German authorities search Continental, VW as part of diesel probe By Reuters


© Reuters. FILE PHOTO: Hearing over VW diesel emissions cheating scandal, in Braunschweig

BERLIN (Reuters) – German prosecutors have extended their diesel emissions probe to include auto supplier Continental (DE:) for its role in supplying engine components, searching the company’s offices and those of automaker Volkswagen (DE:), the companies said on Wednesday.

Prosecutors in Hanover, Germany conducted the searches as part of an investigation into how a 1.6 litre diesel engine came to violate emissions rules by masking excessive pollution levels.

Premises in Hanover, Regensburg, Wolfsburg, Gifhorn, Berlin, Frankfurt und Nuernberg were searched by 76 Police and 4 prosecutors, a spokesman for the Hanover prosecutor’s office said on Wednesday.

“We are investigating employees of Continental for abetting fraud and for providing false documentation,” Prosecutor Oliver Eisenhauer told Reuters, adding that 7 engineers and 2 project leaders were among the accused. Two business heads and a compliance officer were also cooperating with the probe, he added.

Continental said in a statement that several of its offices had been searched, adding it was cooperating with the authorities, but declined to comment on the investigation.

A Volkswagen spokesman said the carmaker was cooperating with the probe in the capacity as a witness, given that VW has already settled with prosecutors in Braunschweig.

The Hanover prosecutor’s office said the Hanover probe was an extension of the prior probes against Audi and VW.

The WirtschaftsWoche magazine had earlier reported that prosecutors in the northern German city of Hanover had searched offices of Continental and carmaker Volkswagen.

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Wirecard North America seeks buyer, distances itself from German company By Reuters


© Reuters. FILE PHOTO: A man walks past the Wirecard booth at the computer games fair Gamescom in Cologne, Germany

(Reuters) – Wirecard North America Inc, a unit of German payments company Wirecard AG (DE:), on Monday said it has put itself up for sale, days after the troubled parent firm filed for insolvency. The U.S.-based unit, which was bought by Wirecard in 2016, said an investment bank is coordinating the sale process. The unit was formerly known as Citi Prepaid Card Services.

It did not provide further details but said Wirecard North America is a separate legal and business entity of Wirecard and is “substantially autonomous” from the German company, adding that it remains “self-sustaining”.

Last week, Wirecard filed for insolvency owing creditors almost $4 billion after disclosing a 1.9 billion euro ($2.14 billion) hole in its accounts that its auditor EY said was the result of a sophisticated global fraud.

The company said on Saturday it would proceed with business activities after the insolvency filing and an administrator was appointed on Monday.

($1=0.8895 euros)

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German auto stimulus to boost VW’s electric push By Reuters


© Reuters. FILE PHOTO: A Volkswagen E-Golf is displayed at the Canadian International Auto Show in Toronto

BERLIN/FRANKFURT (Reuters) – Germany unveiled sweeping incentives for cheap electric cars, providing a boost to Volkswagen’s (DE:) electric push while penalising heavy sports utility vehicles (SUVs) with new staggered taxes for polluting combustion-engined cars.

Buyer incentives for passenger cars, including a lowering of value added tax (VAT) to 16% from 19% were included as part of a 130 billion euro ($145.74 billion) stimulus but analysts said it would not be enough to significantly boost car demand.

“The lowering of VAT will hardly provide an impetus,” said Peter Fuss, a partner at EY, adding that electric cars are still too much of a niche product to lift the overall market.

Germany included a 6,000 euro incentive for battery electric cars costing below 40,000 euros, bringing consumer incentives for electric cars to 9,000 euros once a 3,000 euro manufacturer stipend is included. [nL8N2DH2E8]

According to Germany’s Federal Office for Economy and Export, BAFA, the cars eligible for the full subsidy include the BMW i3, Hyundai’s Ioniq and Kona models, Kia’s E-Nero, Peugeot (OTC:)’s electric 208, Renault (PA:)’s Zoe and Tesla (NASDAQ:)’s Model 3.

VW is readying a mass market push for its ID3 model which will cost below 40,000 euros.

Tesla’s Model S and the Mercedes EQC are also eligible for subsidies but not for the full amount.

Electric cars made up only 1.8% of new passenger car registrations last year in Germany.

Germany will overhaul its motor vehicle tax. From January 2021, cars with an emission of more than 95 grams of CO2 per kilometre will face higher levies.

The average vehicle emissions of a new car last year in Germany was around 150.9 grams of CO2 per kilometre. Due to the popularity of SUVs, average emissions of new cars rose to 154.8 grams per kilometre in May.

($1 = 0.8920 euros)

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Lufthansa, German government agree on rescue package: source By Reuters


© Reuters. FILE PHOTO: Lufthansa aircraft parked on tarmac in Germany

BERLIN (Reuters) – The German government and the management of flagship carrier Lufthansa (DE:), which has been hit hard by the coronavirus pandemic, have reached an agreement on state aid worth billions of euros, a source close to the matter said.

The agreement is still pending approval by the German coronavirus rescue fund’s steering committee, which is expected to meet on Monday, as well as Lufthansa’s boards and the EU commission.

The German government declined to comment. A Lufthansa spokesperson declined to comment.

The carrier said last week that it was in advanced talks on a deal that would involve the government taking two seats on its supervisory board, but it would only exercise its full voting rights in exceptional circumstances, such as to protect the firm against a takeover.

Lufthansa has been in talks with Berlin for weeks over aid to help it cope with what is expected to be a protracted travel slump, but has been wrangling over how much control to yield in return for support.

Rivals such as Franco-Dutch group Air France-KLM (PA:) and U.S. carriers American Airlines (O:), United Airlines (O:) and Delta Air Lines (N:) have also sought state aid.

Lufthansa has said it expected conditions of the deal to include the waiver of future dividend payments and limits on management pay. The plan includes a 3 billion euro ($3.27 billion) loan from the state-backed bank KfW, Germany taking a 20% stake in Lufthansa and a convertible bond, which could be exchanged for a further 5% stake.

German news agency dpa earlier reported that a deal has been agreed.

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Trump, German Court Cast a Long Shadow Over Stretched Markets By Investing.com


© Reuters.

By Geoffrey Smith 

Investing.com — What could be worse for the stock market’s spirits than the resumption of a trade war and the crippling of Europe’s crisis response? While neither is real yet, the coming week will show how present the risk is.

On Sunday, President Donald Trump and Secretary of State Mike Pompeo both launched attacks against China for its perceived role in unleashing the pandemic, Trump in particular highlighting the possibility and desirability of punishing it, not least through the imposition of new tariffs.

By 5:30 AM ET (0930 GMT), the benchmark was down 3.6% at 327.86, its lowest in over a week, making April’s rebound look more than ever like a bear-market rally. The German , Europe’s best performer in April, was down 3.7%, while the was the outperformer, falling only 0.5% thanks to some strong performances by virus-beating stocks such as Rentokil (LON:) (office cleaning) and Reckitt Benckiser (LON:) (disinfectants) and to the stabilization of index heavyweights Royal Dutch Shell (LON:) and BP (NYSE:) after last week’s bloodbath.

There is evidence to suggest that the coordinated media blitz is an exercise in diverting attention rather than an earnest threat: the Trump administration has temporarily waived tariffs on a large range of Chinese imports since the crisis began, afraid of burdening U.S. consumers with higher prices as tens of millions lose their jobs or suffer cuts to their income.

“If President Trump’s attempts to get re-elected continue to rely on attacking China, investors will worry about whether this will bring additional costs to specific U.S. firms,” UBS Wealth Management chief economist Paul Donovan said in a morning note.

Pompeo, meanwhile, told ABC at the weekend that there was “significant evidence” that the Covid-19 virus originated in a laboratory in Wuhan, without actually presenting any of that evidence – an approach that worked for his predecessor Colin Powell in rallying public opinion before the invasion of Iraq 17 years ago, but which may be difficult to repeat, given how that turned out.

While U.S.-China tensions have kept their ability to terrorize global markets, the more immediate threat to European markets is a more local one. On Tuesday, Germany’s Constitutional Court is set to give its final ruling on the legality of the European Central Bank’s asset purchase programs.

A couple of months ago, this looked likely to be waved through with little more than the usual grumbling from a court which has already backed away twice from challenging the ECB head-on.

However, the ECB last month cast aside all the restraints on its bond-buying that it had previously adopted to placate its German critics. That raises the risk of the judges handing down a ruling that could stop the German central bank from participating in QE, damaging the credibility of a policy that is the centerpiece of the euro zone’s crisis response.

This being the euro zone, the likeliest outcome is still a fudge that puts off answering the hard question – how willing are Germany and the rest of northern Europe to accept liability for their brethren in the weaker periphery of the euro zone.

Even so, it’s more than enough to keep markets on the defensive after a month-long rally that has found little justification so far in companies’ quarterly reports: data from Refinitive suggest that first-quarter earnings will be down 25% on the year for Stoxx 600 companies. The second quarter, of course, is likely to be much worse.

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Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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