Futures rise as investors assess big bank earnings

(Reuters) – U.S. stock futures rose and pointed to a positive open for Wall Street on Friday as investors digested fourth-quarter earnings reports from big U.S. lenders.

JPMorgan Chase Co (JPM.N) rose 1 percent in choppy premarket trading after the biggest U.S. bank by assets reported profit that beat estimates, benefiting from higher interest rates and loan growth.

Regional lender PNC Financial Services’ (PNC.N) quarterly profit doubled, driven by a $911 million one-time benefit related to the new tax law. Its shares rose more than 1 percent.

While tax-related costs are expected to weigh on banks’ earnings, they are expected to benefit in the long run from lower tax burden.

Earnings for SP 500 companies are expected to increase on an average by 11.8 percent in the quarter with profit for financial services companies growing as much, according to Thomson Reuters I/B/E/S.

At 6:58 a.m. ET (1158 GMT), Dow e-minis 1YMc1 were up 100 points, or 0.39 percent, with 24,748 contracts changing hands.

SP 500 e-minis ESc1 were up 5.5 points, or 0.2 percent, with 108,891 contracts traded.

Nasdaq 100 e-minis NQc1 were up 7 points, or 0.1 percent, on volume of 24,422 contracts.

Shares of BlackRock Inc (BLK.N) jumped 2.2 percent in thin volumes after the world’s largest asset manager reported a better-than-expected profit as its ETF business saw more inflows in the quarter.

Wells Fargo Co (WFC.N) was down 0.8 percent ahead of its quarterly report.

The dollar fell to its lowest in more than four months against a basket of currencies .DXY after euro rose on bets that the European Central Bank was set to wind down its stimulus and on reports Germany had reached a deal that should lead to the formation of a coalition government. [USD/]

Oil prices eased from three-year highs on Friday, after helping drive the major stock indexes to close at record highs.

One of the Fed’s most influential members, New York Fed Chief William Dudley said on Thursday the tax cuts could provide a short-term boost but risk overheating the economy.

Facebook (FB.O) slipped more than 4 percent and was the most traded stock premarket after the company started changing the way it filters posts and videos on News Feed.

Advanced Micro Devices (AMD.O) fell 2.8 percent after the company said its microprocessors are prone to both variants of the Spectre security flaw, days after saying its risk for one of them was “near zero”.

December readings on U.S. consumer prices and retail sales are due at 8:30 a.m. ET.

The consumer price index is expected to show inflation increased 0.2 percent after rising 0.4 percent in the month before, and retail sales is likely to have increased 0.4 percent.

Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur

Chinese bitcoin miners eye sites in energy-rich Canada

MONTREAL/SHANGHAI (Reuters) – China’s Bitmain Technologies is eyeing bitcoin mining sites in Quebec, a company spokesman told Reuters, as expectations of a potential Chinese crackdown on cryptocurrency mining make the energy-rich Canadian province an attractive alternative.

China has grown into one of the world’s biggest sources of cryptocurrency mining but there are signs Beijing is increasing scrutiny of the sector’s players and may ask local authorities to regulate their power use. Bitmain Technologies, operator of some of the largest mining farms in the country, is among several companies looking to expand overseas.

Bitmain spokesman Nishant Sharma said in an e-mail on Friday that the company was looking at sites in Quebec and is in talks with regional power authorities in the province. It is also planning to expand in Switzerland.

Bitcoin mining consumes large quantities of energy because it uses computers to solve complex math puzzles to validate transactions in the cryptocurrency, which are written to the blockchain, or digital ledger. The first miner to solve the problem is rewarded in bitcoin and the transaction is added to the blockchain.

While Beijing has not issued any official edict on the bitcoin mines, two Chinese miners told Reuters that local authorities had grown more unwilling to allow expansion and had started to shut down some mines in late 2017, as China clamped down on cryptocurrencies.

Last September, Chinese authorities banned so-called initial coin offerings and ordered Beijing-based cryptocurrency exchanges to halt trading.

“We, and from what I understand many of our peers, are already making plans to go overseas,” said Li Wei, chief executive of ZQMiner, a Wuhan-based company that sells bitcoin mining equipment and has mines in three Chinese provinces.

Globally, regulators are increasingly voicing concerns about cryptocurrencies, which are not backed by any central bank, because of their volatility and worries about risks to investors. China, which has strict capital controls, is also worried that cryptocurrencies could facilitate illegal fund flows and breed financial risks.

In Canada, Hydro Quebec described a potential sales pipeline of around 30 large cryptocurrency miners after a campaign by the public utility to attract data centres to the province triggered a flurry of interest from bitcoin miners in 2017.

“Of the world’s top five largest blockchain players, we have at least three or four,” David Vincent, director of business development at Hydro Quebec distribution, said in an interview on Wednesday.

MANITOBA ALSO ATTRACTIVE

Stephane Paquet, a vice president of Montreal International, which promotes foreign investment in the province’s largest city, has called Quebec a place for “green bitcoin.”

According to Hydro Quebec, the province has an energy surplus equivalent to 100 Terawatt hours over 10 years. One terawatt hour powers 60,000 homes in Quebec during a year.

Neither Hydro Quebec nor Montreal International would divulge names of interested miners. Vincent said companies are eyeing operations from about 20 megawatts, the size of a data centre, to sites as large as 300 megawatts, about the size of a small aluminum smelter.

He expects some of the large companies to begin operations in Quebec this year and in early 2019. Bitmain’s spokesman said that Bitmain has been mining in Canada since 2016, but did not say where.

The challenge for miners is finding existing facilities in Quebec that already have buildings and other infrastructure in place to use the large energy supply required for cryptocurrency mining. A new facility would take about a year to be operational.

“We have the energy available,” said Eric Filion, customer vice-president for Hydro Quebec’s distribution division. “It’s a question of finding land and buildings quickly.”

Hydro Quebec, which offers some of the lowest electricity rates in North America, charges an industrial rate of $0.0248 per kilowatt hour (Kwh) (2.48 U.S. cents) for data centres and $0.0394/kwh (3.94 U.S. cents) for cryptocurrency customers. Customers would have to assume other start-up costs, Filion said.

Textiles and pulp and paper factories are particularly attractive to cryptocurrency mining companies.

Alain Bourdages, a company vice president at Montreal-based Resolute Forest Products Inc (RFP.N), said by phone that the company has been contacted by cryptocurrency companies about possibly sharing their existing production sites, or ones that are no longer in use.

“We are looking at this prudently,” he said. “It’s an interesting opportunity that could generate value.”

In central Canada’s Manitoba province, provincial government-owned utility Manitoba Hydro has fielded more than 100 inquiries from cryptocurrency miners in the past three months about specific sites, a company spokesman said.

The interest includes North American brokers who represent Chinese investors, attracted by Manitoba’s cheap power and potential reduced cooling requirements, spokesman Bruce Owen said. It is working with two large-scale cryptocurrency operations that want to set up in Manitoba, he said.

    Manitoba’s power rates may soon rise, however. Manitoba Hydro is asking the province’s utilities board to approve a rate increase of 7.9 percent across the board, effective April 1, 2018. That is far larger than utility rate changes proposed last year in other provinces, including 0.7 percent in Quebec, according to Manitoba Hydro data.

Reporting by Allison Lampert in Montreal, Alexandra Harney and Brenda Goh in Shanghai; Additional reporting by Rod Nickel in Calgary; Editing by Grant McCool and Raju Gopalakrishnan

Explainer: Investors to scour outlooks for U.S. companies’ tax cut plans

NEW YORK (Reuters) – Corporate results for 2017’s final quarter will start pouring in next week and are expected to be laden with one-time charges as U.S. companies begin to cope with tax code changes, including a one-time tax on trillions of dollars in profits held overseas.

Wall Street investors will be tuned in to chief executives’ statements about plans for 2018 and beyond for savings that will result from a deep cut in corporate income taxes enacted last month by the U.S. Congress and President Donald Trump.

Some investors expect many companies will use their tax savings to buy back shares and increase dividends, while others will look for increased capital spending or wage increases.

Walmart announced on Thursday that it will raise entry-level wages for hourly employees, partly because of tax cuts. It also said it would lay off thousands of workers and close dozens of Sam’s Club stores.

The tax law was Trump’s first major legislative achievement since he took office in January last year, and it slashes the corporate income tax rate to 21 percent from 35 percent.

The tax package, approved despite the unanimous opposition of Democrats, helped drive stock market gains in the last months of 2017. The momentum has continued in 2018, and there are widespread expectations that investors will overlook fourth-quarter charges and focus on upbeat corporate outlooks.

“What you’ll see is companies will take a one-time hit, but it’s not going to have a bearing on stock price movements,” said David Katz, chief investment officer at Matrix Asset Advisors in New York. “They will talk about 2018, and we feel pretty confident it will be a win to a big win for U.S. companies.”

Estimates for 2018 SP 500 earnings have risen more than 2 percentage points since the beginning of the year, partly due to analysts factoring in the impact of the tax code changes.

Profit growth for the year is forecast at 14.2 percent, according to Thomson Reuters data, while analysts expect fourth-quarter earnings to have risen 11.8 percent from a year ago.

WINNERS IN ENERGY

The energy sector is expected to post the biggest year-over-year gain in earnings. Estimates have risen in recent weeks following a surge in oil prices, which this week climbed to their highest level in three years.

In the short term, many companies are expected to take one-time charges against earnings because of the tax bill, which includes a one-time tax on an estimated $2.6 trillion in profits held offshore by multinationals.

Among early reporters, Delta Air Lines said on Thursday that it was taking a one-time charge of $150 million on tax code changes. It said the new tax law would lower its tax rate to between 22 percent and 24 percent in 2018, and that it expects the tax cuts to help drive business demand. Delta’s stock rose on Thursday, as did other airlines’ shares.

Under the new law, companies with earnings parked offshore will face a one-time tax of 15.5 percent on cash and equivalents and 8 percent on illiquid assets, payable over eight years.

In the future, domestic corporate profits will be taxed at 21 percent, while most foreign profits will no longer be taxed, within some limits. The new law also allows companies to write off immediately the full value of new capital investments.

BANKS TO ADJUST

Banks and other companies will need to remeasure the value of their deferred tax assets and liabilities at the new tax rate, a note from strategists at Goldman Sachs said.

For instance, JPMorgan Chase Co,, which will be the first big bank to give results when it reports on Friday, could show a 35 percent plunge in net income from a year earlier, based on analysts’ estimates.

Technology and healthcare companies are sitting on the largest stash of overseas cash and are expected to post the biggest charges related to the one-time repatriation tax, Goldman strategists wrote.

Apple “will incur the largest tax bill of any company under the provision, owing $33 billion on its $216 billion of overseas cash,” they wrote.

As a group, the technology sector, which led the market’s rally in 2017, is expected to benefit less from the tax rate cut than most other sectors, analysts said.

Graphic: Year-over-Year SP 500 earnings growth since 2015 interactive – tmsnrt.rs/2kFEJz4

Reporting by Caroline Valetkevitch; Editing by Kevin Drawbaugh and Daniel Wallis

Rents boost U.S. core CPI; retail sales rise solidly

WASHINGTON (Reuters) – Underlying U.S. consumer prices recorded their largest increase in 11 months in December amid strong gains in the cost of rental accommodation and healthcare, bolstering expectations that inflation will accelerate this year.

The strengthening domestic demand was also underscored by other data on Friday showing retail sales increasing at a solid clip in December. The reports likely keep the Federal Reserve on course to raise interest rates at least three times this year. The U.S. central bank hiked borrowing costs three times in 2017.

The Labor Department said its Consumer Price Index excluding the volatile food and energy components rose 0.3 percent last month also as prices for new motor vehicles, used cars and trucks and motor vehicle insurance increased.

That was the biggest advance in the so-called core CPI since January and followed a 0.1 percent gain in November. Core CPI increased 1.8 percent in the 12 months through December, picking up from 1.7 percent in November.

Economists polled by Reuters had forecast core CPI rising 0.2 percent month-on-month and holding steady at 1.7 percent on an annual basis.

Weak import and producer price reports this week had raised concerns about the inflation outlook, although the two reports do not have a strong correlation with the CPI data.

Economists are hoping that a tightening labor market, rising commodity prices and a weak dollar will lift inflation toward the Fed’s 2 percent target this year. The Fed’s preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, has undershot its target since May 2012.

The dollar trimmed losses against a basket of currencies after the data. Prices for U.S. Treasuries fell, with the yield on the interest-rate sensitive two-year note rising to the highest since 2008. U.S. stock index futures pared gains.

BROAD PRICE INCREASES

Supporting the rise in underlying inflation pressures last month, rents increased 0.4 percent. Owners’ equivalent rent of primary residence climbed 0.3 percent after gaining 0.2 percent in November.

The cost of medical care increased 0.3 percent, with prices for prescription medication surging 1.0 percent after rising 0.6 percent in November. The cost of both hospital and doctor visits increased 0.3 percent.

Households also paid more for new motor vehicles, which rose 0.6 percent in price last month, the biggest gain since January. The cost of motor vehicle insurance increased 0.6 percent. Apparel prices, however, fell 0.5 percent.

Cheaper gasoline prices limited the increase in the overall CPI to 0.1 percent in December after climbing 0.4 percent in November. That lowered the year-on-year increase in the CPI to 2.1 percent from 2.2 percent in November.

Last month, gasoline prices fell 2.7 percent after rebounding 7.3 percent in November. Food prices rose 0.2 percent after being unchanged for two straight months.

In a separate report on Friday, the Commerce Department said retail sales rose 0.4 percent last month. Data for November was revised to show sales gaining 0.9 percent instead of the previously reported 0.8 percent increase. Retail sales rose 5.4 percent from a year ago.

Sales last month were supported by a 1.2 percent jump in receipts at gardening and building material stores. Sales at auto dealerships rose 0.2 percent. Excluding automobiles, gasoline, building materials and food services, retail sales increased 0.3 percent last month after an upwardly revised 1.4 percent surge in November. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously reported to have increased 0.8 percent in November. Last month’s increase in retail sales and the sharp upward revision to November data bolsters economists’ expectations of an acceleration in consumer spending in the fourth quarter. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 2.2 percent annualized rate in the third quarter. The economy grew at a 3.2 percent pace during that period.

Reporting by Lucia Mutikani; Editing by Andrea Ricci

Canada welcomes Trump suggestion of NAFTA deadline extension

LONDON, Ontario (Reuters) – Canada welcomes the suggestion by U.S. President Donald Trump that the deadline for concluding talks to modernize NAFTA could be extended beyond the end of March, Foreign Minister Chrystia Freeland told reporters on Friday.

Trump told the Wall Street Journal on Thursday that “a lot of things are hard to negotiate” ahead of a Mexican presidential election in July.

“I thought that was a sensible suggestion from the President. I think all of us are mindful of the Mexican elections,” Freeland told reporters on the sidelines of a Cabinet retreat.

Talks to update the North American Free Trade Agreement, which are due to wrap up by end-March to avoid clashing with the Mexican vote, have bogged down amid major disagreements.

In his remarks on Thursday, Trump reiterated his threat to announce a U.S. withdrawal from the treaty unless major changes are made but said he was “leaving it a little bit flexible” until after the election.

“We have always felt that imposing artificial deadlines was not necessary from the Canadian standpoint … I thought that was a constructive proposal from the president,” said Freeland.

Trump wants the 1994 deal between the United States, Canada and Mexico overhauled to better serve U.S. interests.

Reporting by David Ljunggren; Editing by Frances Kerry

Xerox in talks for deal with Fujifilm: WSJ

(Reuters) – Printer manufacturer Xerox Corp (XRX.N) is in talks to do a deal with Japanese camera maker Fujifilm Holdings Corp (4901.T) that could include a change in control of Xerox, the Wall Street Journal reported on Wednesday, citing people familiar with the matter.

However, a full takeover of Xerox is not on the table, the newspaper said, citing one of the people. (on.wsj.com/2EwGDXQ)

Xerox declined to comment, while Fujifilm said it would not comment on speculative reports.

Xerox “desperately” needed new leadership as it was slow to launch new products and increase revenue, activist investor Carl Icahn wrote in an open letter to shareholders in December, a day after nominating four members to the board.

Xerox spun off its business process outsourcing unit in 2016 and separated into two independent, publicly traded companies.

Last August, Fujifilm said it aimed to spend 500 billion yen ($4.49 billion) in strategic acquisitions over three years as it seeks growth outside its shrinking photographic film business.

Xerox and Fujifilm created a joint venture, Fuji Xerox, in 1962. The company is now 75 percent owned by Fujifilm and 25 percent by Xerox.

($1 = 111.4800 yen)

Reporting by Uday Sampath in Bengaluru and Minami Funakoshi in Tokyo; editing by Grant McCool

Pimco could add U.S. Treasuries if market weakens further: Ivascyn

NEW YORK (Reuters) – Pimco, one of the world’s biggest money managers, sees this week’s U.S. bond market selloff as a buying opportunity and is not ready to call the spike in 10-year Treasury yield to a nine-month high a bear market precursor.

Dan Ivascyn, the group chief investment officer at Pacific Investment Management Co, told Reuters on Wednesday he would consider adding U.S. Treasuries to the firm’s portfolios if the bond market weakens further.

The $14 trillion Treasury market has been roiled in the past 48 hours. On Tuesday, the Bank of Japan said it would trim its purchases of Japanese government bonds, raising speculation it will reduce its monetary stimulus this year.

On Wednesday, Bloomberg News reported that officials in China, the largest foreign holder of U.S. government debt, had recommended the country slow down or halt its purchases of the bonds amid a less attractive market for them and rising U.S.-China trade tensions.

China had $1.19 trillion in Treasuries as of October 2017, data from the Treasury Department show.

U.S. yields jumped broadly with the two-year yield hitting 1.985 percent on Wednesday, the highest level since Sept. 2008. The benchmark 10-year yield touched 2.597 percent, its loftiest level since March, according to Reuters data.

Ivascyn said shorter-dated U.S. Treasuries are “looking more interesting at these levels” and that Pimco “prefers (the) front end” of the U.S. Treasury yield curve.

Pimco, a unit of German insurer Allianz SE, oversaw more than $1.69 trillion in assets under management as of Sept. 30, 2017.

“There’s a lot going on behind the scenes, regarding trade and North Korea,” Ivascyn said. “This is likely a warning shot that can lead to a bit of volatility short term. The U.S. and China trade policy is a legit risk in 2018.”

“With all that said, and similar to our views from a year or so ago, it remains premature to declare beginnings of bear markets,” he added.

Others are not so sure.

On Tuesday, Bill Gross, the high-profile fixed-income investor, tweeted: “Bond bear market confirmed today. 25 year long-term trendlines broken in 5yr and 10yr maturity Treasuries.” Gross revealed on Wednesday that his main fund had made a bearish bet on the bond market.

The Janus Henderson manager said his $2.2 billion Global Unconstrained Bond Fund had taken a short position on Treasuries, U.K. gilts and German Bunds. In an interview with Bloomberg, he said that there appears to be a “negative type of posture for bonds.”

For his part, Jeffrey Gundlach, known on Wall Street as the ‘Bond King’, said on an investor webcast on Tuesday that if the 10-year Treasury yield pushes above 2.63 percent, it will accelerate higher.

That 10-year yield level Gundlach referred to was a level last seen a day before the Federal Reserve raised interest rates at its March 14-15 policy meeting.

Reporting By Jennifer Ablan and Richard Leong; Editing by Susan Thomas

Exclusive: Justice Department blindsided banking agency on pot policy flip

WASHINGTON (Reuters) – When the U.S. Justice Department said last week it was reversing policy on the $7 billion marijuana business, it failed to first notify federal officials who advise banks in states where the drug is legal, sources in Congress said.

The announcement by U.S. Attorney General Jeff Sessions, a longtime critic of legalizing marijuana, caused confusion among banks about how to do business with marijuana growers, processors and distributors without running afoul of federal money laundering laws.

The uncertainty unleashed a flood of phone calls to the Financial Crimes Enforcement Network (FinCEN), an office within the U.S. Treasury Department, from congressional offices with questions from lawmakers and constituents.

But FinCEN had no ready answers because it received no advance warning of Sessions’ Jan. 4 announcement rescinding an Obama-era policy that had eased up on federal enforcement of marijuana laws, said congressional aides who spoke on condition of anonymity.

A Justice Department spokesman declined to comment about whether it had coordinated with FinCEN in advance.

The abrupt announcement by Sessions was the latest example of sudden actions by the Trump administration that have blind-sided its own government agencies on major policy shifts. In 2017 the administration blindsided the Defense Department with a decision to ban transgender Americans from serving in the military. It also took many by surprise at the Department of Homeland Security by barring people from some predominantly Muslim countries from entering the United States.

Marijuana is banned by federal law but it has become legal in one form or another in a number of states.

About 400 banks and credit unions do business with the U.S. marijuana industry. Most are small institutions with operations limited to states where marijuana has been legalized.

Critics said the Justice Department’s decision, which gives prosecutors wide latitude to pursue criminal charges, could drive banks out of the cannabis industry.

Sessions issued his one-page announcement three days after California formally launched the world’s largest regulated commercial market for recreational marijuana. Five other states have legalized recreational use, while dozens permit medicinal use.

“I imagine that Sessions did not even contemplate that his action could trigger potentially billions of dollars of cash from being unbanked,” said Saphira Galoob, whose firm The Liaison Group lobbies on behalf of cannabis clients.

Reversing the Obama administration, Sessions said the Justice Department was withdrawing legal guidelines known as the Cole and Ogden memos, widely seen as giving safe harbor against prosecution to cannabis businesses in states where pot is legal.

The memos said that, while marijuana was still illegal, prosecutors would not prioritize pursuing criminal charges in states that had set up their own regulatory regimes.

Deputy Attorney General Rod Rosenstein said in September that the marijuana policy was under review for possible changes.

In last week’s announcement, the Justice Department made no mention of parallel marijuana guidance that FinCEN issued in February 2014 in coordination with Justice officials.

The guidance provided a pathway for banks to serve marijuana businesses in states such as Oregon, Colorado, Washington and California. It relied heavily on the Cole memo.

FinCEN requires banks to file suspicious activity reports with the government on legally questionable transactions. The FinCEN guidance says banks must continue to file those reports, but lets them say if they are confident that their cannabis customers are complying with relevant state laws.

Democratic Representatives Dennis Heck of Washington state and Ed Perlmutter of Colorado are expected this week to send a letter, seen by Reuters, to FinCEN urging it not to rescind the guidance amid concerns that doing so could “inject uncertainty in the financial markets.”

Stephen Hudak, a FinCEN spokesman, said in a statement that the agency’s guidance “remains in place,” despite the Justice Department’s actions.

Reporting by Sarah N. Lynch; Editing by Kevin Drawbaugh and Grant McCool

Asian shares step back from New Year rally as trade concerns resurface

TOKYO (Reuters) – The New Year rally in Asian shares ran out of steam on Thursday as concerns about the U.S. administration’s protectionist stance hit Wall Street while U.S. bonds were dented by speculation China may curtail buying.

MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.1 percent in early trade, slipping further from Tuesday’s 10-year peak. Japan’s Nikkei lost 0.6 percent.

U.S. shares snapped their New Year rally on Wednesday while the Canadian dollar and the Mexican peso fell after a Reuters report said Canada increasingly believes that U.S. President Donald Trump will soon announce his intention to withdraw from the North American Free Trade Agreement treaty.

U.S. bond prices tumbled, boosting the benchmark 10-year Treasuries yield to a 10-month high of 2.597 percent after Bloomberg reported that China, the biggest foreign holder of U.S. Treasuries, could slow or stop buying government bonds.

“I would think that China is flexing its muscles as the United States is looking into measures to deal with its trade deficit with China,” said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.

“I have been expecting rising trade frictions between the United States and China this year. It appears China is quick to touch the Achilles heel of the States,” he added.

Investigations into U.S. imports are due to report to Trump this month, including probes into whether imports of steel and aluminum threaten U.S. national security. A separate probe into Chinese intellectual property practices may also conclude as early as this month, Axios reported, and could result in tariffs on the country’s consumer-electronics exports.

U.S Treasuries later pared some of their losses and the 10-year yield stood at 2.555 percent in early Asian trade.

The speculation that China may reduce its buying in U.S. bonds helped to underpin the euro, the most obvious alternative assets to the dollar.

The euro traded at $1.1950, extending its rebound from Tuesday’s low of $1.1916.

Against the yen, the dollar posted a even bigger fall of 1.1 percent on Wednesday, its largest decline in almost eight months.

It last stood at 111.40 yen, after hitting a six-week low of 111.27 yen the previous day.

The yen has been buoyed this week after a cut in the Bank of Japan’s bond buying on Tuesday fueled speculation that the central bank could eventually seek to exit from its stimulus later this year, following in the footsteps of other major central banks.

The Canadian dollar traded at C$1.2559 per U.S. dollar after having lost 0.7 percent on Wednesday.

Crude oil prices jumped on Wednesday and settled near three-year highs after U.S. government data showed a drop in crude inventories and production, though the fall in the latter could be the result of extreme cold temperatures across the United States.

U.S. West Texas Intermediate (WTI) crude futures traded at $63.47 per barrel, after hitting a high of $63.67 in the previous session, their loftiest level since December 2014.

Brent crude futures settled at $69.20 a barrel on Wednesday, up 38 cents. The session high for the global benchmark was $69.37, highest since May 2015.

Editing by Shri Navaratnam

Canada takes U.S. to WTO, U.S. says case helps China

GENEVA (Reuters) – Canada has launched a wide-ranging trade complaint against the United States, the World Trade Organization said on Wednesday, in a dispute that Washington said would damage Canada’s own interests and play into China’s hands.

Canada’s complaint, challenging Washington’s use of anti-dumping and anti-subsidy duties, was based on almost 200 examples of alleged U.S. wrongdoing, almost all of them concerning other trading partners, such as China, India, Brazil and the European Union.

“Canada’s new request for consultations at the WTO is a broad and ill-advised attack on the U.S. trade remedies system,” U.S. Trade Representative Robert Lighthizer said in a statement.

”Even if Canada succeeded on these groundless claims, other countries would primarily benefit, not Canada,“ he said. ”Canada’s complaint is bad for Canada.”

The 32-page complaint faulted technical details of the U.S. trade rule book, ranging from the treatment of export controls to the handling of split decisions at the six-member U.S. International Trade Commission.

Canadian Foreign Minister Chrystia Freeland said the legal action was in response to the “unfair and unwarranted” U.S. duties against Canada’s softwood lumber producers and part of a “broader litigation” to defend forestry jobs.

“We continue to engage our American counterparts to encourage them to come to a durable negotiated agreement on softwood lumber,” Freeland said in an emailed statement.

Canada said U.S. procedures broke the WTO’s Anti-Dumping Agreement, the Agreement on Subsidies and Countervailing Measures, the General Agreement on Tariffs and Trade and the Understanding on Rules and Procedures Governing the Settlement of Disputes.

Anti-dumping and countervailing duties – punitive tariffs to restrict imports that are unfairly priced or subsidized in order to beat the competition – are a core component of Washington’s trade arsenal, and frequently used to defend U.S. interests.

For U.S. President Donald Trump, who has espoused an “America First” trade policy and the unraveling of multi-party trade agreements, those levers for managing individual U.S. trade relationships appear even more important than before.

Under WTO rules, the United States has 60 days to try to settle the complaint, or Canada, which sends 75 percent of its goods exports to the United States, could ask the WTO to adjudicate.

CHINA IMPORTS

Lighthizer said Canada’s demands undermined confidence in its commitment to mutually beneficial trade, and would only damage its own interests if they were realized.

“The flood of imports from China and other countries would negatively impact billions of dollars in Canadian exports to the United States, including nearly $9 billion in exports of steel and aluminum products and more than $2.5 billion in exports of wood and paper products,” he said.

The tariffs at the center of the complaint are allowed under WTO rules but they are subject to strict conditions.

The United States has been under fire for years about the way it calculates unfair pricing, or dumping. It has already lost a string of WTO disputes after its calculation methodology was ruled to be out of line with the WTO rule book.

Trump has threatened to expand the use of punitive duties against China and has angered Beijing by refusing to accede to China’s demand to be treated as any other “market economy”.

He has also upset Canada by demanding major changes to the North American Free Trade Agreement, and by slapping punitive tariffs on Canadian softwood lumber exports, leading to a challenge at the WTO and NAFTA.

Trade friction has also arisen over a dispute between U.S. planemaker Boeing Co (BA.N) and its Canadian rival Bombardier Inc (BBDb.TO), which faces a potential 300 percent duty on U.S. sales of its CSeries jets.

Reporting by Tom Miles, additional reporting by Andrea Hopkins in Ottawa and Tim Ahmann in Washington; Editing by Alison Williams and Phil Berlowitz