Pressure mounts on MF Global to strike a deal (Reuters)

(Reuters) – Shares of MF Global Holdings Ltd hit another all-time low and its bonds were in freefall on Friday as troubles intensified for the U.S. futures brokerage that is looking to sell off units in order to retain customers and to survive.

The company run by former Goldman executive Jon Corzine has shed 63 percent of its market capitalization this week. That could hamper MF Global's dealmaking ability, while at the same present possible buyers with assets at big discounts.

Goldman Sachs Group Inc, State Street Corp and Macquarie are all eyeing MF Global or parts of it, The Wall Street Journal reported.

In the last few days, the brokerage posted a quarterly loss and two ratings agencies cut its debt rating to junk -- underscoring the bad bets MF Global made on bonds of countries in the euro zone, which is now battling a debt crisis.

MF Global stock dropped as much as 31 percent in early trading to 99 cents, its lowest ever, but later rebounded to $1.35. It was the second most actively traded stock on the New York Stock Exchange.

"The MF Global team has no choice but to quickly shrink its balance sheet to raise cash and then to sell the cash into the market to show 'strength'," Brad Hintz, a senior analyst at Bernstein Research, wrote to clients.

"These events play out in days."

The company's bonds were trading at distressed levels in the mid-40s, after touching a morning low of 38 cents on the dollar. That was down from Thursday when the bonds, maturing in 2016 with a 6.25 percent coupon, were at 70.

MF Global, which is emerging as one of the hardest-hit U.S. firms in the fallout from Europe, had offered the notes at par in August.

The company tapped Evercore to advise it on strategic options including a possible sale, said a source familiar with the situation. A second source, who was briefed on the matter, said the company is "focused on doing a smart deal, a fair deal," and that it did not enter the talks with "specific targets and objectives."

"We believe MF could generate proceeds from sale of its customer asset portfolio or Futures Commission Merchant which frees up capital," Keefe Bruyette & Woods analyst Niamh Alexander wrote to clients. "However, we cannot quantify the cost of wind down or exiting broker positions that could offset those proceeds and wipe out equity," she wrote.

MF Global has declined to comment on its troubles.

CORZINE AND EUROPE'S FALLOUT

Some customers are diverting money from the New York-based brokerage, according to hedge funds, rivals and analysts, though the extent of the outflows remained unclear. (Graphic of MF Global's market share among futures commission merchants: http://link.reuters.com/syz64s )

MF Global's bank loans were lower Friday amid rumors the company drew down its revolving credit lines, separate sources said. The extended revolver due 2014 is quoted 60-65 on Friday after a large piece of the paper is said to have changed hands on Thursday at 70, the sources said.

Corzine, who became CEO in March last year after a term as New Jersey's governor, has been trying to transform MF Global from a brokerage that mainly places customers' trades on exchanges into an investment bank that bets with its own capital.

But its bets on bonds from euro zone countries, including those issued by Italy, Spain, Portugal and Ireland, have gone bad, prompting regulators to press it to boost capital and ratings agencies to issue their warnings.

The loss of its investment grade rating could hasten the exodus of customers away from MF Global.

"Given the uncertainty around timing of the agencies' next move, management needs to move quickly in order to avoid client defections and either work on strategic options or work with the agencies to get back to stable status," Deutsche Bank analyst Michael Carrier wrote to clients.

European Union leaders stuck a deal this week to relieve the continent's sovereign debt crisis -- potentially good news for MF Global -- but many details of the EU deal still need ironing out.

In Asia, the Singapore Exchange said MF Global's unit in the city state is meeting its financial obligations as a clearing member. That echoes assurances Thursday by U.S. clearers CME Group Inc, IntercontinentalExchange Inc and options clearinghouse OCC.

(Reporting by Jonathan Spicer, John Balassi, Philip Scipio, Paritosh Bansal, Jeanine Prezioso and Herb Lash in New York, and Charmian Kok in Singapore; Editing by Matthew Lewis and Phil Berlowitz)

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Gadhafi vows to fight as loyalists strike oil hub (AP)

By RYAN LUCAS and HADEEL AL-SHALCHI, Associated Press Ryan Lucas And Hadeel Al-shalchi, Associated Press – 1?hr?11?mins?ago

TRIPOLI, Libya – Fugitive leader Moammar Gadhafi accused revolutionary forces of surrendering Libya to foreign influence and vowed to press ahead with his resistance in a message Monday issued just hours after a twin attack on a key oil facility by loyalist fighters. At least 15 attackers were killed, an anti-Gadhafi commander said.

"We will not be ruled after we were the masters," said the brief statement attributed to Gadhafi that was read on Syria's Al-Rai TV by its owner Mishan al-Jabouri, a former Iraqi lawmaker and Gadhafi supporter.

The message described the opposition forces as "traitors" who are willing to turn over Libya's oil riches to foreign interests.

"We will not hand Libya to colonialism, once again, as the traitors want," said the statement, which pledged to fight against the "coup."

The firebrand words by Gadhafi contrast sharply with the staggering losses for his regime in recent weeks, including being driven from the capital Tripoli and left with only a handful of strongholds that are surrounded by former rebel forces.

Gadhafi's whereabouts are unknown, but his followers claim he is still in Libya. Some of his family members have fled to neighboring Niger, most recently his son al-Saadi.

Although Gadhafi's opponents now hold sway over most of Libya — and remain backed by NATO airstrikes — there are signs that the Libyan strongman's backers can still strike back.

At the important oil terminal at Ras Lanouf, suspected loyalist staged back-to-back attacks that began with saboteurs setting fires and then shifted to a convoy of gunmen riding in from the desert.

Col. Hamid al-Hasi, the commander for anti-Gadhafi forces in eastern Libya, said a group of 15 employees set fire to the facility, located on the Mediterranean coast about 380 miles (615 kilometers) southeast of Tripoli. He said five of the saboteurs were killed and the rest arrested.

In a possibly coordinated attack, the port was then targeted by a convoy of armed men apparently based in a refugee camp about 18 miles (30 kilometers) south of Ras Lanouf. One revolutionary commander, Fadl-Allah Haroun, said a total of 15 people were killed in both attacks.

The size of the ground assault force was unclear, but Haroun said it may have been as big as 40 vehicles.

Former rebels, meanwhile, have been facing stiff resistance from Gadhafi supporters in Bani Walid since last week and have captured most of the northern half of the town, which is one of three significant remaining bastions of Gadhafi's loyalists.

Mubarak al-Saleh, an opposition political envoy from Bani Walid, claimed Gadhafi's son Seif al-Islam is leading loyalist forces massed in the town, about 90 miles (140 kilometers) southeast of Tripoli.

"The forces are not from Bani Walid but from all over Libya," he said. "We lost many people in the battle."

Dozens of cars loaded with Libyan families and personal belongings streamed out of the town in anticipation of a fresh assault.

"The fighting will be very bad," said Fadila Salim as she drove out of Bani Walid. Her husband, Mohammed Ibrahim, said there is no electricity, no water and shops are running out of food. He says many are "stuck in their houses and afraid to leave."

Khairiyah al-Mahdi, a 40-year-old housewife, was fleeing the town along with her husband, six daughters and two sons.

She said her house was among the first to fly the revolution's tricolor flag when Libyan fighters pushed into Bani Walid over the weekend. But deteriorating living conditions, threats from Gadhafi supporters and heavy clashes in the town prompted her family to flee.

"We left Bani Walid because Gadhafi loyalists in control of the local radio announced through airwaves that anyone helping the rebels or part of them will be killed," she said. "A lot of people are scared and now leaving."

The main battle front in Bani Walid is now a bridge that links the town with the port city of Misrata to the northwest. Gadhafi loyalists have covered the pavement with oil slicks and fuel spills to hinder vehicles trying to cross into the city center.

A rebel commander, Abu Ouejeila al-Hbeishi, said Gadhafi snipers have taken up positions on roof tops, including on a hotel, an ancient castle and an administrative building in the town center. Loyalist forces also fired Grad rockets and mortars at revolutionary fighters on the northern edge of Bani Walid, where al-Hawaishi said some 2,000 former rebels have gathered.

NATO, which has played a key role in crippling Gadhafi's military forces since intervening in Libya's civil war in late March, has kept up its attacks on remaining pro-Gadhafi sites. The military alliance said its warplanes hit targets Sunday in Gadhafi's hometown of Sirte, including a military logistics facility and three surface-to-air missile systems.

The Misrata Military Council said clashes inside Sirte between Gadhafi loyalists and opposition backers has left at least three people dead.

___

Al-Shalchi reported from Wadi Dinar, Libya.

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45K Verizon workers strike after labor talks fail (AP)

NEW YORK – Thousands of Verizon Communications Inc. workers are on strike from Massachusetts to Washington, D.C., over labor issues.

Dozens of people wearing red shirts and carrying signs have gathered outside Verizon's headquarters in New York City on Sunday. They're carrying signs saying they're "on strike for middle-class jobs."

The company is asking for changes in their contract including employee contributions to health care.

The 45,000 workers went on strike after their contract expired at midnight Saturday. That contract covers the company's division that oversees landlines and Internet networks.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

Forty-five thousand Verizon Communications Inc. workers from Massachusetts to Washington, D.C., went on strike Sunday after negotiations fizzled over a new labor contract for more than a fifth of the company's work force.

Verizon is the nation's largest wireless carrier, but the contract that expired at midnight Saturday covers workers in the company's wireline division, which includes landline operations, services for businesses and governments and long-haul wholesale traffic.

Talks in Philadelphia and New York stalled Saturday night after Verizon continued to demand more than 100 concessions from workers regarding health care, pensions and work rules, said the Communications Workers of America.

CWA workers picketed at Verizon headquarters in New York City on Sunday morning, wearing red and holding signs with messages including "CWA on strike for middle-class jobs."

Mark C. Reed, Verizon's executive vice president of human resources, called the outcome of the unions' actions "regrettable" for customers and employees.

"We will continue to do our part to reach a new contract that reflects today's economic realities in our wireline business and addresses the needs of all parties," he said in a statement.

Workers covered by the expired contract include 10,000 represented by the International Brotherhood of Electrical Workers, who serve as telephone and repair technicians, customer service representatives, operators and more. Contract negotiations began June 22.

"Even at the 11th hour, as contracts were set to expire, Verizon continued to seek to strip away 50 years of collective bargaining gains for middle-class workers and their families," CWA said in a statement Sunday.

New York-based Verizon has 196,000 workers; 135,000 are non-union.

The CWA said the concessions are unjustified and harsh, given that Verizon is highly profitable — the company's revenue rose 2.8 percent to $27.5 billion in the second quarter. Its growth was largely attributed to its wireless business.

But Verizon said its wireline business has been in decline for more than a decade as more people switch to using cellphones exclusively. It had 25 million landlines at the end of the second quarter, down from 26 million at the end of 2010. It has been selling off some of its landlines to other phone companies.

The company is asking for changes in the contract to strengthen the unit. It said union employees contribute nothing to their health care premiums.

Verizon activated a contingency plan to ensure customers experienced "limited disruption in service" for the length of the strike.

"Tens of thousands of Verizon managers and other personnel have been trained to step in and perform emergency work assignments," Verizon spokesman Rich Young said.

Lowell McAdam, the former head of Verizon Wireless, became CEO of Verizon Communications Inc. on Aug. 1, replacing Ivan Seidenberg. Seidenberg, the longtime CEO, remains chairman of the company.

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NATO air strike kills 13 civilians: Afghan police (AFP)

KHOST, Afghanistan (AFP) – Up to 13 civilians, mostly women and children, were killed in a NATO air strike on Thursday in the eastern Afghan province of Khost, provincial police chief Mohamad Zazai said.

The coalition said those killed were family members of insurgents who also died in the strike that was called in after Afghan-led forces came under fire.

The deaths triggered protests blocking the main highway to Kabul nearby, with civilian casualties in Western military operations extremely sensitive in war-torn Afghanistan, where the Taliban have waged a decade-long insurgency.

"Unfortunately eight women, four children, and one man were killed in a NATO air strike on a residential house in Dowamanda district early this morning," Zazai said, adding that four Taliban-linked Haqqani militants were also killed.

"The body of a Haqqani commander and three fighters have also been recovered from the vicinity of the house. A delegation has been sent to investigate the incident," he said.

A spokesman for the provincial governor confirmed that civilians had been killed in the incident but gave no further details.

NATO's International Security Assistance Force said those killed were family members of the Haqqani network, which is a target of the alliance force. It did not say how many civilians were among the dead.

A spokesman for the coalition said Afghan-led forces had gone in search of the insurgents when they came under attack by rocket-propelled grenades and small-arms fire.

"Responding to the insurgent attack, the security forces returned fire and called in an air weapons team. The subsequent air strike killed several insurgents and unintentionally a number of associated family members," he said.

The air strike came a day after provincial authorities in southern Ghazni province said two civilians were killed and one other injured in another military incident. NATO said it was looking into the allegations.

Eight Afghan policemen were meanwhile killed Thursday when their vehicle struck a mine in Jawzjan province in northern Afghanistan, police in the province said.

Police also said that six Afghan policemen and a civilian were killed in another landmine blast in the restive southern province of Uruzgan late Wednesday.

The Taliban were not available to comment on the attacks but roadside bombs are one of their most widely used weapons against the Western-backed Afghan government.

Civilians are the biggest casualties in the near 10-year war in Afghanistan, where 150,000 foreign forces are stationed.

Last year was the bloodiest yet for civilians, with the United Nations recording 2,777 fatalities.

In May this year alone, a total of 368 civilians were killed, 301 of them in insurgent attacks, according to figures released by the UN mission in Afghanistan, making it the deadliest month for civilians since at least 2007.

The UN has blamed insurgents for more than three-quarters of the civilian deaths last year, but the issue enflames anger among ordinary Afghans toward foreign forces, as they blame NATO's presence for the increased danger.

The latest civilian deaths are a reminder of the depth of the task facing the Afghan government as it takes increasing responsibility for security following the announcement of the first wave of foreign troop withdrawals.

The United States has announced that 33,000 "surge" forces will leave the war by the end of next summer, while Britain has said another 500 troops will return next year. France and Belgium have also announced limited withdrawals.

Civilian casualties are a huge bone of contention between foreign forces and President Hamid Karzai who issued a "last warning" to the military in early June to avoid "arbitrary and unnecessary" operations that kill civilians.

Those comments came after he said 14 people died in an air strike in southern Helmand province. NATO said nine civilians were killed in the strike.

In another high-profile case this year, two NATO helicopters killed nine Afghan boys as they collected firewood in northeastern Afghanistan, leading to a rare apology from the US commander in Afghanistan, General David Petraeus.

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NATO air strike kills fighter linked to Afghan hotel attack (Reuters)

KABUL (Reuters) – NATO aircraft killed an insurgent leader linked to a deadly hotel attack in the Afghan capital this week, the coalition said on Thursday, a raid that raised questions about whether Afghan forces are ready for the looming security transition.

The Taliban claimed responsibility for the attack on the Intercontinental, one of two major hotels used by foreigners and Afghan government officials, a rare night-time raid that began on Tuesday and ended five hours later with 12 killed.

However, the NATO-led Security Assistance Force (ISAF) said the al Qaeda-linked Haqqani network had also been involved in the assault by nine suicide bombers and gunmen.

ISAF identified the Haqqani network leader killed in an air strike as Ismail Jan, who it described as a deputy to the senior Haqqani commander in Afghanistan, Haji Mali Khan.

It said he and "several Haqqani fighters" were killed in the air strike in the Gardez district of Paktia province south of Kabul on Wednesday.

"The Haqqani network, in conjunction with Taliban operatives, was responsible for the Tuesday night attack on the Kabul Intercontinental hotel which killed 12 people, including a provincial judge," ISAF said in a statement.

The brazen raid came only a week after President Barack Obama announced a phased withdrawal of combat troops, with 10,000 to leave by the end of this year and another 23,000 by the end September 2012.

Obama's announcement preceded the start of a gradual transition of responsibility to Afghan forces from next month that will end with all foreign combat troops leaving Afghanistan by the end of 2014.

With that transition process to begin in seven areas next month, the hotel raid raised serious questions about whether Afghan forces, particularly the police, were ready to take over.

"It shows one of the concerns is that the Afghan security forces are growing in quantity, not in quality," said Thomas Ruttig, co-director of the Kabul-based Afghanistan Analysts Network.

SNIPERS

The attack ended when snipers on board a NATO helicopter killed the last three attackers fighting from the roof of the hotel. Earlier television footage showed Afghan forces firing wildly into the air.

The New York Times reported on Thursday that some police had refused to fight back.

ISAF has been training members of the 126,000-strong Afghan National Police since 2009.

Afghan police, who will be at the front line of the security transition in villages and towns across Afghanistan, have long been viewed as inept and lagging behind the training of the better-equipped army, which had been the focus of training efforts since the Taliban were toppled in late 2001.

Violence has risen to record levels across Afghanistan over the past 18 months as NATO troops, especially U.S. forces, hit back against a growing insurgency, especially in the Taliban heartland in the south.

A quarterly report by the United Nations secretary-general to the Security Council about Afghanistan found that the number of security incidents since March had risen 51 percent on the same period in 2010, with suicide attacks rising sharply.

Attacks in the Taliban heartland of Kandahar were especially worrying. "The city of Kandahar and its surroundings registered the majority of the incidents during the reporting period, with a quarter of the overall attacks and more than half of all assassinations recorded countrywide," the report said.

But Ruttig said the attack also highlighted other problems confronting Afghanistan before the transition process, which also includes handing the running of civil institutions and projects over to Afghans, begins.

Not the least of those is the political paralysis that has gripped the country for months.

"The fact that neither NATO nor the Afghans were able to prevent it says something -- that transition needs to be something more than just security," Ruttig said of the hotel attack.

"Security forces are only part of transition. There also needs to be a strengthening of political institutions and, at the moment, the parliamentary crisis has brought politics to a standstill," he told Reuters.

Last week, a special poll court set up by a decree by President Hamid Karzai overturned the results for a quarter of the seats in parliament from elections last year, effectively throwing out 62 MPs who had been declared winners.

The move, and the court itself, have been branded unconstitutional and illegal by Afghan and Western officials and observers. Critics have said the court was set up by Karzai to further his own political agenda and silence opposition.

(Additional reporting by Alistair Scrutton; Editing by Sugita Katyal)

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