Libya's Tripoli government seizes last LNA stronghold near capital

TRIPOLI (Reuters) – Forces loyal to Libya’s internationally recognised government captured the last major stronghold of eastern commander Khalifa Haftar near Tripoli on Friday, capping the sudden collapse of his 14-month offensive on the capital.

Military sources in Haftar’s Libyan National Army (LNA) said their forces had withdrawn from the town of Tarhouna. They headed towards Sirte, far along the coast, and the airbase of al-Jufra in central Libya. The LNA made no immediate official comment.

The advance extends the control of the Government of National Accord (GNA) and allied forces across most of northwest Libya, reversing many of Haftar’s gains from last year when he raced towards Tripoli.

The GNA has been backed by Turkey, while Haftar, whose LNA still controls the east and oil fields in the south, has been supported by Russia, Egypt and the United Arab Emirates.

The United Nations has started holding talks with both sides for a ceasefire deal in recent days, though previous truces have not stuck. The GNA gains could entrench the de facto partition of Libya into zones controlled by rival eastern and western governments whose foreign backers compete for regional sway.

Turkish military support for the GNA, with drone strikes, air defences and a supply of allied Syrian fighters, was key to its recent successes. Ankara regards Libya as crucial to defending its interests in the eastern Mediterranean.

However, the LNA still retains its foreign support. Washington said last week Moscow had sent warplanes to LNA-held Jufra, though Russia and the LNA denied this.

The United Nations says weapons and fighters have flooded into the country in defiance of an arms embargo, risking a deadlier escalation. Meanwhile, a blockade of oil ports by eastern-based forces has almost entirely cut off energy revenue and both administrations face a looming financial crisis.

STRONGHOLD

Located in the hills southeast of Tripoli, Tarhouna had functioned as a forward base for Haftar’s assault on the capital. Its swift fall suggests Haftar’s foreign supporters were less willing to sustain his bid to take over the entire country once Turkey intervened decisively to stop him.

The GNA operations room said in a statement that its forces had captured Tarhouna after entering from four sides. Abdelsalam Ahmed, a resident, said GNA forces had entered the town.

Videos and photographs posted online appeared to show GNA forces inside Tarhouna cheering and hugging each other and firing into the air.

“The Libyan government forces are rapidly moving in an organised manner and with armed drones. There could be a solution at the table, but Haftar’s forces are losing ground in every sense,” said a Turkish official.

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Libyan government says it has entered Haftar stronghold Tarhouna

TUNIS (Reuters) – Forces loyal to Libya’s internationally recognised government said on Friday they had entered Tarhouna, the last major stronghold of eastern commander Khalifa Haftar near Tripoli, capping the sudden collapse of his 14-month offensive.

There was no immediate comment from Haftar’s Libyan National Army (LNA) on whether its forces remained in the town, a day after they were pushed from their last positions in the capital.

Turkish backing has helped the internationally recognised Government of National Accord (GNA) to a string of victories in recent weeks, ending an assault on Tripoli that led to battles in its southern suburbs and bombardment of the city centre.

The GNA operations room said in a statement that its forces had reached the centre of Tarhouna after entering from four sides.

Abdelsalam Ahmed, a resident of Tarhouna, said GNA forces had entered the town.

Libya’s conflict is far from over, however, with the LNA still controlling the country’s east, where there is a parallel administration, and large parts of the south, where the country’s main oilfields are located.

The LNA is backed by Russia, the United Arab Emirates and Egypt.

The United Nations has warned that a recent flood of weapons and fighters to both sides in Libya risks a major new escalation.

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White House, on Tiananmen anniversary, urges China to respect human rights

WASHINGTON (Reuters) – The White House, in a statement on the 31st anniversary of China’s Tiananmen Square crackdown, urged Beijing on Thursday to respect human rights, fulfill its commitments on Hong Kong and end persecution of ethnic and religious minorities.

“The Chinese Communist Party’s slaughter of unarmed Chinese civilians was a tragedy that will not be forgotten,” the White House said.

It urged the Chinese government to fulfill its commitments under the Universal Declaration of Human Rights and the Sino-British Joint Declaration governing Hong Kong’s status, and to “uphold the rights and freedoms guaranteed to all Chinese citizens under China’s constitution, and to end the systematic persecution of millions of ethnic and religious minorities.”

The anniversary of China’s bloody 1989 crackdown on pro-democracy activists coincides with widespread protests across the United States against racism and police brutality touched off by the killing of a black man while in custody of white Minneapolis police officers.

U.S. President Donald Trump has threatened to militarize the response to the mass demonstrations, saying he could deploy the military in states that fail to crack down on the sometimes violent protests.

“The American people stand together with all Chinese citizens in their pursuit of fundamental rights, including the right to accountable and representative governance and freedom of speech, assembly, and religious belief,” the White House said.

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Gap records nearly $1 billion in losses on coronavirus-led store closures

(Reuters) – Gap Inc (GPS.N) on Thursday reported a quarterly loss of nearly $1 billion as the apparel retailer was forced to close its stores due to the coronavirus outbreak, sending its shares down about 8% after market hours.

Retailers that sell non-essential goods such as clothing have been crushed by the COVID-19 pandemic as they were forced to restrict their businesses to online operations and curbside pickups.

San Francisco-based Gap, which operates nearly 2,800 stores in North America, said 55% of its company-operated stores in the region were now open and sales from online operations were booming.

The company’s more expensive brands Gap and Banana Republic did not do well as customers opted for casual clothing as they stayed at home during the lockdowns, Chief Executive Officer Sonia Syngal said.

However, its affordable clothing brands, Old Navy and Athleta, were seeing signs of strong demand, Syngal added.

The retailer, which is streamlining its fleet of retail stores, said it would prioritize closing some Gap stores and seek rent concessions for well-positioned stores that cannot support the current rent structures.

“While our economics in our Old Navy and Athleta fleets are strong, our specialty store fleet (Gap and Banana Republic) has not been as profitable as we need it to be,” Chief Financial Officer Katrina O’Connell said in a conference call with analysts.

Net loss came in at $932 million, or $2.51 per share, for the three months ended May 2, which included a $484 million writedown on store and operating lease assets and a $235 million charge on excess inventory.

Net sales fell 43% to $2.11 billion from $3.71 billion.

Analysts had forecast a loss of 67 cents per share and revenue of $2.30 billion, according to IBES data from Refinitiv.

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Wall Street Week Ahead: Bond investors look for Fed to justify steepening yield curve

NEW YORK (Reuters) – Expectations that the global economy has dodged the worst-case scenarios for the coronavirus pandemic have led to a dramatic selloff in U.S. government bonds from their record highs, pushing the yield curve to its steepest level since March.

Investors will get a chance next week to see whether the U.S. Federal Reserve agrees with their optimism. The U.S. central bank is expected to hold a two-day meeting that will conclude Wednesday, the first since a meeting in April in which Fed Chair Jerome Powell said that the U.S. economy could feel the weight of the economic shutdown for more than a year.

While the Fed could introduce additional bond-buying programs known as quantitative easing or yield-curve control measures to target short-term rates, some fund managers say they expect that yields would need to rise significantly from here to justify any intervention in the bulk of the curve. Instead, they are watching for hints that the central bank believes the worst part of the coronavirus crisis has passed.

“They are really in this transition phase,” said Eric Stein, co-director of global income and portfolio manager at Eaton Vance. “Markets are functioning, if not all the way back to pre-shock levels, with very strong debt issuance and market improvement, even though the real economy is incredibly weak.”

As a result, Stein is looking for signs the Fed believes the economic rebound can support the rise in yields.

“The Fed will be okay with a slow creep higher, particularly with a backdrop of a recovery, but if it moves too much and destabilizes the recovery, there’s a reason for concern,” he said.

Ed Al-Hussainy, senior interest rate analyst at Columbia Threadneedle, expects the Fed to focus on its newly announced Main Street Lending Program, meant to support small- and medium-sized businesses facing financial strain because of the pandemic, as opposed to introducing significant new stimulus measures.

“The Fed is likely to communicate that there is more scope for fiscal measures but that is a very uncomfortable spot to be in,” he said. “We won’t have a clear sense of direction of the economy until well into the fourth quarter because all the sequential data now is massively positive.”

The manufacturing ISM index rose to 43.1 in May from 41.5 in April, while weekly jobless claims fell to 1.877 million from 2.126 million the week before.

“Recent economic reports in the U.S. have been uniformly weak, though not any worse than expected,” said Kevin Cummins,senior U.S. economist at NatWest Markets.

Eddy Vataru, lead portfolio manager at Osterweis Capital Management, said the larger risk for the Fed is that rates remain too low, making it unlikely that there will be a significant push for yield curve-control measures.

“We can now discredit the worst outcomes of the virus. The sentiment around the risks around the virus have really changed,” he said, pointing to declining infection and fatality rates in coronavirus hot spots such as the New York City region.

As a result, he is moving into corporate debt and mortgage-backed securities and shying away from Treasuries, which he said have “no investment value” at their current yields.

“At the end of the day, we have a ton of stimulus, both fiscal and monetary, and the markets have reacted to it,” he said.

(This story has been refiled to correct time element in paragraph 2.)

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American Airlines soars on news it will boost U.S. flights in July

WASHINGTON (Reuters) – American Airlines Group Inc (AAL.O) shares jumped by 25% after it said Thursday it will significantly boost its U.S. flight schedule next month after dramatic reductions caused by the coronavirus pandemic, flying more than 55% of its July 2019 domestic capacity.

American shares, up 24.6% to $14.77 on the bullish announcement, are still down more than 50% since mid-February.

The airline, the largest U.S. carrier, will also boost its international flights schedule next month, flying nearly 20% of its July 2019 schedule.

By comparison, American flew just 20% of its domestic schedule in May and is flying 25% in June, said Vasu Raja, American Airlines’ senior vice president of network strategy.

“As an airline, we’ve consciously bet on demand coming back. We have bet the economy,” Raja said, noting American has been operating a larger schedule than U.S. rivals.

Raja told Reuters that the airline would fly just over 4,000 flights on peak days in July compared with nearly 2,000 on peak days in May. That is still down from the peak 6,800 daily flights before the crisis.

Other U.S. carriers are also adding flights to summer schedules.

In total, American plans to fly 40% of July 2019 capacity.

The airline is boosting flights from New York City airports, Los Angeles and Washington and adding flights from its Dallas Fort Worth and Charlotte hubs. It is also increasing flights to major cities in Florida, Gulf Coast cities and mountain destinations as national parks and outdoor recreational spaces reopen.

In late May, the airline carried a daily average of about 110,000 customers – an increase of 71% over the 32,000 daily average the airline served in April, but still far below last year. Load factors rose to 55% by late May.

American plans to resume service to additional European and Latin American destinations in August. It will resume service to Rio de Janeiro, Brazil from Miami on July 7.

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LVMH propels Arnault scion to head up Tag Heuer watches

PARIS (Reuters) – LVMH (LVMH.PA) on Thursday said that Frederic Arnault, one of the younger sons of the luxury goods group’s billionaire boss, would take over running watch brand Tag Heuer, joining his siblings in taking on bigger roles within the conglomerate.

The Arnault family controls just under half of LVMH, which was vastly expanded through acquisitions under CEO Bernard Arnault, France’s richest man, and owns fashion labels such as Louis Vuitton and also champagne and jewellery brands.

Frederic Arnault, 25, will step up at Tag Heuer as of July 1, the company said. He had previously worked at the label, but with a focus on developing its digital activities, at a time when watch brands are struggling to re-invent themselves for a younger clientele and face falling demand.

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Germany forces all petrol stations to provide electric car charging

FRANKFURT (Reuters) – Germany said it will oblige all petrol stations to offer electric car charging as part of a sweeping 130 billion euro ($146.26 billion) economic recovery plan, boosting electric vehicle demand which has been hampered by consumer concerns over refuelling.

Germany unveiled the incentives as part of a broader stimulus plan which included staggered taxes to penalise ownership of large polluting combustion-engined sports utility vehicles.

Customers have been concerned about the limited operating range of electric cars, a factor which has hampered demand. Converting Germany’s 14,118 petrol stations would provide a significant boost to electric vehicle demand.

In Germany, electric cars made up only 1.8% of new passenger car registrations last year, with diesel and petrol cars accounting for 32% and 59.2% respectively.

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Of the 168,148 new registrations in May, only 5,578 or 3.3% were electric cars according to German vehicle agency KBA. A further 51.1% were petrol powered, 31.6% were diesel cars and 17.6% were hybrid or plug-in hybrid cars.

As of March 2020, Germany had only 27,730 electric car charging stations according to BDEW, Germany’s association for the energy and water industry.

To make electric cars a mass market phenomenon, at least 70,000 charging stations and 7,000 fast charging stations are required, according to the BDEW.

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Mexico overtakes U.S. coronavirus daily deaths, sets records

MEXICO CITY (Reuters) – Mexico overtook the United States in daily reported deaths from the novel coronavirus for the first time on Wednesday, with the health ministry registering a record 1,092 fatalities it attributed to improved documenting of the pandemic.

Latin American has emerged in recent weeks as a major center for coronavirus. Brazil, where the virus has hit hardest in the region, also reported a record number of deaths on Wednesday.

The Mexican government had previously predicted the pandemic would peak in early May and under U.S. pressure has begun reopening its vast auto industry, which underpins billions of dollars of business through cross-border supply chains.

However, plans to further relax social distancing measures this week were put on hold in recognition of the fact that infections had not yet begun coming down.

Wednesday saw a record 3,912 new infections, with the number of daily deaths more than twice the previous record of 501.

The total number of known cases in Latin America’s second-largest economy is now 101,238 and its tally of deaths is 11,729, making it the seventh country with most deaths from the virus, according to the John Hopkins Center for Systems Science and Engineering.

Deputy Health Minister Hugo Lopez-Gatell attributed the sharp jump in numbers to a new mortality committee established by the Mexico City government to better identify which deaths in the capital were caused by the virus.

“Over the past 20 or 25 days, we have had various cases that were slowly passed on to the registry, for various reasons,” he said. “A technical committee has specifically been carrying out complementary methods.”

The committee was established after growing criticism that Mexico’s very limited testing rate meant most cases and deaths from COVID-19, the illness caused by the virus, were not being registered. A Reuters investigation concluded that fatalities could be 2.5 times higher than reported.

Mexico’s government has previously admitted the real number of fatalities was higher than the official count.

It was not clear if the inclusion of more deaths registered by the Mexico City committee would push daily numbers higher in future.

Mexico, with just over a third of the population of the United States, is at an earlier stage of the pandemic curve than its neighbor and the government has acknowledged that deaths could eventually surpass 30,000.

U.S. daily reported deaths were 1,045 on Wednesday, government data showed.

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Asian stocks set to extend gains as stimulus fans recovery hopes

NEW YORK (Reuters) – Stronger appetite for riskier assets is set to lift Asian equities on Thursday, as government stimulus expectations support investor confidence in an economic recovery from the coronavirus.

E-mini futures for the S&P 500 were up 0.05% and Australian S&P/ASX 200 futures rose 1.23% in early trading. Japan’s Nikkei futures rose 1.1%.

The safe-have U.S. dollar continued to fall.

Markets for risk assets have been on a tear, carrying major stock market indexes to within sight of pre-pandemic, all-time highs.

MSCI’s gauge of stocks across the globe moved up for the seventh consecutive trading day on Wednesday with a gain of 1.68%.

The rise came as the Nasdaq Composite, S&P 500 and the Dow Jones Industrial Average continued their rise from March cornonavirus-lockdown-lows to come within 2%, 8% and 11%, respectively, of overtaking all-time closing highs registered in February.

The dollar index fell 0.24% against a basket of other currencies early on Thursday, having hit an 11-week low on Wednesday. The euro rose as high as $1.1251, a level not seen since March 12.

“Liquidity provision by central banks – and expectations that more is coming – is helping to support the recent drive in risk markets,” ANZ Research senior economist Liz Kendall and strategist David Croy, said in a note early on Thursday.

But the analysts cautioned asset prices would need a recovery in the global economy to sustain gains.

On Wednesday, the Dow rose 2.05%, the S&P 500 gained 1.36% and the Nasdaq Composite added 0.78%.

The pan-European STOXX 600 closed at its highest since March 6. European markets have performed strongly so far this week as several countries eased strict lockdown measures.

The move to riskier assets continued to take down prices for U.S. Treasuries. The yield on the benchmark 10-year reached 0.7333% on Wednesday, up from 0.667% on Tuesday.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, reached 55 basis points on Wednesday, the steepest level since mid-March. A steepening curve often points to a stronger economy.

Governments around the world have gradually started to lift tough lockdown measures imposed to contain the coronavirus which has infected nearly 6.4 million people and killed over 379,000.

Markets await Friday’s U.S. Labor Department May jobs report, which is expected to show unemployment soaring to a post-World War Two high of nearly 20% from 14.7% in April.

On Wednesday, a report showed that U.S. private payrolls fell less than expected in May, suggesting layoffs were abating as businesses reopen.

Investors are also focused on whether the European Central Bank will increase the size of its 750 billion euro ($669 billion) Pandemic Emergency Purchase Programme, when it meets on Thursday.

Oil prices rose again on Wednesday, briefly trading above $40 a barrel, the highest since March, and reflecting increased demand.

Brent crude futures for August settled up 22 cents, or 0.6%, at $39.79 a barrel. The session high of $40.53 was the highest since March 6. West Texas Intermediate (WTI) crude for July rose 48 cents, to $37.29 a barrel.

Spot gold added 0.1% to $1,698.39 an ounce early on Thursday after losing 1.6 % on Wednesday.

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