HNA chairman Wang died falling off wall in France: police source

PARIS (Reuters) – Chinese HNA group chairman Wang Jian fell to his death while visiting the southern France village of Bonnieux on Tuesday, a French police source told Reuters.

FILE PHOTO: A HNA Group logo is seen on the building of HNA Plaza in Beijing, China February 9, 2018. REUTERS/Jason Lee/File Photo

Wang died after a 10 meter fall off a wall, the source said.

“He tried to climb a low wall to see the view and take pictures,” the source said. After failing a first time, Wang took a run up. “He fell over the top and dropped 10 meters.”

Reporting by Emmanuel Jarry; Writing by Ingrid Melander; Editing y Richard Lough

Shouting CEO, changing rules: inside Tesla’s Model 3-building sprint

SAN FRANCISCO (Reuters) – Chief Executive Elon Musk barked at engineers on the Fremont, California assembly line. Tesla Inc tapped workers from other departments to keep pumping out the Model 3 electric sedans, disrupting production of the Model S and X lines. And weekend shifts were mandatory.

Tesla pulled out all the stops in the final week of June to meet its goal of making 5,000 Model 3s in a week, according to employees who spoke to Reuters. The sedan is essential to put money-losing Tesla on a path to profitability and prove that the electric car company can master mass production.

Whether Tesla can do it week in and week out – and without relying on overtime and extra hands – is another question, and one that weighed on investors.

Shares closed down 7.2 percent at $310.86 on Tuesday.

Leading up to Sunday morning’s production milestone, Musk paced the Model 3 line, snapping at his engineers when the around-the-clock production slowed or stopped due to problems with robots, one worker said.

Tesla built a new line in just two weeks in a huge tent outside the main factory, an unprecedented move in an industry that takes years to plan out its assembly lines, and said the tented production area accounted for 20 percent of the Model 3s produced last week.

“They were borrowing people from our line all day to cover their (Model 3) breaks so the line would continue to move,” said a Model S worker on Sunday.

“They’ve been throwing Model 3s ahead of the S to get painted to try to assure that they make their goal of 5,000,” the worker said. “The paint department can’t handle the volume.”

Because of the focus on the Model 3, the S line was about 800 cars behind schedule to enter the paint shop, the worker said.

Any potential disruption of the Model S and X lines could threaten Tesla’s target of building 100,000 of those vehicles in 2018. Tesla built 49,489 of those cars in the first half of this year.

FILE PHOTO – A car carrier trailer carries Tesla Model 3 electric sedans, is seen outside the Tesla factory in Fremont, California, U.S. June 22, 2018. REUTERS/Stephen Lam

Tesla said there had been no disruption to S and X productivity and noted it also built 1,913 of those vehicles during the last week of the quarter along with its Model 3s. A spokesperson also said workers from the S and X line had volunteered to help out on the 3 line.

Tesla built a total of 28,578 Model 3s in the second quarter, and 40,989 since production began last July, the company said.

Last week’s big push also brought a rewrite of the employee attendance policy. After mandatory weekend shifts were assigned, two workers said, Tesla rescinded a policy promising workers at least one week’s notice before weekend work.

“The manager and supervisor are verbally going around and saying: ‘If you don’t come in, you’ll be written up’,” one of the workers told Reuters last week.

Some employees are worried the frenetic pace plus long hours could burn out workers. One employee said they were told to keep working until they met their daily production mark, not when their shifts ended.

“They said starting tomorrow be prepared to work up to 12 hours,” said the Model S employee on Monday. “It’s going to be basically 12 hours from now on and I’ve got a feeling it’s going to be six days a week.”

To make its number, Tesla was willing to “spend any kind of money,” a Gigafactory worker said, pointing to the new battery assembly-line flown in from Europe via cargo planes to the Gigafactory in May.

In the morning of Sunday, July 1, about five hours after the self-imposed second-quarter deadline had passed, the number 5,000 flashed on a countdown screen viewed by Tesla’s Model 3 assembly-line workers. The Model 3 itself bore a “5,000” sign in its front window.

Tesla said on Monday that some of its Model 3 production would be on break as part of the July 4 holiday, with production to resume on Thursday. Tesla plans to build 6,000 Model 3s per week by August.

But the worker told to expect longer shifts warned that pushing assembly-line workers too hard could backfire.

“He (Musk) is going to go through an awful lot of people because people are going to start getting hurt left and right,” by the fast-moving assembly line, the worker said.

Slideshow (2 Images)

“There’s only so fast a person can move.”

Reporting by Alexandria Sage and Salvador Rodriguez; Editing by Greg Mitchell, Lisa Shumaker and Nick Zieminski

Exclusive: China presses Europe for anti-U.S. alliance on trade

BRUSSELS/BERLIN (Reuters) – China is putting pressure on the European Union to issue a strong joint statement against President Donald Trump’s trade policies at a summit later this month but is facing resistance, European officials said.

In meetings in Brussels, Berlin and Beijing, senior Chinese officials, including Vice Premier Liu He and the Chinese government’s top diplomat, State Councillor Wang Yi, have proposed an alliance between the two economic powers and offered to open more of the Chinese market in a gesture of goodwill.

One proposal has been for China and the European Union to launch joint action against the United States at the World Trade Organisation.

But the European Union, the world’s largest trading bloc, has rejected the idea of allying with Beijing against Washington, five EU officials and diplomats told Reuters, ahead of a Sino-European summit in Beijing on July 16-17.

Instead, the summit is expected to produce a modest communique, which affirms the commitment of both sides to the multilateral trading system and promises to set up a working group on modernizing the WTO, EU officials said.

Vice Premier Liu He has said privately that China is ready to set out for the first time what sectors it can open to European investment at the annual summit, expected to be attended by President Xi Jinping, China’s Premier Li Keqiang and top EU officials.

Chinese state media has promoted the message that the European Union is on China’s side, officials said, putting the bloc in a delicate position. The past two summits, in 2016 and 2017, ended without a statement due to disagreements over the South China Sea and trade.

“China wants the European Union to stand with Beijing against Washington, to take sides,” said one European diplomat. “We won’t do it and we have told them that.”

China’s Foreign Ministry did not immediately respond to a request for comment on Beijing’s summit aims.

In a commentary on Wednesday, China’s official Xinhua news agency said China and Europe “should resist trade protectionism hand in hand”.

“China and European countries are natural partners,” it said. “They firmly believe that free trade is a powerful engine for global economic growth.”

CHINA’S MOMENT?

Despite Trump’s tariffs on European metals exports and threats to hit the EU’s automobile industry, Brussels shares Washington’s concern about China’s closed markets and what Western governments say is Beijing’s manipulation of trade to dominate global markets.

“We agree with almost all the complaints the U.S. has against China, it’s just we don’t agree with how the United States is handling it,” another diplomat said.

Still, China’s stance is striking given Washington’s deep economic and security ties with European nations. It shows the depth of Chinese concern about a trade war with Washington, as Trump is set to impose tariffs on billions of dollars worth of Chinese imports on July 6.

It also underscores China’s new boldness in trying to seize leadership amid divisions between the United States and its European, Canadian and Japanese allies over issues including free trade, climate change and foreign policy.

“Trump has split the West, and China is seeking to capitalize on that. It was never comfortable with the West being one bloc,” said a European official involved in EU-China diplomacy.

“China now feels it can try to split off the European Union in so many areas, on trade, on human rights,” the official said.

Another official described the dispute between Trump and Western allies at the Group of Seven summit last month as a gift to Beijing because it showed European leaders losing a long-time ally, at least in trade policy.

European envoys say they already sensed a greater urgency from China in 2017 to find like-minded countries willing to stand up against Trump’s “America First” policies.

NO “SYSTEMIC CHANGE”

A report by New York-based Rhodium Group, a research consultancy, in April showed that Chinese restrictions on foreign investment are higher in every single sector save real estate, compared to the European Union, while many of the big Chinese takeovers in the bloc would not have been possible for EU companies in China.

China has promised to open up. But EU officials expect any moves to be more symbolic than substantive.

They say China’s decision in May to lower tariffs on imported cars will make little difference because imports make up such a small part of the market. China’s plans to move rapidly to electric vehicles mean that any new benefits it offers traditional European carmakers will be fleeting.

“Whenever the train has left the station we are allowed to enter the platform,” a Beijing-based European executive said.

However, China’s offer at the upcoming summit to open up reflects Beijing’s concern that it is set to face tighter EU controls, and regulators are also blocking Chinese takeover attempts in the United States.

The European Union is seeking to pass legislation to allow greater scrutiny of foreign investments.

“We don’t know if this offer to open up is genuine yet,” a third EU diplomat said. “It’s unlikely to mark a systemic change.”

FILE PHOTO: Chinese and U.S. flags are set up for a meeting during a visit by U.S. Secretary of Transportation Elaine Chao at China’s Ministry of Transport in Beijing, China April 27, 2018. REUTERS/Jason Lee/File Photo

Additional reporting by Ben Blanchard in Beijing; Editing by Giles Elgood

General Motors’s China vehicle sales growth rate eases in second-quarter

BEIJING (Reuters) – U.S. automaker General Motors Co (GM.N) said on Wednesday its second-quarter sales in China increased 0.7 percent to 858,344 vehicles compared with the same period a year ago.

FILE PHOTO: A Cadillac Escalade SUV by General Motors Co of the U.S. is displayed during a media preview of the Auto China 2018 motor show in Beijing, China April 25, 2018. REUTERS/Joe White/File Photo

However, the second-quarter growth rate of vehicle sales in China eased compared with the January-March quarter, which saw an increase of 8 percent. The slowdown was mainly due to lean sales of Buick brand vehicles in the April-June period.

Buick sales dived 16 percent to 230,454 vehicles in the second quarter compared with a year-ago period. Sales of Cadillac, Chevrolet and other brands climbed in the second quarter from a year ago.

Buick sales declined due to a technology shift by the brand to offer a number of models with smaller-displacement, turbo-charged engines, said a Shanghai-based spokeswoman for General Motors.

“Buick is leading the industry in the deployment of the cutting-edge small displacement engines, but it takes time for sales to pick up after technology changeovers,” the spokeswoman said.

While the 1-litre and 1.3-litre turbo-charged engines match or exceed the performances of non-turbo 4-cylinder engines that were replaced, the new engines also offer greater fuel efficiencies.

“We believe the adoption of these engines will be commonplace in China in the years ahead,” she added.

In the first-half of 2018, GM and its local Chinese joint venture partners posted record sales, selling 1.84 million vehicles, up 4.4 percent from the first half a year ago.

The previous first-half record was during the January-June period of 2016 when GM sold 1.81 million vehicles.

The Detroit automaker has stopped reporting monthly China vehicle sales, saying the monthly snapshot does not accurately reflect the market. The company now issues sales reports only on a quarterly basis.

Reporting By Norihiko Shirouzu, Editing by Sherry Jacob-Phillips

Trade war worries drag world stocks lower, yuan steadies

LONDON (Reuters) – World stocks were dragged lower on Wednesday by growing anxiety ahead of Washington’s end of week deadline to impose tariffs on Chinese imports, while the yuan rebounded after China’s central bank moved to calm investors.

FILE PHOTO: A worker shelters from the rain as he passes the London Stock Exchange in the City of London at lunchtime October 1, 2008. REUTERS/Toby Melville/File Photo

The MSCI All-Country World index, which tracks shares in 47 countries, was down 0.1 percent on the day.

Washington has said it would implement tariffs on $34 billion of Chinese imports on July 6, and Beijing has vowed to retaliate in kind on the same day.

Concerns about the outbreak of a global trade war have, among other factors, prevented a sustained recovery in global stock markets since a violent selloff in February.

The U.S. has listed another 284 product lines valued at $16 billion that it will target with tariffs, including semiconductors and a broad range of electronics. It also threatened another 10 percent tariffs on up to $400 billion of Chinese goods.

Washington has also launched a national security investigation into car and truck imports, with Trump threatening Europe with a 20 percent tariff on car imports while various countries have also already taken retaliatory steps against U.S. tariffs on steels and aluminum products.

Over 40 countries have voiced deep concern at the World Trade Organization (WTO) about possible U.S. measures.

“There is a lot of concern I think about the effect a long term trade war might have but actually if you look at the data we’re seeing, the economic data is not that bad,” said Michael Hewson, chief markets analyst at CMC Markets in London, noting that most equity markets were well above lows hit earlier this year.

“So it could have a drag, and it will have a drag. But will it push the global economy into recession? Not yet.”

The pan-European STOXX 600 index was down 0.2 percent in morning trade in London, while Germany’s exporter-heavy DAX also declined 0.3 percent and the FTSE 100 fell 0.2 percent.

A Chinese court temporarily banned Micron Technology from selling chips in China, the world’s biggest memory chip market, hitting shares in U.S. and Asian semiconductor stocks.

Europe’s tech sector was led 0.5 percent lower by falls in chipmakers STMicro and Infineon, which were both down around 2 percent. [.EU]

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.25 percent, a day after it hit a nine-month low. Japan’s Nikkei erased earlier losses to stand flat by late afternoon.

Mainland Chinese shares dropped, with CSI300 Index off 0.7 percent.

In the currency market, the yuan bounced back from an 11-month low following moves by China’s central bank on Tuesday to calm jittery financial markets.

The Chinese currency fetched 6.6177 per dollar in onshore trade, off Tuesday’s low of 6.7204.

Major currencies were treading water as traders fretted about the fallout of the intensifying trade frictions between Washington and the rest of the world.

The euro was off by 0.2 percent at $1.16380 while the dollar fetched 110.51 yen, down 0.1 percent.

Oil prices edged up following a report of tightening U.S. fuel inventories amid an outage at Syncrude Canada oil sands facility in Alberta, which usually supplies the United States. [O/R]

International benchmark Brent futures rose 0.3 percent to $77.98 a barrel.

U.S. light crude futures traded down 0.4 percent at $73.86 per barrel, after rising above $75 for the first time in more than three years on Tuesday.

Copper, sometimes seen as barometer of global economic strength given its wide use in power and construction, hit a fresh nine-month low of $6,423 a tonne on Wednesday. [MET/L]

Reporting by Ritvik Carvalho; Editing by Raissa Kasolowsky

Report of Trump bill rejecting WTO seen by trade experts as hot air

GENEVA (Reuters) – U.S. President Donald Trump has ordered the drafting of legislation that would mean abandoning key disciplines agreed at the World Trade Organization, Axios news website reported late on Sunday, to a skeptical response from trade experts.

U.S. President Donald Trump speaks to the press aboard Air Force One en route to Bedminster, New Jersey, from Joint Base Andrews, Maryland, U.S., June 29, 2018. REUTERS/Eric Thayer

Axios reported on Friday that Trump wanted to leave the WTO, a story dismissed by U.S. Treasury Secretary Steve Mnuchin as “wrong” and “an exaggeration”.

The website followed up on Sunday by publishing what it said was a draft bill, the “United States Fair and Reciprocal Tariff Act”, immediately drawing ridicule for legislation that would be known by its acronym, the FART Act.

The act would allow Trump to ignore the WTO’s “most favored nation” principle, which stops countries trading on different terms with different trading partners unless they have a formal trade agreement, Axios said.

It would also allow “reciprocal tariffs”, so Trump could impose U.S. tariffs on particular goods equal to the tariff charged on U.S. exports of those goods by another country.

  • Trump threatens action on WTO after reports he wants to withdraw

The draft bill published by Axios did not mention the WTO, but its report said the law would allow the United States to disregard tariff limits agreed at the WTO since 1995.

Axios quoted a source familiar with the bill as saying the bill was “insane” and Congress would never consent to it. Trump was briefed on the draft in late May, Axios said, and most officials thought it was unrealistic or unworkable, apart from Trump’s trade adviser Peter Navarro.

White House spokeswoman Lindsay Walters told Axios that the administration was not preparing to roll out such legislation.

Trump has caused a crisis in the WTO by blocking the appointment of new trade judges, threatening to destroy the system of binding dispute settlement. But many diplomats say quitting the WTO would not be in the U.S. interest, and the WTO has said it has never had any indication of Trump intending to leave.

U.S. officials in Geneva, home of the WTO, did not immediately respond to a request for comment on Monday.

Simon Lester, associate director of the Trade Policy Center at the Cato Institute, wrote on the International Economic Law and Policy Blog that “I’m not taking this too seriously”.

If the goal was to get lower tariffs for U.S. exports, Trump could do that by negotiating trade agreements, he said.

Reporting by Tom Miles; Editing by Peter Graff

Tesla’s all-nighter to hit production goal fails to convince Wall Street

(Reuters) – Tesla Inc’s (TSLA.O) burning the midnight oil to hit a long-elusive target of making 5,000 Model 3 vehicles per week failed to convince Wall Street that the electric carmaker could sustain that production pace, sending shares down 2.3 percent on Monday.

Tesla met the target by running 24 hours a day for seven days, setting up a new production line inside a tent on the campus of its Fremont factory and pulling workers from other projects, according to the company and employees at the factory.

Tesla’s heavily-shorted shares rose as much as 6.4 percent to $364.78 in early trading, but sank after several analysts questioned whether Tesla would be able to sustain the Model 3 production momentum, which is crucial for the long-term financial health of the company.

“In the interim, we do not see this production rate as operationally or financially sustainable,” said CFRA analyst Efraim Levy. “However, over time, we expect the manufacturing rate to become sustainable and even rise.”

Levy cut CFRA’s rating on Tesla stock to “sell” from “hold.”

Tesla, which Chief Executive Elon Musk hailed on Sunday as having become a “real car company,” said it now expects to boost production to 6,000 Model 3s per week by late August, signaling confidence about resolving technical and assembly issues that have plagued the company for months.

  • Tesla shares fall after automaker hits production milestone

Tesla also reaffirmed a positive cash flow and profit forecast for the year and announced that Doug Field, senior vice president of engineering, was stepping down after five years with the company.

Tesla has been burning through cash to produce the Model 3. Problems with an over-reliance on automation, battery issues and other bottlenecks have potentially compromised Tesla’s position in the electric car market as a host of competitors prepare to launch rival vehicles.

While UBS analyst Colin Langan said there was some relief the company hit the Model 3 production target, he noted that second-quarter vehicle deliveries of 40,740 missed his expectation for 51,000 and the consensus estimate of 49,000.

He also questioned whether the company could keep up the faster production and its profit outlook.

“We’re very worried about quality and if you read the reports online there’s significant quality issues. They still haven’t proven they can produce these profitably. The math is very challenging in getting to a sustained profit,” said Langan.

Model 3 production tripled to 28,578 in the company’s second quarter from the previous quarter, Tesla said.

The company said 11,166 Model 3 vehicles were in transit to customers at the end of the second quarter, and would be delivered early next quarter.

FILE PHOTO: A Tesla Model 3 sedan, its first car aimed at the mass market, is displayed during its launch in Hawthorne, California, U.S. March 31, 2016. REUTERS/Joe White/File Photo

Reservations at the end of the second quarter stood at roughly 420,000. Tesla has delivered 28,386 Model 3 cars to date. Model 3 reservations totaled 450,000 at the end of the first quarter.

The company said it expects orders to grow faster than the production rate after it starts allowing potential customers to see and test drive Model 3s at local stores.

Despite originally touting the Model 3 as a $35,000 vehicle, Tesla has yet to begin building that basic version and instead is currently building a higher-priced model as it tries to come out of “production hell.”

The prices of Tesla’s three convertible bonds were little moved by hitting the production goal, suggesting that share price volatility discouraged bondholders from converting their securities into equity despite the positive production news.

As of Friday’s close, 34.83 million Tesla shares or 27.5 percent of the shares available for trading were sold short and investors did not appear to be covering their positions ahead of Monday’s announcement, according Ihor Dusaniwsky, managing director at S3 Partners a financial analytics firm.

“You wonder are traders maxed out on risk on Tesla. At a certain point you’re gorged. You can’t take another bite,” he said.

Tesla’s milestone achievement did not alter a recommendation to short Tesla stock from David Kudla, founder and chief executive of Mainstay Capital Management in Grand Blanc, Michigan. Selling shares short is a bet the price will fall.

“The push to meet these self-imposed targets makes one question what cost was incurred to build these cars and how was quality adversely impacted,” said Kudla, who is personally short Tesla stock.

“Whether somebody is short at $361 or $300 they’re going to be fine.”

Reporting by Supantha Mukherjee in Bengaluru and Sinead Carew in New York: Additional reporting by Kate Duguid in New York and Munsif Vengattil in Bengaluru; Editing by Tom Brown, Alden Bentley and Lisa Shumaker

Dell moves to go public, spurns IPO

(Reuters) – Dell Technologies Inc said on Monday it would pay $21.7 billion in cash and stock to buy back shares tied to its interest in software company VMware Inc (VMW.N), returning the computer maker to the stock market without an initial public offering.

Dell said the agreement values its equity at between $61.1 billion and $70.1 billion, more than twice the value of the $24.9 billion deal that founder and Chief Executive Officer Michael Dell and buyout firm Silver Lake clinched to take the company private in 2013.

The transaction will allow Dell to bypass the traditional IPO process, which would likely have involved grilling by stock market investors over Dell’s $52.7 billion debt pile.

It also means Dell will not have to raise any new money, because it will pay for the deal by issuing new shares and with a $9 billion dividend it will receive from VMware.

Going public gives Michael Dell and Silver Lake the option to eventually sell down their stakes, even as they affirmed on Monday that they had no plans to do so. Following the deal, Michael Dell will own 47 percent to 54 percent of the combined company, while Silver Lake will own between 16 percent and 18 percent.

A new public security will give Dell currency it can use to pay for acquisitions beyond cash. The security that Dell is buying back is a so-called tracking stock tied to its 81 percent economic stake in VMware. VMware specializes in virtualisation, which allows multiple systems and applications to run at the same time on the same server, something can cut companies’ IT costs.

Dell hopes the deal will allow investors to value it more easily, because it will remove the complexity of the tracking stock, according to sources familiar with the company’s thinking.

Dell issued the tracking stock in 2016 to buy data storage company EMC Corp for $67 billion, because it could not pay for the deal in cash. EMC owned the majority stake in VMware, which Dell inherited.

A logo of Dell Technologies is seen at the Mobile World Congress in Barcelona, Spain February 28, 2018. REUTERS/Yves Herman

Such a security “tracks,” or depends, on the financial performance of a specific business unit or operating division of a company rather than the operations of a company as a whole.

Dell will exchange each share of VMware tracking stock (DVMT.N) for 1.3665 shares of its Class C common stock, or $109 per share in cash, for a total cash consideration of not more than $9 billion.

Dell said it will list its Class C shares on the New York Stock Exchange following the completion of the deal that will eliminate its tracking stock. Following the deal, investors who owned the tracking stock will collectively account for between 20.8 percent and 31 percent of Dell’s ownership.

The transaction represents a premium of 28.9 percent to the closing price of the tracking stock on Friday. The stock ended 9 percent higher at $92.20 on Monday. VMware shares rose 10.2 percent to $162.02.

“We believe that this development is positive for VMware shares not only because it avoids the reverse merger scenario, but also because there is the possibility of VMware being taken out by Dell in the future as a ‘second step’ following this transaction,” FBN Securities analyst Shebly Seyrafi wrote in a note.

A STRING OF DEALS

Michael Dell has turned to dealmaking to transform his company from a PC manufacturer into a broader seller of information technology services to businesses, ranging from storage and servers to networking and cyber security.

The strategy is in sharp contrast to that of rival HP Inc (HPQ.N), which separated in 2016 from Hewlett Packard Enterprise Co (HPE.N), based on the reasoning that two technology companies focused separately on hardware and services would be more nimble.

Dell’s strategy is beginning to pay off, as companies look to one-stop shops to help them manage their IT infrastructure on the cloud. Dell reported consolidated adjusted cash flow of $2.4 billion in its latest quarter, up by a third year-on-year. Its total debt has gone down by $4.6 billion since the EMC deal.

“Dell is a very different company than it was five years or so years ago. And we’re seeing tremendous momentum inside the business,” Michael Dell told analysts on a conference call.

Reporting by Carl O’Donnell in Bangalore and Munsif Vengattil in Bengaluru; Editing by Saumyadeb Chakrabarty and Leslie Adler

Wall Street ends higher, helped by tech rally

(Reuters) – Wall Street ended higher on Monday after a choppy session, with gains in Apple and other technology stocks offsetting worries about an escalating trade war between Washington and its trading partners.

Microsoft Inc (MSFT.O), Facebook Inc (FB.O) and Apple Inc (AAPL.O) each rose 1 percent or more, pushing the SP 500 information technology index .SPLRCT up 0.99 percent, bringing gains for the year-to-date to 11 percent as investors bet on strong earnings from Silicon Valley in the approaching quarterly reporting season.

“It doesn’t look like tech is going to slow down this year,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. “The tech play is here to say.”

Traders were also eyeing the July 6 deadline for U.S. tariffs on $34 billion worth of Chinese goods to kick in, which pose the danger of a strong response from Beijing.

The European Union has warned the United States that imposing import tariffs on cars and car parts would likely lead to counter-measures on $294 billion of U.S. exports, while Canada has vowed to take punitive measures in response to U.S. steel and aluminum tariffs.

“These tit-for-tat trade tariffs will ultimately raise prices for consumers and will likely dampen demand for products,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago.

Ablin said he expected strong U.S. corporate earnings for the quarter ended in June, but that profits for the rest of 2018 were in danger of being hurt by an escalating trade war.

Only three of the 11 main SP 500 sectors ended lower on Monday, with energy .SPNY down 1.55 percent on the back of a 2 percent drop in Brent crude LCOc1.

Wall Street suffered steep losses at the start of the session, but reversed course later.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 28, 2018. REUTERS/Brendan McDermid

The Dow Jones Industrial Average .DJI rose 0.15 percent to end at 24,307.18 points, while the SP 500 .SPX gained 0.31 percent to 2,726.71. The Nasdaq Composite .IXIC added 0.76 percent to 7,567.69.

On Tuesday, U.S. stock exchanges will close at 1 p.m. EDT (1700 GMT) ahead of the Fourth of July holiday, when the exchanges will also be closed. With some investors already taking time off on Monday, volume on U.S. exchanges was 6.2 billion shares, compared with the 7.3 billion average over the last 20 trading days.

Also helping the market was Commerce Department data that showed U.S. construction spending increased 0.4 percent in May, more than estimated, amid gains in investment in private and public construction projects.

The Institute for Supply Management said national factory activity surged last month, likely as steel and aluminum tariffs disrupted supply chains, resulting in factories taking longer to deliver goods.

Tesla Inc (TSLA.O) fell 2.3 percent after the electric car maker said it hit its target of producing 5,000 Model 3 sedans per week. Many investors were skeptical about the financial impact of ramping up production and the quality of the cars being built. In addition, just before the market close, Tesla said its chief engineer was leaving the company.

Shares of casino companies fell as gambling revenue in the Chinese territory of Macau rose less than expected in June.

Wynn Resorts (WYNN.O) sank 7.89 percent, while Las Vegas Sands (LVS.N) fell 6.67 percent after Bank of America downgraded the stock. MGM Resorts (MGM.N) dropped 3 percent.

Dell Technologies took a step closer to becoming a public company again with a deal to buy the tracking stock of its majority-owned VMware unit. The VMware tracking stock (DVMT.N) jumped 9 percent, while VMware (VMW.N) gained 10.24 percent.

Advancing issues outnumbered declining ones on the NYSE by a 1.09-to-1 ratio; on Nasdaq, a 1.55-to-1 ratio favored advancers.

The SP 500 posted two new 52-week highs and 11 new lows; the Nasdaq Composite recorded 52 new highs and 70 new lows.

Additional reporting by Amy Caren Daniel in Bengaluru; Editing by Nick Zieminski and Leslie Adler

Top U.S. business group assails Trump’s handling of trade dispute

WASHINGTON (Reuters) – The U.S. Chamber of Commerce on Monday denounced President Donald Trump’s handling of a global trade dispute, issuing a report that argued the tariffs imposed by Washington and retaliation by its partners would boomerang badly on the American economy.

The Chamber, the nation’s largest business lobby group and a traditional ally of Trump’s Republican Party, argued the White House is risking a global trade war with the push to protect U.S. industry and workers with tariffs.

The group’s analysis of the potential hit each U.S. state may take from retaliation by U.S. trading partners painted a gloomy picture that could increase pressure on the White House from Republicans ahead of congressional elections in November.

For example, nearly $4 billion worth of exports from Texas could be targeted by retaliatory tariffs, the Chamber said, including $321 million in meat the state sends to Mexico each year and $494 million in grain sorghum it exports to China.

Trump has slapped tariffs on billions of dollars worth of steel and aluminum imports from China, the European Union, Canada and other trading partners, prompting retaliation against U.S. products. He is considering extending the levies to the auto sector.

The Chamber, which has 3 million members, had praised Trump for signing a sweeping bill that included steep cuts to corporate taxes in December. But the mounting trade tensions have opened a rift with the White House.

“The administration is threatening to undermine the economic progress it worked so hard to achieve,” Chamber President Tom Donohue said in a statement. “We should seek free and fair trade, but this is just not the way to do it.”

The White House did not respond to a request for comment.

The Chamber is expected to spend millions of dollars ahead of the November elections to help candidates who back free trade, immigration and lower taxes. It has already backed candidates who share those goals in Republican primaries.

Slideshow (2 Images)

RETALIATION

Perhaps most unsettling to businesses and investors, Washington and Beijing have engaged in tit-for-tat tariffs and threatened retaliation that has raised the prospect of a trade war between the world’s two largest economies.

The United States is set to impose tariffs on $34 billion worth of additional goods from China on July 6. China has threatened to retaliate in kind with its own tariffs on U.S. agricultural products and other goods.

Although Trump has previously been persuaded to back off trade threats based on the fact that they would hurt states that supported him in the 2016 presidential election, he has taken a more aggressive tack in recent months.

On Monday, he threatened to take action against the World Trade Organization after media reports said he wanted to withdraw from the global trade regulator. Trump says the WTO has allowed the United States to be taken advantage of in global trade.

Trump initially granted Canada, EU members and other nations exemptions on the metal tariffs – 25 percent on steel and 10 percent on aluminum. But he lifted the exemptions the same week he met with Group of Seven leaders in Quebec last month.

Trump railed against his trading partners during the meeting, according to sources, and withdrew his support for a joint communique after leaving the summit, angering and bewildering some of Washington’s closest allies.

Retaliation for his tariffs came swiftly.

Early last month, Mexico imposed tariffs on U.S. products ranging from steel to pork and bourbon, while the EU levied duties of 25 percent on 2.8 billion euros of U.S. imports, including jeans and Harley-Davidson (HOG.N) motorcycles.

Harley-Davidson, which dominates the heavyweight U.S. motorcycle market, subsequently announced it would shift some U.S. production overseas to avoid higher costs for EU customers. Trump slammed the company’s move, saying it was tantamount to surrender, and threatened punitive taxes.

Canada, a member of the North American Free Trade Agreement (NAFTA) with the United States and Mexico, on July 1 imposed retaliatory measures on C$16.6 billion ($12.63 billion) of American goods, including coffee, ketchup and whiskey.

Global equities fell on Monday as investors worried about an escalation of the trade disputes.

The Chamber based its state-by-state analysis on data from the U.S. Department of Commerce and government agencies in China, the EU, Mexico, and Canada.

Reporting by Ginger Gibson; Writing by Ginger Gibson and Paul Simao; Editing by Kevin Drawbaugh, David Gregorio and Bill Berkrot