Milan outperforms as European stocks end week on positive note

(ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon)

* Pan-European STOXX 600 index up 1.6 pct

* Italian lenders biggest gainers in strong bank sector

* Autos top sectoral gainer after China data

* Telecoms firm TDC soars after takeover approach

By Danilo Masoni and Atul Prakash

MILAN/LONDON, July 8 European shares rose on Friday, ending a week of losses on a positive note with Milan outperforming thanks to a rally in its battered baking stocks.

Equities got a boost late in the session from a stronger-than-expected jobs report in the United States.

The pan-European STOXX Europe 600 rose 1.6 percent but still ended the week with a loss of 1.5 percent due to persistent worries over the economic and political fall-out of Britain's vote on June 23 to leave the European Union.

"The concerns of the Brexit are reflected quite well in share prices so the question is how much pain (there) will be before a relief. It's probably still a little bit away," Gerhard Schwarz, head of equity strategy at Baader Bank in Munich, said.

"It will also depend on a rebound in banks as the systemic risk due to Brexit is certainly a concern and credit risks coming from Italy are weighing on the sector," he said.
Milan's blue chip index outperformed the region to gain 4.1 percent with banks Intesa Sanpaolo Banco Popolare and UniCredit posting gains of between 8.7 and 18.4 percent.

Capital weakness and a mountain of bad loans have put Italian banks at the centre of investors' immediate concerns following the shock UK vote. But traders on Friday said there was some optimism that a solution to help Italian banks cut their soured loans could be reached.

"We have to monitor the situation very closely but if and when we'll get a solution, it will be a very interesting opportunity for financials but also European equities in general," Saxo Bank head of equity strategy Peter Garny said.

The European banking index, the worst sectoral performer since Brexit and so far this year, rose 3.8 percent.

The auto index rose 3.9 percent, making it the biggest sectoral gainer after data showed passenger vehicle sales in China rose 19.4 percent in June.

Germany's auto-heavy DAX index rose 2.2 percent with BMW, Daimler and Volkswagen gaining 3.6 to 4.3 percent.

Shares in Danish telecoms group TDC jumped more than 9 percent after it said it had rejected a potential takeover approach believed to be from private equity firm Apollo Global Management.

Reuters (Reporting by Danilo Masoni; Editing by Mark Heinrich)

Bank earnings loom large as stocks near record

The focus on Wall Street will shift to corporate earnings next week after a strong June jobs report on Friday gave investors confidence that the U.S. economy was on stable footing and left the S&P 500 within a whisper of a new closing record high.

Earnings next week are expected from big banks JPMorgan Chase (JPM.N), Citigroup (C.N) and Wells Fargo (WFC.N) as well as other financial companies such as BlackRock (BLK.N) and PNC Financial Services (PNC.N). Earnings for the sector are expected to decline 5.4 percent.

If bank earnings come in better than expected, the S&P 500 .SPX is likely to push through its record highs set in May 2015 after several failed attempts, as Friday's jobs number helped push the benchmark index to less than one point from its closing record high of 2,130.82.

"Banks are definitely in the spotlight," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York. "There is some trepidation in the market going into this earnings season, the quarter economically was not particularly strong."
Financials have been the worst performing of the 10 major S&P sector groups this year, down nearly 6 percent, as they were hit by reduced expectations for a U.S. interest rate hike by the Federal Reserve and uncertainty in the wake of the vote by Britain to leave the European Union, or "Brexit."
Second-quarter earnings overall are expected to decline 4.7 percent, according to Thomson Reuters data, the fourth straight quarter of negative earnings, but up slightly from the 5 percent decline in the first quarter.

Investors will be looking for confirmation this quarter that earnings are starting to turn, with analysts anticipating a return to growth in the back half of the year, starting with expectations for a 1.8 percent increase in the third quarter.

"What we are hoping ... is that we are starting to see that we have stepped out of the trough in terms of the economy from the first quarter," said Jim Davis, regional investment manager at U.S. Bank Private Client Group in Springfield, Illinois.

"That second-half pickup could translate into some better earnings outlooks." The current price-to-earnings ratio for the S&P 500 is an elevated 18.2 and an increase in profits would make stocks cheaper.

Other notable earnings expected next week include Alcoa Inc (AA.N), Yum! Brands (YUM.N), Delta Air Lines (DAL.N) and CSX Corp (CSX.O).

The end of the week will give investors some insight on the health of the consumer, manufacturing and inflation with monthly retail sales, the consumer and producer price indexes, the Empire State manufacturing survey and a preliminary reading on consumer sentiment.

Yet even with stocks scraping up against a record high, some investors remain cautious in light of uncertainty about the Fed's plan for rates, upcoming U.S. elections and potential ripple effects as the UK begins to move forward with its exit from the European Union.

"It just strikes me there are just too many things that can go wrong over the next couple of months," said Phil Orlando, chief equity market strategist, at Federated Investors, in New York.

Reuters (Reporting by Chuck Mikolajczak; Editing by Linda Stern and James Dalgleish)

Saudi energy minister says oil market is balancing

Saudi Arabia's energy minister said on Sunday the oil market was becoming more balanced and prices were stabilizing.

Khalid al-Falih said Saudi Arabia, the world's biggest oil exporter, would always strive to stabilize the oil market, a statement by the energy ministry said on Sunday.

"In doing so, the Kingdom secures the flow of oil supplies as it retains a spare production capacity," the minister, attending a climate meeting in Berlin, was quoted as saying in the statement.

His remarks echo earlier comments made on Monday by the Saudi minister in the Saudi city of Dhahran at a meeting with newly appointed OPEC secretary general, Mohammed Barkindo.

Reuters - (Reporting By Maha El Dahan. Editing by Jane Merriman)

Obama says Brexit talks must not harm 'wobbly' world economy

U.S. President Barack Obama said on Saturday he expected Britain to go through with leaving the European Union after last month's referendum and was concerned to limit the damage to the British, European and global economies from the move.

As a friend, ally and trading partner of Britain and of the EU, he said Washington wanted to see an orderly negotiating process and as close a relationship as possible in future.

"It's important that neither side harden positions in ways that ultimately do damage to their respective economies and ultimately to the world economy at a time when our world economy is still pretty wobbly in places," Obama told a news conference at the end of a NATO summit in Warsaw.

  

Reuters (Reporting by Paul Taylor and Robin Emmott)

Bin Laden's son threatens revenge for father's assassination: monitor

The son of slain al Qaeda leader Osama bin Laden has threatened revenge against the United States for assassinating his father, according to an audio message posted online.

Hamza bin Laden promised to continue the global militant group's fight against the United States and its allies in the 21-minute speech entitled "We Are All Osama," according to the SITE Intelligence Group.

"We will continue striking you and targeting you in your country and abroad in response to your oppression of the people of Palestine, Afghanistan, Syria, Iraq, Yemen, Somalia and the rest of the Muslim lands that did not survive your oppression," Hamza said.
"As for the revenge by the Islamic nation for Sheikh Osama, may Allah have mercy on him, it is not revenge for Osama the person but it is revenge for those who defended Islam."
Osama bin Laden was killed at his Pakistani hideout by U.S. commandos in 2011 in a major blow to the militant group which carried out the Sept. 11, 2001 attacks.
Documents recovered from bin Laden's compound and published by the United States last year alleged that his aides tried to reunite the militant leader with Hamza, who had been held under house arrest in Iran.

Hamza, now in his mid-twenties, was at his father's side in Afghanistan before the 9/11 attacks and spent time with him in Pakistan after the U.S.-led invasion pushed much of al Qaeda's senior leadership there, according to the Brookings Institution.

Introduced by the organization's new chief Ayman al-Zawahiri in an audio message last year, Hamza provides a younger voice for the group whose aging leaders have struggled to inspire militants around the world galvanized by Islamic State.

"Hamza provides a new face for al Qaeda, one that directly connects to the group's founder. He is an articulate and dangerous enemy," according to Bruce Riedel of Brookings.

(Reporting By Asma Alabed; Editing by Noah Browning and Janet Lawrence)

Protests over shootings block roads in U.S. cities, arrests made

BATON ROUGE, La./MINNEAPOLIS | By Bryn Stole and David Bailey 

 

Protests against the shootings of two black men by police officers shut down main arteries in a number of U.S. cities on Saturday, leading to numerous arrests, scuffles and injuries in confrontations between police and demonstrators.

Undeterred by heightened concerns about safety at protests after a lone gunman killed five police officers in Dallas Thursday night, organizers went ahead with marches in the biggest metropolis, New York City, and Washington D.C., the nation's capital, among other cities.

It was the third straight day of widespread protests after the fatal shooting of Alton Sterling, 37, by police in Baton Rouge on Tuesday and the death of Philando Castile, 32, on Wednesday night in a St. Paul, Minnesota suburb, cities which both saw heated protests on Saturday.

The most recent shooting deaths by police come after several years of contentious killings by law enforcement officers, including that of Michael Brown, a teenager whose death in the summer of 2014 caused riots and weeks of protests in the St. Louis suburb of Ferguson.
On Saturday evening, hundreds of protesters shut down I-94, a major thoroughfare linking the Twin Cities, snarling traffic.
Protesters, told to disperse, threw rocks, bottles and construction rebar at officers, injuring at least three, St. Paul police said. Police made arrests and used smoke bombs and marking rounds to disperse the crowd.
Protesters at the scene said police fired tear gas and rubber bullets. Police said early on Sunday they had begun clearing the highway of debris in preparation for re-opening it.

A march in Baton Rouge saw scuffles between riot police and Black Panther activists, several of whom carried shotguns. Louisiana law allows for weapons to be carried openly.

After a short standoff later in the evening, riot police arrested as many as 30 demonstrators and recovered weapons. Prominent black activist and former Baltimore mayoral candidate Deray McKesson was among those arrested.

Protests also took place Saturday in Nashville, where protesters briefly blocked a road, and in Indianapolis. A rally in San Francisco also briefly blocked a freeway ramp, according to local media.

Hundreds of protesters marched from City Hall to Union Square in New York. The crowd swelled to around a thousand people, closing down Fifth Avenue.

Some chanted "No racist police, no justice, no peace" as rain fell in New York.

"I'm feeling very haunted, very sad," said Lorena Ambrosio, 27, a Peruvian American and freelance artist, "and just angry that black bodies just keep piling and piling up."

New York police said they arrested about a dozen protesters for shutting down a major city highway.

(Additional reporting by Laila Kearney, Elizabeth Barber and Chris Michaud in New York; Writing by Nick Carey; Editing by Mary Milliken and Ryan Woo)

 

 

Sterling's fall could batter UK's fish & chips

By Martinne Geller

LONDON (Reuters) - Prices of salmon and squid have soared as disease and weather hurt global supplies, and British fish sellers say the Brexit-related drop in its currency may be the next scourge.
The British pound has fallen to a 31-year low on fears about the effect of the June 23 vote to leave the European Union, leaving it 13 percent weaker against the dollar.
That may make imports pricier, including the cod and haddock used by roughly 10,500 fish and chip shops in the 380 million meals they serve up each year.
Large retailers like Tesco (L:TSCO) and Asda (N:WMT) have long-term supply contracts and hedges that shield them from near-term volatility. But independent players -- which also include roughly 950 fishmongers, according to estimates by research firm Seafish -- are more exposed.
"We tried to buy some shellfish this morning ... and our suppliers advised us to buy now because the price is going to go up," Gary Hooper, owner of GCH Fishmongers in Bedford, England, said. "If I had a big freezer I'd buy it now."
Hooper spends at least 3,000 pounds a week on fish, including bass and bream from Turkey and Greece, tuna from Sri Lanka and swordfish from Brazil. He reckons shellfish costs could rise 20 percent, but knows he would lose customers if he tried to pass that on.
"What we have to try and do is switch the consumer into local fish," he said.
The vast majority of the fish Britons eat is imported, mostly from Norway and Iceland, while much of the domestic catch is exported. Many UK fishermen hoped a Brexit would free them from EU fishing quotas, but the impact on the sector, which has a large showing in pro-EU Scotland, is unclear.
FOREIGN FISH
Norway, the world's top salmon exporter, is benefiting from salmon prices that are 60 percent higher than a year ago, due to disease and a prevalence of sea lice in south America.
Supermarket chain Wm Morrisons (L:MRW) raised its salmon fillet prices "months" ago, and Tesco followed suit recently, increasing the price of 2 fillets to 3.50 pounds from 3 pounds.
Martyn Boyers, chief executive of the fish market in the northern port town of Grimsby, says the pound's weakness, which is also down about 10 percent against the Norwegian crown, could reduce Britain's lure as a market, even for cod and haddock.
"In the end, if the Icelandics and Norwegians who send white fish don't think the price they're getting is good enough, it won't come here at all," Boyers said.
Britain is Norway's third-biggest market for seafood, worth seven percent of total sales in 2015, with a value of about 5 billion Norwegian crowns ($591.90 million). Norway sells mostly salmon to Britain (3.4 billion crowns), followed by cod (600 million crowns) and haddock (450 million crowns).
"Those selling on the spot market will likely not see the current pound value as attractive and look for other alternatives," said Jack-Robert Moeller, director in Britain for the Norwegian Seafood Council. "But regardless of whether you sell on the spot market or with long-term contracts, a weakening pound will lead to higher import costs."
Fluctuating costs are par for the course at London's bustling and wet Billingsgate Market in the shadows of Canary Wharf's skyscrapers. Sellers there said fresh fish prices move every day based on supply, which is heavily reliant on weather.
One merchant who imports more exotic fish like tilapia and cuttlefish, said he moved prices in line with currency, while another said he hadn't yet seen much change, as most frozen stock had arrived before the big drop or was priced in euros.
Prices for squid were a notable outlier, nearly doubling in the last couple months as El Nino weather conditions reduced South American catches.
"Customers grumble for a while, but then get on with it," said Paul Harris of Seahawk Marine Foods. "You still have to eat."
PASSING IT ON
Sainsbury 's (L:SBRY) chief executive told Reuters that sterling's fall would not necessarily mean higher prices for consumers.
Fresh fish prices across the UK rose in each of the last five months, according to the British Retail Consortium, bucking a three-year trend of overall deflation due to lower commodity costs and a retail price war as chains fight for fussy shoppers.
But it said retailers were hedged on currency for at least six to nine months.
"The time it takes for any price increases to make a re-appearance will depend on a combination of factors including the future value of the pound, commodity prices and any eventual impact of last week's Brexit vote," said Helen Dickinson, BRC's chief executive.
The National Farmers Union has predicted that higher prices along the supply chain would lead to increased domestic production. That could be good news for food makers like Charlie Bigham, who tries to use as much British produce as possible in the supermarket pre-cooked dinners bearing his name.
"Our preference is to source from the UK, but we're never going to buy our Parmesan from the UK," Bigham said. His firm is now in "lots of discussions" with suppliers about prices.
"One of the things we need to consider is whether we put some price increases through to our retail partners. It's obviously their choice ... whether they pass those on to consumers."
($1 = 0.7723 pounds)

UK to finalize Boeing patrol plane, helicopter deals: sources

FARNBOROUGH, England (Reuters)

British Prime Minister David Cameron is likely to finalize multi-billion dollar deals with Boeing (N:BA) on Monday to buy nine P-8A Poseidon maritime patrol planes and to upgrade 50 Apache (NYSE:APA) helicopters, two industry sources said on Sunday.
Cameron is expected to announce the deals at the opening of the Farnborough Airshow in southern England.
Spokespeople for the prime minister and Britain's Ministry of Defence declined to comment.
Britain announced its intention to buy the submarine-hunting P-8A planes in November to plug a gap in its defenses that has existed since 2010, when it ditched the Nimrod, built by Britain's BAE Systems (L:BAES).
Cameron said last month he would step down as prime minister once his ruling Conservative Party had chosen a successor, following a referendum in which Britain voted to leave the European Union. Cameron had campaigned for staying in the EU.
Britain's Minister for Defence Procurement Philip Dunne said on Friday the "Brexit" vote did not change the country's commitment to the NATO military alliance and that it was "not retreating into its shell".

German authority would not have approved beta-phase Tesla autopilot: newspaper

FRANKFURT (Reuters)

Germany's Federal Office for Motor Vehicles (KBA) would not have approved the autopilot system installed on Tesla (O:TSLA) cars if the technology was still in a beta-phase version, it told German newspaper Welt am Sonntag.
Tesla's partial self-driving Autopilot feature has been thrust under the microscope since a fatal crash involving a Tesla Model S sedan in the United States in May.
European approval for the autopilot system was gained in the Netherlands, but the view of KBA is significant because Germany is Europe's biggest car market.
"If the word beta-phase means an incomplete status of the software, the KBA would not authorize (such) a functionality," the newspaper quoted the KBA as saying.
A beta version generally describes a product that has moved from mere functional readiness but still requires improvements for full usability.
Tesla said on Friday that it is cooperating with the KBA, which reports to the Transport Ministry, to review components. The Berlin ministry, for its part, said it was "clarifying technical issues" with Tesla but denied it was investigating the company for not sufficiently informing authorities, as Der Spiegel magazine reported on Saturday.

Boeing defense CEO says always looking at M&A opportunities

FARNBOROUGH, England (Reuters)

Boeing Co's (N:BA) defense division is continuing to look at bolt-on acquisitions across its various business areas, and particularly in the services business, Leanne Caret, chief executive of Boeing Defense, Space & Security, said on Sunday.
Caret did not comment directly when asked if Boeing was also looking at larger acquisitions, but said the company was always studying possible opportunities to expand its business.

Thyssenkrupp says in talks with Tata about European steel plants

FRANKFURT (Reuters)

Thyssenkrupp (DE:TKAG), Germany's biggest steelmaker, confirmed on Sunday that it is in talks with India's Tata Steel (NS:TISC) about a consolidation of beleaguered European steel mills that are hit by overcapacity, weak demand and cheap imports.
Tata Steel said on Friday it had suspended the process of selling its troubled UK arm while it held talks with potential partners, including Thyssenkrupp, about alternative and more sustainable solutions for its entire European business. In addition to its UK operations Tata Steel Europe also owns the former Hoogovens steel plant in the Netherlands.
Thyssen spokeswoman Nicola Roettger, contacted by Reuters, said on Sunday her company has long said it believes that a consolidation of the European steel industry is necessary, due to the extremely difficult economic situation.
"We have also said already that in such a situation, everybody's talking to everybody else. Among other (conversations), we are also talking to Tata Steel," she said.
She said it was to be left open for now if, when, and with whom further steps would be taken. More specific statements would be made only if decisive progress towards consolidation could be made.
Tata had said in a statement on Friday that the talks, which could include a possible joint venture, were at a preliminary stage and the European approach was in addition to its attempts, launched in March, to sell its main British steelmaking operations, which include its Port Talbot blast furnace plant in southern Wales.
The firm said the British vote to leave the European Union, and the outcome of the UK government's consultation on Tata Steel UK's British Steel pension scheme, had prompted a rethink on the sale.
"Consequently, Tata Steel has now entered into discussions with strategic players in the steel industry, including Thyssenkrupp," the Indian company said.
However, Thyssenkrupp has said in the past it is not in a position to spend cash on a merger.

Germany's electric car discount scheme spurs new BMW i3 sales: report

FRANKFURT (Reuters)

BMW has recorded rising sales of the latest version of its electric car, the i3, following the Berlin government's push to subsidize electric cars, weekly German newspaper Frankfurter Allgemeine Sonntagszeitung (FAS) said.
Citing company sources, FAS said that orders for the new i3 with a longer range battery, for deliveries from mid-July onwards, had risen "many times over" levels following the introduction of the car's initial version in 2013.
Total orders for the new version had risen to 5,000 worldwide of which around 1,000 were placed in Germany, ahead of delivery.
BMW said last month it was overhauling its research and development to focus on self-driving cars for the future.
It also plans a sportier version of the i3 by 2018 and aims to launch the next new electric car in 2021.
The German government decided in the spring to subsidize new electric car purchases by giving a 4,000-euro ($4,400) discount to the buyer in a scheme that also pays 3,000 euros towards each purchase of a plug-in hybrid vehicle.
"The (buyers') incentive bonus plays a positive part," the paper quoted a BMW manager as saying.
BMW was not immediately available to comment.

BlackRock's Rieder sees Fed likely on hold after June jobs data

NEW YORK (Reuters)

A top bond manager at BlackRock, the world's biggest asset manager, said on Friday the Federal Reserve would likely leave U.S. interest rates alone for the rest of 2016 despite a surprisingly strong rebound in domestic hiring in June.
Rick Rieder, BlackRock's chief investment officer of global fixed income, said the bigger-than-expected 287,000 gain in payrolls in June, the biggest in eight months, was not enough to alter his outlook that U.S. jobs growth would cool as the earlier strong pace of gains is unsustainable and corporate profits will likely weaken.
Global risks including the fallout from Britain's vote to leave the European Union and the likelihood of more monetary stimulus from overseas central banks will also likely keep the Fed from raising rates this year, he said.
"The Fed might do one hike this year, but likely won’t be able to do that one given global economic, geopolitical, and competitive monetary policy dynamics," Rieder said in a statement.

Oi investor urges new board after record Brazil bankruptcy filing

By Ana Mano and Tatiana Bautzer

SAO PAULO (Reuters) - A minority investor in Oi SA, Brazil's largest fixed-line phone carrier, has called for the replacement of most of its board after the company filed for the country's biggest-ever bankruptcy protection.
Nelson Tanure, a Brazilian investor with a contentious track record, has been buying up shares through a fund controlled by Bridge Administradora de Recursos Ltda, according to four sources familiar with the matter.
In a late Thursday filing, Oi said Bridge, acting on behalf of a fund holding 6.6 percent of Oi's capital, had given eight days to call a shareholder meeting to replace board members. The company said it was reviewing the request.
A Bridge representative declined to identify investors in the fund or to answer other questions about plans for Oi.
A source close to Tanure said he was the main investor and chief representative of the fund. The source said he had traveled to New York and met with representatives of the Ontario Teachers' Pension Plan, which owned nearly 6 percent of Oi's common shares in June, in a bid to organize an investor group.
Tanure, through representatives, declined to comment on the matter. Ontario Teachers' Pension Plan did not immediately respond to a request for comment.
The common shares, which have doubled in value since the company's bankruptcy filing nearly three weeks ago, were little changed in Friday trading.
Tanure last made news in Brazil's telecommunications industry with a lawsuit against the controlling shareholder of Oi's rival, TIM Participações SA, in 2012.
Through another investment vehicle, Tanure accused Telecom Italia (MI:TLIT) SpA of abusing its control of TIM by appointing a chief executive the company knew was a target of an Italian investigation into irregular SIM card activations.
Tanure, who made a fortune buying troubled shipyards in the 1990s, entered the telecom sector through long-distance operator Intelig Telecom, which was acquired by TIM in 2009.

IMF's Lagarde nominates Chinese central banker as new deputy

By David Lawder

WASHINGTON (Reuters) - International Monetary Fund Managing Director Christine Lagarde said on Friday she has nominated Tao Zhang, deputy governor of China's central bank, to serve as an IMF deputy managing director effective Aug. 22.
Assuming no objections from the IMF's executive board, Zhang will succeed Min Zhu, who will step down from the position on July 25. Zhu also is a Chinese national who previously had served as deputy governor of the People's Bank of China.
Zhang returned to the PBOC as deputy governor in 2015 after serving as the IMF's executive director representing China for four years.
He previously served in several positions at the PBOC, including as head of the bank's legal affairs department and as head of its financial survey and statistics department. He also has worked at the World Bank and the Asian Development Bank in the 1990s and early 2000s and has degrees from the University of California, Santa Cruz, and Tsinghua University in Beijing.
China holds 6.11 percent of the IMF's voting power, the third largest share after the United States and Japan.
"Mr. Zhang brings a strong combination of international economic expertise, public sector policymaking, and diplomatic skills," Lagarde said in a statement. "He also has extensive experience with international financial institutions, excellent communication and negotiating skills, and a superb knowledge of IMF policies and procedures."
Zhang will serve alongside three other IMF deputy managing directors: first deputy David Lipton, an American; Mitsuhiro Furusawa, a Japanese national; and Carla Grasso, who holds dual citizenship of Brazil and Italy and serves as the fund's chief administrative officer

Theranos CEO Holmes barred from operating lab for two years

By Natalie Grover and Ankur Banerjee

(Reuters) - A U.S. health regulator has barred blood-testing company Theranos Inc's founder and CEO, Elizabeth Holmes, from operating a lab for at least two years, the latest blow for a company that is under scrutiny for the accuracy and quality of its tests.
The Centers for Medicare & Medicaid Services (CMS)revoked a key certificate for the company's Newark, California lab, and terminated the facility's approval to receive Medicare and Medicaid payments for all services, Theranos said late on Thursday.
Theranos, once valued at $9 billion, is also being investigated by other federal and state agencies and was accused in a suit filed in May of endangering customer health through "massive failures" that misrepresented test results, according to court papers.
"While we are disappointed by CMS' decision, we take these matters very seriously and are committed to fully resolving all outstanding issues," Holmes said in a statement.
Holmes, once a Silicon Valley darling, has seen her net worth dwindle to zero from $4.5 billion last year, according to Forbes magazine.
Holmes founded Theranos in 2003 and it promised ground-breaking methods that would allow quick results for a wide range of tests with just one drop of blood.
The company has been under pressure since the Wall Street Journal published a series of reports that had raised doubts about Theranos's devices.
The CMS said in January that Theranos's practices violated several clinical-laboratory regulations, jeopardizing patient health and safety.