Gold holds onto gains from Iraq concerns, Fed language

Investing.com - Investing.com - Gold futures held onto the week's gains on Friday, buoyed by dovish language out of the Federal Reserve as well as concerns the U.S. may get dragged deeper into the Iraqi insurgency and risk slowing economic recovery.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at 1,316.10 a troy ounce during U.S. trading, up 0.15%, up from a session low of $1,307.20 and off a high of $1,322.40.

The August contract settled up 3.25% at $1,314.10 on Thursday.

Futures were likely to find support at $1,258.00 a troy ounce, Tuesday's low, and resistance at $1,322.00, Thursday's high.

The Federal Reserve on Wednesday left benchmark interest rates unchanged at 0.00-0.25% and cut its monthly bond-buying program to $35 billion from $45 billion in widely expected move.

The dollar weakened and gold strengthened, however, after the U.S. central bank stopped short of offering a timetable as to when interest rates may rise. Gold and the dollar tend to trade inversely with one another.

Markets viewed the Fed's language as somewhat dovish.

"It likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored," the Fed said in its Wednesday policy statement.

Geopolitical concerns kept gold prices elevated.

Iraqi security forces fought with Sunni militants for control of a 300,000 barrel-per-day refinery on Thursday, which pressured oil prices higher by stoking supply concerns, and gold prices followed suit on concerns higher oil and gasoline prices could slow the pace of U.S. recovery.

Still, many of the country's major oilfields remain far south of the fighting, which eased fears somewhat and allowed gold to give back some of its gains in profit taking.

U.S. President Barack Obama said on Thursday that he was sending up to 300 U.S. military advisers to Iraq and added he was prepared to take "targeted" military action later if deemed necessary.

Meanwhile, silver for July delivery was up 1.36% at $20.928 a troy ounce, while copper futures for July delivery were up 1.42% at $3.122 a pound.

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U.S. stocks gain on interest rate outlook; Dow rises 0.15%

Investing.com - Investing.com - U.S. stocks finished Friday higher in a session void of major economic indicators, as investors digested the Federal Reserve's somewhat dovish Wednesday policy statement and traded on sentiments that borrowing costs will remain low for some time to come.

At the close of U.S. trading, the Dow 30 rose 0.15%, the S&P 500 index rose 0.17%, while the NASDAQ Composite index rose 0.20%.

The Volatility S&P 500 index, which measures the outlook for market volatility, was up 0.85% at 10.71.

The Federal Reserve on Wednesday left benchmark interest rates unchanged at 0.00-0.25% and cut its monthly bond-buying program to $35 billion from $45 billion in a widely expected move.

While the Fed did not clear up uncertainty over how much time will elapse from when bond purchases end and rate hikes begin, language suggested that markets should be comfortable knowing borrowing costs will remain low for a while.

"It likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored," the Fed said in its Wednesday policy statement.

Energy stocks saw gains stemming from the Iraqi insurgency.

Iraqi security forces fought with Sunni militants for control of a 300,000 barrel-per-day refinery on Thursday, which pressured prices higher by stoking supply concerns.

Still, many of the country's major oilfields remain far south of the fighting, which kept broader stock prices somewhat steady.

U.S. President Barack Obama said on Thursday that he was sending up to 300 U.S. military advisers to Iraq and added he was prepared to take "targeted" military action later if deemed necessary.

Iraq produced approximately 3.5 million barrels a day of oil last month, making it OPEC's second-biggest oil producer behind Saudi Arabia.

Leading Dow Jones Industrial Average performers included Caterpillar Inc (NYSE:CAT), up 1.99%, Dupont Fabros Technology Inc (NYSE:DFT), up 1.55%, and Johnson & Johnson (NYSE:JNJ), up 1.43%.

The Dow Jones Industrial Average's worst performers included Walt Disney Company (NYSE:DIS), down 1.13%, The Travelers Companies Inc (NYSE:TRV), down 1.05%, and Nike Inc (NYSE:NKE), down 0.71%.

European indices, meanwhile, ended the day largely lower.

After the close of European trade, the DJ Euro Stoxx 50 fell 0.24%, France's CAC 40 fell 0.48%, while Germany's DAX fell 0.17%. Meanwhile, in the U.K. the FTSE 100 rose 0.25%.

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Expectations From The New Government

Friday: 10.30 pm, Saturday: 11.30 am

Sunday: 9:30am & 11.00pm

Published on Thu, Jun 19,2014 | 22:29, Updated at Thu, Jun 19 at 22:43Source : Moneycontrol.com |   Watch Video :

At the recent CII Capital Markets Summit, Cyril Shroff of  Amarchand Mangaldas, Rashesh Shah of Edelweiss Financial Services, Ananth Narayan of Standard Chartered Bank, G V Nageswara Rao of NSDL, Atul Joshi of India Ratings & Research and Rohit Sipahimalani of Temasek Holdings Advisors India, spoke about their Expectations From The New Government Of India.

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'FM needs to keep deficit reduction programme on path'

Answering a query on what he expected from the new finance minister, Arun Jaitley's upcoming Union Budget Richard Iley, Chief Asia Economist at BNP Paribas said it is important that the finance minister keeps the deficit reduction programme on path.

"What is absolutely critical for me is the new finance minister credibly commits to keeping the last administration's deficit reduction path on track," said Iley in an interview to CNBC-TV18.

Also read: Will present a good not just a populist Budget: Sitharaman  

Below is the transcript of Richard Iley's interview with Anuj Singhal and Ekta Batra on CNBC-TV18.

Ekta: A lot of the dynamics for the Indian macros have changed recently, this is with Brent crude prices rising and being uncertain in terms of a trajectory going forward and along with the fact that we might even be suffering from deficient monsoon this time around, do you think that inflation targets of around 8 percent by January 2014 might now be under risk?

A: I think there are some upside risk to inflation. I think most of it being worried about food prices and the risk of a deficient monsoon pushing food inflation back up towards the end of the year certainly back up into double digit territory, he is rightly said that the threat of higher oil prices is now another upside inflation risk that we can have to the worry list. So I think the inflation numbers that we will get over the very next couple of months will be pretty benign due to base effects. I think consumer price index (CPI) inflation is only certainly going to fall below 8 percent in the next couple of months but I think the risk is that later in the year on the back of maybe worse than expected monsoon, those higher oil prices we could be back up above 8 percent. Governor Rajan critically has indicated that he will look through base effects. So the RBI is going to be very alert to the signs of higher food and energy inflation that may be coming through.

Anuj: What is your call on the Indian rupee which has seen quite a bit of volatility over last three or four days. Of course there are some global factors as well but at 60 how are you positioned on the Indian currency?

A: It seems about fair value to me when you look at estimates of the real exchange rates. The rupee was clearly overvalued before last year's taper tantrum when we fell back to a much more appropriate level versus the dollar and on a broader real effective basis.

What is critical are going to be two factors; the external environment and in particular this very artificial environment have extremely damped volatility and quite swollen risk appetite continues and also what we get from the new administration and for me in terms of the reform process in terms of continuing the optimistic spirit the foreign investors are viewing in the year through next month's budget is really going to be the key litmus test.

Ekta: What is your expectation from the budget next month and do you think to adhere to the 4.1 percent target for fiscal deficit and because of the risk of rising crude prices growth might also be on the back foot for FY15 as well?

A: It has got a certain amount of sympathy. Finance minister Jaitley is already on the back foot given the extent to which subsidy spending from fiscal 14 has been pushed in to this year by the last administration. In terms of the broad themes what is absolutely critical for me is the new finance minister credibly commits to keeping the last administration's deficit reduction path on track. So as you say that 4.1 percent Gross domestic product (GDP) deficit target is critical that that is credibly committed to and that there are plausible measures designed to reach that.

In particular subsidy control we are hearing news that fertiliser subsidies could be cut, action on diesel subsidies as well. Those would be very welcome measures for me to rain in subsidy spending. Moving on the tax base as well a credible commitment to finally getting the Goods and Service Tax (GST) in place would be very important. So that fiscal arithmetic is vital committing credibly for the 4.1 percent deficit target but I would also want to see more from the new administration in the budget. Action on foreign direct investment (FDI) liberalisation which again has been lots of chatter about concrete measures announced on that with liberalisation in various sectors would be very positive for me. If we get all of that I would be positive on the rupee.

Ekta: If in case brent rises to say USD120/bbl or maybe even surpasses all time highs how much of the macros change for India and would you change a couple of your parameters that you would be looking at and which would be the current parameters that you would have to rework for India immediately, would it be a GDP target as well?

A: Yeah, higher oil prices are clearly a negative supply shock as these economists like to call them. They are growth destructive, they push down economic growth and they push up inflation. A base case barring much higher oil prices is for the GDP growth to pick up to somewhere around five and quarter to five and half percent for fiscal 15 just pretty poor performance for the Indian economy really is all about growth expectations for 2016 and beyond and that is why this year's budget is so important in helping cement those and taking some of the tough decisions that are needed to reinvigorate India's macro dynamics out over the medium term action on infrastructure action and on food supply action decisive action to really bring down the deficit at least in line with the last administration's target ideally even faster and critically providing support for Reserve Bank of India (RBI) in its fight against inflation and eventually opening up space for the central bank to potentially cut interest rates at some point over the next year.

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Gold post slight gains as Fed reiterates rates to stay low

Investing.com - Investing.com - Gold futures posted slight gains on Wednesday after the Federal Reserve cut its bond-buying program by $10 billion but reaffirmed its plans to keep interest rates at current rock-bottom levels for a while longer after it ends stimulus measures.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at 1,273.50 a troy ounce during U.S. trading, up 0.12%, up from a session low of $1,266.60 and off a high of $1,275.70.

The August contract settled down 0.26% at $1,272.00 on Monday.

Futures were likely to find support at $1,2508.00 a troy ounce, Tuesday's low, and resistance at $1,285.10, Monday's high.

The Federal Reserve on Wednesday said it was leaving its benchmark interest rate unchanged at 0.00-0.25% but said it would cut its monthly bond-buying program to $35 billion from $45 billion due to an improving economy.

Fed bond purchases support gold by weakening the dollar, as the two assets tend to trade inversely with one another, and news of their dismantling often weakens the yellow metal.

Still, gold found room to rise on Wednesday as the Fed pointed out once bond purchases end, rates won't rise immediately afterwards, the Fed's rate setting body, the Federal Open Market Committee, said in a statement earlier.

"The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored," the Fed said.

"The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run."

Meanwhile, silver for July delivery was up 0.46% at $19.822 a troy ounce, while copper futures for July delivery were up 0.09% at $3.064 a pound.

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Dollar slips as Fed reaffirms rate forecast, trims growth estimate

Investing.com - Investing.com - The dollar traded largely lower against most major currencies on Wednesday after the Federal Reserve reiterated interest rates will stay low for some time to come.

The U.S. central bank also cut its 2014 economic growth forecast to 2.1%- 2.3% from an earlier 2.9% forecast, which came as no huge surprise to investors, though the dollar did slide.

In U.S. trading on Wednesday, EUR/USD was up 0.24% at 1.3578.

The Federal Reserve on Wednesday said it was leaving its benchmark interest rate unchanged at 0.00-0.25% but said it would cut its monthly bond-buying program to $35 billion from $45 billion.

Fed bond purchases weaken the dollar, though Fed language suggesting interest rates will stay low for the foreseeable future kept the greenback in Wednesday afternoon trading.

The Fed pointed out that economic activity has rebounded and added the labor market continued to strengthen though monetary authorities still see room for more improvement.

"Labor market indicators generally showed further improvement. The unemployment rate, though lower, remains elevated," the Fed said in its statement.

"Household spending appears to be rising moderately and business fixed investment resumed its advance, while the recovery in the housing sector remained slow."

Fiscal policy continues to dampen economic growth, although the extent of that restraint is diminishing, the Fed added, while consumer prices remain in comfort zones.

"Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable."

The U.S. central bank said highly accommodative policy remains appropriate to keep recovery on track and added additional stimulus tapering is likely if inflation rates and the labor market continue to improve.

When determining how long benchmark interest rates will remain at rock-bottom levels, monetary authorities will pay close attention to both real and anticipated progress needed to reach maximum employment and 2% inflation, including labor market conditions, inflationary pressures, inflation expectations, and readings on financial developments.

While markets expect some time to pass between when the Fed closes its stimulus program and when it first hikes interest rates, don't expect that time to pass too quickly, as the Fed wants to be sure the economy can stand on its own two feet before tightening.

"The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored," the Fed said.

"The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run."

The dollar was down against the yen, with USD/JPY down 0.17% and trading at 102.98 and down against the Swiss franc, with USD/CHF down 0.33% at 0.8964.

The greenback was down against the pound, with GBP/USD up 0.15% at 1.6988.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.13% at 1.0846, AUD/USD up 0.65% at 0.9397 and NZD/USD up 0.77% at 0.8724.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.21% at 80.54.

On Thursday, the U.S. is to publish the weekly report on initial jobless claims as well as a report on manufacturing activity in the Philadelphia region.

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Dollar gains on firming U.S. inflation figures

Investing.com - Investing.com - The dollar traded largely higher against most major currencies on Tuesday after U.S. inflation rates beat market expectations, while soft housing data failed to seriously dent the greenback's advance.

In U.S. trading on Tuesday, EUR/USD was down 0.21% at 1.3544.

The Labor Department reported earlier that the U.S. consumer price index rose 2.1% on year in May and rose 0.4% from April. Consumer prices rose at their fastest pace since October 2008, which sparked demand for the greenback.

Market expectations had been for an annual increase of 2.0% and a monthly rise of 0.2%.

Firming inflation rates should prompt the Federal Reserve to continue winding down its monthly bond-buying program and later raise benchmark interest rates from current record lows as the economy gains steam.

The Fed will conclude a two-day policy meeting on Wednesday, and the U.S. central bank is seen scaling back its asset-purchasing program by another $10 billion, though hikes to benchmark interest rates won't come until sometime in 2015.

A separate report showed that both U.S. housing starts and building permits fell in May, pointing to underlying weakness in the housing sector.

The Commerce Department reported that housing starts dropped by 6.5% last month to 1.001 million units, while the number of building permits issued last month fell by 6.4% to 991,000 units, though markets focused on inflation data instead.

Meanwhile in Europe, data revealed that German economic sentiment deteriorated unexpectedly in June, reflecting the recent slowdown in the German economy after a strong start to the year.

The ZEW index of German economic sentiment came in at 29.8 this month, down from 33.1 in May and far shy of market expectations for a 35.0 reading. It was the lowest reading since December 2012.

The dollar was up against the yen, with USD/JPY up 0.30% and trading at 102.15 and up against the Swiss franc, with USD/CHF up 0.29% at 0.8997.

The greenback was up against the pound, with GBP/USD down 0.14% at 1.6960.

The pound came under pressure after the Office for National Statistics reported the U.K.'s inflation rate rose 1.5% on year in May and fell 1.8% from April and the lowest reading since October 2009.

Economists were expecting an annual inflation rate of 1.7% and a monthly 0.2% rate.

Core CPI, which strips out food costs, but includes transportation costs, rose 1.6% year-over-year, slightly below expectations of 1.7%.

However, the report also showed that house prices rose 9.9% in April, their biggest annual increase since June 2010, fuelling fears over a bubble in the property market.

Despite the rapid economic recovery in the U.K. low levels of inflation have given the Bank of England leeway to keep interest rates on hold at record lows of 0.5%. But BoE Governor Mark Carney indicated last week that rates could rise sooner than markets expect as the recovery continues to gain momentum.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.21% at 1.0867, AUD/USD down 0.66% at 0.9338 and NZD/USD down 0.27% at 0.8653.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.21% at 80.71.

On Wednesday, the dollar will move on the Federal Reserve's announcement on monetary policy.

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U.S. stocks rise on hopes for upbeat Fed report; Dow rises 0.16%

Investing.com - Investing.com - U.S. stocks rose on Tuesday after an uptick in consumer prices fueled hopes the Federal Reserve's statement on monetary policy due out on Wednesday will provide a largely positive take on the U.S. economy.

At the close of U.S. trading, the Dow 30 rose 0.16%, the S&P 500 index rose 0.22%, while the NASDAQ Composite index rose 0.37%.

The Volatility S&P 500 index, which measures the outlook for market volatility, was down 4.66% at 12.06.

The Labor Department reported earlier that the U.S. consumer price index rose 2.1% on year in May and rose 0.4% from April. Consumer prices rose at their fastest pace since October 2008, which sparked demand for the greenback.

Market expectations had been for an annual increase of 2.0% and a monthly rise of 0.2%.

Firming inflation rates should prompt the Federal Reserve to continue winding down its monthly bond-buying program and later raise benchmark interest rates from current record lows as the economy gains steam.

The Fed will conclude a two-day policy meeting on Wednesday, and the U.S. central bank is seen scaling back its asset-purchasing program by another $10 billion, though hikes to benchmark interest rates won't come until sometime in 2015.

While Fed stimulus programs and low borrowing costs tend to boost stocks, a decision to move away from ultra-accommodative policy would signal the arrival of more robust economic recovery, which would also bode well for equities.

A separate report showed that both U.S. housing starts and building permits fell in May, pointing to underlying weakness in the housing sector.

The Commerce Department reported that housing starts dropped by 6.5% last month to 1.001 million units, while the number of building permits issued last month fell by 6.4% to 991,000 units, though markets focused on inflation data instead.

On Monday, the International Monetary Fund trimmed its 2014 U.S. economic growth forecast to 2% from 2.8% due to a harsh winter and a 'still-struggling housing market," though markets bet the Fed's take on the economy will be positive even with a few clouds on the horizon.

Leading Dow Jones Industrial Average performers included Home Depot Inc (NYSE:HD), up 1.43%, Goldman Sachs Group Inc (NYSE:GS), up 1.43% as well, and J P Morgan Chase & Co (NYSE:JPM), up 0.98%.

The Dow Jones Industrial Average's worst performers included Exxon Mobil Corporation (NYSE:XOM), down 0.48%, Johnson & Johnson (NYSE:JNJ), down 0.48% as well, and Dupont Fabros Technology Inc (NYSE:DFT), down 0.46%.

European indices, meanwhile, ended the day higher.

After the close of European trade, the DJ Euro Stoxx 50 rose 0.39%, France's CAC 40 rose 0.58%, while Germany's DAX rose 0.37%. Meanwhile, in the U.K. the FTSE 100 rose 0.18%.

On Wednesday, stocks will move on the Federal Reserve's announcement on monetary policy.

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Expect major agri reforms from Modi govt: Arun Shourie

Arun Shourie also made a case to axe the controversial retrospective amendment to tax laws.

Fiscal consolidation, reviving investments and big bang reforms, Arun Shourie expects the new government to get India back on the high-growth path. Speaking exclusively to CNBC-TV18's Manasvi Ghelani, the former divestment minister in the Vajpayee government says he expects major agriculture reforms from the Modi government. Shourie also made a case to axe the controversial retrospective amendment to tax laws.

Below are edited excerpts from the interview:

Q: What kind of reforms are you expecting from the new government?

A: First is fiscal consolidation, second is changing the rules of doing business in India and that should mean that you raise resources in imaginative ways because you can't raise it through taxes on other ways. But in holding companies or public sector undertakings (PSUs), for all PSUs on the manufacturing side you can really raise a lot of resources. Similarly, another holding company in the banks and you re-capitalise the banks by first taking out the bad assets. These are ways in which unlimited amounts of money can be raised.

One small estimate that Raghav Bahl had made was that you can raise anywhere between USD 500 billion to one trillion dollars for infrastructure investments just by the holding companies for PSUs. That will relive the government from pressure on the budget. So those things should be done.

Q: Talking about the agri reforms, what are your views in that particular segment?

A: I am not an expert in agriculture but I certainly feel the idea that you can go on raising minimum support prices and on the other side that will not impact inflation; it is not possible.

Q: On the retrospective tax, do you think that should be amended or the court should be given the contractual validity?

A: No. One of the most retrogressive things was the legislation to overturn the Supreme Court judgement and impose retrospective taxation and it will be very good that the government should announce that we will never go in for retrospective taxation. Secondly, we will contest you till the High Court, but we will not contest you in the Supreme Court if we lose. That assurance should be given. Thirdly, the most important point is that tax administration has gone completely haywire.

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Gold gains on Iraqi violence, U.S. data cap gains

Investing.com - Investing.com - Gold futures rose on Monday due to safe-haven demand from investors worried over chaos erupting in Iraq, though upbeat U.S. indicators watered down gains by reminding investors that monetary stimulus tools in the U.S. are on their way out.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at 1,274.60 a troy ounce during U.S. trading, up 0.04%, up from a session low of $1,272.60 and off a high of $1,285.10.

The August contract settled up 0.01% at $1,274.10 on Friday.

Futures were likely to find support at $1,250.10 a troy ounce, Tuesday's low, and resistance at $1,294.70, the high from May 27.

Concerns over the ongoing Sunni insurgency in Iraq continued to weigh on the dollar Monday by stoking fears that escalating conflict could dampen global recovery, especially if the conflict disrupts Iraqi oil exports, hikes prices at U.S. gasoline pumps and waters down the economy.

Geopolitical concerns boosted gold, as the yellow metal tends to trade inversely from the dollar, while news that the International Monetary Fund trimmed its 2014 U.S. economic growth forecast due to a harsh winter and 'still-struggling housing market' supported the precious metal as well.

The IMF said it now expects the U.S. economy to expand 2% in 2014, down from its forecast of 2.8% in April.

Positive U.S. data, meanwhile, capped gold's gains, as the numbers solidified market expectations for the Federal Reserve to wind down its monthly bond-buying program possibly this year.

The Federal Reserve Bank of New York reported earlier that its general business conditions index increased to 19.28 this month from 19.01 in May. Analysts had expected the index to decline to 15.0.

A separate report showed that U.S. industrial production rose by 0.6% last month, beating forecasts for a 0.5% gain.

Past and current Fed asset-purchasing programs have supported gold since the 2008 financial crisis by suppressing interest rates, which boosts gold's appeal as a hedge to a weaker dollar.

Meanwhile, silver for July delivery was down 0.01% at $19.653 a troy ounce, while copper futures for July delivery were up 0.59% at $3.048 a pound.

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Egypt cabinet formation delayed as PM continues talks

CAIRO (Reuters) - The expected formation of Egypt's new cabinet has been held up after several candidates turned down offers of ministerial positions from Prime Minister Ibrahim Melheb, two government sources said on Sunday.

Melheb is forming a new government following President Abdel Fattah al-Sisi's election victory last month. He had not been expected to make sweeping changes, and officials had said he would unveil his new cabinet on Sunday.

But government sources said on Sunday evening the premier was still trying to fill several portfolios.

"There have been apologies from some of the nominated candidates including those who were asked for the ministries of investment, justice, culture and information," one source said.

"The prime minister is still conducting talks and holding meetings to pick other new candidates for those ministries."

Both sources said it was unclear when the cabinet would be finalised, but Al-Ahram newspaper said it would be completed by Tuesday at the latest. The cabinet spokesman was not immediately reachable for comment.

The sources did not say why the candidates tapped to serve in Melheb's government had turned down the offers.

However since the 2011 overthrow of former President Hosni Mubarak several people have rejected cabinet jobs, fearing it could open them up to potential legal complaints after a number of former cabinet ministers faced charges of corruption or taking decisions which were not in the national interest.

Sisi reappointed Melheb as prime minister after his inauguration last Sunday. Government sources have said Finance Minister Hany Kadry Dimian is expected to stay, as are the ministers for planning and international cooperation, supplies, housing, industry, defence and interior.

Keeping the main ministers could allow Sisi to implement quickly the types of reform urged by the United Arab Emirates - one of the Gulf states that gave billions of dollars in aid after Islamist President Mohamed Mursi was ousted by the army in July in reaction to mass protests against his rule.

(Reporting by Yasmine Saleh; Editing by Mark Potter)

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Factbox - What is net neutrality? U.S. debates once again

(Reuters) - The U.S. Federal Communications Commission is collecting public comments until Sept. 10 on new "net neutrality" or "open Internet rules" that may let service providers charge content companies for faster and more reliable delivery of their traffic to users.

Below are some details about the concept of "net neutrality" and the FCC's work to regulate Internet traffic.

WHAT IS NET NEUTRALITY?

Net neutrality is a principle that says Internet service providers should treat all traffic on their networks equally. That means companies like Comcast Corp or Verizon Communications Inc should not block or slow down access to any website or content on the Web - for instance, to benefit their own services over those of competitors.

HOW IS NET NEUTRALITY REGULATED?

The FCC, which regulates telephone and cable companies that provide broadband service in the United States, has several times adopted rules aimed at ensuring Internet providers abide by the net neutrality principle.

In 2010, FCC passed an order that prohibited Internet providers from blocking traffic. It allowed "commercially reasonable" discrimination of traffic, but rejected potential "pay-for-priority" deals that may have allowed content companies to pay for faster delivery of their traffic.

Bit a U.S. appeals court in January ruled against the FCC in a case brought by Verizon, effectively striking down the agency's net neutrality regulations.

Comcast is the only Internet provider that has to abide by the older version of those rules until 2018, because of a condition placed on its acquisition of NBC Universal. All other major Internet providers have said they support an open Internet.

WHY DID THE COURT REJECT THE RULES?

In setting the 2010 rules, the FCC treated Internet providers like utilities similar to telephone companies, which are more heavily regulated. The U.S. Court of Appeals for the District of Columbia Circuit ruled that treatment improper because broadband providers were actually classified as less-regulated information service providers.

WHAT IS THE FCC'S NEW PLAN?

The court did affirm the FCC's authority to regulate broadband, indicating that the agency could use another section of the communications law to restore some of the rules.

Based on that guidance, the FCC has proposed new rules that would ban Internet providers from blocking users' access to websites or applications and would require them to disclose exactly how they manage traffic on their networks.

Under the proposal, some "commercially reasonable" deals to give priority to certain Web traffic may be allowed, although the FCC also seeks comment on whether "some or all" pay-for-priority deals should be presumed illegal.

The proposal also asks questions about potentially reclassifying broadband providers and how the FCC may address so-called "interconnection" deals that are currently outside the scope of net neutrality rules, but which have been in spotlight in Netflix Corp's recent spat with Comcast and Verizon.

WHY ARE CONSUMER ADVOCATES OPPOSED?

Consumer advocates say Wheeler's proposal would create "fast lanes" for companies willing to pay while leaving startups and others behind, which would potentially harm competition.

More than 100 technology companies including Google Inc, Facebook Inc and Amazon.com Inc have warned of a "grave threat to the Internet."

However, consumer advocates are pushing for reclassification of broadband providers as public utilities, while tech companies in their opposition to pay-for-priority have not supported reclassification.

WHAT DO OPPONENTS OF REGULATION SAY?

Internet providers say stricter net neutrality regulations could discourage investment in the expensive network infrastructure. Verizon, in its case against the FCC, argued that the rules amounted to government overreach into companies' business dealings.

Past efforts to regulate broadband providers more like telephone companies have drawn backlash from the cable and wireless industries and Republican lawmakers. Companies have argued that reclassification would create prolonged regulatory uncertainty without preventing pay-for-priority deals.

(Reporting by Alina Selyukh; editing by Andrew Hay)

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PM Modi warns of tough decisions ahead to improve economy

"I have taken over the reins of the country in circumstances when there is nothing left behind by the previous government. They left everything empty. The country's financial health has hit the bottom," Modi said.

With just a few days left for the commencement of Budget Session of Parliament, Prime Minister Narendra Modi on Saturday said that his Cabinet would take really tough measures to improve the economy of the country which is in shambles currently owing to the steps taken by the previous government.

Addressing BJP workers in Goa's Bambolim, PM Modi said, "In the coming years we will take tough decisions to improve the condition of country. People might even stop liking me in the coming times becuase of these tough decisions to improve the economy," said the PM dedicated the country's latest warship aircraft carrier INS Vikramaditya to the nation earlier in the day.

This is the first occasion in less than three weeks since taking over reins of power that Modi has made sharply critical comments on the previous Manmohan Singh government's performance.

"I have taken over the reins of the country in circumstances when there is nothing left behind by the previous government. They left everything empty. The country's financial health has hit the bottom," Modi said.

However, in the short run, such measures may not go down well with everybody, he said.

"I am well aware that my steps may dent the immense love that the country has given to me. But when my countrymen would realise that these steps would result in getting the financial health back, then I will regain that love," said the Prime Minister.

On the other hand, if these tough measures were not taken, the financial situation would not improve, he said, adding "we need to take action wherever required".

"We won't be helping the country by praising Modi and praising BJP. There is no guarantee that just singing praise of Modi would improve the situation. We need to take harsh measures to improve the financial situation," he said.

Shortly later, Modi tweeted that "time has come to take tough decisions in the interest of the nation. Whatever decisions we take will be solely guided by national interest".

(With inputs from PTI)

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Outlook for 10 day Monsoon Performance

Southwest Monsoon has been making a slow advancement after making a sluggish start this year. Nevertheless, according to the latest weather update rain is picking up now. Tropical cyclone 'Nanauk' had been restricting the actual outburst of Monsoon in India. Now that the system has weakened it lost its hold over the monsoon current, allowing free flow of westerly winds favourable for the Monsoon surge. Rain will gradually pick up from now on across the country. Here's an outlook of Monsoon performance in coming 10 days:

A small system developing in the Bay of Bengal in the form of a cyclonic circulation will enhance rain over the west coast of peninsular India. Monsoon rain will gradually pick up in Mumbai and the city will receive good showers next week. Intensity of rain over the interiors of South India will also increase gradually in coming 10 days. Southwest Monsoon will cover entire West Bengal, Bihar and touch east Uttar Pradesh by the 21st of June. Monsoon is still behind schedule as normally by the 15th it should have covered Bengal, Bihar and reached central parts of Uttar Pradesh. As of 13th June, the northern limit of monsoon (NLM) passes through- Ratnagiri, Agumbe and Madikeri in west coast, Chennai in east coast, And Coochbehar and Gangtok in Sub Himalayan West Bengal and Sikkim. The onset of Monsoon phase should normally witness significant rain and the actual outburst of Southwest Monsoon is expected in the coming week. Here's a look at the Monsoon performance from 1st to 10th June-

National - The national cumulative average Monsoon rain was deficient by a whopping 43% until the 10th June. Kerala and Karnataka- Monsoon rain over Kerala witnessed to be deficit by 40% while coastal Karnataka was deficit by 80%. Northeast India- Assam and Arunachal Pradesh were deficit by 25%. Nagaland, Manipur, Mizoram and Tripura have hardly received rain accounting for 80% deficit. Sub Himalayan West Bengal- This region has been witnessing good Monsoon showers and is surplus by 60%. In the next 10 days, rain will increase over the country but will fail to cover up the deficiency.By: Skymetweather.com

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