The 6am London Cut

Markets: Stocks in Greater China climbed as China’s central bank allowed the country’s currency to rise slightly, ending a seven-day losing streak. (FT’s Global Markets Overview)

Putin puts armed forces on alert in Ukraine show of strength: He ordered a surprise drill by forces in western Russia, including areas bordering Ukraine. Sergei Shoigu, defence minister, insisted the exercise was “largely unrelated to events in Ukraine”, but John Kerry, US secretary of state, nevertheless made clear that any sign of intervention would not be acceptable to Washington. (Financial Times)

Brazil’s central bank has raised benchmark interest rates by another quarter point to 10.75 per cent as it continues the battle against inflation. The bank’s board voted unanimously to raise the Selic rate, which most economists had expected. Brazil is caught in an uncomfortable bind of weakening growth and rising inflation. (FastFT)

US senators rebuff Credit Suisse arguments over tax allegations: US senators accused Credit Suisse executives of hiding behind Swiss laws during a testy hearing in Washington to investigate allegations the bank helped 22,000 US clients avoid tax. Credit Suisse chief executive Brady Dougan and the bank’s general counsel, Romeo Cerutti, repeatedly told the Senate Permanent Subcommittee on Investigations that they were prohibited from providing all the US client names that authorities are seeking. (Financial Times)

Tesla Motors, the US electric car manufacturer, announced plans to sell at least $1.6bn in convertible senior notes to raise funds for a vast new battery factory as its shares hit a record high on Wednesday. Morgan Stanley, Goldman Sachs, JPMorgan Chase and Deutsche Bank are managing the offer, which could be priced as early as Thursday. All four banks participated in the company’s 2010 initial public offering. (Financial Times)

RelevantFT Alphaville

Stephen Hester is finalising plans to shore up RSA’s balance sheet by as much as £1.5bn with one of the biggest equity raisings by a UK insurer, said people with knowledge of the matter. The former Royal Bank of Scotland chief, drafted in to run RSA after a series of profit warnings, is expected to press the button on Thursday on a rights issue of about £800m. It is set to be priced at a discount of between 35 and 40 per cent to the current share price. (Financial Times)

Ocwen Financial, the fourth-largest US mortgage servicer, has come under renewed fire as New York’s chief financial regulator cautioned that potential conflicts of interest could encourage the company to “push homeowners unduly into foreclosure”. (Financial Times)

“Bank of America said it does not owe the U.S. government the $2.1 billion it is seeking in penalties after a jury found the bank liable for fraud over defective mortgages sold by its Countrywide unit, according to a court filing made on Wednesday. Lawyers for the bank said the government’s request “contradicts every pertinent legal principle” and called it a “dramatic departure from reality,” the filing stated. Bank of America said in the filing that it should only have to pay the amount it made in profit from selling the loans, which it contended was zero.” (Reuters)

Rusal told a court that it could lose “at the very least tens of millions of pounds” under new regulations from the London Metal Exchange that it has called a breach of its human rights. Lawyers acting for Rusal told a court in London that the LME had made an “irrational and disproportionate decision” that would depress aluminium prices in the short term. It has asked the court to quash the new rules, which are meant to reduce warehouse queues, and to require the exchange to consider other options. (Financial Times)

Vale posted its biggest quarterly loss since it went public in 1997 after settling a decade-long tax dispute with the Brazilian government. The Rio de Janeiro-based company, which also ranks as the world’s third-biggest miner by market value, posted a net loss of $6.45bn in the last three months of 2013, more than double its loss of $2.62bn a year earlier. (Financial Times)

Qantas will axe 5,000 jobs, sell domestic terminals leases, retire aircraft early and defer some existing orders in a radical restructuring designed to return the airline to profit. Australia’s national flag carrier revealed the turnround strategy on Thursday, as it reported underlying losses of A$252m (US$226m) for the six months to end December 2013 – the biggest first-half loss since the airline was privatised in 1995. (Financial Times)

US buyout house Blackstone is nearing agreement to buy a minority stake in Italian luxury group Versace, in a move highlighting private equity groups’ growing interest in high-end fashion brands. The Versace family, led by creative designer Donatella Versace, was on Wednesday expected to grant exclusivity to the New York-based fund manager to purchase a 20 per cent stake in the company, said two people with knowledge of the talks. Blackstone’s offer may value the Milan-based designer at as much as €1bn including debt (Financial Times) (WSJ)

“Washington, D.C., law firm Patton Boggs LLP is in merger talks with a much larger firm, Squire Sanders, over a potential tie-up that could create a roughly 1,700-lawyer global entity with ofices in 22 countries. The negotiations are in early stages, according to a joint statement the firms issued on Wednesday that described the talks as “preliminary,” adding, “there is no assurance that a combination will be completed.” A combination could shore up the bottom line of Patton Boggs, which is under growing strain amid an overhaul and disappointing financial results.” (WSJ) Odds are always short on these things falling through though.

COMMENT etc

WTF, AO IPO PDF? (FT Alphaville)

Republican tax plan splits corporate US (Financial Times)

Why Thailand is looking like the next Ukraine (Financial Times, Pilling)

China, where “environmental problems used to be like pandas, distant, remote and cute” (Financial Times)

Stop Icahn before it’s too late, basically (Financial Times, Gapper)

Hamish Nakamoto and Splitcoin (Financial Times, Shrimsley)

The fraud behind a $14m whistleblower award (WSJ)

Securities class action: will It Become endangered species? (WSJ)

OVERNIGHT MARKETS

Asian markets
Nikkei 225 down -63.05 (-0.42%) at 14,908
Topix down -5.84 (-0.48%) at 1,220
Hang Seng up +244.09 (+1.09%) at 22,682
ASX 200 down -25.59 (-0.47%) at 5,411

US markets
S&P 500 up +0.04 (0.00%) at 1,845
DJIA up +18.75 (+0.12%) at 16,198
Nasdaq up +4.48 (+0.10%) at 4,292

European markets
Eurofirst 300 down -2.69 (-0.20%) at 1,349
FTSE100 down -31.35 (-0.46%) at 6,799
CAC 40 down -17.64 (-0.40%) at 4,397
Dax down -37.62 (-0.39%) at 9,662

Currencies
€/$ 1.37 (1.37)
$/¥ 102.32 (102.35)
£/$ 1.67 (1.67)
€/£ 0.8209 (0.8209)

Commodities ($)
Brent Crude (ICE) down -0.19 at 109.33
Light Crude (Nymex) down -0.27 at 102.32
100 Oz Gold (Comex) down -1.00 at 1,327
Copper (Comex) at 3.27

10-year government bond yields (%)
US 2.67%
UK 2.74%
Germany 1.62%

CDS (closing levels)
Markit iTraxx SovX Western Europe -0.75bps at 50.92bp
Markit iTraxx Europe +1.26bps at 72.64bp
Markit iTraxx Xover +3.56bps at 268.47bp
Markit CDX IG +0.15bps at 64.55bp

Sources: FT, Bloomberg, Markit

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