By Lucia Mutikani

WASHINGTON (Reuters) – U.S. existing home sales rebounded more than expected in February as lower mortgage rates and the first year-on-year decrease in prices in 11 years pulled buyers back into the market, further evidence that the housing market was stabilizing at low levels.

The jump in sales of previously owned homes, which was reported by the National Association of Realtors on Tuesday, was the largest in more than 2-1/2 years and ended 12 straight monthly declines in sales, the longest such stretch since 1999.

The housing market has been the biggest casualty of the aggressive interest rate hikes delivered by the Federal Reserve in its battle to tame high inflation. The surge in sales added to data on housing starts and homebuilder confidence in suggesting that the housing market was probably finding a floor.

“It’s too early to declare the home sales recession over, but the decline in mortgage rates allowed buyers to dip their toes back in the market as did the cheaper prices,” said Christopher Rupkey, chief economist at FWDBONDS in New York.

Existing home sales, which are counted at the close of a contract, surged 14.5% to a seasonally adjusted annual rate of 4.58 million units last month. February’s sales likely reflected contracts signed a couple of months back. Mortgage rates decreased from mid-November through early February before rising again. Home sales could fall in March.

Last month, sales increased in all four regions, with the Midwest, West and the densely populated South posting double-digit growth. The bulk of sales were concentrated in the $250,000-$500,000 price bracket.

Economists polled by Reuters had forecast home sales would rebound 5.0% to a rate of 4.20 million units. Home resales, which account for a big chunk of U.S. housing sales, fell 22.6% on a year-on-year basis in February.

(Graphic: Sales of existing homes rise to 5-month high – https://www.reuters.com/graphics/HOME-SALES/USA/dwvkdkzqmpm/chart.png)

Residential investment has contracted for seven straight quarters, the longest such streak since the collapse of the housing bubble triggered by the 2007-2009 Great Recession.

The worst is likely over. A survey last week showed the National Association of Home Builders/Wells Fargo Housing Market Index increased for a third straight month in March, though homebuilder sentiment remains depressed. Single-family housing starts and building permits rebounded in February.

Mortgage rates, which in February resumed their upward trend, are falling again in tandem with a sharp decline in U.S. Treasury yields following the recent collapse of two U.S. regional banks that sparked fears of contagion in the banking sector. But the outlook for the housing market remains unclear.

Despite financial market instability, the Fed is expected to raise interest rates by another quarter of a percentage point on Wednesday, according to CME Group’s FedWatch tool.

Financial conditions have tightened, which could cause banks to become more strict in extending credit. That could impact small businesses, who have been the main drivers of job growth, and prospective homebuyers.

“There is still the possibility that tightening lending standards imply that (mortgage) applications for purchase will not directly translate to actual purchases,” said Veronica Clark, an economist at Citigroup in New York. “An upcoming weakening in the labor market would also be a risk to stronger housing demand and prices.”

U.S. stocks were trading higher. The dollar fell against a basket of currencies. U.S. Treasury prices fell.

(Graphic: U.S. existing home sales – https://www.reuters.com/graphics/USA-STOCKS/gkplwblqrvb/ehs.png)

SUPPLY STILL TIGHT

The median existing house price fell 0.2% from a year earlier to $363,000 in February. That was the first annual price decline since February 2012. Prices dropped on a year-on-year basis in the Northeast and West, the most expensive housing regions. They continued to rise in the Midwest and South, which are generally considered more affordable.

The South experienced an influx of people during the COVID-19 pandemic as companies gave workers the flexibility to work from anywhere in the country. Lawrence Yun, the NAR’s chief economist, said there were “stronger sales gains in areas where home prices are decreasing.”

There were 980,000 previously owned homes on the market last month, unchanged from January and an increase of 15.3% from a year ago. At February’s sales pace, it would take 2.6 months to exhaust the current inventory of existing homes, up from 1.7 months a year ago. A four-to-seven-month supply is viewed as a healthy balance between supply and demand.

Given tight supply, a collapse in house prices is unlikely.

Properties typically remained on the market for 34 days last month, up from 33 days in January. Fifty-seven percent of homes sold in February were on the market for less than a month.

First-time buyers accounted for 27% of sales, down from 29% a year ago. All-cash sales made up 28% of transactions compared to 25% a year ago. Individual investors or second-home buyers purchased 18% of homes, down from 19% last February. Distressed sales, foreclosures and short sales represented only 2% of sales, little changed from a year ago.

“The data suggest that there is a bid underneath the market that may limit the decline in home prices unless mortgage rates rise sharply again, and encourage our belief that the eventual drop in home values will only be a moderate one,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

LONDON/SINGAPORE (Reuters) – An uneasy calm descended across battered bank bonds and shares on Tuesday, with prices recovering a day after regulators sought to convince investors that the hit facing bondholders of embattled Credit Suisse is isolated.

Additional Tier 1 (AT1) bonds issued by European lenders rose, with UniCredit’s 6.625% issue up more than 5 cents.

AT1 bonds from others such as Deutsche Bank, UBS and BNP Paribas rose more than 3 cents, data from MarketAxess and Tradeweb showed.

On Monday bank AT1 bonds took a beating after news that those issued by Credit Suisse would be written down to zero as part of a rescue merger with UBS.

Banking supervisors in Britain and the euro zone then tried to stop a market rout by stressing holders of such junior bank debt would only suffer losses after shareholders had been wiped out.

The European Central Bank’s top supervisor Andrea Enria said on Tuesday European Union authorities would never write off bank bonds before shares were wiped out, whether a bank is being wound down or there are “private solutions” to rescue it.

Tuesday’s AT1 rebound only partially offset hefty losses of 5 cents or more suffered on Monday and sentiment remained fragile.

“Looking forward, the bank debt market is likely to remain fragile as well as vulnerable for news headlines,” said Joost Beaumont, head of bank research at ABN AMRO.

AT1s are issued by banks to help them make up regulatory capital buffers.

Credit Suisse’s own AT1 bonds were trading with bid prices around 3 cents on the dollar and ask prices around 6, according to Tradeweb, suggesting expectations bondholders may be able to recover some value.     Some bondholders are mulling possible legal action after their wipeout, one law firm said on Monday.

Graphic: A trip from above par to pennies – https://www.reuters.com/graphics/GLOBAL-HEDGEFUNDS/jnpwyjaoxpw/chart.png

STABILITY?

European banking stocks rose 3.8%, set for their biggest one-day gain since October, U.S. bank stocks rallied 3.8%..

The cost of insuring exposure to bank debt meanwhile fell.

UBS five-year credit default swaps (CDS) fell 36 bps to 128 bps from Monday’s close, while Credit Suisse CDS also edged down, S&P Global Market Intelligence data showed.

The iTraxx Crossover Europe, which measures the cost of insuring exposure to a basket of European corporate junk debt, eased 31 basis points (bps) to 474 bps from Monday’s close, the S&P data showed. The iTraxx subordinated financials index tumbled by 22 bps to 195 bps, and the iTraxx senior financials index was down 11 bps to 106 bps.

Invesco’s AT1 Capital Bond exchange-traded fund, which tracks the value of AT1 debt, was flat having jumped over 2.5% earlier in the session and dropping sharply on Monday.

S&P Global Ratings said it did not believe the decision to write off Credit Suisse AT1s would lead to material contagion risk for European banks.

“Traders will wait to see a bit more stability before they add more money to these (bank) stocks. A lot of people just want to make sure that the contagion fears abate before jumping back in,” said Patrick Spencer, vice chair of equities at RW Baird.

Some investors took comfort from the distinction between rules governing AT1 bonds in Switzerland and other jurisdictions.

“You can’t apply the Credit Suisse story to any other bank because none of these other instruments have got the same sort of provision and the regulators now have come out globally saying hey, as far as we’re concerned, equity is first in line,” said Thomas Jacquot, head of research at fixed income broker FIIG in Sydney.

(Reporting by Tom Westbrook and Rae Wee in Singapore, and Chiara Elisei and Karin Strochecker in London; additonal reporting by Naomi Rovnick, Yoruk Bahceli and Francesco Canepa; Graphic by Nell Mackenzie; Writing by Dhara Ranasinghe, Editing by Jason Neely)

By Julia Payne

LAUSANNE, Switzerland (Reuters) -Goldman Sachs expects a commodities supercycle driven by China and the capital flight from energy markets and investment this month after concerns triggered by the banking sector, the U.S. bank’s head of commodities said.

“As losses mounted, it spilled into commodities,” Jeff Currie, global head of commodities for Goldman Sachs, told the Financial Times Commodities Global Summit on Tuesday.

“Historically, when you have this kind of scarring event, it takes months to get capital back … We will still get a deficit by June and it will drive oil prices higher.”

Oil prices tanked to 15-month lows as a crisis at Switzerland’s second-biggest bank Credit Suisse, which followed the collapse of two U.S. lenders, led to a takeover by bigger Swiss rival UBS.

Currie emphasised the hit was to the supply side rather than demand and he remains very bullish on copper.

“The deposits have already left …Cash is going into money markets not into the banks.”

“On copper, the forward outlook is extraordinarily postive. We’ll be at the lowest observable inventories that have ever been recorded at 125,000 tonnes. We have peak supply occuring in 2024…Near term we put (the copper price) at $10,500 and longer term our price target is $15,000 a tonne.”

His remarks echoed those of major copper trader Trafigura which said the price could top $12,000. Copper hit a record high $10,845 in March 2022.

Currie added that concerns about the banking sector were centred around U.S. regional banks while Europe was relatively safe from contagion.

(Reporting by Julia Payne; editing by David Goodman and Jason Neely)

By Anirban Sen and David Carnevali

(Reuters) -U.S. scientific instruments maker Thermo Fisher Scientific Inc and South Korea’s Celltrion Inc are among those competing to acquire the biopharma solutions business of medical device maker Baxter International Inc, according to people familiar with the matter.

The divestment, which the sources said could fetch more than $4 billion, would help Baxter pay down debt following its $10.5 billion acquisition of medical device maker Hill-Rom Holdings in 2021. Baxter, which has a market value of $19 billion, had total debt of $16.6 billion as of the end of December.

Private equity firms, including KKR & Co and Carlyle Group, have also expressed interest in the Baxter business, the sources said. Other bidders could still emerge, they added.

The sources requested anonymity because the matter is confidential. Baxter, Thermo Fisher and KKR declined to comment. Celltrion and Carlyle did not immediately respond to requests for comment.

Baxter said in January it was exploring alternatives for its biopharma solutions business and would also spin off its kidney care units.

The Deerfield, Illinois-based company focuses on areas such as critical care, surgical products, nutrition and pharmaceutical equipment.

Baxter’s biopharma solutions unit supports drugmakers in the formulation, development and commercialization of drugs typically given by infusion or injection, such as biologics and vaccines.

Thermo Fisher, one of the world’s largest suppliers of scientific equipment, has been making acquisitions in recent years to expand its offerings in contract research and manufacturing, including a $5.2 billion purchase of Patheon NV in 2017 and a $17.4 billion takeover of PPD Inc in 2021.

Celltrion, whose co-founder and chairman Seo Jung-jin is South Korea’s richest person according to Forbes, is a biopharmaceutical company that also has a contract research and manufacturing arm.

(Reporting by Anirban Sen and David Carnevali in New YorkAdditional reporting by Chibuike Oguh in New York; Editing by Bill Berkrot)

By Marc Jones

LONDON (Reuters) – This month’s U.S. banking system turmoil and renewed recession worries have left global investor confidence at one of the lowest levels in the last 20 years, and that does not even account for this week’s demise of Credit Suisse.

A monthly survey carried out by investment bank BofA following the collapses of Silicon Valley Bank and Signature Bank, but before Sunday’s Credit Suisse takeover, showed the perception of risk levels worsening dramatically.

BofA’s self-compiled “Financial Market Risk Indicator” of investor worry levels jumped to 7.7, leaving it just off the extreme highs of last year amid the Ukraine war and above both its global financial crisis and COVID outbreak peaks.

European fund managers are particularly gloomy.

Even though their questionnaire closed before the weekend woes at Credit Suisse, nearly a third of them had said “a systemic credit event” was now the biggest risk for markets.

That was up from only 8% in the February survey and knocked inflation off the top spot for the first time in nine months. With the Silicon Valley Bank turmoil fresh in minds, the U.S. “shadow banking” sector was cited as the most likely source of danger.

Other surveys told a similar story.

In Germany, a monthly poll from the ZEW economic research institute showed a large fall in investor sentiment there.

“The international financial markets are under strong pressure,” and the high level of uncertainty is reflected in the economic expectations, ZEW President Achim Wambach said.

The collapse of U.S. mid-sized lenders Silicon Valley Bank (SVB) and Signature Bank, followed by the demise of 167-year-old Credit Suisse, have left investors concerned about other potential bank crises.

BofA’s survey showed recession and stagflation risks are also rising again.

Just over half the 212 funds it surveyed globally expect weaker world growth and though 84% see inflation going lower, 88% now think stagflation – the phenomenon of anaemic growth and high inflation – is the most likely macroeconomic outcome in the next 12 months.

Among Europe’s money managers, a net 61% expect the region to sink into recession in the next year, up from 55% in February. A net 42% also expect a global recession, up from 24% last month.

(Reporting by Marc Jones, editing by Ed Osmond)

AMSTERDAM (Reuters) -Just Eat Takeaway.com, Europe’s largest food online ordering and delivery service, said on Tuesday it will reorganise in Britain, ending a service by which it employs its own couriers, a decision that will impact the jobs of around 1,870 workers.

Takeaway has been a prominent defender of European plans for rules giving couriers rights to full employment.

However it also makes use of self-employed couriers, commonly referred to as “gig workers”, to deliver more than 90% of its meals in Britain.

Competitors including Deliveroo and Uber use the “self employed” or “contractor” model, which Just Eat has complained leaves it at a competitive disadvantage.

The approximately 1,700 couriers employed by Just Eat’s British “Scoober” service have been given six weeks notice that they will no longer be employed on full contracts, Just Eat said in a statement.

Another 170 in the company’s operational department will also be impacted, the company said.

Just Eat said it will retain the employed courier model in most parts of continental Europe.

The company uses the gig model in Ireland and Slovakia. In France, Just Eat uses employed “Scoober” couriers in Paris but not in other cities.

In the rest of the European Union it employs its couriers.

(Reporting by Toby Sterling, Editing by Louise Heavens)

By Sudip Kar-Gupta and Bart H. Meijer

BRUSSELS (Reuters) – EU antitrust regulators have raided a company active in the energy drinks sector in several EU countries on suspicion of taking part in a cartel and also abusing its dominance, the European Commission said on Tuesday.

Austrian energy drinks maker Red Bull confirmed that its premises had been searched, the Austrian news agency APA reported, although the company declined further comment when contacted by Reuters.

The EU executive, which also acts as the competition watchdog in the 27-country bloc, said the raids took place on Monday. It did not name the company or the countries where the raids occurred in line with its policy.

“The Commission has concerns that the inspected company may have violated EU antitrust rules that prohibit cartels and restrictive business practices,” the EU enforcer said in a statement.

“The inspected company may also have violated EU antitrust rules that prohibit abuses of a dominant position.”

Companies found breaching EU antitrust rules face fines of as much as 10% of their global turnover.

(Reporting by Bart Meijer; additional reporting by Alexandra Schwarz-Goerlich; Editing by Sudip Kar-Gupta, Foo Yun Chee, Susan Fenton and Barbara Lewis)

SHANGHAI (Reuters) – Tesla is poised to report one of its best quarters in China, the latest retail sales data showed, after becoming the first electric vehicle maker in the country to cut prices in a bid to defend its market share.

The U.S. EV maker’s retail sales in China totaled 106,915 units from Jan. 1 to March 19, or 1,371 units per day on average, according to data from China Merchants Bank International, which tracks car insurance registrations.

That was slightly higher than the 1,327 units it sold daily on average in the fourth quarter in China, when Tesla sold a total of 122,038 cars, its best quarter so far, the data showed.

Tesla did not immediately respond to a request for comment.

Bulwarked by its higher profits per car than other electric vehicle makers, the U.S. automaker slashed prices of its best-selling models by up to 13.5% in China in January, triggering a price war with BYD and several rivals following suit over the next two months.

Tesla’s growth pace, however, is yet to catch up with BYD, which outsold Tesla by more than five times in the January-February period, with its wide range of offerings of electrified products in China.

The company is planning refreshed versions of Model 3 and Model Y in the next two years to tackle an ageing product mix that has hit its attractiveness to customers. It has also improved the suspension system in the Model Y made in China since January to make the ride smoother, an update Tesla fans lauded on social media.

The company had been focusing more on energy efficiency and practical features such as safety and storage space in its marketing in China to lure more pragmatic buyers.

Tesla’s sales in the first two months accounted for 7.9% in China’s fragmented sector of new energy cars including pure electric and plug-in hybrids, slightly up from 6.8% in the same period a year ago, according to Reuters calculations based on data from China Passenger Car Association.

Meanwhile, BYD extended its lead with a 41% market share, a big jump from 29% a year ago.

(Reporting by Zhang Yan, Brenda Goh; Editing by Bernadette Baum)

By Markus Wacket

BERLIN/BRUSSELS (Reuters) -The European Commission has drafted a plan to allow sales of new cars with internal combustion engines after 2035 if they run only on climate neutral e-fuels, as it tries to resolve a spat with Germany over moves to phase out combustion engine cars.

The draft proposal, seen by Reuters on Tuesday, suggests creating a new type of vehicle category in the European Union for cars that can only run on carbon neutral fuels.

Such vehicles would have to use technology that would prevent them from driving if other fuels are used, the draft said.

The proposal could offer a route for carmakers to keep selling combustion engine vehicles after 2035, the date when a planned EU law is set to ban the sale of new CO2-emitting cars.

After months of negotiations, EU countries and the European Parliament agreed the law last year. But Germany’s Transport Ministry surprised other countries this month by lodging last-minute objections to the law, days before a final vote that would have seen it enter into force.

The Ministry’s core demand is that the EU allow sales of new cars running on e-fuels after 2035. On Tuesday, it said it was in contact with the Commission to try to reach a solution on an issue being closely watched by Germany’s powerful car industry.

“We are interested in a quick clarification, but it must be resilient and binding. We are currently examining this carefully,” a spokesperson said.

Two sources familiar with the matter said the Commission’s condition that cars must be able to recognise CO2-neutral fuels from fossil fuels was problematic for Germany because it would largely force automakers to develop new engines.

German Transport Minister Volker Wissing did not want to completely reject the Commission’s proposal, but rather make some improvements to it, the sources told Reuters.

The parties are aiming to secure an agreement by Thursday’s EU summit.

A Commission spokesperson declined to comment on the draft document, but referred to comments by EU climate policy chief Frans Timmermans, who said last week any solution must comply with the 2035 phaseout law agreed last year.

“The talks are ongoing between the Commission and the German authorities,” the spokesperson said.

An EU official told Reuters on Monday that any proposal on registering e-fuel cars would only be made after the combustion engine phaseout law was finally adopted.

E-fuels are made by synthesizing captured CO2 emissions and hydrogen produced using CO2-free electricity.

They are not yet produced at scale. A study published on Tuesday by the Potsdam Institute for Climate Research found that all planned e-fuel projects worldwide would only produce enough fuel to cover 10% of Germany’s demand for e-fuel use in aviation, shipping and chemicals in the next few years.

(Reporting by Markus Wacket, Kate Abnett and Riham AlkousaaEditing by Rachel More and Mark Potter)