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WSJ City: May Warns Brexit Rebels; U.S. House, Senate Republicans Split on Taxes

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MUST READS FROM WSJ CITY

Theresa May has warned she will not 'tolerate' attempts to derail the U.K.’s exit from the European Union, as the government spelled out the precise hour of Britain’s departure from the bloc. Meanwhile, European officials cautioned that Britain's hopes of advancing to the next stage of talks in December are diminishing.

Senate Republicans’ proposal to rewrite the tax code breaks significantly with the one crafted by the House GOP, confronting party leaders with dozens of differences to reconcile and little time before the year-end deadline they’ve set to pass it.

With Brexit talks between London and Brussels bogged down, Britain’s best hope for some progress preparing for life outside the EU may come from Washington. The U.S. and U.K. recently began negotiations on a provisional aviation agreement, without which no flights between the countries would be permitted after Brexit.

Italy’s once-tottering financial system isn’t nearly as scary as it was, writes Paul J. Davies for Heard on the Street. About €300 billion in bad and doubtful loans is still a big figure – and almost one-third of Europe’s total – but a banking cleanup through sales, higher provisions and capital injections is well under way.

Investors are demanding growth from companies, and those that don’t deliver are getting hammered. But growth is an increasingly hard achievement these days, so investors are rushing into the one sector that is delivering big numbers – tech, writes Justin Lahart for Heard on the Street.

TCI Fund Management, the activist hedge fund fighting to keep Xavier Rolet at the helm of the London Stock Exchange, has called for the chairman of the exchange group to explain the reasons for the CEO’s departure at an extraordinary general meeting.

A steady economic recovery helped European companies beat earnings expectations this quarter, despite currency headwinds and rising commodity prices.

IN THE PAPERS

Theresa May is prepared to increase the £20 billion Brexit divorce offer as Eurosceptics accept that more money may be needed to advance talks. FT (£)

Dublin has demanded the U.K. remain in the EU’s customs union after Brexit to avoid a hard border. The Times (£)

The government has handed the world’s largest oil company Saudi Aramco $2 billion in loan guarantees to secure its IPO in London. The Telegraph

New data has shown the first ‘concrete signs’ of a buy-to-let slowdown, with landlords selling properties and paying down debt. FT (£)

EU officials agreed to revise the bloc’s cap-and-trade system, ramping up efforts to curb carbon-dioxide emissions as part of their push to meet Paris Agreement commitments to fight climate change. WSJ

MARKETS TODAY

European stocks edged higher at the open on Friday, despite investor concerns over the prospects of a U.S. tax overhaul.

London's FTSE 100 opened 0.1% higher, while the Stoxx Europe 600 was up 0.2% in early trading.

U.S. and Asian stocks fell after the Senate's plan to push through a different tax proposal than what the House of Representatives released last week caused some investors to question Republicans' ability to get a bill through to the White House.

"Investors are slowly unwinding their expectations from the Trump tax bill," said Margaret Yang, market analyst at CMC Markets. Given the significant run-up in global shares in the past few weeks, traders took cues to take profits, she said.

COMING UP

U.K. short term output indicators; NIESR monthly GDP estimates.