London/New York, Dec 21
IntercontinentalExchange's US $8.2 billion takeover of New York Stock Exchange owner NYSE Euronext allows it to tap into a dramatic expansion of demand for clearing financial derivatives expected next year.

The deal announced on Thursday gives commodities and energy bourse ICE control of NYSE Liffe, Europe's second-largest derivatives exchange, helping it to compete against larger US rival CME Group, owner of the Chicago Board of Trade.

Unlike stock trading, derivatives remain highly profitable for the exchanges, and new rules next year will sharply increase demand for clearing over-the-counter contracts.

NYSE Euronext CEO Duncan Niederauer had long felt that his shareholders did not appreciate the true value of the London-based futures and options exchange, and had talked to bankers about how to improve NYSE's stock price, a person familiar with the matter said.

NYSE made an operating income of $473 million from Liffe in 2011 on revenues of $861 million compared to an income of $533 million on revenues of $1.3 billion from its equities business.

The deal threatens to further reduce the clout of the New York Stock Exchange. While "Big Board", as it is affectionately known, has stood for 200 years as an iconic symbol of US capitalism, it is almost an afterthought in the takeover.

The stock market businesses are less valuable to ICE. The company said it will try to spin off the Euronext European stock market businesses in a public offering, generating speculation it may also have little interest in the NYSE trading floor.

Profits from stock trading have been significantly eroded by new technology and the rise of other places for investors to trade, including venues known as "dark pools."

ICE's Jeff Sprecher will be CEO of the combined organization, and the NYSE Euronext CEO will be president, a ceremonial title at many US companies. In an interview, Niederauer said he would remain at least through 2014 as an "important senior member" of Sprecher's management team. — Reuters

Mumbai, December 21
The rupee hit a three-week low on Friday, extending its fall for a third straight week, as uncertainty over the U.S. "fiscal cliff" resolution dented demand for risk assets including domestic equities.

Traders said month- and year-end dollar demand from oil and gold importers also added to the downward pressure on the local currency. Oil firms bought the greenback aggressively this week while gold importers purchased the US unit to take advantage of relatively lower global gold prices.

"INR has been choppy and I expect it to remain so in the last week as well. The US fiscal agreement will be important for the market," said Paresh Nayar, head of fixed income and forex trading at First Rand Bank. "54.10 is showing good support while 55.45 is the first technical resistance. I expect the pair to hold in that broad range next week," he added.

The partially convertible rupee closed at 55.06/07 per dollar versus its previous close of 54.8450/8550. The unit fell to a low of 55.2550, its weakest since November 29. On the week, the rupee shed 1 % of its value, marking its third consecutive weekly fall.

Traders said dollar sales by exporters around the 55.20 to 55.25 levels helped the rupee recover some of its losses from the day's lows but the weakness in shares hurt.

Sentiment for the rupee has also been dented by a status quo at the central bank's policy review earlier this week. The RBI kept interest rates on hold on Tuesday, ignoring government pressure to reduce borrowing costs, but said it was shifting its focus towards boosting a flagging economy. — Reuters

London, December 21
Global ratings agency Fitch has downgraded ArcelorMittal, the world's biggest steelmaker, to a 'junk' status with a BBplus rating and stable outlook.

In a release Fitch Ratings said that the downgrade reflects the more challenging than previously expected outlook for Western European steel markets in 2013, which in turn implies a slower pace of improvement in the group's credit metrics over the next two to three years.

Fitch now does not expect ArcelorMittal to achieve the agency's previous targets of funds from operations (FFO) gross leverage below 3.0x and EBIT margin above 5 per cent by the end of 2014. For 2013, Fitch now expects an EBIT margin of around 2.5% with FFO gross leverage of between 3.5-4.0x.

Fitch believes that ArcelorMittal will continue to pursue a variety of nonoperational measures including asset sales to reduce absolute debt levels. Whilst this process carries execution risks, Fitch considers that AM has a good track record in delivering on promises in this regard.

Earlier in the day it was reported that ArcelorMittal is writing down the value of its European business by US $4.3 billion, underscoring its gloom about prospects for the region's recession-hit manufacturers.

The group, formed in 2006 when the steel business of India-born Lakshmi Mittal bought Europe's Arcelor for about $33 billion, said on Friday steel demand had fallen about 8 per cent in Europe this year and there was no sign of a quick recovery.

As a result, the group said it was writing down the goodwill — the value of intangible assets like a brand rather than physical assets like machinery — of its European operations by 87 per cent.

"It is negative, but it shouldn't really be a big surprise that the book value of its European business was too high," said a London-based analyst who asked not to be named. — Agencies

New Delhi, December 21
The government today raised the FDI ceiling in asset reconstruction companies (ARCs) from 49% to 74%.

ARCs acquire the bad loans of banks and financial institutions so that recovery can take place at a later date. According to a finance ministry statement, the FDI ceiling in ARCs has been hiked from 49% to 74% subject to the condition that no sponsor may hold more than 50% of the shareholding in an ARC either by way of FDI or by routing through an FII.

Foreign investments in ARCs would need to comply with the FDI policy in terms of entry route conditionality and sectoral caps.

The foreign investment limit of 74% in ARCs would be a combined limit of FDI and FII. Hence, the prohibition on investment by FII in ARCs will be removed. The total shareholding of an individual FII shall not exceed 10% of the total paidup capital.

The limit of FII investment in security receipts issued by ARCs may be raised from 49% to 74%. Further, the individual limit of 10% for investment of a single FII in each tranche of SRs issued by ARCs may be dispensed with.