European Midday Briefing : Stocks Rebound But -2-

BERLIN-Volkswagen AG said Monday that it would list its iconic sports car maker Porsche AG in one of the biggest initial public offerings in years and a crucial test of investors' confidence as high inflation and the war in Ukraine put a damper on the global economy.

The offering could value Porsche at as much as 85 billion euros, equivalent to $84 billion, according to analyst estimates, injecting fresh cash into VW's coffers that executives say will help the company bankroll its transition to electric vehicles and self-driving cars.

Lufthansa Confirms Negotiation With Pilot Union After Strike Call

Deutsche Lufthansa AG will continue negotiations with its pilot union to avert a strike that would cause massive disruptions to flights, the German airline said Tuesday.

The pilot union, Vereinigung Cockpit, called for a strike for Sept. 7 and 8, plus another one until Sept. 9 for Lufthansa Cargo, after it said that the airline didn't submit a new offer in response to demands.

A 75-Basis-Point ECB Interest Rate Rise in Sept Is the Right Size at Right Time, BNY Mellon IM Says

A 75-basis-point interest rate rise by the European Central Bank on Thursday will be the appropriate size and timing if the ECB wants to benefit from the window of opportunity to lower core inflation, Lale Akoner, senior market strategist at BNY Mellon Investment Management, told Dow Jones Newswires in an interview.

"The [eurozone] August core inflation data at an all-time high of 4.3% actually stamps an interest rate hike of 75bps this week," she said.

U.K. Retail Sales Growth Slowed in August on Weak Back-To-School Sales

U.K. retail sales slowed in August compared with the prior month amid weak back-to-school spending and a slowdown in clothing sales, according to the latest British Retail Consortium and KPMG report.

Retail sales rose 0.5% in August on a like-for-like basis, compared with an increase of 1.5% in August 2021, the report said. In July, retail sales rose 1.6% on a like-for-like basis, the report noted.

Rio Tinto Enters Binding Agreement to Acquire Turquoise Hill

SYDNEY--Rio Tinto PLC said it has entered a binding agreement with Turquoise Hill Resources Ltd. to acquire the remaining shares in the Mongolia-focused copper miner that it doesn't already own.

Rio Tinto said Turquoise Hill's independent directors had unanimously recommended its cash offer of 43.00 Canadian dollars (US$32.72) per share for all shares outstanding. It previously offered C$40.00 per share.

GLOBAL NEWS

Windfall Taxes Are the Latest Hit on Europe's Banks

European banks have started to reap higher profits from rising interest rates-and governments are already starting to clamp down on them.

In Spain, the government has laid out plans to tax lenders on their rising income and use the money to alleviate higher living costs for the population. Hungary has imposed a similar measure, and the Czech Republic, where inflation is above 17%, is also considering such a move. In Poland, where mortgages carry variable rates that are quickly rising, the government placed a moratorium on repayments to help borrowers.

Junk-Loan Defaults Worry Wall Street Investors

Financial pain is spreading in the junk-loan market, showing how interest-rate increases are hurting debt-laden companies and worrying investors that a credit crunch looms as the economy slows.

Defaults on so-called leveraged loans hit $6 billion in August, the highest monthly total since October 2020, when pandemic shutdowns hobbled the U.S. economy, according to Fitch Ratings. The figure represents a fraction of the sprawling loan market, which doubled over the past decade to about $1.5 trillion. But more defaults are coming, analysts say.

Investors Are Pouring Into U.S. Stocks to Avoid Greater Turbulence Overseas

Investors around the world are piling into U.S. stocks, even as they brace for the prospect of a rocky autumn, because they say there's nowhere better to shelter from the turbulence in global markets.

Skyrocketing inflation, worries about a potential recession, Russia's invasion of Ukraine, rising energy prices and new Covid-19 outbreaks have rattled everything from stocks to bonds to commodity prices this year.

Australia's Bumper Wheat Crop Faces Export Constraints

SYDNEY-Australia forecast another bumper wheat crop following above-average rainfall on its east coast, but supply chain bottlenecks could limit its ability to export more and ease concerns about global food security.

Russia's invasion of Ukraine pushed up wheat prices to record levels earlier this year and led some big producers, including India, to ban exports. Higher wheat prices have added to inflationary pressures, threatening the global economic recovery from the Covid-19 pandemic.

RBA Delivers Another Big Rate Increase, Warns of More to Come

SYDNEY--The Reserve Bank of Australia delivered a fourth consecutive 50-basis-point rise in official interest rates to combat inflation while warning that further increases remain in the pipe.

The RBA raised the official cash rate to 2.35% from 1.85% after a policy meeting earlier Tuesday. Since May, it has announced 225 basis points of increases, the fastest pace of policy tightening in nearly 30 years.

Ukraine Warns of Risks to Nuclear Plant Ahead of U.N. Inspectors' Report

KHARKIV, Ukraine-Ukrainian President Volodymyr Zelensky warned that the Zaporizhzhia nuclear plant was again in jeopardy after shelling disconnected it from the grid ahead of the release of a report by United Nations inspectors.

Mr. Zelensky was speaking as the International Atomic Energy Agency prepared to publish a report Tuesday following its visit to the plant last week. Ukraine's energy operator said on Monday that a fire caused by Russian shelling effectively disconnected the plant from Ukraine's electricity grid-the latest in a series of incidents that have raised international concerns about a nuclear accident.

Boris Johnson Bows Out as U.K. Prime Minister, Ending a Tumultuous Three Years in Office

LONDON-Boris Johnson officially ends his three-year tenure on Tuesday by tendering his resignation to Queen Elizabeth II in Scotland, closing out one of the most tumultuous periods in office for a U.K. prime minister in recent history.

The voluble British leader will be replaced by the current Foreign Secretary Liz Truss, who won a two-month battle to replace Mr. Johnson after he resigned following a party revolt in early July.

Sichuan Earthquake Death Toll Climbs as Rescuers Work to Reach Survivors

HONG KONG-Rescuers cleared roads to reach survivors of the most powerful earthquake to hit China's southwestern Sichuan province in five years, with the death toll rising to 66 and adding to the troubles of a region already hit by drought, scorching heat and Covid-19.

As of Tuesday afternoon, 15 people were missing and 253 were injured, state-run People's Daily cited local officials as saying.

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

(END) Dow Jones Newswires

09-06-22 0659ET