Canada hits back on U.S. tariffs; Mnuchin denies Trump wants to quit WTO

OTTAWA/WASHINGTON (Reuters) – Canada struck back at the Trump administration on Friday over U.S. steel and aluminum tariffs, vowing to impose punitive measures on C$16.6 billion ($12.63 billion) worth of American goods until Washington relents.

FILE PHOTO: Canadian Foreign Minister Chrystia Freeland gestures during a joint news conference on the closing of the seventh round of NAFTA talks in Mexico City, Mexico, March 5, 2018. REUTERS/Edgard Garrido/File Photo

The retaliation came as General Motors Co warned that any tariffs Washington might impose on imported vehicles could cost U.S jobs, and as Treasury Secretary Steve Mnuchin denied a report that President Donald Trump wanted to withdraw from the World Trade Organization.

Rising trade tension between Canada and the United States and a pushback from U.S. businesses on further tariffs, including on imported autos, pressured a White House that has championed an “America First” protectionist stance since Trump took office in January 2017.

Mnuchin lashed out against a report by the Axios news website that said Trump frequently told advisers he wanted the United States to quit the WTO, a move that could devastate global commerce. The report cited people involved in discussions with the president.

“This is an exaggeration,” Mnuchin said. “The president has been clear … he has concerns about the WTO, he thinks there’s aspects of it that are not fair, he thinks that China and others have used it to their own advantage, but we are focused on free trade. That’s what we’re focused on – breaking down barriers.”

Canada’s retaliatory tariffs, effective on July 1, largely target U.S. steel and aluminum products, along with foodstuffs such as coffee, ketchup and whisky, according to a list released by Canada’s Finance Department.

“We will not escalate and we will not back down,” Canadian Foreign Minister Chrystia Freeland told reporters at a Stelco Holdings Inc plant in the steel city of Hamilton, Ontario.

The measures are designed to pressure Trump by focusing on goods from states where his Republican party is fighting to hold Congressional seats in the November miterm elections. They were announced just as America’s largest automaker warned that overly broad tariffs could isolate U.S. businesses and cut jobs.

The Trump administration in May launched an investigation into whether imported vehicles posed a national security threat. Trump has repeatedly threatened a 20 percent import tariff on vehicles.

In comments filed with the U.S. Commerce Department, GM said expansive tariffs could “lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less — not more — U.S. jobs.”

GM, which makes many vehicles for the U.S. market in Mexico and Canada, said the tariffs could hike vehicle prices and reduce sales.

Even if automakers opted not to pass along higher costs to consumers, “this could still lead to less investment, fewer jobs, and lower wages for our employees. The carry-on effect of less investment and a smaller workforce could delay breakthrough technologies,” GM said.

Canada’s Freeland called the idea of auto tariffs “absolutely absurd.” U.S. officials have linked the tariffs to slow progress in talks to modernize the North American Free Trade Agreement, which Trump says is a disaster and must be changed.

($1=1.3141 Canadian dollars)

Additional reporting by David Shepardson, David Lawder, Steve Holland and Patricia Zengerle in Washington and Tom Miles in Geneva, Writing by Andrea Hopkins; Editing by David Gregorio

Wall Street jumps as Nike, financials boost

(Reuters) – U.S. stocks jumped on Friday, boosted by a surge in Nike on its strong earnings report and as banking stocks soared after clearing the Federal Reserve’s stress test.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 28, 2018. REUTERS/Brendan McDermid

Nike’s shares surged as much as 11.5 percent to a record high after the world’s largest shoe maker returned to growth in North America last quarter and gave an upbeat forecast for the year.

The S&P financial sector, which snapped a 13-day losing streak on Thursday, jumped 0.88 percent after U.S. lenders cleared the second part of the Federal Reserve’s annual stress tests.

Wells Fargo led the gains, surging 4.6 percent, while Citigroup gained 1.3 percent, Bank of America rose 0.5 percent and JPMorgan was up 0.5 percent.

The gains in Goldman Sachs and Morgan Stanley were lower as they cleared the test with conditions.

Also boosting financials was Commerce Department data that showed core personal consumption expenditures (PCE) in May hit the Federal Reserve’s 2-percent target for the first time in six years.

After a slight wobble on a report that President Donald Trump has said he wanted the United States to withdraw from the World Trade Organization, the markets regained their footing after Treasury Secretary Steven Mnuchin told Fox Business Network that the Axios report was wrong.

“The markets are very much subject to headlines on trade and tariffs,” said Peter Cecchini, chief market strategist at Cantor Fitzgerald in New York.

“They are important from the standpoint that trade globalization has been the cornerstone for growth and when you do something to sort of undermine that cornerstone, that’s a reasonable reason for concern.”

At 9:51 a.m. EDT the Dow Jones Industrial Average was up 215.59 points, or 0.89 percent, at 24,431.64, the S&P 500 was up 17.58 points, or 0.65 percent, at 2,733.89 and the Nasdaq Composite was up 48.01 points, or 0.64 percent, at 7,551.70.

Seven of the 11 major S&P sectors were higher, with the energy index up 1.55 percent as oil prices rose, while the consumer discretionary sector also rose more than 1 percent, boosted by Nike.

Constellation Brands fell 6.9 percent after the Corona beer maker reported a lower-than-expected quarterly profit and maintained its full-year earnings forecast that missed estimates.

KB Homes rose 6.9 percent after the homebuilder’s second-quarter results beat Wall Street estimates.

Advancing issues outnumbered decliners for a 2.66-to-1 ratio on the NYSE and a 2.17-to-1 ratio on the Nasdaq.

The S&P index recorded four new 52-week highs and no new lows, while the Nasdaq recorded 20 new highs and 20 new lows.

Reporting by Amy Caren Daniel in Bengaluru; Editing by Shounak Dasgupta

Drug stocks hit by Amazon health push, while tech steadies Wall Street

(Reuters) – Amazon’s move to entrench itself in the health sector sent drug stocks sliding on Thursday, but gains in financial and technology stocks helped Wall Street keep its footing.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 27, 2018. REUTERS/Brendan McDermid

Amazon.com said it would buy online pharmacy PillPack, sending shares of drug distributors and retailers tumbling as the e-commerce giant moves deeper into the healthcare sector.

Walgreens Boots Alliance, already under pressure after its third-quarter earnings report, tumbled 10.5 percent and along with UnitedHealth’s 2.4-percent drop pulled the Dow Jones Industrial Average lower.

Shares of CVS Health sank 9.3 percent, Rite Aid fell 10.1 percent and Express Scripts was down 3.2 percent.

The S&P health sector dropped 0.73 percent, the most among the 11 S&P sectors, while Amazon gained 0.8 percent.

The U.S. economy slowed more than previously estimated in the first quarter, with Commerce Department data showing gross domestic product increased at a 2 percent annual rate in the period, instead of the 2.2 percent pace reported last month.

The revision came amid the weakest performance in consumer spending in nearly five years and with the United States engaged in tit-for-tat trade tariffs with its major trade partners, including China, Canada and the European Union.

While data shows the U.S. GDP growth appears to have regained momentum in the second quarter on the back of a robust labor market and tax cuts, analysts fear the tariff wars could undermine those benefits.

“Investors remain fixated on trade disputes which continue to weigh on risk appetite,” said Craig Erlam, senior market analyst at online forex broker Oanda.

“With Trump picking fights on multiple fronts and no sides showing any willingness to back down, we may have to get used to this risk-averse environment in the near-term.”

At 9:59 a.m. EDT the Dow Jones Industrial Average was down 76.70 points, or 0.32 percent, at 24,040.89, the S&P 500 was up 1.76 points, or 0.07 percent, at 2,701.39 and the Nasdaq Composite was up 9.90 points, or 0.13 percent, at 7,454.98.

Amazon’s burgeoning reach was not limited to just the health sector. Its plans to entice entrepreneurs to set up their own package-delivery businesses sent shares of United Parcel Service and FedEx skidding about 2.5 percent each.

Seven of the 11 major S&P sectors were higher, with the financial index gaining 0.19 percent ahead of results from the second round of the Federal Reserve’s stress test for banks and lenders.

The technology sector’s 0.43 percent jump gave the biggest boost to the market.

Accenture jumped 5.1 percent after the consulting and outsourcing services provider reported quarterly revenue and profit above estimates.

Marvell Technology jumped 7.9 percent after the chipmaker said China cleared its $6 billion acquisition of rival Cavium, which rose 9.6 percent.

Declining issues outnumbered advancers for a 1.20-to-1 ratio on the NYSE and a 1.16-to-1 ratio on the Nasdaq.

The S&P index recorded seven new 52-week highs and 22 new lows, while the Nasdaq recorded 17 new highs and 67 new lows.

Reporting by Sruthi Shankar in Bengaluru and Savio D’Souza; Editing by Shounak Dasgupta

Automakers warn U.S. tariffs will cost hundreds of thousands of jobs, hike prices

WASHINGTON (Reuters) – Two major auto trade groups on Wednesday warned the Trump administration that imposing up to 25 percent tariffs on imported vehicles would cost hundreds of thousands of auto jobs, dramatically hike prices on vehicles and threaten industry spending on self-driving cars.

FILE PHOTO: A logo of Toyota Motor Corp is seen at the company’s showroom in Tokyo, Japan June 14, 2016. REUTERS/Toru Hanai

A coalition representing major foreign automakers including Toyota Motor Corp, Volkswagen AG (VOWG_p.DE), BMW AG, and Hyundai Motor Co, said the tariffs would harm automakers and U.S. consumers. The administration in May launched an investigation into whether imported vehicles pose a national security threat and President Donald Trump has repeatedly threatened to quickly impose tariffs.

“The greatest threat to the U.S. automotive industry at this time is the possibility the administration will impose duties on imports in connection with this investigation,” wrote the Association of Global Automakers representing major foreign automakers. “Such duties would raise prices for American consumers, limit their choices, and suppress sales and U.S. production of vehicles.”

The group added: “Rather than creating jobs, these tariffs would result in the loss of hundreds of thousands of American jobs producing and selling cars, SUVs, trucks and auto parts.”

On Friday Trump threatened to impose a 20 percent tariff on all imports of EU-assembled cars. On Tuesday Trump said tariffs are coming soon. “We are finishing our study of Tariffs on cars from the E.U. in that they have long taken advantage of the U.S. in the form of Trade Barriers and Tariffs. In the end it will all even out – and it wont take very long!” Trump tweeted.

The Alliance of Automobile Manufacturers, representing General Motors Co, Ford Motor Co, Daimler AG, Toyota and others, urged the administration in separate comments filed Wednesday not to go forward.

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“We believe the resulting impact of tariffs on imported vehicles and vehicle components will ultimately harm U.S. economic security and weaken our national security,” the group wrote, calling the tariffs a “mistake” and adding imposing them “could very well set a dangerous precedent that other nations could use to protect their local market from foreign competition.”

The Alliance said its analysis of 2017 auto sales data showed a 25 percent tariff on imported vehicles would result in an average price increase of $5,800, which would boost costs to American consumers by nearly $45 billion annually.

Automakers are concerned tariffs will mean less capital to spend on self-driving cars and electric vehicles.

“We are already in the midst of an intense global race to lead on electrification and automation. The increased costs associated with the proposed tariffs may result in diminishing the U.S.’ competitiveness in developing these advanced technologies,” the Alliance wrote.

Both automotive trade groups cited a study by the Peterson Institute for International Economics that the cost to U.S. jobs from the import duties would be 195,000 jobs and could be as high as 624,000 jobs if other countries retaliate.

The proposed tariffs on national security grounds have been met by opposition among many Republicans in Congress.

Trump has made the tariffs a key part of his economic message and repeatedly lamented the U.S auto sector trade deficit, particularly with Germany and Japan. Some aides have suggested that the effort is a way to try to pressure Canada and Mexico into making more concessions in ongoing talks to renegotiate the North American Free Trade Agreement.

U.S. Commerce Secretary Wilbur Ross said on Thursday the department aimed to wrap up the probe by late July or August. The Commerce Department plans to hold two days of public comments in July on its investigation of auto imports.

The Commerce Department has asked if it should consider U.S. owned auto manufacturers differently than foreign automakers.

The Association of Global Automakers rejected that contention, saying its members’ American workers “are no less patriotic or willing to serve their country in a time of crisis than any other Americans.”

The group questioned national security as grounds to restrict auto imports. “America does not go to war in a Ford Fiesta,” they added.

The Alliance said “there is no basis to claim that auto-related imports are a threat to national security” and noted that 98 percent of U.S. auto imports came from U.S. national security allies.

In 1941, there were 31 manufacturing facilities in the U.S producing fewer than four million vehicles, the Alliance said. By contrast, the United States now has 45 assembly plants – operated by both U.S. and foreign automakers. Those plants produced nearly 12 million vehicles in 2017, more than three times the production volume before World War II.

“We are confident that today’s U.S. production capabilities are more than sufficient to satisfy our country’s future security needs,” the Alliance wrote.

Reporting by David Shepardson

GE to spin off healthcare unit, divest Baker Hughes stake

(Reuters) – General Electric Co said on Tuesday it will spin off its healthcare business and divest its stake in oil-services company Baker Hughes, leaving the once-sprawling conglomerate focused on jet engines, power plants and renewable energy.

FILE PHOTO: The General Electric logo is pictured on the General Electric offshore wind turbine plant in Montoir-de-Bretagne, near Saint-Nazaire, western France, November 21, 2016. REUTERS/Stephane Mahe/File Photo

The changes are designed to reward battered shareholders and to strengthen GE’s balance sheet by reducing debt, building up cash and further shrinking GE Capital, GE said. Shareholders will receive 80 percent of the value of GE Healthcare as a tax-free distribution of shares.

GE shares jumped 6.8 percent to $13.60 in premarket trading.

The 126-year-old company, which was once the most valuable U.S. corporation, will spin off the profitable healthcare unit over the next 12 to 18 months, and sell its Baker Hughes stake over two to three years, it said.

The moves, which end a year-long strategic review, mirror changes that Wall Street analysts had called for a year ago. They come as GE is replaced in the Dow Jones Industrial Average, the iconic stock index that GE was a founding member of in 1896.

With these finishing touches, GE said its plan to divest $20 billion in assets “is substantially complete,” leaving a “simpler and stronger” company with plans to boost its growth, operating profits and shareholder returns.

“We are aggressively driving forward as an aviation, power and renewable energy company – three highly complementary businesses poised for future growth,” Chief Executive John Flannery said in a statement.

The remaining businesses “share similar technologies and industrial markets, in contrast to limited synergies that exist with GE Healthcare,” Fitch analyst Eric Ause said in a note.

BEST AND WORST

The changes leave GE with some of its best- and worst-performing units. Aviation has been highly profitable, but the power business profit has tumbled as sales of plants and services have slowed, and renewable energy profit margins are in the single digits.

The spinoff of its healthcare unit follows a similar move by rival Siemens AG, which floated its medical business as a separate company, Siemens Healthineers, in March.

GE faces tough competition for medical imaging machines, which include MRI scanners and ultrasound devices, from rivals Philips and Siemens, as well as Asian upstarts.

On Monday GE said it agreed to sell its distributed power unit for $3.25 billion to U.S. buyout group Advent. GE also has agreed to shed its transportation unit, which makes railroad locomotives.

GE bought Baker Hughes in July 2017 and combined it with the GE oil and gas equipment and services operations to create a new company in which GE holds a 62.5 percent stake. The unit reported sales of $17.23 billion in 2017.

GE said it plans to reduce its industrial net debt by about $25 billion by 2020 and maintain more than $15 billion of cash on its balance sheet.

The company has foundered in several key industrial markets in recent years, and a foray into financial services steered it into the eye of the global financial crisis in 2008. GE has since largely divested GE Capital, but lingering liabilities forced GE to take a $6.2 billion charge last year, and begin setting aside $15 billion more in reserves against insurance claims.

Reporting by Alwyn Scott in New York, Ben Hirschler in London and Ankit Ajmera, Ismail Shakil and Rachit Vats in Bengaluru; Editing by Bernard Orr and Jeffrey Benkoe

Stock futures drop as trade tensions escalate

(Reuters) – Wall Street was set to start the week lower on Monday, as a move to check Chinese investments in U.S. technology firms further raised tensions between the United States and its trading partners.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 19, 2018. REUTERS/Brendan McDermid

The U.S. Treasury Department was set to be drafting curbs that would block firms with at least 25 percent Chinese ownership from buying U.S. companies with “industrially significant technology,” a government official said on Sunday.

Chipmakers and U.S.-listed Chinese companies were among the most traded stocks in premarket trading on Monday. Advanced Micro Devices fell 0.6 percent and Alibaba dropped 1.7 percent.

The move marks another escalation of President Donald Trump’s trade conflict with China, which has sent ripples across financial markets and threatened to dent global growth.

Harley-Davidson dropped 1.7 percent after the motorcycle maker forecast additional costs due to European Union tariffs.

The Dow Jones Industrial Average lost 2 percent last week, posting its worst weekly performance since late March, after Trump threatened to impose a 20 percent tariff on all European Union car imports. The EU — which has promised retaliatory measures on Harley-Davidson, bourbon and other products — vowed to respond.

“The catalyst for weakness is overnight reports pointing to White House plans to tighten restrictions on Chinese investments in the US and limiting tech exports to China. Moreover, EU rhetoric continues to be tough,” Peter Cecchini, chief market strategist at Cantor Fitzgerald in New York, wrote in a client note.

At 8:52 a.m. ET, Dow e-minis were down 166 points, or 0.67 percent. S&P 500 e-minis were down 13 points, or 0.47 percent and Nasdaq 100 e-minis were down 53.75 points, or 0.74 percent.

Brent crude prices, which provided support to the equity markets last week, fell more than 1.5 percent as investors prepared for an extra 1 million barrels per day in output to hit the markets after OPEC and its partners agreed to raise production.

A Commerce Department report, due at 10:00 a.m. ET, is expected to show new home sales rose 1.5 percent to a 667,000-unit rate in May.

Among early gainers was Campbell Soup, which jumped 5.5 percent after a New York Post report that Kraft Heinz was considering buying the company. Kraft Heinz rose 0.4 percent.

Education Realty Trust Inc rose 1.5 percent after the company said it would be acquired by an affiliate of Greystar Real Estate Partners for about $4.6 billion, including debt.

Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta

EU to respond to any U.S. auto tariff move: report

PARIS (Reuters) – The European Union will respond to any U.S. move to raise tariffs on cars made in the bloc, a senior European Commission official said, the latest comments in an escalating trade row.

FILE PHOTO – Harley-Davidson bikes are seen at the “Hamburg Harley-Days” in Hamburg, Germany, June 22, 2018. REUTERS/Fabian Bimmer

U.S. President Donald Trump on Friday threatened to impose a 20 percent tariff on all imports of EU-assembled cars, a month after his administration launched an investigation into whether auto imports posed a national security threat.

“If they decide to raise their import tariffs, we’ll have no choice, again, but to react,” EU Commission Vice President Jyrki Katainen told French newspaper Le Monde.

“We don’t want to fight (over trade) in public via Twitter. We should end the escalation,” he said in the comments published on Saturday.

The European Autos Stocks Index fell on Friday after Trump’s tariff threat. Shares U.S. carmakers Ford Motor Co and General Motors Co also dropped.

FILE PHOTO: The Mercedes emblem is seen on a vehicle at the New York Auto Show in the Manhattan borough of New York City, New York, U.S., March 29, 2018. REUTERS/Shannon Stapleton/File Photo

“If these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!” Trump tweeted.

The U.S. Commerce Department has a deadline of February 2019 to investigate whether imports of automobiles and auto parts pose a risk to U.S. national security.

U.S. Commerce Secretary Wilbur Ross said on Thursday the department aimed to wrap up the probe by late July or August. The Commerce Department plans to hold two days of public comments in July on its investigation of auto imports.

Trump has repeatedly singled out German auto imports to the United States for criticism.

Trump told carmakers at a meeting in the White House on May 11 that he was planning to impose tariffs of 20 or 25 percent on some imported vehicles and sharply criticized Germany’s automotive trade surplus with the United States.

The United States currently imposes a 2.5 percent tariff on imported passenger cars from the EU and a 25 percent tariff on imported pickup trucks. The EU imposes a 10 percent tariff on imported U.S. cars.

The tariff proposal has drawn sharp condemnation from Republican lawmakers and business groups. A group representing major U.S. and foreign automakers has said it is “confident that vehicle imports do not pose a national security risk.”

The U.S. Chamber of Commerce said U.S. auto production had doubled over the past decade, and said tariffs “would deal a staggering blow to the very industry it purports to protect and would threaten to ignite a global trade war.”

German automakers Volkswagen AG (VOWG_p.DE), Daimler AG and BMW AG build vehicles at plants in the United States. BMW is one of South Carolina’s largest employers, with more than 9,000 workers in the state.

The United States in 2017 accounted for about 15 percent of worldwide Mercedes-Benz and BMW brand sales. It accounts for 5 percent of Volkswagen’s VW brand sales and 12 percent of its Audi brand sales.

Reporting by Mathieu Rosemain; Additional reporting by David Shepardson in Washingtom; Editing by Edmund Blair and Mark Potter

Xiaomi puts indefinite delay on CDRs in blow to China’s plans for tech listings

HONG KONG (Reuters) – Chinese smartphone maker Xiaomi Corp (IPO-XMGP.HK) said on Saturday there is no time frame for a mainland share offering, casting doubt on Beijing’s efforts to lure foreign-listed Chinese tech giants back home.

Xiaomi’s Founder, Chairman and CEO Lei Jun attends a news conference in Hong Kong, China June 23, 2018.  REUTERS/Bobby Yip

Xiaomi had been expected to raise up to $10 billion, split between its Hong Kong and mainland offerings. But in a surprise move this week, it postponed its mainland share offering until after it completes its scheduled July 9 listing in Hong Kong.

It did not say when it would restart its China depositary receipts (CDRs) issuance process or why it was postponing the mainland offering.

Sources told Reuters the decision was mainly because of a dispute between the company and Chinese regulators over the valuation of its CDRs, but the company denied this.

“We’ve had many rounds of discussions with the regulators and reached a consensus that to ensure the quality of our CDR issuance, it’s better that we go public in Hong Kong first,” Xiaomi’s chief financial officer, Shou Zi Chew, told a news conference in Hong Kong.

Xiaomi, which also makes internet-connected devices, awarded its chief executive and co-founder Lei Jun about $1.5 billion worth of shares for his contribution to the company, it said in an updated regulatory filing this week, in one of the largest one-off share-based corporate bonuses in years.

The $1.5 billion stock, which has been awarded to Lei’s holding entity – Smart Mobile Holdings Ltd – was recorded by Xiaomi as share-based compensation expenses on April 2, one month before it filed for its blockbuster Hong Kong IPO.

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Xiaomi is the latest high-profile company to lavish its senior executives with large stock awards ahead of a stock market flotation in recent years.

Its co-founder and president, Lin Bin, defended the board’s decision on the compensation.

“Many new-economy companies have compensated their chairmen or CEOs with stocks ahead of the IPOs. Xiaomi isn’t the first and won’t be the last to do so,” he said at the news conference.

Lin added Xiaomi’s board unanimously agreed on the stock award to Lei, who “completely knew nothing about it”.

Chinese e-commerce powerhouse JD.com (JD.O) awarded CEO Richard Liu stocks worth nearly $900 million at the company’s IPO price, ahead of its New York listing in 2014.

Xiaomi has lined up $548 million from seven cornerstone investors including U.S. chipmaker Qualcomm Inc (QCOM.O) for its Hong Kong IPO, Reuters reported on Thursday.

The offering is set to be the first listing under new exchange rules designed to attract tech floats, as competition heats up between Hong Kong, New York and the Chinese mainland.

It is selling about 2.18 billion shares at a price range of HK$17 to HK$22 ($2.17 to $2.80) each, representing a multiple of 22.7–29.3 times 2019 earnings forecast by its underwriting syndicate.

The IPO values the Beijing-based, Cayman-domiciled company at $54.3 billion – $70.3 billion after a 15 percent “greenshoe” or over-allotment option which can be sold if there is demand. If the greenshoe is exercised, Xiaomi’s free float will be 9.99 percent of its enlarged share capital.

The new valuation range is far below the $100 billion touted by sources this year and below the more recent $70 billion plus valuation target that some analysts and investors see as aggressive.

CEO Lei said he expected to expand its product range and international market presence. Xiaomi’s phones are sold in 74 countries.

“I agree the smartphone market in the next 10 years will grow slowly. But still, it is a giant market,” Lei said.

Set up in 2010, the company doubled its smartphone shipments in 2017 to become the world’s fourth-largest maker, according to Counterpoint Research, defying a global slowdown in smartphone sales.

Xiaomi also makes dozens of internet-connected home appliances and gadgets, including scooters, air purifiers and rice cookers.

(This version of the story corrects Xiaomi’s scheduled listing date is July 9, not July 7, in paragraph 2)

Reporting by Julie Zhu and Sijia Jiang in Hong Kong; Additional reporting by Fiona Lau of IFR; Editing by Anne Marie Roantree and Stephen Coates

Stocks set for worst week in three months on trade war worries

LONDON (Reuters) – World shares rose on Friday but were set to end a second week lower amid intensifying worries over the fallout of a trade dispute resulting from U.S. tariffs, while oil prices were higher ahead of an OPEC meeting later in the day.

FILE PHOTO: The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, March 21, 2018. REUTERS/Tilman Blasshofer

The MSCI All-Country World index .MIWD00000PUS, which tracks stocks in 47 countries, was up 0.2 percent in the European morning but down 1.3 percent on the week, its worst weekly showing since mid-March.

Investor anxiety over a possible full-blown trade war has deepened this week over increasingly sharp rhetoric between the United States and China, and growing evidence of the economic damage such a conflict could produce.

German carmaker Daimler (DAIGn.DE) cut its earnings forecast earlier this week, saying tariffs on cars exported from the United States to China would hurt Mercedes-Benz sales.

India joined the European Union and China in retaliating against U.S. President Trump’s tariffs on steel and aluminium, raising import duties on U.S. almonds by 20 percent.

U.S. Commerce Secretary Wilbur Ross said on Thursday the United States needed to make it harder for its trading partners to have high trade barriers in order to achieve Trump’s ultimate goal of lower tariffs and a level playing field.

Chinese state media said on Friday that U.S. protectionism was self-defeating and a “symptom of paranoid delusions” that must not distract China from its path to modernisation.

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“With no negotiations in sight at the moment, our base case (scenario) is shifting to a further escalation of the trade conflict between the two countries,” wrote analysts at Danske Bank in a note to clients.

There is a risk of a further deterioration in relations on June 30, when Washington is due to announce a plan to restrict Chinese investments into the United States and limit exports of U.S. tech products to China, they added.

Strong financial stocks and better-than-expected euro zone purchasing managers index for services helped drive a timid relief bounce in European shares. The pan-European STOXX 600 and its euro zone counterpart .STOXXE were set for their biggest weekly loss in three months as the consequences of rising protectionism sank in, notably for the autos sector.

The strong PMIs also boosted the euro EUR=D4. It was last up half a percent on the day and was set to end the week higher by half a percent. Against a basket of currencies, the dollar was 0.2 percent lower.

Against the yen, the greenback was little changed. It was modestly higher at 110.14 yen JPY=EBS, below a one-week high of 110.76 scaled the previous day amid lingering concerns over the U.S.-China trade dispute.

“The potential for all-out trade war, European political risks and emerging market volatility remain potent factors that should contain dollar/yen within the current range, though the lack of downside over the last week or so suggests stronger underlying demand,” wrote Robert Rennie, head of market strategy at Westpac.

The European PMIs also showed manufacturing growth was the weakest in 18 months on trade worries.

Elsewhere in Europe, Greece’s borrowing costs fell to four-week lows on Friday after Athens won debt relief from the euro zone.

Sterling was half a percent higher against the dollar GBP=D3 on Friday, extending gains made the previous day after the Bank of England’s chief economist Andy Haldane unexpectedly joined the minority of policymakers calling for a UK interest rate hike, citing concerns about growing wage pressure.

Oil prices rose on uncertainty ahead of a meeting of the Organization of Petroleum Exporting Countries (OPEC) and other major producers including Russia starting in Vienna later in the day.

Saudi Arabia and Russia are in favour of raising output. Other OPEC-members, including Iran, have opposed this, resulting in a flurry of backdoor diplomacy ahead of the meeting.

Brent crude LCOc1 traded at $74.00 a barrel, up 1.3 percent. U.S. West Texas Intermediate crude CLv1 rose 1.1 percent to $66.27 per barrel.

Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped as much as 0.35 percent at one point to touch its weakest since early December, before erasing losses to be up 0.15 percent. Still it was 2.3 percent off for the week.

Hong Kong’s Hang Seng .HSI plumbed six-month lows, having lost 3.9 percent so far this week. South Korea’s KOSPI .KS11 hit nine-month lows and in mainland China, the CSI300 index .CSI300 lost almost 5 percent this week to one-year lows.

Japan’s Nikkei .N225 gave up 0.8 percent for a weekly loss of 1.7 percent.

Reporting by Ritvik Carvalho; additional reporting by Saikat Chatterjee; Editing by Jon Boyle