manus: problems mount for toshiba over concerns of a right down at the nuclear unit. the group says the it will probably be in the billions. another bright spot, japan has a an industrial output rises the most in five months. an outflow fears, chinese authorities could be braced for renewed pressure on the currency as the convergent quota increases flight concerns for the pboc. ♪

anna: a very warm welcome to bloomberg daybreak europe, our flagship morning show. i'm joined by use of who is over into dachshund joined by yusuf who is over in dubai. yusuf: what caught my attention this morning, we are still in a low bond you'll situation after the holidays and people still struggling to get back. concerns are being set andifically between bonds inare up 235 basis points that spread. very mind this is from 167 basis points back in november. ofis of course an indication the lack of consensus among analysts when it comes to how

european core yields are going to evolve in 2017. there is of course the scenario for lower longer-term yields and flatter curves supported by the low inflation expectation and rising political risk and they -- bond scarcity. that's what keeps it interesting and very tense. anna: as we head toward the end of the year. let's show where we are on various asset classes overnight. .3%.sci asia-pacific up this is the first time we've seen an increase in seven days for the msci asia-pacific. mayans are low, for example in then, the topics $.45 below moving average. we will discuss it with our

guest. the oil prices in their as well, ti.n on w the oil prices up by 1.7% in interday's trading session case you were not engaged in the financial markets yesterday. opec and their 11 friends have agreed to trim production with it generally upward push on oil prices. looking ahead to the rest of the wednesday trading day internationally, you will see we are expecting to be fairly flat. we edged up yesterday .2% on the s&p, the nasdaq hitting yet another all-time high. angie: good morning to you. japan's industrial output rose the month ofe november, pointing to a suspected economic expansion in the fourth order.

production 11 point -- rose 1.5%. retail sales climbed from a year ago, the first gains seen since february. the world's second-largest economy showed improvement with gains across all industries according to the china beige book. revenues jobs in capital expenditures all improved from the previous three months while new orders were stable. deteriorating corporate cash flow remains a risk in the year ahead. u.k. house prices may eke out a modest gain as a pickup in inflation squeezes consumers. are stricter underwriting standards and it highlighted markets in london saying adverse of affordability means there will be a sharper slowdown elsewhere.

russian investigators are studying the flight data recorder from the military plane that crashed into the black sea on sunday. all 92 people on board were killed including members of the fame ensemble choir. disappeared from radar shortly after taking off from sochi on its way to military base in syria. the recovery of victims also continues. has visiteder abe pearl harbor, the first japanese leader in decades to tour the site since world war ii. he did not apologize for the strike which killed more than 2000 people. however, his visit match president obama's trip to hiroshima earlier in the year when obama likewise stopped short of apologizing for the use of an atomic bomb on the city. harrison ford has led a tribute to the star wars actress carrie fisher, who died at the age of 60. her asared opposite

princess leia in the star wars movies. he said she was one-of-a-kind, brilliant, original, honey, and emotionally fearless, he said. fisher suffered a heart attack are a flight from london to los angeles on ride a. news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. find more stories on the bloomberg at top . had more markets come online in asia today. let's see how they been holding up. the region ending a six-day losing streak and oil prices trading at a 17 month high helping along that sentiment. equities helped along by that strong rally were seeing in the philippines and indonesia. australia back in business,

closing at a new high for 2016, above 1%. adding to the gains led by software stocks, the cost befalling the most in two weeks and the second day lower for the shanghai composite. nikkeif swings for the 225. , and toshibaain the biggest drag on the regional benchmark. take a look at the again, given the softness we're seeing there. major currency so we against the dollar, are seeing real money sell on the tokyo fixed. were looking at oil, given that it's something that's been in focus today. brent slightly retreating from the high we saw on tuesday and gold on the up, up .3%.

that is the view here in asia. anna: thank you very much, sophie, joining us from hong kong. europe, moody's is reviewing the standalone baseline credit assessment saying it reflects its expectation that the bank will profile.ts credit the ecb said the bank needs 8.8 million euros in capital to fight this the central bank said it does consider the letter to be solvent. an italianom newspaper said the italian state contribution could total 6.3 billion euros, with the rest coming from bondholders. currently suspended from trade. joining us is our guest host for this hour, charles, senior economist.

great to have you on the program this morning. we approach the end of the year and as always, there is one story that keeps people busy, certainly keeping the ecb busy right now. they haven't ecb deadline at the end of the year and that is fast approaching. the ecb has put a new number out there as to how much capital the bank to raise. how nervous does this make you? >> it is a concern regarding the italian banking sector in general. smaller lenders seem to be having some issues. the italian banking sector has the highest share of all of europe. a climate ofeates uncertainty on that whole spectrum. yusuf: you mentioned the smaller lenders. enough,llion euros

given what is at stake? >> what is at stake here, at ais point, is not necessarily solvency issue, is more of a liquidity issue. it is still manageable, but the question is, how much new money , how muchovernment will it strained the relationship with other european countries and hearing that package.as a rescue anna: they're calling it a cautionary recapitalization. that is the difference in getting this through the various legal hoops they have to get through based on new allocations. it's to be expected because there are different views on the way the banking system should be treated right now.

it's going to be a fine line for the italians to walk. >> it will be a fine line because they also need to be very careful of who pays the cost. they know that if they go too much into the debt folder and reducing the equity of some of the retail investors that will have a lot of backlash on them, especially in the year when we could have an early election in italy. there's a lot of ramifications in the banking situation. yusuf: i'm listening to a lot of your scenarios. it up a chart to see how investors felt on monte paschi. this is the price-to-book ratio pulled up on the bloomberg. ande added deutsche bank some of the stocks represented for financials. case, what is your base what are you expecting in 2017

terms of how the italian financial story is going to play out? i'm not a bank analyst, so it's hard for me to have a proper and complete view, but we governmenthe italian that they will want to go into a precautionary recapitalization, as they call it. at this point it's not a solvency issue, it is a liquidity issue, and they were probably have the backing of the european commission to do that. they will probably have, again, one of those situations where they will have some kind of agreement to go around some of -- they will probably kind of cell through it, but it will take time. it will continue to be part of the news for months to come. more in certainty

going into the early part of 2017. anna: the eurozone already has a lot to deal with in the political scene, certainly. we can already put those in our diaries, the pressure points of concern for the markets around those big elections. as we look into 2017, what are as axpecting from the ecb result of all the political testing that is going to happen? >> in terms of the economy, it's interesting. the number should be similar to what we had last year, between .1 and .2%. we don't expect a big acceleration in terms of growth. ecb is more for the where does inflation go. base metals and other commodities are going higher. we should see some inflationary expectations in the headlines.

they have to bring that into account. those said, you have all political events coming up, elections, most likely an italian election at some point this year. that may start to filter into the business confidence. how do you expect the ecb to navigate these waters? we have the reflation story on going with a higher oil prices and broader commodity prices as well. if you had to pin it down as to how the ecb is going to deal with that, what would your call be? >> i think in a way, the ecb sets at the table really nicely at the december meeting. tapering, but they've kept it very flexible. if they need to increase because

political uncertainty is too high, they can react. themselves a lot of flexibility to adjust to the economic conditions. the results you describe there are what we heard from the ecb and from the fed. and the contrast between the two, let's get back to the chart restarted this hour. it seems to be gathering momentum. a lot of this is the u.s. dollar story, the fed story expectations around where central-bank policy goes in the united states. there's also the contrast with what were hearing from the ecb at the moment. what is driving a lot of divergence between 10 year yields is also the contrast in terms of the policy mix between the two countries. you have tighter monetary policy in the u.s., still lose monetary policy in europe, but you also have a

contract and fiscal policy. you have more expectations of big fiscal stimulus in the u.s. with donald trump coming into power in january. and the contrast in europe, there's no talk of fiscal policy. anna: expectation seems to be muted for most of the economist. >> there's no big change in terms of structural deficit, no one seems to be pushing for more new money going into the economy. the only country with saw doing that is germany but it's more on the migrant issues. anna: thank you very much. coming up on the program, japanese industry gets a boost and export volumes rebound

sharply. we are live in tokyo. what is in store in the year of the rooster? over there toead assess the economy for the next 12 months. this is bloomberg. ♪

yusuf: it's 6:20 in london, 10:20 in divine and it's almost the end of the trading day in hong kong. we've seen volumes come back quite substantially today, a 10% difference in terms of the average volume. the dollar- just below the 6.96 mark. especially with where the fed is going in the rate hike. let's get the bloomberg business

flash now. toshiba has fallen by's daily thet say it met the cut value of acquisition by billions of dollars. the possible write-down falls the acquisition of a nuclear construction unit bytes westinghouse division last year. there have been arguments over new nuclear projects in the u.s. which are years behind schedule and over budget. toshiba has lost a third of its value since returning from the holiday break. >> we are yet to determine the final write-down, but it could be as much as billions of dollars that may affect our earnings. we apologize to all of our stakeholders on this matter and out would like to ask your continuous support for us. >> bp will pay 1.3 billion u.s. dollars for the network of australian petrol stations. the london-based energy country will acquire 527 fuel outlets

that are currently -- the deal will submit bp is one of the country's biggest fuel providers . a record $853 million fine on qualcomm, the country's are trade commission said the company license to only mobile --ne makers did not properly it threatened the u.s. chipmaker's most profitable business. qualcomm called it unprecedented and insupportable, saying it will appeal the decision. that's your bloomberg business flash. let's talk about japan. japan's industrial output rose the most in five months in november. export lines rebounded sharply, pointing to an unexpected economic expansion in the fourth order. production rose 1.5% from a month earlier. retail sales climbed from a year

earlier, the first gain since february. henry joins us now, japan's economy reporter. great to have you on the program. the data is up but still below expectations. tell us what we learned about japan. >> on the manufacturing front numbersefinitely up the , a solid results for november and rejecting even stronger numbers in the months ahead. the government upgraded its view of the sector to continue to show improvement. strong,ales were certainly encouraging. data came outand, on household spending showing an unexpected decline in november. on the consumer spending front, still a mixed picture. yusuf: so here he come in terms of other data, it's been a mixed

picture. the life of make the boj any easier, does it? are there any signs of optimism here? sure, the domestic demand is gaining traction, export shipments in november were solid. obviously the yen has declined quite a bit in the last couple dueonths and that should be to stronger results. at the same time there's the mystic stimulus that will be working its way through the economy. pointing to growth in the months ahead, modest growth at least. much henry, thank you very there from tokyo. is with us, let's talk about japan and the unexpected

export stress we've seen in these numbers coming through, even without the full extent of the yen weakness post donald selection being factored in. exportee strength in the story now, it looks to get stronger, doesn't it? >> it has over the past six months. in recent months, the asian region has been stronger than most analysts had been expecting that's probably having some spillover into the japanese economy. , but were be helping only back to the level we were about a year ago, so it's not necessarily that much of a push higher at this point. what is interesting is, i look at the data and the reality is that with a central growth rate of .2%, it doesn't take much to turn things around for japan. what do you expect going into

2017 in terms of boj strategy and how that is working out for them? >> i think the boj has laid out very nicely what they want to do next year. they will continue to do their bond purchases and continue to keep their target for the 10 year yield. them into a sets flexible approach to monetary policy where they can keep yields low but still provide liquidity to the market. havee flipside, again, you a fed who will be tightening monetary policy and that rate divergence will continue to create some upward pressure on the dollar-yen. anna: charles, thank you very much. down asies coming industrial production is rising,

the picture point to something a little more positive at the end of the year. next, china's not so happy new year. could currency and liquidity worries mean a bumpy start to 2017? this is bloomberg. ♪

welcome back. it's 6:30 here in london. it's the afternoon in tokyo. 117dollar against the yen, point 55 is where we trade. not a great deal of movement in the dollar and the dollar-yen being fairly typical. a new edition of daybreak is andlable on your mobile bloomberg. the cover story is about russia. that's where money managers are areing and develop markets focused in 2017, apparently. centered on the markets and where the political climate is

improving. from higher u.s. borrowing costs says stoll policy announcements, but some are less enamored by russia, of course. yusuf: absolutely. the nest or -- next-door he is the white house plans to announce punitive measures against countries for interference in the election. the response is expected to include economic sanctions, diplomatic steps and covert action. anna: interesting to see how things shifted -- under president trump. 1.29 u.s. it will pay dollars to buy more than 500 gas stations across australia from will work. that can make the u.k. oil company one of the nation's biggest will providers. the deal includes a long-term strategic partnership between the two countries to preserve

incentives for customers. we heard recently about how this is the time to grow again in the oil market. wti.are down .10% on yusuf: let's cross over to china. it could be a grim year ahead. the country's market have liquidity fears with a conversion quota on jen reversed in cash demand rising for the lunar new year at the end of january here's what to the biggest names in banking had to say about china directly. it's anssue in china, economy of complexity. can you make the transition of change from a heavy industry infrastructure investment led export led economy to a consumer driven, technology, research and development economy smoothly?

there were clearly some policy bumbles back in august of last year and the end of last year and beginning at issue. there was a failure to communicate intentions of the market. against that backdrop, the actual economic activity was very good. capital is fleeing faster than a lot of people would have expected. that we show you some of the clues i found on the bloomberg. this chart showing transaction yuan, the highest since april 2014. let's get more perspective on the story from our bloomberg china reporter. what does the year end mean for chinese markets? >> we all know that it's a tougher time for chinese markets and then you have tax payments

and this regulatory assessment for banks, and both of them tim to tighten the money market. this year it has been especially to because as you all know, the dollar has been rallying. elliott -- to theveraging, that is giving pboc a really strong incentive to push of those rates as well. betterso will it be after the countdown on saturday? what are the analysts saying? >> the first challenge chinese policymakers are going to face is the reset of this $50,000 fx conversion quota. what analysts are concerned about is that there will be a rush to sell the local currency on january 1. there is also chinese new year which falls earlier than usual at the end of january this year. what this means is that companies and families will be hoarding cash for guests and bonuses, which is great for all

of us in greater china, but maybe not so great if you on bond or stocks. it seems like it could be a cheerless countdown to saturday for chinese market at least. anna: thank you very much, what to expect as the go into 2017 in china. charles is still with us on the set here in london. i have a chart similar to what .usuf was trying to illustrate this is the weakening of the chinese currency in september through december. the pboc seems very careful, they want to defend the currency perhaps theybut want to stand in front of a moving train also. what is it going to be from the chinese around the currency into 2017? what do we need to be aware of?

on their balancing act side. you have continued pressure on one side but continuing strength on the u.s. dollar side that will push for some weakness and higher dollar in china. it's been pushing in that general direction for a weaker chinese currency. on the flipside you still have a lot of risk on the economic side. we've seen a lot of leveraging our the economy has been leveraging a lot in the past few years. growth has been driven by more and more borrowing, more concerned that the borrowing is unsustainable and could create some type of crisis situation. on the flipside also you have in party congress sets up the fall. you can expect the authorities to be wanting to have growth as we get into those events later

this year. so all those events will push in different directions and will make for a very interesting 2017. china is a quintessential part of any 2017 outlook. you've talked us through some of the topline risks. if you had to nail it down in terms of whether the liquidity situation is going to get worse before it gets better. could getably slightly worse in the next few months. as was said in the report, you have to read that in terms of the allocation of quarters for conversion. different liquidity demands but you could have some tension early into the year. further intot 2017, i think investors will continue to look at what is going on in terms of financial stability, do we continue to have concern regarding the

leverage we have in the economy? chinait's partly in story, partly a u.s. story with what happens with the chinese currency. china wants to focus on a basket and the u.s. administration has to focus on what the chinese currency is doing to the u.s. dollar. what are you bracing for in 2017? fore heard a lot of things markets and investors to get excited about with donald trump, .s evidenced by the euphoria we've heard that side of the story. we've not yet had the negative, protectionist impulse, the labeling of china as a currency manipulator. is that going to happen? >> the market has been open sing on the good parts of the trump presidency, bigger investment

structure and how that will have an impact on the u.s. economy. put that market is not much thought into what will be the actual spillover to the rest of the world, we have to take into account that fiscal stimulus in the u.s. will be positive for the economy, but could bel spillover much smaller than what some investors have been pricing in. on the flipside you have all this risk rate regarding trade. wildcard at this moment. will take itth us, to another conversation. u.k. house prices may only eat out a modest gain next year as economic growth weakens and inflation squeezes consumers, according to halifax, which sees demand easing in 2017 as stricter underwriting standards restrict investment.

it also highlighted the market in london saying the capital will see a sharper slowdown than elsewhere. let's get back to charles and talk about the u.k. story. halifax talking about the impact of the brexit vote and what pound moves and import prices will do to the u.k. consumer. what are your expectations for 2017?k. economy in they are in a relatively strong position. the economy is doing much better than most analysts would have expected just in june of last year before the brexit vote. it has been doing quite well. the question is, brexit has not really happened yet. the question is what will happen once article 50 is triggered and the uncertainty starts. you'll have that increased uncertainty that will happen,

but then the question is, what happens with inflation and how much of that starts to en to consumers purchasing power? yusuf: it's been the lowest annual average since 1985 for the british pound. chart on thehis bloomberg just for additional context. where does this currency go in 2017? what is your call on his, can it go any lower, or is this a good time to buy? we are still in that phase where the economy is still working relatively well. , inflation is ticking up slightly. should still be slightly supported for the pound in the first few months of 2017. after that you'll start to have ,ore concern regarding brexit and if we have a hard brexit.

on the flipside, you had that relatively strong u.s. dollar that will continue to put hard downward pressure on the table. king, weing to another heard from mervyn king speaking to the bbc about how britain needs to be more self-confident when it comes to the opportunities it can get from brexit. what do you expect from the politics around this, the negotiations look set to take months or years into the future. there will be a lot of cards played close to the chest. we want know exactly what we will be dealing with. what are you going to be looking out for, charles? >> what kind of ultimate deals do we get? is it completely out of the union, but on the flipside, but 2017, we alsoe

have a lot of european partners that are facing election. the germans and french are facing elections this year, so they will be busy getting reelected and their own situation at home. anna: do you think the more populist governments would be supportive of the brexit court, because some of them -- do you think they just want to punish to leave?r wanting what with the populist impulse result in? >> if it's the current government that's being played more centrist, you will continue to have hard positioning from the european partners. then if you get the populist movement coming into power, then you could have some more opening, probably in terms of

immigration and the free movement of labor. at this point, it still seems to be more likely you'll have the hard conditioning in european countries. in terms of what the boe might or might not do, likely accommodating despite rising inflation? that's something morgan stanley highlighted in a note. is that something you agree with? >> they will have to be accommodating. they will have to be careful to keep a lot of support for growth going into 2017, because we still don't know what will be the impact from this part of the negotiation. it will have a hit on confidence, but how much will it be? is it just a couple of points of growth, or actually a big shock on growth? that's where the bank of england will want to take a more

cautious approach. yusuf: let's get you a bit of a preview of what to expect on the program, with state elections coming up, can the prime minister say on message? bad year for brazil. we hear from an analyst to says it was the worst 12 months since the country returned to democracy. and no rooster booster for china, as currency and liquidity fears loom in the year ahead. we will widen out the conversation later on. stay tuned for that and plenty more. this is bloomberg. ♪

anna: welcome back. it's 6:48 in london, 1:48 in the morning if you are in new york. features and u.s. a little stronger at the start of the

trading day. we're expected to see a little bit stronger, new highs on the from all-time far highs on the other indices as well. >> toshiba has fallen bytes daily limit after saying it may have to cut the value of u.s. acquisitions by billions of dollars. they will write down acquisition of it new reconstructed unit by its westinghouse division last year. there have been arguments over new user projects that are years behind schedule and over budget. a third of itst value since markets return from the holiday break. >> we are yet to determine the final right down amount, but it could be as much as billions of dollars and may affect our earnings. we apologize to all of ours take holders on this matter and i would like to ask your continued support for us. pay $1.3 billion u.s.

for will worst network of australian petrol statement -- stations. they will acquire 503 seven fuel outlets that are currently as well by rivals development sites. the deal will submit bp is one of the country's biggest fuel providers. airbus struggles with the withe-decker are deepening delivery delayed over the next two years. plan fors for emirates 2017 in 2018 will be shifted to a year later. to compensate, airbus said it for accelerate prospects orders from the superjumbo to our brand that failed to materialize earlier this year. delta airlines has scrapped in order for 18 boeing dreamliner that wasommitment inherited from the merger with northwest airlines.

have for the cancellation not been disclosed. delta is sticking with orders already in progress for 120 narrow body boeings. south korea's antitrust onulator has/a record fine hong kong. the country fair trade commission said the company license is only to mobilephone makers and did not properly negotiate the terms of its licenses. it's the latest in the history of government actions that threaten possible business. qualcomm called it unprecedented and says it will appeal the decision. that is your bloomberg business flash. for: thank you very much the details of all the stories you need to know about their from hong kong. increasingly toward the end of the year has been the strength of the dollar. this is something we've talked about many times here on "daybreak: europe."

levels the highest on raisesas the fed interest rates. of course donald trump wins the u.s. election. let's get to our senior economist here on set in london. as we look at the strength of the dollar as we approach the end of the year, i read a great story on the bloomberg is morning, one hedge fund manager saying it's become the only trade, the one everyone is talking about. what is your expectation around the dollar? charles: the dollar can continue to be well supported. the question is, does it continue to appreciate at the same pace? support has been given for fiscal stimulus that will allow the fed to hike more, but yet we've not had any concrete announcement in terms of fiscal stimulus from president-elect trump, so there is still a lot of uncertainty on that front.

on the flipside, what will be the feedback into the fed thinking? it's been a big appreciation and that will have some impact on growth and also on inflation. they will have to internalize that and reduce the amount of hike being needed, especially that trend continues. a top for the dollar, what about the top for the stock market? our investors likely to buy into what trump says about economic growth and what it does for infrastructure projects? are not waiting on clues as to where the protectionist rhetoric goes, we don't know that. >> the stock market depends on

what growth is doing. so far, fiscal stimulus will be positive, but again, we don't have any details. if we were to get big tax cuts on the business side, that would be positive. still, we are a bit short on details on that front. ist's where maybe the market tightening maybe a bit too much. maybe we're setting ourselves up for some disappointment. that will be key going into this year. it will take time before we can get a clear sign of the whole fiscal package. you'rehere is what probably asking yourself, charles, every morning. i put this up on the chart in terms of what some of these households in the united states are expecting. you're seeing the expectation about higher stock prices in a year from now, and these are levels we've not seen since the.com boom.

what does this tell you about the fundamental health of the u.s. economy? charles: it kind of tells me ist gradually, the economy actually doing better, at least on the consumer side. there seems to be a little less worry, but the question is, the jump in consumer sentiment was quite strong, so you wonder, is some of it due to the election and the hope that president -- if you be changing speak to americans there were some disappointment in terms of the election result, but there's also some hope that you will get some positive change for the economy. i think that is driving some of that improvement in confidence. some of that reflected in the record highs we are seeing in stock markets. the biggest story is in what happened in the year. the s&p sees its largest fluctuation since 2008,

reflected here in this bar chart at the side. it's a slightly outdated story has been the big surge in the s&p. charles: it has been a volatile year also for the dollar. we started the year with everyone expecting the dollar to do quite well, then we had some market jitters early in january. maybe we won't battle to hike is much as we thought, and that can set the tone until the election. the question is, could we get into that same situation? we know there's some risk in china. 26ld we get a reprise of when everyone is positive going into the year, but then some shock. anna: there's still time for everybody to change their mind. it seems to be an annual dance that we go to. charles, thank you. ahead, a bit of a

preview on what's ahead on the program. bridging the gap after brazil's biggest deficit on record. we will get you all the details. this is bloomberg. ♪

yousef: a sharp fall. the problems for toshiba after concerns over the nuclear unit. the hit will probably be in the billions the group says. another bright spot. export volumes rebound and industrial output rises the most in five months. of fear.tflow chinese authorities should be braced as the conversion quotas will reset on january 1. increasing capital, a slight concern for the pboc.

welcome to "bloomberg daybreak: europe." i am joined by anna edwards in l ondon. are returning. we hope you have cut your holiday short to do some trading. u.s. futures were called higher and you can see that on your w eif function. the european markets, you can see they are taking their cue from the other markets in the world. the ftse 100 called higher by seven points. and we can see some weakness there with the dax. what are you looking at, anna? anna: we are looking at the risk radar. we have the asian-pacific up by .3%. stocks are increasing.

this increase is the first in seven days. australia is back in the mix after the christmas holiday, helping volumes. the topix volume, 45% below their 30 day moving average. we have a lot of data out of japan and will get another update on that data. some of that is looking be said. l,e price per barrel of oi $53.80 is where we stand, down .2%. we were up 1.7% yesterday and this drop comes after we saw seven days of increases in the oil prices. futures, up by .2%. the nasdaq hit another all-time high and the dow, just over 100 points from that 20,000 mark. a little bit of breaking news coming through on the u.k. housing front. we brought you one housing story

from a market provider earlier today. today we have a u.k. housebuilder who say they are confident to deliver their plans for a final dividend by 2016. fromeal headline is coming the volume delivery. they say they see 2016 volume delivery lower than anticipated. land sales generated revenue of about 26 million pounds. they achieved a profit of about 7 million pounds in 2016. we will look out for any movement b in the share price for -- we will look up any movement in the share price for bovis homes. the volume headline was interesting coming through from the company today, issuing a pre-close update ahead of reporting their final results for the year. this is their assessment of where they are as we head into 2017. let's get the bloomberg first word news for you then now. japan's industrial output rose

the most in five months in november as volumes rebounded sharply from economic expansion in the fourth quarter. production rose 1.5% from a month earlier. retail sales rose 1.7% from one month earlier, the first game in since the very. yousef: improvement in the fourth quarter in the world's second largest economy. revenues, profits, jobs, and profit expenditures improved across the board from the previous three months. it are's were stable. -- new orders were stable. cash flow remains a risk in the year ahead. anna: russian investigators are studied the flight data recorder from the military plane that crashed on sunday. on monday to people on board were killed -- all 92 people on the board were killed. the plane disappeared from the

radar shortly after taking off. the henrit had the field after a flight from moscow to syria. ledef: harrison ford has tributes to the "star wars" actor carrie fisher, who has died at the age of 60 years old. fourlayed princess leia in "star wars" movies. and says she was funny emotional. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. you can find more stories on the bloomberg at top . let's cross over to asian markets to see how they have been holding up. reporter: thank you. lackluster volumes before the year end, but asian shares are

rising for the first time in seven days. oil prices are trading near a 17 month high. we have seen upward climb and regional equities. we also see a rally in the philippines, adding over 2%. the asx closing at a new high for 2016, adding 1% there. , closingt the cospi at .9% lower. and a second day of lowering for the shanghai composite. energy and i.t. shares have dropped. .6%, this asp health care and i.t. shares helped the index. the showdown between the tata group intensifies. looking at the nikkei, closing in the red.

a little changed after a softer yen. the volume on the index was 44% below the 30 day average. toshiba, no surprise, the biggest drag on the nikkei, and original benchmark. the stock losing one third of tuesday's adding to 12% drop. and the cost to ensure toshiba's bonds ahas widened. the company will consider equity financing to offset that nuclear impairment loss. we will be checking in on ashiba as the day wears on, well as what happens tomorrow when we come back to trade. back to you. anna: thank you. we will keep watching that toshiba story this morning. by .3%., up

let's turn our attention now to latin america. accountsfiscal deteriorated in november with the primary budget deficit reaching $12 million following a one-time surplus from a tax program. brazil is on its way for posting its worst budget gap this year. here now to talk more about brazil and the region in 2017 the head of latin america at mabel croft. thank you for joining us at "daybreak" in london. it has been a really volatile period in the politics of brazil. how is brazil now compared to where it was earlier in the year? period, we were very focused on the fate of dilma rousseff. >> at the moment we have a sense

of more stability, but there might not be more stability when we look at what has been happening over 2016. it has been a political roller coaster. , we have seen a government that has been largely unable to pass any major reforms . failed through congress. the political agenda has been really dominated by a series of scandals and the government has lost six ministers in six months. it has really been on the back foot since it took power. anna: it seems stable, but maybe not quite so. yousef: again, you mentioned they were able to pass most of the reforms they were keen on passing. talk to me about the credibility of these reforms and their impact. >> the reforms that have passed or that you fear once to pass. in order to bring down the fiscal deficit, the government

has to pass some structural labor laws and pensions. the pensions reform is the achilles heel for the government and congress next year because it is such an unpopular reform. it promises to bring people out .n the street many of the congress members will be responsible for bringing those changes in. anna: and how secure is the leader? if we are reminded, we see this campaign, these allegations about illegal campaign financing back in 2014. of course, this is part of the story around dilma rousseff, but this was a joint ticket. even though we have had this hand over of power to temer, as if a page had been turned, perhaps things could still be volatile into next year. >> the story continues on the other side of the page.

we have turned the page, but in 2017, the campaign financing investigation will be the main threat for temer's government. we have seen over the last 24 hours the electoral courts are actually moving into the raiding companies to look for evidence for illicit campaign financing. what will be interesting to look for is whether the court decides to split the investigation and investigate dilma rousseff on the one hand and temer on the other, or whether they investigate them together. if they investigate them together and find out there were violations to the law, they an terminate the entire mandate. if they separate them, we are in uncharted waters. yousef: it has been a wild year for brazil, but it has been a

difficult year for south america in general. what has been the key highlight here for 2016 and as we get into 2017, as for other economies that could offer opportunities for people looking to get those yields in. >> we had a very difficult year in terms of the major economies in the region. but th positive story might be coming out of argentina. ministrationhe was able to have a first year without a major arrest and was able to pass significant reforms, that was able to go back into international markets and a start showing a country that wants to be more open, more transparent, more ordered, that could pay some dividends in 2017. but that is not an easy story either antigovernment needs to show some economic -- an easy

story either and the government needs to show some economic yields if it is going to perform in the elections that is facing in october. anna: we will pick up on the argentina story in a moment. about this brazil story, bloomberg shows where the currencies have traded in relation to the u.s. dollar year to date. a lot of the expectation around brazil and the impeachment of dilma rousseff boosted the currency. the story has changed toward the latter part of this year with dollar strength being a dominant theme for all investors globally, not just those in latin america. >> when we are looking at markets, we are seeing a very different story from when we are looking at the politics on the ground. the large part of that is because the markets are expecting the brazil y to start

growing again in 2017. investors have cashed in on cheap assets and have taken advantage of the opportunities that the recession and high levels of political volatility created on the ground. , head ofimena blanco latin america verisk maplecroft, thank you. no rooster booster for china as currency fears loom in the year ahead. we talk about what the year ahead holds for china, next. this is bloomberg. ♪

anna: welcome back. this is "bloomberg daybreak." x futures remain completely unchanged at the start of the trading day. low volumes this time of year.

we saw the christmas break and new york break. berlin or paris. let's get the bloomberg business flash. toshiba said it may have to cut the value of a u.s. acquisition by billions of dollars. the possible write down follows the acquisition of a nuclear unit last year. there have been arguments over new nuclear projects in the united states, which are years behind schedule and over budget. toshiba has lost 1/3 of the market value since the market return from the holiday break. >> we are yet to determine the final write down, but it could be as much as billions of dollars and could affect our earnings. we apologize to all of our stakeholders on this matter and i would like to ask for your continued support. yousef: bp will pay $1.3 billion for australian petrol stations.

the london-based company will acquire fuel outlets that are currently supplied by caltech al straley a. bp is one of the country's biggest fuel suppliers. anna: airbus struggles with the double-decker, with one dozen deliveries delayed over the next couple years. handovers of six planes per year will be shifted to one year later. to compensate, airbus said it will accelerate cost cuts. this comes as expected orders failed to materialize earlier this year. yousef: delta airlines had to scrap in order for three boeing jets valued at $4 billion. part of the merger with northwest airlines.

delta has orders in progress foalready. gain,a record quarterly rising 40 cents. it is trading near $80 per metric ton. still, brising 40anks, includins and a citigroup, say there is a potential for losses in the year. that is your bloomberg business flash. let's talk about china now. it could be a grim start to the year for china. the markets are filled with fx and equity fears. the cash demand is rising before the lunar year. here is what two of the biggest names in banking had to say earlier this year about china's direction. >> the issue of china is, with an economy of that size, can you make the transitional

change from an export led economy to a consumer driven, technology savy, research and development economy smoothly? >> they were clearly some policy theles last year and beginning of this year. there was a failure to communicate intentions with the market about the underlying equity market and currency markets, etc. against that backdrop, the actual economic activity is very good. anna: a couple of big banking voices on the china story. joining us now to look at next year is our bloomberg china reporter. meandoes the year end for chinese markets? we get this reset on january 1. walk us through that. >> exactly. the year end is typically a

tough time for the chinese money markets because you have tax payments and regulatory assessments that usually heightens liquidity. as you mentioned, people are very concerned about what is going to happen on january 1 because that is when this $15,000 fx conversion quarter resets. there is concern that a lot of people will rush to the banks, maybe on january 1 or january 2, to try to convert their money into dollars. the yuan depreciation has been quickening. yousef: what is key here is whether things will be better after the countdown on saturday. what is the feedback you have been getting? >> we have already talked about the $50,000 quota, which resets on sunday. the chinese new year is actually earlier than usual in 2017. it will be in the last week of january. usually what happens during that an unusuallyre is

high demand for cash because families" brit have to keep more money -- because families" brits have to keep -- because families and corporates have to give more money to pay for the holidays. for joining us, with analysis from hong kong on the china story. let's continue our focus on emerging markets this morning. head oflanco is the verisk maplecroft in latin america. we discussed brazil. you sounded more optimistic on argentina. we have seen interesting news from argentina in the recent days with the finance minister there of course, being fired. last 24ying in the hours that he has left the economy ready for takeoff. what is your assessment? >> i think argentina has been a

cautionary, but optimistic story. none of the government's promises for economic growth in the second half of the year have panned out, and there is no guarantee they will. that thethe assessment economy was left iready to grow is a fair one. the administration had to pass a high number of reforms to get rid of the constraints it had inherited. and you know, a very tough situation, in terms of unraveling energy subsidies, which pushed up inflation, and the government has to bring that back down, and it has done to some degree. so, there is hope that in 2017 all those dividends could actually come true. good andope is all

well, but what are you tangibly expecting in argentina, when you look at the asset classes good d and the reforms they have done? what would you highlight? >> i think some of the main reforms and some of the main opportunities will come in from the traditional sectors, like hydrocarbons. we already can see a lot of interest and investment commitments for unconventionals. but we are also seeing a lot of government plans to stimulate small and medium-sized companies, which at the end of the day, are the engine of the local markets. those we put all of together with infrastructure and investment plan that will come together in 2017 ahead of minte ons, weectti expect the economy to grow. anna: the fact that we saw the finance ministers paying for the

lack of success of the government, you have outlined that, does this herald anything new? are new ideas needed? or has the groundwork already been laided? >> one thing to highlight is the wasomic bond and yes, he removed for failing to deliver that, but also, there are personal and political issues that we need to look at when it comes to his removal. a lot of that has to do with the fact that he likes to work with teams, so he can delegate to a number of people. that did not really seem to fit in within the economic team that was made out of five ministers. it was really an issue of, was he able to work with the other -- with the rest of the team, and he could deliver?

and the answer that came from the president was, not so much. anna: he says he will stay in contact with the economy minister. thank you for joining us, jimena blanco. this is bloomberg. ♪

very warm welcome to "bloomberg markets," the european open. the land of rising production. japan's industrial outlook increases the most in five months. retail sales also up. but after disappointing inflation, a mixed picture for the world's third-largest economy. the u.k. a nightmare. toshiba losing 1/3 of its value since the holiday break. we report from tokyo.