at 3.1063%.

The dollar index was flat at 108.74, after starting the week by marking a two-decade high at 109.48.

Sterling is set for its worst month since late 2016 against the dollar as UK inflation is already at 10% and rising, with the Bank of England set to increase rates next month.

Gold fell 0.3% to $1,718.4 an ounce, a one-month low.

Crude oil fell further after declines of more than $5 overnight, but drew support after industry data showed U.S. fuel stocks fell more than expected.

U.S. West Texas Intermediate (WTI) crude futures were down 1.3% at $90.45 a barrel, after sliding $5.37 in the previous session, driven by recession fears. Brent crude futures for October fell 2.7%.

On a brighter note, cryptocurrencies staged a rebound, with bitcoin up 1.8% at $20,182.

(Reporting by Huw Jones; Editing by Edmund Klamann, Nick Macfie and Jonathan Oatis)

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By Christoph Steitz and Nina Chestney

FRANKFURT/LONDON (Reuters) – Russia halted gas supplies via Europe’s key supply route on Wednesday, intensifying an economic battle between Moscow and Brussels and raising the prospects of recession and energy rationing in some of the region’s richest countries.

European governments fear Moscow could extend the outage in retaliation for Western sanctions imposed after it invaded Ukraine and have accused Russia of using energy supplies as a “weapon of war”. Moscow denies doing this and has cited technical reasons for supply cuts.

Russian state energy giant Gazprom said Nord Stream 1, the biggest pipeline carrying gas to its top customer Germany, will be out for maintenance from 0100 GMT on Aug. 31 to 0100 GMT on Sept. 3.

The president of the German network regulator said that Germany would be able to cope with the three-day outage as long as flows resumed on Saturday.

“I assume that we will be able to cope with it,” Klaus Mueller told Reuters TV in an interview. “I trust that Russia will return to at least 20% from Saturday, but no one can really say.”

Further restrictions to European gas supplies would deepen an energy crunch that has already triggered a 400% surge in wholesale gas prices since last August, squeezing consumers and businesses and forcing governments to spend billions to ease the burden.

In Germany, inflation soared to its highest in almost 50 years in August and consumer sentiment soured as households brace for a spike in energy bills.

LOWER SUPPLIES

Unlike last month’s 10-day maintenance for Nord Stream 1, the latest work was announced less than two weeks in advance and is being carried out by Gazprom rather than its operator.

Moscow, which slashed supply via the pipeline to 40% of capacity in June and to 20% in July, blames maintenance issues and sanctions it says prevent the return and installation of equipment.

Kremlin spokesman Dmitry Peskov said on Wednesday that Russia remained committed to its gas supply obligations, but was unable to fulfil them due to the sanctions, according to the Interfax news agency.

Gazprom said the latest shutdown was needed to perform maintenance on the pipeline’s only remaining compressor at the Portovaya station in Russia, saying the work would be carried out jointly with Siemens specialists.

Siemens Energy, which has carried out maintenance work on compressors and turbines at the station in the past, said on Wednesday it was not involved in the maintenance but stood ready to advise Gazprom if needed. Russia has also stopped supplying Bulgaria, Denmark, Finland, the Netherlands and Poland, and reduced flows via other pipelines since launching what Moscow calls its “special military operation” in Ukraine.

Gazprom said on Tuesday it would also suspend gas deliveries to its French contractor because of a payments dispute, which France’s energy minister called an excuse, but added that the country had anticipated the loss of supply.

German Economy Minister Robert Habeck, on a mission to replace Russian gas imports by mid-2024, earlier this month said Nord Stream 1 was “fully operational” and there were no technical issues as claimed by Moscow.

‘ELEMENT OF SURPRISE’

The reduced flows via Nord Stream have complicated efforts across Europe to save enough gas to make it through the winter months, when governments fear Russia may halt flows altogether.

“It is something of a miracle that gas filling levels in Germany have continued to rise nonetheless,” Commerzbank analysts wrote, noting the country has so far managed to buy enough at higher prices elsewhere.

In the meantime, some Europeans are voluntarily cutting their energy consumption, including limiting their use of electrical appliances and showering at work to save money while companies are bracing for possible rationing.

With storage tanks filled in 83.65%, Germany is already close to its 85% target set for Oct. 1, but it has warned reaching 95% by Nov. 1 would be a stretch unless companies and households slash consumption.

European Union as a whole reached 80.17% of its storage capacity, already ahead of the 80% target set for Oct. 1, when the continent’s heating season starts.

Analysts at Goldman Sachs said their base scenario was that the latest Nord Stream 1 outage would not be extended.

“If it did, there would be no more element of surprise and reduced revenues, while low flows and the occasional drop to zero have the potential to keep market volatility and political pressure on Europe higher,” they said.

(Reporting Nina Chestney and Christoph Steitz; Additional reporting by Matthias Inverardi, Bharat Govind Gautam and Eileen Soreng; Editing by Veronica Brown, Carmel Crimmins, Lincoln Feast and Tomasz Janowski)

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(Reuters) – U.S. stock indexes opened higher on Wednesday as technology and growth stocks rebounded, while weaker-than-expected private payrolls data and a slide in oil prices helped ease some worries about inflation.

The Dow Jones Industrial Average rose 36.28 points, or 0.11%, at the open to 31,827.15. The S&P 500 opened higher by 14.51 points, or 0.36%, at 4,000.67, while the Nasdaq Composite gained 89.42 points, or 0.75%, to 11,972.56 at the opening bell.

(Reporting by Devik Jain in Bengaluru; Editing by Maju Samuel)

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