The (early) Lunch Wrap

Good morning New York…

FT ALPHAVILLE

The Bárcenas scandal: Just how bad could the Rajoy slush fund scandal get? At a presser earlier this week the Spanish PM said that the information in the press “is untrue — except for some things”, but he didn’t bother to elaborate on what those things were. We’re confused. David’s post tries to shed some light on what the fallout of the scandal might be, and notes that Spanish politics is no stranger to a bit of corruption scandal.

A gesture, at least, towards Chinese redistribution and rebalancing: After eight years and much delay, China’s State Council has released its plan for addressing income inequality. Although it focuses on income inequality, its wording suggests the government is putting more weight on income growth rather than distribution. Kate’s post looks at the details, including the provision that state-owned enterprises who will have to raise their dividends paid to the treasury by 5 percentage points by 2015.

NEWS

US DoJ accuses S&P of $5bn fraud: Standard & Poor’s has been accused by the US justice department of defrauding investors in mortgage-related securities out of at least $5bn by issuing inflated ratings to win hundreds of millions of dollars in fees. Shares in McGraw-Hill, the credit rating agency’s parent, also named as a defendant, have fallen 23 per cent since the lawsuit was first revealed on Monday. The 128-page civil lawsuit is the first against a credit rating agency. “Put simply, this alleged conduct is egregious – and it goes to the very heart of the recent financial crisis,” said Eric Holder, US attorney-general, in announcing the charges. (Financial Times)

BlackBerry’s Z10 enjoys strong reception: The new smartphone is proving popular with consumers in Canada and the United Arab Emirates and is selling out in some stores in the UK, according to mobile operators and industry analysts. Strong demand for the Z10, launched last week by BlackBerry chief executive Thorsten Heins, follows mostly favourable reviews from industry analysts and commentators and has spurred a rebound in the company’s volatile share price. In Toronto the stock was 7 per cent higher at C$16.04 in early afternoon trading. (Financial Times)

Google wins landmark Australian legal case: Australia’s highest court has found that Google is not responsible for the content of third-party advertisements displayed in web searches, concluding a landmark case that had drawn international attention. The ruling brings to an end a six-year legal wrangle between the search engine and the Australian Competition & Consumer Commission that had threatened Google’s main source of revenue – sponsored links or advertisements. The case had been watched closely in Australia and internationally because it had the potential to affect all publishers of ads that pass on or host third-party business, lawyers said. (Financial Times)

Liberty Global confirms Virgin Media bid: John Malone’s Liberty Global has confirmed an agreed $23.3bn cash and stock bid for Virgin Media, the UK cable operator, offering $47.87 a share in a move that will upend competition in the UK pay television, broadband and telecoms market. With a successful entry into the UK taking Liberty Global’s reach to 25m customers, Mr Malone would be the dominant player in the European television market, as Liberty Global also operates cable assets in Germany, Belgium, and other countries across the continent. (Financial Times) Virgin under Liberty will avoid BSkyB UK rights battle (Reuters)

Cable revives RBS privatisation plan: Business secretary Vince Cable will on Wednesday revive a radical plan to return Royal Bank of Scotland to the private sector by distributing free shares to the public, as the majority state-owned bank announces a £390m Libor settlement with UK and US regulators. The long-awaited Libor fines include about £90m for the Financial Services Authority, $150m (£96m) for the US Department of Justice and $325m for the Commodity Futures Trading Commission, according to two people familiar with the deal. However, a third person cautioned the figures could be tweaked at the last minute. (Financial Times)

Claims may push BP’s spill bill to $90bn: BP is facing damages demands of more than $34bn from US states and local government over the 2010 Deepwater Horizon disaster, a figure that could lead to significant upward revisions of its potential bill for the Gulf of Mexico spill. The energy group on Tuesday said Alabama, Mississippi, Florida and Louisiana had all presented claims for alleged losses, including economic and property damage, as a result of the catastrophe. The newly-detailed claims would imply a total bill of more than $90bn for the British company if the maximum possible penalties and damages are awarded. BP has so far set aside $42bn in provisions. (Financial Times)

UK house prices dip on month in January: British house prices dipped on the month in January but posted their first annual rise in more than two years, according to Halifax. It said prices dropped 0.2 per cent last month in line with economists’ forecasts in a Reuters poll and after a one per cent gain in December. (Reuters)

Abe blasts China over maritime incident: Shinzo Abe has accused China of provocatively escalating an increasingly dangerous Sino-Japanese spat over the Senkaku Islands, a day after Tokyo accused the Chinese navy of aiming weapons at a Japanese warship. “It was a unilateral, provocative act and extremely regrettable,’’ the Japanese prime minister said on Wednesday. “I urge strong restraint by China so the situation will not unnecessarily escalate.” Japan’s defence ministry on Tuesday said a Chinese frigate had locked a weapons radar on to a Japanese destroyer on January 30, and that a Chinese ship had targeted a Japanese helicopter in the same way two weeks before that. (Financial Times)

Markets: Stock barometers are inching back to recent multiyear highs as optimism over the global economy and corporate profits, not to mention ongoing central bank support, encourage the buying of certain so-called riskier assets. The FTSE All-World equity index is up 0.3 per cent as the FTSE Eurofirst 300 rises 0.4 per cent and after the Asia-Pacific region added 1 per cent. US index futures suggest Wall Street’s S&P 500 will add 2 point to 1,513, leaving the benchmark a fraction off its highest close in more than five years and just 3.5 per cent shy of virgin territory. It now appears that Monday’s risk asset wobble on a spark of eurozone political fears was treated by many investors as simply an opportunity to buy back into a rally that has left the All-World flirting with its best levels since June 2008. (Financial Times)