The 6am London Cut

Markets: Appetite for stocks has returned to Asia-Pacific following a more encouraging development in Ukraine, and after the US central bank chief pledged to continue supporting markets with easy money policies. Markets were rallying after Putin indicated that he was ready to discuss a way out of the Ukraine crisis. He called on pro-Moscow groups in eastern Ukraine to postpone a referendum on independence that was planned for Sunday. (FT’s Global Markets Overview)

The Obama administration condemned China on Wednesday for introducing an oil rig into waters that it disputes with Vietnam, calling the decision “provocative” and likely to “raise tensions”. These tensions in the South China Sea had earlier escalated dramatically after Vietnam said Chinese ships rammed its vessels near the Paracel Islands and the Philippines detained a Chinese fishing boat and crew. (Financial Times)

China’s export machine showed a marked improvement in April, taking some pressure off a leadership that is nervous about a slowing economy and pointing to firmer global demand from the developed economies that form its biggest market. Total trade firmed in April, with both exports and imports growing by just under 1 per cent year-on-year — compared to a 6.6 per cent yoy fall in March. That could reassure Chinese policy makers worried that the country is facing a slowdown as it weans itself off a credit binge. (Financial Times)

Yellen warns on US housing market risk: The US housing market slowdown poses a fresh risk to growth in the world’s largest economy, Federal Reserve chairwoman Janet Yellen has warned in testimony to Congress. Ms Yellen said the Fed’s otherwise optimistic outlook could be undermined if disappointing housing activity continued for the rest of the year. (Financial Times)

US Regulators see new threat to stability: The growth of non-bank mortgage servicers, possible stresses on asset manager balance sheets and gaps in financial data are some of the emerging threats identified by top US regulators in an annual report. (Financial Times)

BofA’s board backed despite capital woes: Shareholders in Bank of America supported the election of all 15 nominees to the board despite investor calls to punish directors with audit responsibilities in the wake of an embarrassing accounting error that forced the bank to suspend its dividend and share buyback plans. PwC, the external auditor, was also backed at the annual shareholders meeting despite opposition from two Californian pension funds as well as a recommendation from Glass Lewis, the shareholder advisory firm, to vote against it. (Financial Times)

The UK’s Co-op faces a fight over plans to overhaul its governance, despite a warning that it will fade into obscurity without reform. The 150-year old mutual, which was thrown into crisis last year by a £2.5bn loss at its banking arm, has 10 days to persuade its members to back proposals from Lord Myners ahead of a crucial vote on May 17. (Financial Times)

Barclays plans to announce several thousand more job cuts on top of the 12,000 it has promised as it unveils the creation of a bad bank to house much of its investment bank and continental European retail operations. The cuts are expected to fall largely on the investment bank, which employs 26,000 people. (Financial Times)

“Tony Hayward is to be named as chairman of Glencore Xstrata following a year-long search to replace Sir John Bond. It is thought Mr Hayward, who has been interim chairman since last May, will step down from his role as chief executive of Genel Energy within a year or two as a result of the new appointment. Confirmation of his new role is as expected as early as Thursday morning in a statement from the £43bn Swiss commodities giant.” (Telegraph)

Shares in Tesla Motors fell by 6 per cent in after-market trading on Wednesday as Wall Street grew impatient for clearer evidence that plans for future generations of its electric vehicles and a giant battery plant were on track. The decline came despite a quarterly earnings report that pointed to further steady progress towards hitting the company’s internal goals for its current Model S sedans. (Financial Times)

“Toshiba will offer to buy Alstom’s power grid business for “several hundred billion yen” if General Electric completes its planned purchase of Alstom’s energy business, the Nikkei newspaper reported. GE has offered to buy Alstom’s energy business, which makes power generation systems along with power grids, for about $16.9 billion.” (Reuters)

Ford “announced on Wednesday a stock repurchase program of about $1.8 billion that it said will offset potential share dilution and positions the company to reduce its automotive debt by $883 million. The announcement boosted Ford stock about 0.7 percent to $15.57 per share after the New York Stock Exchange closed.” (Reuters)

“Private equity firms, including Corsair Capital, were approached to take part in a 400 million pound ($678.62 million)rescue fundraising for the struggling Co-op Bank, according to Sky News and a source familiar with the matter. However, the source said no serious discussions have occurred between Co-op Bank and Corsair about the private equity firm buying a stake in it.” (Reuters)

Euronext is set to list on three markets — in France, the Netherlands and Belgium — when the European exchanges operator formally demerges from parent IntercontinentalExchange in coming weeks. (Financial Times)

COMMENT etc

Most Indians are no longer satisfied with the make-work schemes or food handouts in which Congress has increasingly specialised (Financial Times, Pilling)

Modi dominating tv coverage (The Hindu)

China labour activism: crossing the line (Financial Times)

Sinopec would really like you to also buy gum (Reuters)

Ma versus Alibaba? (Reuters)

Modern art auctions are as baffling as the paintings (Financial Times, Gapper)

The charge is that the BoE is dovish, not as a matter of policy but as a result of institutional bias (Financial Times, Giles)

The unbeatable Great British Krona (Financial Times)

Three former UK chancellors have urged Osborne to rethink Help to Buy programme (Financial Times)

Of Chinese pork reserves and falling prices (WSJ)

OVERNIGHT MARKETS

Asian markets
Nikkei 225 up +169.44 (+1.21%) at 14,203
Topix up +11.61 (+1.01%) at 1,164
Hang Seng up +117.69 (+0.54%) at 21,864
ASX 200 up +45.13 (+0.83%) at 5,481

US markets
S&P 500 up +10.49 (+0.56%) at 1,878
DJIA up +117.52 (+0.72%) at 16,519

European markets
Eurofirst 300 up +1.42 (+0.11%) at 1,345
FTSE100 down -2.12 (-0.03%) at 6,796
CAC 40 up +18.37 (+0.41%) at 4,446
Dax up +53.77 (+0.57%) at 9,521

Currencies
€/$ 1.39 (1.39)
$/¥ 101.83 (101.90)
£/$ 1.70 (1.70)
€/£ 0.8209 (0.8204)

Commodities ($)
Brent Crude (ICE) down -0.10 at 108.03
Light Crude (Nymex) up +0.06 at 100.83
100 Oz Gold (Comex) down -0.10 at 1,289
Copper (Comex) unchanged -0.02% at 3.05

10-year government bond yields (%)
US 2.61%
UK 2.66%
Germany 1.48%

CDS (closing levels)
Markit iTraxx SovX Western Europe 35.45bp
Markit iTraxx Europe 68.5bp
Markit iTraxx Xover 270.94bp
Markit CDX IG 64.8bp

Sources: FT, Bloomberg, Markit

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