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Financial Services Roundup: Market Talk

11 Nov 2017 9:20 am

The latest Market Talks covering Financial Services. Exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

2226 GMT - PayPal suspends operations of TIO Networks, a bill-payment firm that the company acquired for $238 million earlier this year. PayPal says in a news release that the suspension was the result of the "discovery of security vulnerabilities on the TIO platform and issues with TIO's data security program that do not adhere to PayPal's information security standards." PayPal's namesake platform isn't affected by the news because TIO isn't connected to the rest of PayPal's network. Vancouver-based TIO caters to consumers outside the traditional financial system who use cash to pay their utility bills. As of February, the company counted 14 million consumer accounts and 10,000 billers. (peter.rudegeair@wsj.com; @rudegeair)

1935 GMT - Retail sales of farm tractors and harvesting combines in the US and Canada were surprisingly strong on October. Sales of high-horsepower, two-wheel-drive tractors rose 38% from last October, says the Association of Equipment Manufacturers. US sales alone increased 43%. Sales of four-wheel-drive tractors were up 15%. Combine sales increased by 47%. October's sales report is "somewhat surprising," says JPMorgan, given that the market conditions for "US row-crop farmers remain broadly negative and 2018 looks set up to be another challenging year." Farm equipment makers Deere, CNH Industrial and AGCO all trading higher. (robert.tita@wsj.com; @bob_tita)

1657 GMT - The Bel-20 ends down 0.4% at 4026.26 on Friday. Bekaert is the day's biggest loser, ending down 3.3%, followed by Ontex group, which closes down 1.4%. Among stocks ending in the green, KBC and Umicore both up 0.6%. (natalia.drozdiak@wsj.com; @nat_droz)

1546 GMT - Toronto-based Fairfax Financial increases its stake in Toronto Star publisher Torstar to about 41% late Thursday, according to a filing. Fairfax, a financial-services holding company that own stakes in several insurers as well as BlackBerry, purchased 9.4M Class B Torstar shares for C$1.25 totaling about C$11.8M. Torstar, which also owns several Canadian metro newspapers, recently reported 3Q revenue of C$164M, down 9% from last year amid an ongoing downturn in Canadian print advertising. Torstar rises 5.4% to C$1.37. (david.george-cosh@wsj.com; @itsdgc)

1625 GMT - Greece's Eurobank says it is close to finalizing a deal to sell its Romanian subsidiaries to Banca Transilvania. The sale is part of the bank's restructuring plan and includes its units Bancpost, ERB Retail Servces IFN and ERB Leasing IFN. An agreement could be reached by the end of November, the bank said. (nektaria.stamouli@wsj.com)

1453 GMT - As equity indexes hit record highs, investors are "persistently and increasingly" risk averse, a hangover from prior financial crises, BlackRock Investment Institute says. That risk aversion is helping to keep the lid on interest rates, which are likely to climb, but ultimately settle well below historic averages as global economies expand, it says. Risk aversion has led to an increased appetite for safe-haven assets, particularly US, German and Japanese government bonds, creating a safety premium for bonds that will persist until investors' perceptions change, which isn't likely soon, the institute says. "Ironically, that safety premium could benefit risk assets, as low rates suggest compensation for risk is high and justified," it says. (Daisy.Maxey@wsj.com; @DaisyMaxey)

1444 GMT - Munich Re seems likely to take a tougher stance on pricing, says Deutsche Bank. The insurance company said that after seeing price declines since 2013, the overall background for price negotiations is now "substantially improved," and it would no longer accept price reductions. Following a string of natural disasters in 2017, the company says overall prices in 2018 should at least stay flat, with price increases higher closest to loss-impact areas. Deutsche Bank says this echoes what Munich Re's peers are saying, and the brokerage expects a 1.5 percentage point improvement in Munich Re's combined ratio over the course of 2018 and 2019, which would put prices back at 2015 levels. (sonia.amaralrohter@dowjones.com)

1424 GMT - Euro-denominated covered bonds seem poised to perform better than sterling-denominated paper, ING strategist Maureen Schuller says in a note. Sterling covered spreads are tighter at the front end of the curve. Meanwhile, supply dynamics are more supportive in the eurozone, where issuance has been slower this year compared to a pick-up of sterling supply. And the European Central Bank's asset purchase program, which includes euro covered bonds, will run until at least September 2018. (tasos.vossos@wsj.com; @tasosvos)

1356 GMT - Spreads on European banks' unsecured bonds look bound to rise in 2H 2018, as a combination of monetary policy, regulation and stress tests may bite, according to NordLB. The German regional bank cites the debate on when and how the European Central Bank will end asset purchases, after it announced an extension of bond-buying until at least September. Additional regulatory capital requirement could push spreads higher, while there are also risks from the full implementation of Basel III in early 2019 and the results of the European Banking Authority's stress tests.(tasos.vossos@wsj.com; @tasosvos)

1150 GMT - How did DNB Boligkreditt managed to draw solid demand to its seven-year covered bond even though the spread over mid-swaps was the tightest ever for a Norwegian-covered bond? The answer is probably that investors were lured by the spread pick-up of around 10 basis points versus core eurozone covered bonds, which is a lot given currently tight spreads in the market, ABN Amro strategist Joost Beaumont says in a note. DNB's EUR1.5 billion issue was priced at 9 bps below mid-swaps Thursday and was 1.3 times oversubscribed. (tasos.vossos@wsj.com; @tasosvos)

1146 GMT - Commerzbank's third-quarter results undershot forecasts, but its turnaround is beating expectations and gathering steam, says CFRA. The investment research company raises the German bank to a sell from a strong sell and increases its target price to 10 euros from EUR8.5. Commerzbank swung to a profit in the third quarter and confirmed that it expects to post a small profit for the full year. Shares trade up 0.25% at EUR12.02. (pietro.lombardi@dowjones.com; @pietrolombard10)

1104 GMT - Alfa Financial Software should be able to increase its market penetration among top-tier asset-finance clients and grow ahead of the underlying market, says Berenberg. The brokerage notes Alfa currently works with only 30 of the top 150 asset-finance companies, giving it scope to grow. Berenberg estimates the asset-finance software sector can grow by at least mid-single digits in the coming years, but Alfa can grow over twice as fast, indicating a 12.5% compound annual growth rate. Berenberg adds this could be even higher if client wins and contract revenue accelerate. Berenberg initiates coverage of the stock with a buy rating and 600 pence target price. Shares are up 10.50 pence, or 2.2%, at 490.50 pence. (adam.clark@dowjones.com)

(END) Dow Jones Newswires

November 11, 2017 04:20 ET (09:20 GMT)

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