Business

By Florence Tan

SINGAPORE (Reuters) -Oil prices recovered on Thursday from a steep drop in the previous session, supported by tight oil supply and peak summer consumption, after a hefty U.S. rate hike sparked fears of slower economic growth and less fuel demand.

Brent crude futures rose 86 cents, or 0.7%, to $119.37 a barrel by 0644 GMT while U.S. West Texas Intermediate (WTI) crude futures climbed to $116.27 a barrel, up 96 cents, or 0.8%.

Prices slipped more than 2% overnight after the Federal Reserve raised its key interest rate by three-quarters of a percentage point, the biggest hike since 1994.

The dollar index retreated from a 20-year high, easing downward pressure on oil prices. A stronger greenback makes U.S. dollar-priced oil more expensive for holders of other currencies, curtailing demand.

Investors remained focused on tight supplies and robust demand as Western sanctions restricted access to Russian oil.

“It was overall a volatile session across almost all markets yesterday,” said Howie Lee, an economist at Singapore’s OCBC bank.

“Tight fundamentals suggest any dips in oil prices are likely to be short-lived, or shallow, or possibly both.”

In Libya, oil output has collapsed due to the shutdown of production and export facilities as a tactic in the country’s political stalemate. Production fell to 100,000-150,000 barrels per day, a spokesman for the oil ministry said on Tuesday, a fraction of the 1.2 million bpd seen last year.

Also, optimism that China’s oil demand will rebound as it eases COVID-19 restrictions supported the price outlook.

“A rebound in China demand sentiment, and expected seasonal ramp-up in OECD oil demand into August leaves price risk to the upside through 3Q 2022,” said Baden Moore, head of commodities research at the National Australia Bank.

U.S. crude production, which has been largely stagnant over the last few months, edged up 100,000 barrels per day last week to 12 million bpd, its highest level since April 2020, data from the Energy Information Administration showed. [EIA/S]

U.S. crude stocks and distillate inventories rose while gasoline inventories fell in the week through June 10, the EIA said.

(Reporting by Florence Tan in Singapore and Sonali Paul in Melbourne; editing by Richard Pullin and Kim Coghill)

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By John O’Donnell, Huw Jones and Marc Jones

LONDON (Reuters) – A markets sell-off has brought back memories of the euro zone debt crisis more than a decade ago, highlighting divisions that have plagued the currency bloc’s efforts to forge a closer bond.

While the years since the debt crisis have seen the 19 countries in Europe’s euro area centralise and toughen bank controls, many planned economic reforms in Italy and elsewhere were watered down as vast money printing buoyed the economy.

Spurred by fears higher borrowing costs will choke economic growth, the markets rout has exposed cracks in the uneasy alliance which – unlike the United States – is held together largely by the central bank rather than a government with power to tax and spend.

Two events this week expose the fragility of the union: the ECB’s efforts to restore confidence in weaker states facing surging borrowing costs as its debt-buying programme ends, and ministers’ decade-long failure to put the bloc’s savers on a solid footing.

After a rare emergency meeting on Wednesday, the ECB promised fresh measures to temper the market selloff but the lack of a concrete plan to help debt-laden countries like Italy and Greece disappointed some.

This was in sharp contrast to 2012, when then ECB president Mario Draghi tackled a crisis of confidence in the currency’s future with a pledge to do “whatever it takes”, followed by a vast programme of money printing.

Now, however, rocketing prices, triggered by that money printing, as well as soaring energy costs in the wake of Russia’s invasion of Ukraine and pandemic lockdowns in China, makes this feat difficult to repeat.

“It was easy to do whatever it takes when inflation was low,” said Guntram Wolff of think-tank Bruegel, adding that rising prices would push the ECB to reverse course.

“The emergency meeting created a lot of expectations that the ECB cannot ultimately meet,” he said. “Only governments can address the real economic divergence and incomplete set up of the euro zone.”

GRAPHIC: ECB interest rates and balance sheet (https://fingfx.thomsonreuters.com/gfx/mkt/egvbkwrngpq/Pasted%20image%201654781200997.png)

French Finance Minister Bruno Le Maire cautioned against a fragmentation of the bloc, the type of public warning once common but that largely disappeared since vast money printing eased the debt crisis.

Speaking to students in London, Lagarde gave no further clues as to how ECB action could look, talking instead about climate change and the impact of war on global grain supplies.

‘GONE BACKWARDS’

The divisions in the euro zone are likely to come to the fore at a ministers’ meeting later on Thursday to discuss a deadlocked plan to reinforce the bloc’s financial system.

A central pillar of financial crisis reform, the so-called banking union remains mired in debate, with the critical question of region-wide protection of deposits still unresolved.

“We have gone backwards rather than forwards,” said Karel Lannoo of the Centre for European Policy Studies.

“If there is a bank failure, it will be the same as 2008,” he said, adding that individual states rather than the wider bloc would be left to shoulder the burden. “The Draghi period is over.”

The ministers are expected to further delay plans for the single safety net for the bank deposits, long opposed by Germany which did not want to be on the hook for problems elsewhere, prolonging the decade-long push to unify the sector to better withstand crises.

Thomas Huertas, a former alternate chair of the EU’s banking watchdog and now at the Leibniz Institute, said the absence of such a safety net put European banks at a disadvantage to American rivals.

“It is one of those benefits that the person can see and recognise. It’s an important element not only for finance, but I think also of the Union itself,” he added, commenting on the need for cross-border saver protection.

That lack of progress with a banking union, in turn, has weighed on the stocks of Europe’s banks, which have been trailing their U.S. rivals for years.

The ministers’ debate takes place against the backdrop of a rise in Italy’s borrowing costs, exacerbated by the ECB’s plans to raise interest rates and wind down its debt-buying to temper rising prices. Spanish, Portuguese and Greek bonds are under similar pressure.

GRAPHIC: Euro zone yields (https://fingfx.thomsonreuters.com/gfx/mkt/lbvgnxnmwpq/Pasted%20image%201655281213512.png)

How Europe responds is being closely watched by bankers and investors.

“So much of what we do is a confidence game,” said Vis Raghavan, CEO of EMEA and Co-Head of Global Investment Banking at JPMorgan. “A lot of what we are seeing is about confidence in policy and achieving an orderly route out of stagflation.”

But with the ECB running out of road to keep investors happy, the ball is back in the court of politicians to act.

“While the ECB could keep markets happy with a bazooka, it’s getting harder to do this in a time when it has to fight inflation,” said Carsten Brzeski, an economist with Dutch bank ING.

“That leaves it up to the governments to finally get their act together in finding a proper union.”

(Writing By John O’Donnell; additional reporting by Leigh Thomas in Paris and Sinead Cruise in London; editing by Emelia Sithole-Matarise)

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By Howard Schneider and Ann Saphir

WASHINGTON (Reuters) – The Federal Reserve raised its target interest rate by three-quarters of a percentage point on Wednesday to stem a disruptive surge in inflation, and projected a slowing economy and rising unemployment in the months to come.

The rate hike was the biggest made by the U.S. central bank since 1994, and was delivered after recent data showed little progress in its inflation battle.

U.S. central bank officials flagged a faster path of increases in borrowing costs to come as well, more closely aligning monetary policy with a rapid shift this week in financial market views of what it will take to bring price pressures under control.

“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices and broader price pressures,” the central bank’s policy-setting Federal Open Market Committee said in a statement at the end of its latest two-day meeting in Washington. “The committee is strongly committed to returning inflation to its 2% objective.”

The statement continued to cite the Ukraine war and China lockdown policies as sources of inflation.

The action raised the short-term federal funds rate to a range of 1.50% to 1.75%, and Fed officials at the median projected the rate increasing to 3.4% by the end of this year and to 3.8% in 2023 – a substantial shift from projections in March that saw the rate rising to 1.9% this year.

The stricter monetary policy was accompanied with a downgrade to the Fed’s economic outlook, with the economy now seen slowing to a below-trend 1.7% rate of growth this year, unemployment rising to 3.7% by the end of this year, and continuing to rise to 4.1% through 2024.

While no policymaker projected an outright recession, the range of economic growth forecasts edged toward zero in 2023 and the federal funds rate was seen falling in 2024.

The projections are a break with recent Fed efforts to cast tighter monetary policy and inflation control as consistent with steady and low unemployment. The 4.1% jobless rate seen in 2024 is now slightly above the level Fed officials generally see as consistent with full employment.

Since March, when Fed officials projected they could raise rates and control inflation with the unemployment rate remaining around 3.5%, inflation has stubbornly remained at a 40-year high, with no sign of it reaching the peak Fed policymakers hoped would arrive this spring.

Even with the more aggressive interest rate measures taken on Wednesday, policymakers nevertheless see inflation as measured by the personal consumption expenditures price index at 5.2% through this year and slowing only gradually to 2.2% in 2024.

Kansas City Fed President Esther George was the only policymaker to dissent in Wednesday’s decision in preference for a half-percentage-point hike.

Fed Chair Jerome Powell is scheduled to hold a news conference at 2:30 p.m. EDT (1830 GMT) to elaborate on the latest policy meeting.

Inflation has become the most pressing economic issue for the Fed and begun to shape the political landscape as well, with household sentiment worsening amid rising food and gasoline prices.

(Reporting by Howard Schneider; Editing by Paul Simao)

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By Yoruk Bahceli and Dhara Ranasinghe

LONDON (Reuters) – Rather than invent a radical new instrument to ease bond market strains across the euro bloc, investors reckon the European Central Bank might get away with cobbling together the best parts of schemes already contained in its policy toolkit.

The ECB on Wednesday promised fresh support and the design of a potential new scheme to temper a market rout that has fanned fears of a new debt crisis on the euro currency area’s southern rim.

Its statement sent 10-year borrowing costs in Italy and Greece sliding as much as 40 basis points, the biggest daily move since March 2020 for the latter. In a week when yields across the bloc hit multi-year highs, the immediate reaction was one of relief.

Yet, it was not really the whatever-it-takes pledge ex-ECB president Mario Draghi delivered almost exactly a decade ago, signalling his determination to rescue the euro from collapse.

“I hope that they have the intelligence to design (a new tool) in a way that’s not too strict, keeping flexibility by purchases,” said Patrick Krizan, senior economist at Allianz.

“The biggest error would be to be too committed and put themselves in a straitjacket.”

The ECB has already drawn criticism for being too complacent over the risk that its plans to raise interest rates would lift borrowing costs for financially weaker nations such as Italy too far above those of safe-haven Germany.

With the bloc clearly facing that fragmentation problem, it is important for any new bond-buying tool from the ECB to be flexible, investors said.

So just like the pandemic-era PEPP emergency stimulus scheme, it would need to ditch the capital-key principle of buying bonds in relation to the size of economies, instead buying debt from countries which most need help.

Graphic: Italy-Greece-https://fingfx.thomsonreuters.com/gfx/mkt/lgpdwbwyjvo/Pasted%20image%201655302743622.png

One suggestion is creating a new tool similar to the Outright Monetary Transactions (OMT) scheme, an unused crisis-time tool allowing for unlimited purchases of a country’s debt.

The main sticking point for the original OMT programme is the requirement to sign up for a European Union bailout, often with unpopular conditions.

“The political price is quite high for the current OMT, so the ECB cannot do this alone, there must be something on the political side to design an OMT-light, which allows a country to be a bit protected,” said Krizan.

Analysts said they would expect an OMT-like programme to come with conditions attached, but not as strict as those in the original programme.

Aside from fiscal requirements, “the size will be everything, the maturities of the bonds they will be looking at, these are the most important,” said ING Bank senior rates strategist Antoine Bouvet.

The original OMT programme focused on buying shorter-dated bonds.

Yet another option is to design a package with traits of the OMT’s precursor – the Securities Markets Programme (SMP), which did not include the OMT’s strict, formal conditionality.

The SMP’s positive was that it also allowed the ECB to buy bonds, without adding to stimulus already sloshing around the system, in a process economists refer to as sterilisation.

For this reason, France’s central bank governor Francois Villeroy de Galhau has said bond purchases could again feature sterilisation.

The bank could also buy debt during a market stress episode, then sell gradually as conditions improve, thus avoiding increasing its overall balance sheet size, Villeroy has said.

The SMP had limited success however, and was terminated with a value of just 209 billion euros, not long after Draghi’s July 2012 “whatever it takes” promise.

Still, Piet Christiansen, chief analyst at Danske Bank, expects something along the lines of the SMP.

“Sterilised purchases have been our baseline all throughout and I think that is what is to be expected, because the SMP programme was done in a way so it doesn’t interfere with the monetary policy stance and the only way they could do that is by sterilizing the purchases,” he said.

What’s certain is that the ECB has the firepower to calm frenzied markets.

On March 18, 2020, when the COVID-19 outbreak sent Italian/German bond spreads briefly above 300 bps, the Bank of Italy stepped up bond purchases on behalf of the ECB. Later that day, the ECB launched its PEPP scheme.

Investors urged the ECB to unveil detailed plans fast, warning that otherwise bond market relief would fade.

“At the end of the day people want to see action,” said Francois Savary, chief investment office Prime Partners.

(Reporting by Yoruk Bahceli and Dhara Ranasinghe; editing by Sujata Rao and xxx)

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(Corrects number of employees in Russia in 1st and 6th paragraph)

By Anna Ringstrom

STOCKHOLM (Reuters) -IKEA said on Wednesday it would sell factories, close offices and reduce its 15,000-strong workforce in Russia, the latest move by the world’s biggest furniture brand to cut its operations there following Moscow’s invasion of Ukraine.

The move comes after IKEA temporarily closed stores and paused sourcing in Russia, joining a mass corporate exodus as Western companies rushed to comply with Western sanctions and amid threats the Kremlin would seize foreign assets.

The Swedish company has continued paying employees and will do so until the end of August.

On Wednesday, it said it did not see any possibility to resume sales in the country, where it opened its first store in 2000, in the foreseeable future.

As a result, brand owner Inter IKEA, which is also in charge of supply, said it would now start looking for buyers for its four factories, permanently close two purchase and logistics offices in Moscow and Minsk and cut staff.

IKEA has 15,000 employees in the country, of which 12,500 work at Ingka Group which owns all IKEA stores in Russia.

“Unfortunately, the circumstances have not improved, and the devastating war continues. Businesses and supply chains across the world have been heavily impacted and we do not see that it is possible to resume operations any time soon,” Ingka Group said in a statement.

Still Ingka, also one of the world’s biggest shopping centre owners, is keeping its 14 malls in Russia, branded “MEGA”, open.

The company said it wants to ensure people have access to basics they need, including clothes, groceries, and pharmacies, but it is continuously evaluating the situation.

It also declined to comment on its plans for the 17 shuttered stores, saying in an email it was “exploring various options”.

The steps so far differ from some other major Western companies, such as McDonald’s and French carmaker Renault, which have sold their assets to local buyers and quit the country entirely.

The retail business remains paused, IKEA said, but hinted it may open the doors for Russians for a final time. “To ensure necessary business processes, we are organising the sale of homeware goods that are in our warehouses to employees and customers. Dates will be announced soon,” IKEA said.

It said it may donate some stock to people in need.

But selling surplus inventory and generating revenue there may raise eyebrows given the public and political pressure on companies not to make money from doing business in Russia.

“We considered a wide range of options before taking the decision to sell off the stock, and there was no other viable solution,” the company said in the email.

(Reporting by Anna RingstromWriting by Josephine Mason;Editing by Angus MacSwan and Mark Potter)

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By Sam Nussey

TOKYO (Reuters) – Proxy adviser Glass Lewis has urged SoftBank Group Corp shareholders to oppose the election of corporate lawyer Ken Siegel to the board of directors for a second consecutive year due to his professional ties to the tech conglomerate.

Siegel, who heads the mergers and acquisitions team at the Tokyo office of law firm Morrison & Foerster, has represented SoftBank in deals including the purchase of chip designer Arm and the collapsed sale of the Cambridge-based firm to Nvidia.

“We question the need for the company to engage in legal services with its directors. We view such relationships as creating conflicts for directors,” Glass Lewis said in a proxy paper ahead of the June 24 annual shareholder meeting.

Almost a third of shareholders opposed Siegel’s election last year, in an unusual display of disapproval at an event known for vocal expressions of admiration for Chief Executive Masayoshi Son from attendees.

Son will take the stage at this year’s event on the back foot amid concern over exposure by the conglomerate, whose Vision Fund unit booked a record loss in May, to high growth stocks as interest rates rise and tech valuations fall.

Proxy adviser Institutional Shareholder Services Inc (ISS) recommends election of Siegel, saying while he cannot be seen as independent, “voting against this nominee may run the risk of actually increasing management dominance of the board.”

Son’s dominant role in the company he founded has been brought into relief by the departure of top executives including Chief Operating Officer Marcelo Claure.

Both proxy advisers recommend the election of David Chao, general partner at venture capital firm DCM Ventures, who will become the fifth outside director on the nine person board.

SoftBank has not disclosed the amount of business it does with Chao’s firm, “preventing shareholders from assessing the materiality of the relationship,” ISS said in its proxy paper.

(Reporting by Sam Nussey; Editing by Christopher Cushing)

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RED LODGE, Mont. (AP) — The forces of fire and ice shaped Yellowstone National Park over thousands of years. It took decades longer for humans to tame it enough for tourists to visit, often from the comfort of their cars.

In just days, heavy rain and rapid snowmelt caused a dramatic flood that may forever alter the human footprint on the park’s terrain and the communities that have grown around it.

The historic floodwaters that raged through Yellowstone this week, tearing out bridges and pouring into nearby homes, pushed a popular fishing river off course — possibly permanently — and may force roadways nearly torn away by torrents of water to be rebuilt in new places.

“The landscape literally and figuratively has changed dramatically in the last 36 hours,” said Bill Berg, a commissioner in nearby Park County. “A little bit ironic that this spectacular landscape was create by violent geologic and hydrologic events, and it’s just not very handy when it happens while we’re all here settled on it.”

The unprecedented flooding drove more than 10,000 visitors out of the nation’s oldest national park and damaged hundreds of homes in nearby communities, though remarkably no was reported hurt or killed. The only visitors left in the massive park straddling three states were a dozen campers still making their way out of the backcountry.

The park could remain closed as long as a week, and northern entrances may not reopen this summer, Superintendent Cam Sholly said.

“I’ve heard this is a 1,000-year event, whatever that means these days. They seem to be happening more and more frequently,” he said.

Sholly noted some weather forecasts include the possibility of additional flooding this weekend.

Days of rain and rapid snowmelt wrought havoc across parts of southern Montana and northern Wyoming, where it washed away cabins, swamped small towns and knocked out power. It hit the park as a summer tourist season that draws millions of visitors was ramping up during its 150th anniversary year.

Businesses in hard-hit Gardiner had just started really recovering from the tourism contraction brought by the coronavirus pandemic, and were hoping for a good year, Berg said.

“It’s a Yellowstone town, and it lives and dies by tourism, and this is going to be a pretty big hit,” he said. “They’re looking to try to figure out how to hold things together.”

Some of the worst damage happened in the northern part of the park and Yellowstone’s gateway communities in southern Montana. National Park Service photos of northern Yellowstone showed a mudslide, washed out bridges and roads undercut by churning floodwaters of the Gardner and Lamar rivers.

In Red Lodge, a town of 2,100 that’s a popular jumping-off point for a scenic route into the Yellowstone high country, a creek running through town jumped its banks and swamped the main thoroughfare, leaving trout swimming in the street a day later under sunny skies.

Residents described a harrowing scene where the water went from a trickle to a torrent over just a few hours.

The water toppled telephone poles, knocked over fences and carved deep fissures in the ground through a neighborhood of hundreds of houses. Electricity was restored by Tuesday, but there was still no running water in the affected neighborhood.

Heidi Hoffman left early Monday to buy a sump pump in Billings, but by the time she returned her basement was full of water.

“We lost all our belongings in the basement,” Hoffman said as the pump removed a steady stream of water into her muddy backyard. “Yearbooks, pictures, clothes, furniture. Were going to be cleaning up for a long time.”

At least 200 homes were flooded in Red Lodge and the town of Fromberg.

The flooding came as the Midwest and East Coast sizzle from a heat wave and other parts of the West burn from an early wildfire season amid a persistent drought that has increased the frequency and intensity of fires. Smoke from a fire in the mountains of Flagstaff, Arizona, could be seen in Colorado.

While the flooding hasn’t been directly attributed to climate change, Rick Thoman, a climate specialist at the University of Alaska Fairbanks, said a warming environment makes extreme weather events more likely than they would have been “without the warming that human activity has caused.”

“Will Yellowstone have a repeat of this in five or even 50 years? Maybe not, but somewhere will have something equivalent or even more extreme,” he said.

Heavy rain on top of melting mountain snow pushed the Yellowstone, Stillwater and Clarks Fork rivers to record levels Monday and triggered rock and mudslides, according to the National Weather Service. The Yellowstone River at Corwin Springs topped a record set in 1918.

Yellowstone’s northern roads may remain impassable for a substantial length of time. The flooding affected the rest of the park, too, with park officials warning of yet higher flooding and potential problems with water supplies and wastewater systems at developed areas.

The rains hit just as area hotels filled up in recent weeks with summer tourists. More than 4 million visitors were tallied by the park last year. The wave of tourists doesn’t abate until fall, and June is typically one of Yellowstone’s busiest months.

Mark Taylor, owner and chief pilot of Rocky Mountain Rotors, said his company had airlifted about 40 paying customers over the past two days from Gardiner, including two women who were “very pregnant.”

Taylor spoke as he ferried a family of four adults from Texas, who wanted to do some more sightseeing before heading home.

“I imagine they’re going to rent a car and they’re going to go check out some other parts of Montana — somewhere drier,” he said.

At a cabin in Gardiner, Parker Manning of Terre Haute, Indiana, got an up-close view of the roiling Yellowstone River floodwaters just outside his door. Entire trees and even a lone kayaker streamed by.

In early evening, he shot video as the waters ate away at the opposite bank where a large brown house that had been home to park employees before they were evacuated was precariously perched.

In a large cracking sound heard over the river’s roar, the house tipped into the waters and was pulled into the current. Sholly said it floated 5 miles (8 kilometers) before sinking.

The towns of Cooke City and Silvergate, just east of the park, were also isolated by floodwaters, which also made drinking water unsafe. People left a hospital and low-lying areas in Livingston.

In south-central Montana, 68 people at a campground were rescued by raft after flooding on the Stillwater River. Some roads in the area were closed and residents were evacuated.

In the hamlet of Nye, at least four cabins washed into the Stillwater River, said Shelley Blazina, including one she owned.

“It was my sanctuary,” she said Tuesday. “Yesterday I was in shock. Today I’m just in intense sadness.”

___

Whitehurst reported from Salt Lake City. Associated Press writers Amy Beth Hanson in Helena, Becky Bohrer in Juneau, Alaska, R.J. Rico in Atlanta, and Brian Melley in Los Angeles contributed to this report.

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BEIJING (AP) — China’s factory output rebounded in May, adding to a recovery from the latest COVID-induced economic slump after controls that shut down Shanghai and other industrial centers eased.

Industrial production rose 0.7% over a year earlier, recovering from April’s 2.9% contraction, government data showed. Consumer spending edged up compared with April but was lower than a year ago.

The data suggest a “lockdown recovery got underway across most parts of the economy,” said Sheana Yue of Capital Economics in a report.

China’s case numbers in its latest wave of infections are low, but the ruling Communist Party’s “zero-COVID” strategy that aims to isolate every person with the virus shut down most businesses in Shanghai starting in late March and suspended access or imposed other restrictions on other industrial cities. That fueled fears global manufacturing and trade might be disrupted.

Most factories, shops and other businesses in Shanghai, Beijing and other cities have been allowed to reopen but are expected to need weeks or months to return to normal activity.

Economists have cut forecasts of China’s growth this year to as low as 2%, well below the ruling Communist Party’s target of 5.5%. Some expect activity to shrink in the quarter ending in June before a gradual recovery begins.

Consumer spending, depressed by jitters over the economic outlook and possible job losses, rose 0.05% in May compared with the previous month but was off 6.7% from a year ago. Investment in factories, real estate and other fixed assets rose 0.7% compared with April.

Chinese leaders have promised tax rebates, free rent and other aid to help businesses recover.

“Following all this weak data, we should expect the government to respond with more fiscal stimulus,” said Iris Pang of ING in a report.

Export growth, reported last week, accelerated to 16.9% in May from the previous month’s 3.7%. Import growth rose to 4.1% from April’s 0.7%.

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By Sinead Cruise and Estelle Shirbon

LONDON (Reuters) -JPMorgan Chase has won a London High Court battle against Nigeria, which was seeking $1.7 billion in damages over the U.S. bank’s role in a disputed 2011 oilfield deal.

JPMorgan said the judgment reflected its commitment to acting with high professional standards everywhere it operates, while Nigeria said it was disappointed and would review the judgment carefully before considering its next steps.

The civil case, which was heard earlier this year, relates to the purchase by Shell and Eni of Nigeria’s OPL 245 offshore oilfield.

Nigeria had alleged JPMorgan was “grossly negligent” in its transfer of funds paid by the energy majors to a company linked to the country’s disgraced former oil minister Dan Etete, as per instructions received from Nigerian government officials.

Nigeria now says those officials were party to a fraudulent scheme.

According to Nigeria’s legal argument, the transactions put JPMorgan in breach of its Quincecare duty, which obliges banks to disregard a customer’s instructions if following those instructions might facilitate a fraud against that customer.

JP Morgan rejected the legal argument, putting the emphasis on its primary duty to comply promptly with payment instructions from its customer, and also contested some of the factual elements put forward by Nigeria.

London High Court Judge Sara Cockerill said in a 137-page ruling issued on Tuesday that no Quincecare breach had occurred.

JPMorgan said the outcome reflected “how we are prepared to robustly defend our actions and reputation when they are called into question”.

The Nigerian government said it would continue its fight against fraud and corruption and work to recover funds for the people of Nigeria.

Campaign group Spotlight on Corruption described the ruling as “a huge setback in the fight against corruption”, saying it gave a “free pass” to banks who ignored red flags.

The damages sought included cash sent to Etete’s company Malabu Oil and Gas, around $875 million paid in three instalments in 2011 and 2013, plus interest, taking the total to over $1.7 billion.

Nigerian military ruler Sani Abacha had awarded licence OPL 245 to a company Etete owned in 1998.

Subsequent Nigerian administrations had challenged Etete’s rights to the field over many years until a deal to resolve the impasse via a sale to Shell and Eni was struck in 2011.

The transaction is also at the centre of ongoing legal action in Italy.

(Additional reporting by Kirstin Ridley; editing by Louise Heavens and Jason Neely)

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(Reuters) -U.S. delivery firm FedEx Corp on Tuesday raised its quarterly dividend by more than 50% to $1.15 per share, sending its shares 10% higher in premarket trading.

The company also said it would add two directors – Amy Lane and Jim Vena – to its board as part of an agreement with hedge fund D.E. Shaw.

Vena most recently held the role of chief operating officer at Union Pacific, while Lane serves as a director of NextEra Energy Inc and TJX Companies Inc.

(Reporting by Nathan Gomes in Bengaluru; Editing by Aditya Soni)

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