China consumers driving economic rebound: survey

BEIJING (Reuters) – China‘s consumers are leading an uneven recovery in the world’s second biggest economy that has retailers expecting stronger sales in six months, early results of a national survey showed on Wednesday.

The China Beige Book survey of more than 2,000 executives revealed that the retail sector had the strongest revenue growth and business expectations in the fourth quarter of 2012.

The survey broadly detected a mild economic recovery with the hard-hit sectors of real estate, mining and manufacturing – to a lesser extent – joining retail at the head of the upswing.

“The revenue growth pickup was notable in luxuries and durable goods – furniture, appliances, and autos,” said the survey, conducted between October 26 and December 2 by New York-based CBB International and based on the U.S. Federal Reserve’s economic report of the same name.

“Retailers’ mood remains quite hopeful, with 72 percent forecasting higher sales in six months, up 4 points on last quarter. A remarkably low 6 percent foresee declines,” it said, adding that 61 percent of retailers reported higher sales in the Q4 survey than in Q3.

The biggest bounces were seen in coastal Guangdong province, Beijing, the northeast and central regions of China – locations which Q3′s survey found had the biggest spending falls.

The retail rebound was not evenly distributed, however, with Shanghai and the southwest region recording falls in spending.

The survey’s findings are reflected in the most recent raft of economic indicators from China, revealing a mild rebound taking hold in Q4, and in policymaker comments.

China’s retail sales grew 14.9 percent year-on-year in November, ahead of the 14.6 percent forecast in a Reuters poll.

China is on course to end 2012 with the slowest full year of growth since 1999 and while the 7.7 percent rate forecast in a benchmark Reuters poll is way above the world’s other major economies, it is far below the roughly 10 percent annual growth seen for most of the last 30 years.

Weakness in the external environment remains a key drag on an economy in which exports generated 31 percent of gross domestic product in 2011, according to World Bank data, and where an estimated 200 million jobs are supported by foreign investment, or in factories producing for overseas markets.

RECOVERING, REBALANCING

The upside to the patchiness of the recovery is that it is being driven by services, which are calibrated more towards domestic demand. Geographic rebalancing away from prosperous coastal areas was also evident in the survey, with firms in the western region recording the highest revenue growth in Q4.

The survey had mixed findings for labor markets, with a 3 point rise to 34 percent in the proportion of firms citing an increased availability of unskilled labor, while 20 percent said shortages had increased.

Some 34 percent of firms increased their workforces in Q4 from Q3. Wage rises were reported by 52 percent of respondents.

Bankers questioned in the survey said credit conditions eased in Q4, but fewer firms borrowed. Meanwhile, banks and firms said loan rejections rose slightly, to 16 percent, and exposure to companies with excess production capacity was cut.

“Few corporate loans went to new customers: three-fifths of bankers say under 20 percent did — an astonishingly small number,” the survey said.

“Most were debt rollovers or loan increases for existing clients. This is not yet a period of strong expansion.”

The China Beige Book survey of face-to-face and telephone interviews compares conditions with the previous quarter and asks respondents to anticipate conditions three and six months ahead.

The survey sample includes executives from manufacturing, retail, service, transport, real estate and construction, farming, and mining. Respondents ran businesses of every size from the micro-level – employing up to 19 staff – to large firms with more than 500 employees. It also canvassed opinions from 160 bank loan officers and branch managers.

A detailed report of the survey’s full findings will be published in early January.

(Reporting by Nick Edwards; Editing by Robert Birsel)

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Signs suggest better economy if ‘cliff’ is averted

WASHINGTON (AP) — Fresh signs of a strengthening U.S. economy on Friday suggested that if Congress and the White House can avert the “fiscal cliff,” the economic recovery might finally accelerate in 2013.

Consumers spent and earned more in November. And for a second straight month, U.S. companies increased their orders for a category of manufactured goods that reflects investment plans.

In light of the latest figures, some analysts said the economy could end up growing faster in the current October-December quarter — and next year — than they previously thought.

“I see momentum building,” said Joel Naroff, chief economist at Naroff Economic Advisors. “If Washington makes the moves it needs to make, then the economy should pick up speed next year.”

That’s a big “if.” House Republicans called off a vote on tax rates and left budget talks in disarray 10 days before the package of tax increases and spending cuts known as the fiscal cliff would take effect.

Still, helping lift the optimism of some analysts was a government report that consumer spending, which fuels about 70 percent of the economy, rose 0.4 percent in November compared with October. Spending had dipped 0.1 percent in October. But that decline was linked in part to disruptions from Superstorm Sandy.

Incomes rose 0.6 percent in November, the biggest gain in 11 months. It reflected a rebound in wages and salaries, which had been depressed in October. Damage from Sandy in the Northeast prevented some people from working at the end of October and reduced wages at an annual rate of $ 18 billion.

A separate report Friday showed that a category of durable-goods orders that tracks business investment surged 2.7 percent. That gain followed an upwardly revised 3.2 percent jump in October, the biggest in 10 months.

The back-to-back increases followed a period of weakness in so-called core capital goods that had raised concerns about business investment, a driving force in the economy.

The economy grew in the July-September quarter at a solid 3.1 percent annual rate. But some analysts said they thought growth would slow significantly in the October-December period. They predicted that consumers and businesses would cut back on spending because of worries about the fiscal cliff.

But after Friday’s reports, Peter Newland, an economist at Barclays Capital, said Barclays is raising its estimate of growth in the current quarter to a 2.4 percent annual rate, from a previous estimate of 2.2 percent.

Naroff said he thinks growth in the fourth quarter can reach a 2.6 percent annual rate. He said he expects growth to hit a rate of around 3.2 percent in the January-March quarter and 3.6 percent in the April-June quarter.

He said those estimates are based on his confidence that Washington policymakers will avert the sharp tax increases and spending cuts, which could trigger a recession if they remain in place for much of 2013.

Naroff said U.S. economic growth would benefit next year from a rebounding housing market, gradual hiring gains that will boost incomes and the likelihood that Europe’s financial crisis will ease and dampen U.S. exports less than in 2012.

But he said his optimistic forecasts would be derailed if the economy goes off the fiscal cliff in January, which could send shockwaves through financial markets.

“If the fiscal cliff is breached, the biggest concern is confidence,” Naroff said. “I remain hopeful that saner heads will prevail in Washington.”

Economists said the budget impasse and the uncertainty it’s created about tax rates are reducing consumer confidence. The University of Michigan said Friday that its index of consumer sentiment for December fell to 72.9, its lowest point since July. It was a sharp drop from the November reading of 82.7, a five-year high.

Chris G. Christopher Jr., senior economist at IHS Global Insight, said he still expected holiday retail sales to increase a respectable 3.9 percent this year over last year despite slumping consumer confidence. And he said spending momentum should continue into 2013 — as long as the fiscal cliff is resolved in a way that avoids damaging the economy.

“We are assuming that the fiscal cliff does get resolved, and if it does, we should see strong consumer spending and momentum for the economy in 2013,” Christopher said. “But if we go down the fiscal cliff, then the first quarter will not be pretty.”

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Hurting Spaniards pin hopes on Christmas lottery

MADRID (AP) — After another brutal year of economic hardship, Spaniards across the country are hoping for relief when the country’s famed Christmas lottery — the world’s richest — pays out €2.5 billion ($ 3.3 billion) in tax-free awards on Saturday.

Almost everyone in the country of 46 million people will be glued to live TV to watch school children sing out the winning numbers for the lottery that pays out maximum prizes of €400,000 ($ 529,840) and many more for smaller amounts. The top prize is dubbed “El Gordo” (“The Fat One”) and is likely to be won by hundreds if not thousands of players.

Unlike other big lotteries that generate just a few big winners, Spain‘s lottery — now in its 200th year — has always aimed for a share-the-wealth-system rather than a single jackpot, and thousands of numbers yield at least some kind of return.

The Christmas lottery is so popular that there are frequently three €20 ($ 26) tickets sold for every Spaniard, and the lottery itself is the unofficial kickoff of the holiday season.

“A lot of people win,” said Pablo Foncillas, a marketing professor at the IESE Business School in Madrid. “It’s really common even if you don’t win to get a free ticket. So many people win that people just keep on playing. Everyone knows someone who’s won, even if it’s only a little bit.”

Hundreds of players lined up daily to buy tickets this week outside the Dona Manuelita lottery store in Madrid, which has often sold winning tickets. Before Spain’s property-led economic boom collapsed in 2008, they had hoped to win so they could buy a small apartment or a car. Now people said they need the money just to hang on to what they have and avoid being evicted or having cars repossessed.

Betting that tickets from Dona Manuelita stood a better chance of winning, unemployed construction company office manager Miguel Angel Ruiz drove 165 kilometers (102 miles) to buy for a pool of players including his wife and relatives.

“We’re buying more hoping we’ll hit it so we can emerge from poverty,” said Ruiz, 39. “Before the crisis, lottery winnings were to buy an apartment or a car, and now it’s to pay debts.”

Diego Sanbrano, let go from his waiter’s job two months ago, said the Spanish lottery isn’t about getting rich and never working again.

“It’s to pay off debts and straighten out your life,” he said. “You pay the mortgage and make the car payment, and then maybe you have a little left over to go somewhere on vacation.”

Since so many people chip in to buy tickets in groups, the top prizes frequently end up being handed out in the same small town or in one city neighborhood. Last year’s top winning number hit for 1,800 tickets in the northern town of Granen, population 2,000. Townspeople shared about €700 million ($ 925 million), and the rest of the €1.8 billion ($ 2.4 billion) was doled out in smaller prizes around Spain.

The Dec. 22 lottery began in 1812 and last year sold an estimated €2.7 billion ($ 3.6 billion) in tickets with per-capita spending of about €70 ($ 92) just for the Christmas lottery.

Spain holds another big lottery Jan. 6 to mark the Feast of the Epiphany. It is known as “El Nino” (The Child), in reference to the baby Jesus.

But the crisis will hit El Nino and all lotteries going forward. Until now, lottery winnings have been free from taxation. Waves of austerity measures imposed by the government this year to prevent Spain from asking for public finances bailout like those for Greece, Ireland and Portugal have translated into higher taxes. Lottery winnings above €2,000 ($ 2,640) will face a 20 percent tax in 2013.

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Call for tougher banking reforms

21 December 2012 Last updated at 05:29 ET

Government plans to ring-fence the banks – trying to protect retail banking from the riskier investment side – “fall well short of what is required”, a report has warned.

The Parliamentary Commission on Banking Standards wants the government to “electrify” the fence so banks cannot make holes in it.

The government’s bank reforms will go before Parliament early next year.

The Treasury said it was committed to reforming the banking sector.

Vickers recommendations

The Parliamentary Commission on Banking Standards, known as the Banking Commission for short, was asked by Chancellor George Osborne to study the draft version of the government’s Financial Services (Banking Reform) Bill.

This follows last year’s recommendation by the Independent Commission on Banking, which was led by Sir John Vickers.

Sir John concluded that ring-fencing was the best way to protect “core” retail banking activities from any future investment banking losses, such as were seen during the global financial crisis.

The government’s proposed bill also spells out rules to protect depositors and prevent the use of taxpayer money for bailouts, thereby curtailing banks’ perception they are “too big to fail”.

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AAA-rating

The best credit rating that can be given to a borrower’s debts, indicating that the risk of borrowing defaulting is minuscule.

The bill hinges on three main aspects:

• ring-fencing or protecting retail banking


• ensuring that bank losses fall on bank creditors and not depositors or taxpayers


• making banks better able to absorb losses

Ring-fencing would ensure that retail services of a struggling lender can be carried on independently and smoothly even if authorities let the rest of the group fail.

For example, in the case of a failing banking group, regulators could sell off its core activities – thereby maintaining continuity for depositors – while allowing the rest of the organisation to go through a bankruptcy process.

Secondly, the proposed bill wants to rank retail deposits (but not pension liabilities) ahead of the claims of other bank creditors in the event of a bank insolvency.

Thirdly, banks are to hold a sufficient capital buffer – as outlined by global regulators – which means that if banks do fail, losses can be absorbed by shareholders and other creditors rather than the taxpayer.

“Electrification”

Under the draft legislation, the Treasury would have the authority to decide which banks ring-fencing should apply to, as well as specific activities to be undertaken, within ring-fenced banks.

The Prudential Regulation Authority, which will become the UK’s regulator for deposit-taking institutions in April under the Bank of England, would have the power to ensure the ring-fenced bank to carry on with its business.

But there has been much debate over whether to enforce a full separation between retail and investment activities – that is, a break-up. The recommendation by Sir John stopped short of such action.

Andrew Tyrie, chairman of the Banking Commission, said that the “electrification” of the ring fence should include the regulator being able to force the full separation of a bank’s retail and investment divisions, if the lender was found to be trying to break the fence.

“The proposals as they stand [in the Bill], fall well short of what is required,” he said.

“Over time, the ring-fence will be tested and challenged by the banks. Politicians too could succumb to lobbying from banks and others, adding to pressure to put holes in the ring-fence.”

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• The Parliamentary Commission on Banking Standards was appointed in July following the Libor scandal and other episodes that damaged the reputation of banks in the UK


• It includes MPs and peers and is chaired by Andrew Tyrie, who also heads the House of Commons’ Treasury Committee


• Members include the next Archbishop of Canterbury, Justin Welby


• It heard evidence from major figures in the banking sector


• Evidence included a warning from RBS boss Stephen Hester that ring-fencing banks’ retail and investment arms could increase the risk of institutions needing to be rescued


• But Barclays chief executive Antony Jenkins told the commission that his bank was “embracing” the ring-fencing proposal


• The commission has also heard from Paul Volcker, a former chairman of the US Federal Reserve, about his US proposals to ensure bank safety

He added: “For the ring-fence to succeed, banks need to be discouraged from gaming the rules. All history tells us they will do this unless incentivised not to.”

“That is why we recommend electrification. The legislation needs to set out a reserve power for separation – the regulator needs to know he can use it.”

Anthony Browne, the chief executive of the British Bankers’ Association (BBA), welcomed the report, but warned that uncertainty over banks’ prospects could have a negative impact on their ability to lend.

“The risk here is creating uncertainty. If it’s perpetually hanging over the banking sector that individual banks or the whole sector could be broken up at some point, then it’s going to be difficult to return to having an investable banking sector that can be customer-focused and globally competitive and do what it should be doing, which is lending to homeowners and businesses,” he said.

Ed Balls, Labour’s shadow chancellor said: “As Ed Miliband and I said at the Labour conference this year, if the letter and spirit of the Vickers proposals are not delivered and we do not see cultural change in our banks, full separation will be necessary.

“The Commission is clearly right to say the jury is still out and to demand a reserve power for full separation of the banks.”

‘Consensus commitment’

The Commission’s report comes a month after Mr Osborne urged its members not to send the government’s proposed reform “back to square one” by “unpicking” the consensus on how it should be carried out.

A Treasury spokesman said on Thursday evening: “The government is committed to reforming the financial sector and putting in place a regulatory structure that learns the lessons of the past and protects taxpayers in the future.”

“It has been committed to building consensus and has consulted widely on these reforms over the last two and half years. The Banking Reform Bill is the next step in that.

“The government is grateful to the Parliamentary Commission on Banking Standards for its scrutiny of the draft bill and notes that it, ‘welcomes the government’s action to bring forward legislation to implement a ring-fence’.”

The spokesman added that the government would study the report and respond in detail when the Financial Services (Banking Reform) Bill is formally introduced to Parliament early next year.

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UK retail sales flat in November

20 December 2012 Last updated at 06:06 ET

UK retail sales failed to grow in November, adding to fears that consumers are reining in spending ahead of Christmas.

Sales volumes were flat in November compared with October, the Office for National Statistics (ONS) said.

They had been expected to bounce back after October’s shock 0.8% fall.

The one bright spot was in household goods stores, where sales rose by 3.8% on the month, including consumer electrical items.

However this failed to offset a 0.1% drop in both food sales and sales of clothes and shoes.

Year-on-year, sales volumes rose by 0.9%.

‘Last-minute rush’

By value, sales fell 0.1% on the month but increased 1.5% on the year.

Consumer spending accounts for about two-thirds of gross domestic product (GDP) in the UK.

The ONS figures increase the chance that the UK economy will contract in the last three months of 2012, something the Bank of England has already said is likely.

This year has seen a number of casualties on the High Street, the latest being electrical retailer Comet, whose last stores closed this week.

British Retail Consortium director-general Helen Dickinson, said that the coming weekend would be crucial for retailers.

“With Christmas falling on a Tuesday this year, this weekend will be the critical one – I’m expecting a last-minute rush but overall in sales terms it will be neither a bumper Christmas nor a disaster.”

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Stock index futures trade flat to higher

LONDON (Reuters) – Stock index futures pointed to a flat-to-higher open on Wall Street on Wednesday, consolidating gains after the S&P 500′s best two-day run in a month.

* Futures for the S&P 500 were unchanged, while Dow Jones and Nasdaq 100 contracts rose 0.2 percent and 0.3 percent, respectively, at 0924 GMT.

* Japan’s Nikkei <.n225> jumped 2.4 percent to end above 10,000 for the first time in more than eight months on Wednesday on growing expectations of easier monetary policy under a new government.</.n225>

* European shares continued to drift higher as expectations built that a budget deal in the United States is close, though traders reckoned any positive outcome is largely baked into the price.

* The U.S. Commerce Dept. releases housing starts and permits for November at 1330 GMT. Economists in a Reuters survey forecast 873,000 housing starts in November versus 894,000 in October, and a total of 875,000 building permits in November compared with 868,000 in the prior month.

* FedEx, the No. 2 U.S. package-delivery company, is due to report second-quarter results at 1230 GMT. It is expected to post earnings per share of $ 1.41 down from $ 1.57 one year earlier, as a weakening economy leads corporate customers to choose slower, cheaper and less profitable ways of shipping goods.

* Industrial machinery maker SPX Corp is closing in on a roughly $ 4.2 billion deal to buy rival Gardner Denver Inc , as it makes progress in securing financing, a source familiar with the matter said on Tuesday.

* U.S. securities regulators on Tuesday outlined potential ways to reduce conflicts of interest at the country’s largest credit-rating agencies, Moody’s Corp , McGraw-Hill Cos Inc’s Standard & Poor’s, and Fimalac SA’s Fitch.

* Google‘s Motorola Mobility unit cannot assert a patent against Apple Inc which covers a sensor that stops phone users from dialing wrong numbers on touchscreen devices, a U.S. trade judge ruled.

* The Federal Trade Commission is unlikely to finish its investigation before January into whether Google Inc abused its power in the search market, the New York Times reported, citing people briefed on the investigation.

* Oracle Corp’s quarterly profit beat Wall Street expectations on strong software sales growth, suggesting that the approach of the “fiscal cliff” has yet to crimp corporate spending on technology.

* Pharma group Pfizer plans to cut about 20 percent of its sales force for primary-care drugs, Bloomberg News reported, as the pharmaceutical company copes with the loss of a patent for top-selling cholesterol drug Lipitor.

* Time Warner Cable , the second-largest cable TV distributor in the United States, said on Tuesday it is planning to drop arts-focused cable channel Ovation, citing its low ratings relative to the cost of carrying the network.

* Accenture, the technology outsourcing and consulting company, reports first quarter results after the market close.

* The Dow Jones industrial average <.dji> rose 115.57 points, or 0.87 percent, to 13,350.96 on Tuesday. The S&P 500 <.spx> gained 16.43 points, or 1.15 percent, to 1,446.79. The Nasdaq Composite <.ixic> added 43.93 points, or 1.46 percent, to 3,054.53.</.ixic></.spx></.dji>

(Reporting By Francesco Canepa; editing by Patrick Graham)

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Comet stores open for final day

18 December 2012 Last updated at 02:45 ET

Comet stores are to close their doors for the last time on Tuesday, bringing the failed electrical retailer’s 79-year history to an end.

Of the 236 stores the firm presided over when it went into administration last month, only 49 are still open.

On Monday, administrators Deloitte said unsecured creditors would get back less than 1% of the money owed to them.

The chain’s collapse will also cost the government £49.4m in redundancy payments and foregone tax revenues.

The redundancy money owed to thousands of former Comet workers totals £23.2m and will be paid by the government’s Redundancy Payments Service (RPS).

Meanwhile, £26.2m is owed in taxes to HM Revenue & Customs (HMRC), which is one of dozens of unsecured creditors of the retailer who are owed a total of £233m, none of which will be repaid.

Other unsecured lenders reportedly include landlords owed £135m in rents and other claims, manufacturers unable to reclaim goods delivered to Comet on credit worth £6m, and various other claimants owed £66m, such as ITV and Google, which had reportedly not been paid for advertising.

Big losses

The total hole in Comet’s balance sheet by the time it was wound up had reached £311m, according to Deloitte’s estimations.

Comet’s secured lenders will also be stung by the firm’s failure, receiving only £50m of the £145m they are owed, as the assets on which their debts were secured could not be sold off at a high enough price.

The company’s main secured lender is Hailey, the company set up by private equity firm OpCapita in order to buy up Comet from Anglo-French retail group Kesa last year for a nominal £1 payment.

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Founded in 1933 as a business charging radio batteries

Opened its first store in Hull in 1968

Bought by Woolworths and B&Q owner Kingfisher in 1984, which expanded Comet into one of the UK’s best-known retail brands

In 2003 Comet became part of Kesa Electricals, after Kesa was demerged from Kingfisher

It was announced in November 2011 that Comet would be sold to private equity group OpCapita for just £1

OpCapita was also given £50m by Kesa as part of the deal

However, OpCapita failed to turn around Comet’s fortunes, as the company continued to suffer from the fall in UK consumer spending during the recession and the big growth in online rivals.

Deloitte also revealed on Monday that Comet’s losses in the year to April totalled £95m, while its revenues slumped by £200m.

In the subsequent five months, Comet lost a further £31m.

Towards the end, insurers refused to guarantee suppliers, who in turn refused to extend credit on sales to Comet in the run-up to the crucial Christmas sales period.

Comet’s demise is one of the biggest High Street casualties of recent years.

The 236-store business, which at the time employed about 7,000 people, was founded in Hull in 1933 and began life selling batteries and radios.

The closure of the final Comet stores comes after Deloitte failed to find a buyer for the company.

It is unclear what will become of the Comet brand, with one possibility being a sale to an online retailer, similar to the fate of Woolworths.

Kesa Electricals was renamed Darty in July this year.

Despite having its headquarters in London, it focuses on the continental market – especially France, where it has more than 200 stores under the Darty name.

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Exclusive: Rosneft could raise $10 billion bonds for TNK-BP deal

Russia's Rosneft could raise as much as $10 billion on bond markets to finance its takeover of Anglo-Russian oil firm TNK-BP , potentially matching loans backed by future oil exports.

Bankers familiar with Rosneft's plans to finance the $55 billion deal to buy Russia's No.3 oil firm say the state-controlled oil major was strongly encouraged by high investor demand for a recent $3 billion bond offering.

Demand for the two-tranche Eurobond deal last month topped $20 billion, but Rosneft decided to limit the size, leaving investors clamoring for more, three financial sources familiar with the matter told Reuters.

"They can do a very large transaction in public markets," said one source acquainted with Rosneft's financing plans, adding that a multi-tranche deal of up to $10 billion could be launched before the deal's expected closing in early 2013.

Rosneft declined to comment.

Rosneft is paying relatively low interest on its most recent Eurobonds - 3.1 percent on $1 billion in notes due in March 2017 and 4.2 percent for $2 billion in bonds maturing in March 2022.

It is also talking to oil majors and traders including Shell , Total and Glencore to raise up to $10 billion, secured against future oil exports, sources have told Reuters.

The takeover would create the world's top listed oil firm by output, pumping the equivalent of 4.6 million barrels per day, twinning TNK-BP's cash-generating prowess with Rosneft's deep reserves of oil, which are sufficient to last a quarter of a century.

TOTAL CONTROL

In Russia's largest-ever acquisition, Rosneft will buy out British oil major BP's half stake in TNK-BP for $17.1 billion in cash and 12.8 percent of its own shares.

CEO Igor Sechin this week signed a binding deal to buy the other half of TNK-BP for $28 billion in cash from a quartet of Soviet-born oligarchs represented via the AAR consortium. Full payment is to be made on closing.

The outright takeover will secure a windfall of TNK-BP dividends that have gone unpaid this year, while the target's low debt level would give the merged business a better credit standing than Rosneft's alone.

Even now, Rosneft's borrowing costs are already well covered by cash flows, with a net debt to core profit ratio of 0.91 on an annualized basis.

In its recent Eurobond prospectus, Rosneft said it would be able to draw on over $15 billion in existing cash resources at Rosneft and TNK-BP, covering a third of the $45.1 billion cash component of the takeover.

Rosneft also said it had received a commitment from a syndicate of international banks to lend it approximately $30 billion, including up to $7.5 billion in long-term financing.

In addition to the Eurobond program of up to $10 billion, Rosneft still has the capacity to borrow $2.4 billion from a $3 billion rouble bond issuance program, the prospectus added.

So-called off take finance is also mentioned: Rosneft has raised significant funds in the past in this way, including a $15 billion loan from China in 2009 as part of a major deal to pump oil via a new Siberian export pipeline.

Sechin, for his part, has highlighted possible non-core asset sales to help fund the TNK-BP, including Rosneft's minority stake in the Caspian Pipeline Consortium, which ships oil from Kazakhstan to the Black Sea.

Bankers say Rosneft could end up raising more cash than necessary to close the TNK-BP deal, which would help it cover the cost of launching new fields in the Arctic and a $25 billion program to upgrade its oil refineries.

The final size of the syndicated loan could exceed the $30 billion named in the prospectus, with $35-$40 billion potentially on the table from Western banks, and Russian banks also likely to chip in.

"The company did a road show, and it received commitments from bankers that exceed its financing needs," said a second source familiar with Rosneft's discussions with bankers.

"Bankers are queuing up, there is so much commitment and willingness to participate. I've never seen anything like it. They are fully covered from the western banking community."

Given investor demand for Rosneft exposure, syndicated bridge financing could be quickly refinanced into longer-term arrangements, bankers say. "The syndicated loan won't be out there for long," the first source said.

(Writing by Douglas Busvine; Additional reporting by Megan Davies and Oksana Kobzeva; Editing by Will Waterman)

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