EUROPEAN MIDDAY BRIEFING - Fed Relief Spurs Solid -2-

Deutsche Lufthansa AG said Thursday that the outlook for the 2022 remains uncertain as fuel costs fluctuate and inflation rises amid the war in Ukraine, but that its losses narrowed in the first quarter as travel demand continued to recover.

The German airline group posted an adjusted loss before interest and taxes of 591 million euros ($627.8 million) in the quarter, around half what it booked in the same period last year. Its net loss narrowed to EUR584 million.

Swiss Re Swung to Net Loss in 1Q

Swiss Re AG on Thursday posted a loss for the first quarter of the year.

The Swiss reinsurer said net loss came in at $248 million, compared with a net profit of $333 million a year earlier.

Hikma Slashes 2022 Generics Guidance on Narcolepsy Treatment Delay

Hikma Pharmaceuticals PLC on Thursday downgraded revenue and margin guidance for its generics business due to the delayed launch of a generic of the Xyrem treatment for narcolepsy.

The pharmaceutical company now expects 2022 generics revenue of between $710 million and $750 million with a core operating margin of 20%. Previously, Hikma was expecting 8%-10% growth from 2021 revenue of $820 million, and a core operating margin of 24%-25%.

Airbus Plans to Expand Production in U.S., Moving to Boost A320 Output

LONDON-Airbus SE plans to build a second assembly line at its Alabama jet factory, moving to increase production of its bestselling A320 single-aisle airliner and expand the European plane maker's beachhead in rival Boeing Co.'s home market.

Airbus said it would boost global production of the A320 family of aircraft, which competes with Boeing's 737 MAX, to 75 a month, starting in 2025- up from a current monthly build-rate of around 50. The company had previously outlined plans to boost production to 65 a month by the summer of 2023.

Rio Tinto Looking to Jumpstart Serbia Lithium Project, Outgoing Chairman Says

Rio Tinto PLC will seek to get plans for a new lithium mine in Serbia back on track following last month's elections in the country, outgoing Chairman Simon Thompson told an Australian shareholder meeting on Thursday.

Serbia in January revoked Rio Tinto's licenses for the Jadar lithium project following community protests over environmental concerns. Mr. Thompson said an inability to publish Rio Tinto's environmental studies--which he said need to first be approved by the government under local rules--led to "a bit of a vacuum" and the spread of misinformation about the project leading into the April elections.

UBS's Reasoning for 2018 Firing of Investment Banker Was Defamatory, Finra Rules

UBS Group AG's rationale for the 2018 firing of a senior investment banker was defamatory and should be expunged from his record with regulators, according to an arbitration ruling issued this week.

The ruling, released Monday by a panel of arbitrators for the Financial Industry Regulatory Authority, holds that the reason for the termination of James Boland should be changed to "voluntary" and the explanation should be removed entirely.

Pound Vulnerable as BOE Looks Unlikely to Deliver Substantial Rate Increases -- Talking Markets

Investors may be too optimistic about how far the Bank of England will raise interest rates and are overlooking risks facing the U.K. economy, leaving the pound vulnerable to further bouts of selling, analysts say.

The BOE is fully expected to raise interest rates by 25 basis points to 1.0% in a decision Thursday.

Ukraine Retakes Villages Near Kharkiv, Easing Pressure on Battered City

KHARKIV, Ukraine-Ukrainian forces are ousting Russian troops from a string of villages that were used to strike the country's second most-populous city, Kharkiv, regaining strategic terrain that could blunt Russia's attempt to conquer the eastern Donbas region.

The recent Ukrainian gains, to the north and northeast of Kharkiv, build on previous successes in forcing Russia's military from the immediate outskirts of the city, a major industrial and transportation hub with a prewar population of 1.4 million.

Binance Picks Paris to Be Regional Hub in Europe

Binance, the world's largest crypto exchange, is planting a foot in Paris as it seeks to establish itself as a regulated financial player.

The company said it would make Paris its European hub after France's financial markets regulator formally granted Binance the right to offer and market its services to local customers. Binance operates a trading website world-wide but has long operated without an official headquarters and without registration in many countries.

Finland Holds War Drill Alongside U.S. Soldiers Ahead of NATO Application

NIINISALO, Finland-Armored vehicles kicked up tails of dirt as fatigue-clad soldiers, their faces freshly daubed in camouflage paint, crouched in the pine forest here Wednesday, part of a sweeping military drill before Finland prepares to break decades of defense policy and applies to join NATO.

More than 3,000 Finnish troops are taking part in the two-week exercise alongside hundreds of American, British, Estonian and Latvian soldiers, shadowed by growing fears that Russia's war in Ukraine could spread to other parts of Europe. A series of other drills involving members of the North Atlantic Treaty Organization and its allies have been held this spring and will continue into the summer and include the world's largest ground-based integrated air and missile exercise, in Poland and the Baltic states, in June.

GLOBAL NEWS

China Caixin Services PMI Drops to Lowest in More Than Two Years

A private gauge measuring activity in China's services sector tumbled to its lowest level since the initial onset of the pandemic in February 2020, as the escalation of measures to contain the spread of the virus weighed heavily on customer demand.

The Caixin services purchasing managers index dropped to 36.2 in April from 42.0 in March, Caixin Media Co. and research company IHS Markit said Thursday. The reading continued to be sharply below the 50 mark that separates contraction from expansion.

Fed Lifts Interest Rates by Half Point in Biggest Hike Since 2000

The Federal Reserve approved a rare half-percentage-point interest rate increase-the largest since 2000-and a plan to shrink its $9 trillion asset portfolio as officials kicked into higher gear a campaign to slow inflation, which is running at a 40-year high.

The moves, approved unanimously at the end of a two-day policy meeting Wednesday by the Fed's rate-setting committee, will raise the central bank's benchmark federal-funds rate to a target range between 0.75% and 1%.

Brazil's Central Bank Raises Key Rate to 12.75%, Sees Smaller Rate Increase at Next Meeting

SÃO PAULO-The Central Bank of Brazil raised its benchmark Selic lending rate to the highest level in five years and said it would continue with its strategy as long as needed until the country's rapid inflation starts to slow.

The bank's monetary policy committee, known as the Copom, raised the Selic by 1 percentage point to 12.75%. Policy makers said they would raise the Selic by a smaller amount at the next meeting, in June.

Blinken China Speech to Affirm Beijing as Main U.S. Rival

WASHINGTON-When much of the global focus is on Russia's war with Ukraine, the Biden administration is preparing to refresh the message that the U.S. sees China, not Russia, as its biggest geopolitical rival.

More than 18 months into the Biden presidency, Secretary of State Antony Blinken had been scheduled to give a speech on Thursday to address the administration's plan to deal with China. However, the State Department said Wednesday afternoon that Mr. Blinken had tested positive for Covid-19 and Thursday's speech would be postponed to a later date.

Russian Oil Ban, Ukraine War Present Risks to Global Economy, Janet Yellen Says

Treasury Secretary Janet Yellen said the U.S. economy remains strong despite the fact that it shrank in the first quarter of this year, adding that both persistently high inflation and spillovers from the war in Ukraine present economic risks.

"The outlook is very uncertain. The dangers at the global level are high, " she said. "I do worry about commodity prices, I am worried about spillovers from Russia and Ukraine that can have adverse impacts not just on the U.S. that is strongly positioned, but on Europe, on emerging markets."

Sri Lanka's Finance Minister Says Country's Available Reserves Near Zero

Sri Lanka remains deep in the throes of a balance of payments crisis that has crippled the country's ability to import necessities and make payments on its over $30 billion in foreign debts, Sri Lanka's finance minister said.

Ukraine Retakes Villages Near Kharkiv, Easing Pressure on Battered City

KHARKIV, Ukraine-Ukrainian forces are ousting Russian troops from a string of villages that were used to strike the country's second most-populous city, Kharkiv, regaining strategic terrain that could blunt Russia's attempt to conquer the eastern Donbas region.

The recent Ukrainian gains, to the north and northeast of Kharkiv, build on previous successes in forcing Russia's military from the immediate outskirts of the city, a major industrial and transportation hub with a prewar population of 1.4 million.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

05-05-22 0542ET