US Deploys More Missile Defense Units To Persian Gulf - Report

DOW JONES NEWSWIRES

The U.S. is sending more missile defense assets to countries around the Persian Gulf to counter what is seen as a growing threat from Iran, Reuters reports on its Web site Sunday. Nations including Kuwait, Qatar and Bahrain will be hosting U.S. anti-missile systems, the report said. In addition, the U.S. Navy is deploying several ships with anti-missile capabilities in and around the region, Reuters said. Full story at http://www.reuters.com/article/idUSTRE60U18R20100131

-Dow Jones Newswires; 212-416-2800

Copyright 2009 Dow Jones Newswires

CORRECT(11/6): =ARC Energy 3Q Cash Flow Drops On Lower Commodity PricesFed chief vote fans economic fears

TARP Watchdog Probes Fund Trades, Battles With US Treasury

WASHINGTON -(Dow Jones)- The special inspector general for the government's $700 billion financial-sector rescue plan and the Treasury Department are battling over a program to deal with toxic assets, after a fund manager involved in the program conducted what the inspector general called "unusual trades" last year.

Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, said in a report released Saturday that his office is investigating the actions of a fund manager involved in the Treasury's Public-Private Investment Program, which combines government and private capital to purchase mortgage-backed securities.

The report said the portfolio manager in question controls both the government-backed fund to invest in the securities, as well as a separate fund that invests in similar securities. In late October, the manager sold a certain portion of a recently downgraded mortgage security from the separate fund to a dealer and then minutes later purchased, for the government-backed fund, the same amount of the mortgage security at a higher price.

Though the Treasury and the management company, which was not named pending the investigation, found there was nothing inappropriate about the trades, the report said it raised questions about whether the trades were "designed to push the risk of this downgraded security from the private...fund onto the taxpayer-supported [fund]."

"How can a manager conclude that it is wise to sell a security at one price but then almost simultaneously repurchase the same securities at a higher price," the report from Barofsky's office said.

Herbert Allison, the Treasury's assistant secretary for financial stability, said in a letter to Barofsky responding to the report that the fact the trades were reviewed show the Treasury has adequate controls in place for the program.

"Our view of the example described in your report is that the comprehensive controls established in our PPIP compliance rules are working properly," Allison said in the Jan. 28 letter.

The episode highlights a running battle between the Treasury and Barofsky, who have locked horns over the transparency of the government's efforts to rescue Wall Street firms with taxpayer dollars, as well as the government's arrangement with private-sector financial firms helping to operate the government's programs.

On the PPIP, Barofsky has suggested there should be "walls" between managers controlling taxpayer dollars and those operating similar funds within the same company. According to the report, the Treasury has said requiring such walls "is simply not practical in the context of PPIP," even though some fund managers involved in the program have voluntarily adopted information barriers. Barofsky challenged the Treasury's position.

"In an environment in which large portions of the public already view the fairness of Government programs with skepticism, whether fairly or unfairly, the reputational risk associated with this review is a wholly unnecessary cost," the report said.

A Treasury spokeswoman said requiring separate investment teams for PPIP fund managers "is not necessary and would be detrimental to the program."

More broadly, the report raised concerns about whether the original goals of the TARP were being met. Though the financial system has been stabilized, unemployment remains at extremely high levels, lending by banks has fallen despite the hundreds of billions of dollars injected into the sector, and the government has been unable to effectively address the issue of foreclosures.

"Whether these goals can effectively be met through existing TARP programs is very much an open question at this time," the report said. "And to the extent that the Government had leverage through its status as a significant preferred shareholder to influence the largest TARP recipients to carry out such policy goals, it was lost with their exit from TARP."

Copyright 2009 Dow Jones Newswires

Banks ramp up lobbying in second half of 2009US Treasury Asks For Primary Dealer Input On Fed Purchases

EARNINGS PREVIEW: Atlas Copco 4Q Net Profit Seen -41%

Atlas Copco AB (ATCO-A.SK): 4Q Earnings Due: Feb. 2 at 1100 GMT DJ/Factset Survey of 13 Analysts Average Net Profit: SEK1.73B, down 41% (SEK2.91B in 4Q 2008) Average Operating profit: SEK2.52B, down 23% (SEK3.29B in 4Q 2008) Average Revenue: SEK15.48B, down 22% (SEK19.73B in 4Q 2008)

Note: Net profit seen dropping compared with 4Q 08 which was boosted by SEK939M capital gain but operating margin expected to remain resilient, dropping to 16.3% from 16.7% a year earlier but up from 15.9% in 3Q as SEK2B cost saving measures bite. Orders will be in focus with high expectations after improved outlook in mining sector and higher raw materials prices. (IAN)

Contact us in London: +44-20-7842-9464 Markettalk.eu@dowjones.com

Copyright 2009 Dow Jones Newswires

GM will sell Saab brand to SpykerBB&T Earnings Fall 37% as Bank Digests Colonial Purchase

CORRECT(11/6): =ARC Energy 3Q Cash Flow Drops On Lower Commodity Prices

("=ARC Energy 3Q Cash Flow Drops On Lower Commodity Prices," published on Nov. 6, 2009, incorrectly said that trust would convert to a dividend-paying corporation on Jan. 1, 2010. It will make that conversion on Jan. 1, 2011. The correct version follows:)

DOW JONES NEWSWIRES

ARC Energy Trust (AET.UN.T) recorded a sharp decline in third-quarter earnings, cash flow and revenue, largely reflecting lower commodity prices.

The Calgary oil and gas trust said cash flow from operating activities fell to C$126 million or 53 Canadian cents a unit from C$251 million or C$1.16 a year earlier.

Revenue before royalties was down 51% to C$239 million, and net income fell 78% to C$69 million. On a per-unit basis, net income of 29 Canadian cents was down from C$1.46 a year earlier.

The Thomson Reuters mean earnings estimate was 8 Canadian cents a unit.

Third-quarter production was 62,824 barrels of oil equivalent a day, down 2% from 64,325 barrels a year earlier.

The trust continues to expect that 2009 production will average 63,000 to 64,000 of barrels of oil equivalent a day.

In the third quarter, the average price was C$41.31 per barrel of oil equivalent, down nearly 50% from a year earlier.

ARC now sees capital spending for 2009 at C$365 million, up from its forecast of C$350 million in the second-quarter report. Its board has approved a capital-spending program of C$575 million for 2010, to be financed through a combination of cash flow, credit facilities, DRIP proceeds and the potential sale of minor assets.

The trust plans to convert to a dividend-paying corporation on Jan. 1, 2011.

carolyn.m.king@dowjones.com

Copyright 2009 Dow Jones Newswires

Iasis repurchases preferred stock with cashBorders’ Holiday Sales Disappoint

Canada's Flaherty: G7 To Explore How To Help Haiti

OTTAWA (Dow Jones) Canadian Finance Minister Jim Flaherty said Wednesday G7 finance ministers will look into how to help Haiti at their meeting next week.

Finance ministers and central bank governors from the Group of Seven most developed nations meet in Iqaluit, Nunavut Feb. 5-6.

Copyright 2009 Dow Jones Newswires

Nashville business briefs: Nashville Bank names new chairmanAustria Finance Minister: ECB VP To Be Decided In February

Chicago Fed: Midwest Factory Output Edged Lower In December

CHICAGO -(Dow Jones)- The economic recovery sustained a modest setback in the midwestern U.S. during December, based on data released Wednesday by the Federal Reserve Bank of Chicago.

The Chicago Fed's Midwest Manufacturing Index decreased 0.3% to 84.1 in December on the heels of a 1.0% rise the previous month. The November reading of 84.4 was the highest since December 2008, according to Chicago Fed figures.

Manufacturing in the five-state region lagged behind national factory activity, as the Federal Reserve Board's industrial production index was unchanged in December.

Both reports measure the number of hours worked during the month, although the U.S. Fed looks at other factors for its national index.

Regional manufacturing in December was 6.4% below year-ago levels, while national output fell 1.4%.

The Chicago Fed looks at the number of hours worked in Illinois, Indiana, Michigan, Wisconsin, and Iowa to determine changes in activity in four sectors.

Two of the sectors, auto and resource output, posted monthly declines. Steel and machinery production increased during the month.

Regional auto output edged down 0.2% in December following a 0.6% rise the previous month. For all of the U.S., auto production was up 0.3% and 3.5% below year-ago levels. For the Midwest, auto output was down 8.8% compared to December 2008.

Midwest resource sector output was 1.0% lower in December after a 1.3% rise in November. Nationally, it was unchanged for the month.

The Chicago Fed reported regional increases for wood and chemical production in December. Food, paper, and nonmetallic production fell during the month.

Resource production was still 4.6% higher compared to December of last year, while national output was up 5.8% during the one-year period.

Meantime, steel production rose 1.3% in the Midwest during December after a 2.5% boost in November. For the year, regional steel output was down 13.9% while nationwide output dropped 9.5%.

Midwest machinery production rose 0.6% in December, improving from a 0.5% loss in November. For the nation, machinery production was up 1.2% in December, but 3.8% lower compared to the year earlier period. Regional machinery output tumbled 15.8% from December 2008.

The Chicago Fed is scheduled to release its January Midwest Manufacturing Index March 18.

Copyright 2009 Dow Jones Newswires

Tax credit, deals ignite home resales in SouthBOND REPORT: Treasurys Dip, On Stock Gain, Gilt Drop

2nd UPDATE:WEF Mourns Davos Police Boss Death;No Event Impact

(Adds details.)

DAVOS, Switzerland -(Dow Jones)- The death of the World Economic Forum's chief of security, Markus Reinhardt, was Tuesday confirmed by the government of the Swiss canton of Grison.

A government spokesman declined to comment on how the 61-year old police chief died, calling his death a tragic event. He said Marcel Suter has taken over Reinhardt's post, adding that security measures at the WEF remained intact at all times.

The canton's chief prosecutor said it has started an investigation into Reinhardt's death. Reinhardt was found in his hotel room earlier Tuesday.

The WEF said it mourned the loss.

"It is with great sadness and regret we learned of the tragic death of the Graubunden Cantonal Police Chief, Dr Reinhardt," the WEF said.

"During the many years during which we co-operated with him over security for our annual meeting at Davos, we appreciated his professionalism and his kindness. Our thoughts are with his loved ones and his colleagues. The security forces continue to have our full confidence and trust in their work," it added.

The death reverberated through the police force. "Sadly, my commander is dead," a local police officer, who requested to remain unnamed for he can't comment publicly, said.

Earlier, a spokeswoman for the summit said Reinhardt likely committed suicide just before world leaders started to convene.

"This has nothing to do with [the meeting]," the spokeswoman told Dow Jones Newswires.

(Marietta Cauchi contributed to this item.)

Copyright 2009 Dow Jones Newswires

DAVOS 3rd UPDATE: WEF Mourns Police Boss DeathHollywood puts big money behind productions for the Web

DAVOS 3rd UPDATE: WEF Mourns Police Boss Death

(Adds comments and details.)

DAVOS, Switzerland -(Dow Jones)- The death of the World Economic Forum's chief of security, Markus Reinhardt, was confirmed Tuesday by the government of the Swiss canton of Grison.

A government spokesman declined to comment on how the 61-year-old police chief died, calling his death a tragic event.

He said Reinhardt, who since 1984 was also the head of the cantonal police of Grison, will be replaced by Marcel Suter as head of WEF security, adding that security measures at the WEF remained intact at all times. Suter was Reinhardt's second-in- command at WEF and is Captain in the cantonal police.

The canton's chief prosecutor said it has started an investigation into Reinhardt's death. Reinhardt was found in his hotel room earlier Tuesday.

The WEF said it mourned the loss.

"It is with great sadness and regret we learned of the tragic death of the Graubunden Cantonal Police Chief, Dr. Reinhardt," the WEF said.

"During the many years during which we co-operated with him over security for our annual meeting at Davos, we appreciated his professionalism and his kindness. Our thoughts are with his loved ones and his colleagues. The security forces continue to have our full confidence and trust in their work," it added.

The death reverberated through the police force. "Sadly, my commander is dead," a local police officer, who requested to remain unnamed because he can't comment publicly, said.

Earlier, a spokeswoman for the summit said Reinhardt likely committed suicide just before world leaders started to convene.

"This has nothing to do with [the meeting]," the spokeswoman told Dow Jones Newswires.

Meanwhile Robert Willi, a Lieutenant-General in the cantonal police, will take up Reinhardt's post as the head of the Grison cantonal police until a permanent replacement is found.

Reinhardt previously worked as a secretary at the Grison Justice and Police department and as a prosecutor of the canton of Grison

Security at Davos will have to be reassessed following the death and will necessarily extend to multi-national organizations and security agencies, said experts.

"There will have to be a full risk assessment to determine if there is an ongoing threat especially in view of the high level of attendees at the conference," said Robert Seiden, president of New York-based Confidential Security and Investigations, or CSI.

This will involve covert intelligence gathering to establish the extent of the risk and the nature and extent of response, he added.

Copyright 2009 Dow Jones Newswires

Hollywood puts big money behind productions for the WebNew UK Poll Shows Conservatives With 9-Point Lead

2nd UPDATE:WEF Mourns Davos Police Boss Death;No Event Impact

(Adds details.)

DAVOS, Switzerland -(Dow Jones)- The death of the World Economic Forum's chief of security, Markus Reinhardt, was Tuesday confirmed by the government of the Swiss canton of Grison.

A government spokesman declined to comment on how the 61-year old police chief died, calling his death a tragic event. He said Marcel Suter has taken over Reinhardt's post, adding that security measures at the WEF remained intact at all times.

The canton's chief prosecutor said it has started an investigation into Reinhardt's death. Reinhardt was found in his hotel room earlier Tuesday.

The WEF said it mourned the loss.

"It is with great sadness and regret we learned of the tragic death of the Graubunden Cantonal Police Chief, Dr Reinhardt," the WEF said.

"During the many years during which we co-operated with him over security for our annual meeting at Davos, we appreciated his professionalism and his kindness. Our thoughts are with his loved ones and his colleagues. The security forces continue to have our full confidence and trust in their work," it added.

The death reverberated through the police force. "Sadly, my commander is dead," a local police officer, who requested to remain unnamed for he can't comment publicly, said.

Earlier, a spokeswoman for the summit said Reinhardt likely committed suicide just before world leaders started to convene.

"This has nothing to do with [the meeting]," the spokeswoman told Dow Jones Newswires.

(Marietta Cauchi contributed to this item.)

Copyright 2009 Dow Jones Newswires

DAVOS 3rd UPDATE: WEF Mourns Police Boss Death

(Adds comments and details.)

DAVOS, Switzerland -(Dow Jones)- The death of the World Economic Forum's chief of security, Markus Reinhardt, was confirmed Tuesday by the government of the Swiss canton of Grison.

A government spokesman declined to comment on how the 61-year-old police chief died, calling his death a tragic event.

He said Reinhardt, who since 1984 was also the head of the cantonal police of Grison, will be replaced by Marcel Suter as head of WEF security, adding that security measures at the WEF remained intact at all times. Suter was Reinhardt's second-in- command at WEF and is Captain in the cantonal police.

The canton's chief prosecutor said it has started an investigation into Reinhardt's death. Reinhardt was found in his hotel room earlier Tuesday.

The WEF said it mourned the loss.

"It is with great sadness and regret we learned of the tragic death of the Graubunden Cantonal Police Chief, Dr. Reinhardt," the WEF said.

"During the many years during which we co-operated with him over security for our annual meeting at Davos, we appreciated his professionalism and his kindness. Our thoughts are with his loved ones and his colleagues. The security forces continue to have our full confidence and trust in their work," it added.

The death reverberated through the police force. "Sadly, my commander is dead," a local police officer, who requested to remain unnamed because he can't comment publicly, said.

Earlier, a spokeswoman for the summit said Reinhardt likely committed suicide just before world leaders started to convene.

"This has nothing to do with [the meeting]," the spokeswoman told Dow Jones Newswires.

Meanwhile Robert Willi, a Lieutenant-General in the cantonal police, will take up Reinhardt's post as the head of the Grison cantonal police until a permanent replacement is found.

Reinhardt previously worked as a secretary at the Grison Justice and Police department and as a prosecutor of the canton of Grison

Security at Davos will have to be reassessed following the death and will necessarily extend to multi-national organizations and security agencies, said experts.

"There will have to be a full risk assessment to determine if there is an ongoing threat especially in view of the high level of attendees at the conference," said Robert Seiden, president of New York-based Confidential Security and Investigations, or CSI.

This will involve covert intelligence gathering to establish the extent of the risk and the nature and extent of response, he added.

Copyright 2009 Dow Jones Newswires

AIG Restricts Use of Corporate Aircraft

American International Group Inc (AIG) said it has restricted the personal use of corporate aircraft by its executives, other than its chief executive.

In a regulatory filing, the company said the CEO may use the corporate aircraft if the personal use is incidental to a business trip, but would have to reimburse the company for any incremental costs.

Firms such as AIG, Goldman Sachs Group Inc (GS) and Morgan Stanley (MS), which have taken part in U.S. taxpayer funded bailouts, have been under close scrutiny for being lenient with executive pay and perks.

Once the world's largest insurer, AIG nearly collapsed from credit default swaps, a type of derivative that had been sold by its financial products business.

AIG was left on the hook for tens of billions of dollars in payouts to some of the biggest U.S. and European financial institutions, forcing the U.S. government to step in with a $182.3 billion aid package.

Tennessee Commerce Bancorp makes $3.2M in stock saleNorthrop Grumman to Move Headquarters to D.C.

Rally Gains Steam on Fed Hopes, Resource Stocks

There's No Business Like FOX Business

After some early hesitation, stocks were solidly higher Monday afternoon as Wall Street rebounds from last week's tumble on hopes Ben Bernanke will be reappointed and a rally in the basic materials sector.

Today’s Markets

As of 2:58 p.m. EST, the Dow Jones Industrial Average rose 73.46 points, or 0.72%, to 10246.44, the Standard & Poor's 500 gained 10.38 points, or 0.95%, to 1102.14 and the Nasdaq Composite picked up 15.05 points, or 0.68%, to 2220.33. The FOX 50 added 7.75 points, or 0.98%, to 798.57.

Aside from new shows of support over the weekend for Bernanke, the chairman of the Federal Reserve, market sentiment was boosted earlier by earnings beats from Halliburton (HAL) and AK Steel (AKS). However, the Dow had been up nearly triple digits before a new report revealed a worse-than-expected decline in December existing home sales.

More than half of the Dow's 30 components were in the green, led by Caterpillar (CAT), General Electric (GE) and Intel (INTC). The index's biggest percentage losers were Kraft (KFT) and American Express (AXP).

The Nasdaq Composite saw less buying as Google (GOOG) and Amazon.com (AMZN) slid by 2% a piece. The sector is likely to be moved by Apple (AAPL), which is expected to report robust growth after Monday's close.

Wall Street suffered a wave of selling last week -- wiping 553 points off the Dow in just three days -- on fears Bernanke won’t be confirmed, China’s economy could be overheating and the White House’s new efforts to reign in big banks.

“The market will eventually look past these Washingtonian speed bumps and focus on what is really important -- earnings,” Peter Kenny, managing director at Knight Capital Group, wrote in a note. “We are in correction mode however, and as trend dictates performance, you have to be somewhat defensive. We have had an incredible run. Smart money is cashing in on winning trades and lowering the risk profile.”

Wall Street pared some of its gains after the National Association of Realtors said existing home sales plunged by 16.7% last month, marking the steepest decline since records began in 1968 and missing expectations. However, shares of PulteHomes (PHM) and other home builders rose as median prices rose 1.5% -- the biggest gain since May 2006 and first rise since Aug. 2007. Also, inventories tumbled to their lowest level since March 2006, another positive sign.

Thanks to a full-court press from the White House, Bernanke’s reappointment at the Fed seemed a little more certain over the weekend after several key Senators, including Minority Leader Mitch McConnell, expressed support for Bernanke or said they expect him to be reappointed. Bernanke will need 60 votes to exceed the procedural hurdles necessary in order be reappointed.

Friday’s selloff, the markets’ steepest since late October, was triggered by a slew of non-committed Senators saying they oppose Bernanke. The Fed chairman, who specialized in his academic years on the Great Depression, is widely considered on Wall Street as the most qualified person for the job and has earned the trust of the markets. A vote is expected before Jan 31 when his term expires.

Boosted by AK Steel's (AKS) stronger-than-expected fourth-quarter profit of 36 cents on revenue of $1.32 billion, the basic materials sector led the way up on Wall Street. Analysts had forecasted EPS of just 20 cents on lighter revenue of $1.25 billion.

In the commodity markets, crude and gold posted modest gains. Crude rose 72 cents a barrel, or 0.97%, to $75.26. Gold gained $6 a troy ounce, or 0.55%, to $1095.20.

Corporate Movers

American International Group’s (AIG) bailout was treated with national-security level secrecy by U.S. securities regulators after a request from the New York Federal Reserve, which orchestrated the rescue, Reuters reported, citing emails. The Fed was only comfortable with AIG submitting critical documents to the SEC after getting assurances that “special security procedures” would be used, including allowing just two employees to review the document and keeping it in a safe, the wire service reported.

General Motors named Chairman Ed Whitacre Jr. its permanent CEO, ending the auto maker’s two-month search for a replacement for Fritz Henderson, Whiteacre, a former AT&T (T) exec, had been serving as interim CEO.

Ticketmaster's (TKTM) merger with Live Nation (LYV) was approved by the Justice Department with conditions, Dow Jones Newswires reported. The U.S. is requiring Ticketmaster to license ticketing software to concert promoter AEG and divest ticketing assets, including Paciolan. Shares of both companies surged more than 16% to 52-week highs.

Halliburton’s (HAL) profits shrank 48% during the fourth quarter but the No. 2 U.S. oilfield services company managed to exceed analysts’ expectations. Halliburton’s non-GAAP profit of 28 cents and 3% rise in revenue to $3.7 billion topped estimates.

Wal-Mart’s (WMT) Sam’s Club announced plans to slash 10% of its workforce over the weekend, eliminating more than 11,200 jobs, by outsourcing its in-store demonstrations and a recruitment position. The job cuts will mostly impact part-time workers.

Global Markets

The U.K.'s FTSE 100 slipped 0.8% to 5260.31, France's CAC 40 fell 1.02% to 3781.85 and Germany's DAX closed down 1.12% to 5631.37.

In Asia, Tokyo's Nikkei 225 lost 0.74% to 10512.69, Hong Kong's Hang Seng sank 0.62% to 20598.55 and China's Shanghai Composite tumbled 1.09% to 3094.41.

Futures Stay Green After Spending, Income DataFed chief vote fans economic fears

2nd UPDATE: White House: We Believe Bernanke Will Be Confirmed

(Updates with additional comments from the White House and lawmakers, and additional background.)

WASHINGTON -(Dow Jones)- White House officials expressed confidence Sunday that Ben Bernanke would be confirmed for a second term as chairman of the Federal Reserve, a view that was echoed by the leading Republican in the Senate.

Three White House officials said on Sunday morning talk shows that Bernanke, who is facing a backlash from some lawmakers over the Fed's handling of the economic crisis, had enough votes for another term.

"We believe he will be confirmed," White House Press Secretary Robert Gibbs said on "Fox News Sunday."

Asked about the potential financial repercussions of the U.S. Senate voting against Bernanke, Gibbs said, "The best way to not have to deal with those repercussions is to support Ben Bernanke for a second term."

Gibbs said senators could support stability in the financial system by backing Bernanke.

The Senate's top Republican, Mitch McConnell of Kentucky, refused Sunday to reveal how he would vote on the nomination but said he believed Bernanke had enough votes to remain Fed chairman.

"He's going to have bipartisan support in the Senate and I would anticipate he'd be confirmed." McConnell said on NBC's "Meet The Press."

According to the latest Dow Jones Newswires tally, 27 senators have said they will vote to confirm Bernanke.

Another Republican senator, John Cornyn of Texas, appearing on "Fox News Sunday," came out in opposition to the Fed chairman Sunday morning, bringing to 16 the number of senators who have said they will oppose him, according to the Dow Jones Newswires tally. Eleven Republicans, four Democrats and one independent (Bernie Sanders of Vermont), have said they will vote no.

Sanders has led the charge from the left against Bernanke.

Cornyn said Bernanke was a "brilliant and honorable man, but one who has presided over what is a crisis of confidence of the American people due to a lack of transparency and accountability with regard to the bailouts and other activities by the Federal Reserve."

Bernanke, whose current term expires Jan. 31, was originally named Fed chairman by former Republican President George W. Bush. President Barack Obama named him for a second term in August 2009 and the Senate must vote to confirm him for another term.

Because four senators have put what's known as a "hold" on the nomination, it will take 60 votes to bring the Bernanke confirmation to the floor for a vote. Once that hurdle is cleared, it will take a majority to confirm him.

Copyright 2009 Dow Jones Newswires

Harry Reid helps to build up support for BernankeWhat If Bernanke Is Not Reconfirmed?

Israeli PM Plays Down Minister's Lebanon War Claim -BBC

DOW JONES NEWSWIRES

Israel's prime minister has distanced himself from comments by a member of his cabinet who suggested Israel was heading for a new war with Lebanon, the BBC reported on its Web site Sunday.

Israel was "not seeking any conflict" with Lebanon, Benjamin Netanyahu said, according to the BBC.

Earlier, Yossi Peled, minister without portfolio and a reserve army general, had said that a repeat of the 2006 war with Lebanon was only a matter of time.

More than 1,000 Lebanese, mostly civilians, and about 160 Israelis, mostly soldiers, died in the conflict.

"Prime Minister Benjamin Netanyahu clarifies that Israel is not seeking any conflict with Lebanon," the Israel leader said in a statement on Saturday, the BBC said.

"Israel seeks peace with its neighbours."

The statement came shortly after comments by Mr Peled were broadcast in which the minister said Israel was "heading towards a new confrontation".

"In my estimation, understanding and knowledge it is almost clear to me that it is a matter of time before there is a military clash in the north," he said.

The 2006 war began when Israel launched air and sea attacks on targets in Lebanon, after Lebanese militant group Hezbollah captured two Israeli soldiers. During the conflict, Hezbollah fired thousands of rockets into Israel.

Copyright 2009 Dow Jones Newswires

S Korea Vice Finance Minister: Government Won’t Meddle In BOK’s PolicyBriefly: Displaced GM auto workers, suppliers get job help

New UK Poll Shows Conservatives With 9-Point Lead

LONDON -(Dow Jones)- A new poll places the opposition Conservatives nine points ahead of the governing Labour party in the U.K., a reduced lead from a week earlier.

A ComRes telephone poll for the Sunday Mirror gives the Conservatives support of 38%, down four points from last week.

Labour have unchanged support of 29% among the 1,004 likely voters polled Jan. 20-21,

The Liberal Democrats would pick up 19% of support if the election were held now, the poll showed.

"If repeated at the general election, the figures in our Sunday Mirror/ComRes survey would mean a hung Parliament with the Tories five seats short of security--the majority they need to get into Downing Street," said Andrew Hawkins, chief executive of ComRes.

A hung parliament means no party can command a parliamentary majority.

U.K. Prime Minister Gordon Brown must hold a General Election by June 3.

(MORE TO FOLLOW) Dow Jones Newswires

Copyright 2009 Dow Jones Newswires

Harry Reid helps to build up support for Bernanke2nd UPDATE:UK Brown Vows Social Mobility At Heart Of Election Race

US Treasury Asks For Primary Dealer Input On Fed Purchases

WASHINGTON -(Dow Jones)- The U.S. Treasury Department wants to know what primary dealers think of the Federal Reserve's programs to purchase mortgage-backed securities and agency debt.

The Treasury on Friday released its quarterly survey of primary dealers, conducted in advance of its announcement of the government's estimated financing needs for the first quarter of 2010.

The survey asks dealers to discuss the potential impact of the Federal Reserve's purchase programs on fixed-income markets and on financial markets more broadly.

The survey also asks for budget-deficit estimates for fiscal years 2010, 2011 and 2012 as well as for suggestions on adjustments to the government's debt-issuance practices.

Noting that the Treasury Market Practices Group has had a fails charge in place for nine months, the Treasury asked dealers for their opinions on the impact of that charge on repo and cash market functioning. A fails charge is imposed when dealers in the repo market do not return securities to other market participants on time.

An administration source said instances where fails occur have come down significantly since the charges started.

Treasury is planning to meet with primary dealers next week.

Copyright 2009 Dow Jones Newswires

Geithner: Bailout program extended to OctoberTreasury Announces Restructuring of GMAC Bailout

BB&T Earnings Fall 37% as Bank Digests Colonial Purchase

Southern regional bank BB&T (BBT) reported a 37% decrease in quarterly profits on Friday, sending the shares lower.

BB&T reported a profit of $194 million, or 27 cents a share, down from $307 million, or 51 cents a share, from a year ago. The results were well ahead of an average 21 cents that analysts had forecasted, according to Thomson Reuters.

Meanwhile, BB&T's non-performing assets rose to 2.65% of the portfolio from 2.48% of the portfolio in the previous quarter and up from 1.34% last year. Net charge-offs rose to 1.83% from 1.29 in 2008.

The bank saw an increase of 37% to its loan-loss provisions to $725 million from a year ago, but it was up only 3.2% from the previous quarter. BB&T loan-losses rose primarily because the bank purchased failed Colonial Bank last year. BB&T had been one of the better-performing regional banks in the financial crisis.

Because of the acquisition, average deposits rose 29% from a year ago. Excluding the purchase, average deposits were up 7.1%.

"We continue to expect meaningful earnings accretion from the transaction, which provides tremendous strategic benefits for BB&T," said BB&T CEO Kelly King in a statement.

Shares of BB&T were down 4% to $28.92 a share on Friday.

Early-Market Movers: New York Community, Akamai TechnologiesGrowth stocks are back on top

Hungary's Small Firms To Recover On Foreign Demand - Minister

BUDAPEST -(Dow Jones)- Hungarian small and medium-size enterprises are expected to recover somewhat in 2010 on rising exports and possibly joining supplier groups of global companies' local operations, Economy Minister Istvan Varga said Friday.

"As there's no hope for a domestic market expansion in Hungary this year, we are trying to encourage SMEs to focus on international expansion through our regional programs, as well as to supply global companies' local operations," Varga said at a press conference.

The Hungarian SME sector employs 1.7 million people, around 65% of the country's workers. While its gross contribution to the country's gross domestic product was 55% in 2008, it only made up 28% of Hungary's exports in the same year, according to the latest available ministry data.

The sector suffered badly from the economic downturn last year; 88% of the country's SMEs saw falling revenue, while 140,000 people were made redundant of those employed in the sector, the minister said.

The government--after supporting the sector with subsidies equaling 1% of gross domestic product last year--plans to make available 40 billion to 50 billion forints ($209 million to $261 million) in general subsidies in 2010, besides research and development, innovation, employment and other one-off subsidies.

Web site: www.nfgm.gov.hu

Copyright 2009 Dow Jones Newswires

S Korea Vice Finance Minister: Government Won’t Meddle In BOK’s PolicyExxon bets on natural gas

CURRENCIES: Dollar Jumps To 5-month High Versus Euro

The dollar jumped to its highest in five months versus the euro on Wednesday as reports that China is reining in lending led investors to shun risky assets and worries about Greece's budget problems kept pressure on the shared currency.

The greenback extended gains as U.S. equities were down and data showed benign wholesale inflation and a rise in housing permits.

The dollar index (DXY) jumped 1% to 78.354, the highest since September and up from 77.451 in late North American trading Tuesday. The index tracks the dollar against a trade-weighted basket of six major rivals.

The euro fell to $1.4110 from $1.4301 late Tuesday, hitting its lowest level since mid-August.

Analysts focused on media reports saying the China Banking Regulatory Commission asked several commercial banks to stop issuing new loans in the rest of January. That would add to efforts to rein in bank lending, which nearly doubled in the past year.

"To the extent that the news of China's tightening is a negative for global growth and equities, it is a positive for the safe-haven currencies such the U.S. dollar and Japanese yen," said strategists at Barclays Capital.

The sell-off in Chinese stocks benefited lower-yielding currencies, such as the dollar and yen, which tend to rise whenever investors are more risk averse and seek assets that are perceived to be safer.

The dollar traded at 91.24 yen, reversing a loss to gain 0.1% versus the Japanese currency.

Major U.S. stock indexes declined about 1.6% after earnings data from big banks. Most Asian markets ended lower, followed by European shares.

The dollar held onto strong gains versus the euro and other major currencies after a pair of U.S. reports showed housing starts improved and core wholesale prices remained benign last month.

Analysts also noted that Republican Scott Brown's win in Tuesday's special Senate election in Massachusetts spells trouble for the Democrats' supermajority and could pave the way toward more compromises and spending cutbacks.

"In an environment where balance-sheet repair is the focus, such a development would be U.S.-dollar-positive," said strategists at RBC Capital Markets.

Pressure on the euro was also tied to continuing worries about Greece's budget woes and the potential for other sovereign-debt problems in the 16-nation euro zone, analysts said.

Euro sentiment "remains negative and if [economic] data does not offer a glimmer of hope sometime soon, the markets may want to take a run at the psychologically important 1.4000 level in the near future," said Boris Schlossberg, director of currency research at GFT, in emailed comments.

Strategists at KBC Bank in Brussels said the break below $1.4218 triggered sell stops, which accelerated the euro's fall.

"The strong downward momentum with the key $1.4218 level so close simply was too obvious (an) opportunity for momentum traders to try some additional stop-tripping," they wrote. "Once again, the Chinese measures were at best a good excuse."

British, Australian impact

The British pound fell to $1.6272 versus the dollar from $1.6369. The euro, meanwhile, dropped 0.7% versus the pound, touching a four-month low.

Sterling had been buoyed by a larger-than-expected drop in December U.K. jobless-benefit claimants but headed broadly lower after the minutes of the Bank of England's January policy meeting were released.

Strategists at BNP Paribas said the Chinese banking data also added to pressure on the Australian dollar, which fell 1.8% versus the U.S. unit to trade at 90.81 U.S. cents. The Australian economy is highly sensitive to Chinese demand for commodities.

The strategists said they continued to view the Aussie as a "relative outperformer," however, and argued that rising consumer confidence has reinforced prospects for a rate increase in early February, which would be supportive for the currency.

Copyright 2009 Dow Jones Newswires

CURRENCIES: Dollar Holds Gains After U.S. Data As Euro Falls3Q income up for Dollar General

US House OKs Accelerated Tax Deductions For Haitian Aid

WASHINGTON -(Dow Jones)- The U.S. House of Representatives unanimously passed legislation Wednesday that would accelerate income-tax deductions this year to victims of last week's earthquake in Haiti.

Under the legislation, individuals may claim itemized charitable deductions for donations to Haitian victims this year on their 2009 tax return, rather than wait to claim 2010 donations on their 2010 tax return. Lawmakers said Congress took a similar approach in Jan. 2005 for individuals making charitable contributions to victims of the Dec. 2004, Indian Ocean tsunami.

In addition, the bill specifies that individuals who used text-messaging to make such a donation will be able to use their phone bill as proof of having made a donation.

The bipartisan bill was introduced Tuesday by House Ways and Means Committee Chairman Charles Rangel (D, N.Y.) and Rep. Dave Camp (R., MI), the senior Republican on the tax-writing panel. House Majority Whip James Clyburn (D., S.C.), House Minority Whip Eric Cantor (R., Va.), and 152 other House members co-sponsored the bill.

Rangel said in a statement he hopes the bill will encourage people to donate to relief efforts in Haiti.

"To the extent this legislation can encourage Americans to increase what has already been an outpouring of generous support for the people of Haiti, it deserves the support of every member of this House, the Senate and the President's immediate signature," Camp said in the same statement.

Copyright 2009 Dow Jones Newswires

File taxes online and get refund in 10 daysUPDATE: Chile’s President To Send Envoy To Assist In Haiti

BOND REPORT: Treasurys Dip, On Stock Gain, Gilt Drop

Treasury prices slumped Tuesday, sending yields higher, dragged down by a drop in U.K. government bonds and gains in U.S. stocks.

"Gilts have led the G-4 debt markets lower after a big increase in U.K. December CPI," wrote analysts at RBS Securities in emailed comments.

Britain's Office for National Statistics on Tuesday said prices rose 2.9% last month compared to December 2008, accelerating from the 1.9% inflation recorded in November. Higher inflation tends to erode the value of bond holdings.

Rising U.S. stocks, propelled by rallying health insurers, also sapped interest in the safety of U.S. government debt.

In addition, the U.S. government said international purchases of Treasurys tripled to $118.3 billion in November from $38.9 billion previously, according to the latest Treasury data on capital inflows. China's holdings fell, while Japanese holdings rose.

Yields on 10-year notes (UST10Y) added 2 basis points to 3.702%. On Friday, 10-year yields fell to their lowest level since Dec.18.

U.S. financial markets were closed Monday for the Martin Luther King Day holiday.

A basis point is 1/100th percentage point. Bond prices move inversely to their yields.

Yields on 2-year notes (UST2YR) rose 2 basis points to 0.89%, also gaining after having hit their lowest since late December.

The Dow Jones Industrial Average (DJI) added 99 points, or 0.9%, to 10,708, while the S&P 500 (SPX) gained 11 points, or 1%, to 1,147.

Treasurys briefly came off lows after the National Association of Home Builders said its sentiment index fell in January to its lowest level since June.

Treasury prices rose last week as the U.S. government saw more than sufficient demand at its auctions. In addition, economic reports showed tame inflation and lower-than-expected consumer confidence as well as improvements in manufacturing.

Separately, the latest fund managers' survey from Bank of America Merrill Lynch found investors have more of an appetite for riskier stocks and assets, after months of maintaining a more cautious stance.

Copyright 2009 Dow Jones Newswires

Growth stocks are back on topStocks Little Changed in Sleepy Session

Phillips Curve May Be Useful In Setting Rates - Fed Study

WASHINGTON -(Dow Jones)- High unemployment in 2009 likely led to big declines in inflation, suggesting an economic theory known as the Phillips curve may be useful in setting interest rates, according to a paper from the San Francisco Federal Reserve published Tuesday.

In a severe recession like the one from which the U.S. is now recovering, evidence shows that prices drop and unemployment rises just as the Phillips curve states, the San Francisco Fed study shows.

Named for economist William Phillips, who wrote a paper in 1958 examining the relationship between unemployment and inflation, the theory states that when unemployment is high, wage demands diminish. Since labor accounts for the bulk of consumer prices, inflation comes down as a result.

Federal Reserve officials--and economists, for that matter--are split on the Phillips curve school of thought that economic slack brings low inflation, which in turn would call for low interest rates.

Minutes from an August 2009 Fed rate-setting meeting showed that most officials saw substantial slack in the economy leading to subdued wage-and-price inflation over the next few years. However, some officials were skeptical, pointing to the "loose empirical relationship of economic slack to inflation."

The Phillips curve lost empirical support during the 1970s stagflation in the U.S., which saw both high inflation and high unemployment. In the early 2000s, low unemployment and relatively low inflation marked another departure from the economic theory.

San Francisco Fed economists Zheng Liu and Glenn Rudebusch said in the paper that outside of severe recessions, fluctuations in inflation and unemployment rates "do not line up particularly well."

However, they said in the most recent recession that started in late 2007, "our findings suggest that the high level of the unemployment rate over the past year likely contributed to the substantial declines in the inflation rate, as the Phillips curve would predict."

Since the start of the current economic downturn, inflation has dropped sharply and the jobless rate has more than doubled to 10%.

Economic research has a significant bearing on the Fed's interest-rate decisions.

In his most recent speech on Jan. 3, Fed Chairman Ben Bernanke responded to criticism that low rates during 2002-05 contributed to the housing boom and the financial crisis by focusing on a 1993 rule for setting rates devised by Stanford University economist John Taylor.

Copyright 2009 Dow Jones Newswires

Bernanke Defends First Term While Seeking SecondExperts fear that U.S. is entering decade of job doldrums

Borders' Holiday Sales Disappoint

Book retailer Borders Group, Inc. (BGP) reported disappointing sales results Monday for the 11-week holiday period. The company said sales fell 13.7% compared to the year-ago period to $846.8 million.

Same-store sales at Borders superstores fell 14.6%, while total sales fell 14.7% to $649.2 million. Sales at the Waldenbooks Specialty Retail division fell 14.6% to $153.2 million. Same-store sales for Waldenbooks fell 9.4%.

International sales were the lone bright spot, rising 8.7% to $44.4 million for the holiday period, excluding the impact of currency. Same-store sales at Paperchase stores rose 10.1% in the quarter.

"We are disappointed with holiday results and must intensify our focus on creating and delivering a shopping experience that drives profitable sales," said Borders Group Chief Executive Officer Ron Marshall, in a release.

"Given the sales challenge, we have continued to manage cash flow and have taken several important steps in line with our strategic priorities, including moving away from underperforming, low margin categories such as music and video in favor of better performing categories such as children's.”

The company said it will also continue to right-size its mall business by closing 182 Waldenbooks stores.

Shares of Borders fell 7 cents last Friday or 4.90% to close at $1.36 a share. The New York Stock Exchange was closed, Monday in acknowledgement of the Martin Luther King Jr. holiday.

3Q income up for Dollar GeneralHot Topic Reports Disappointing Sales, Cuts View

Borders' Holiday Sales Disappoint

Book retailer Borders Group, Inc. (BGP) reported disappointing sales results Monday for the 11-week holiday period. The company said sales fell 13.7% compared to the year-ago period to $846.8 million.

Same-store sales at Borders superstores fell 14.6%, while total sales fell 14.7% to $649.2 million. Sales at the Waldenbooks Specialty Retail division fell 14.6% to $153.2 million. Same-store sales for Waldenbooks fell 9.4%.

International sales were the lone bright spot, rising 8.7% to $44.4 million for the holiday period, excluding the impact of currency. Same-store sales at Paperchase stores rose 10.1% in the quarter.

"We are disappointed with holiday results and must intensify our focus on creating and delivering a shopping experience that drives profitable sales," said Borders Group Chief Executive Officer Ron Marshall, in a release.

"Given the sales challenge, we have continued to manage cash flow and have taken several important steps in line with our strategic priorities, including moving away from underperforming, low margin categories such as music and video in favor of better performing categories such as children's.”

The company said it will also continue to right-size its mall business by closing 182 Waldenbooks stores.

Shares of Borders fell 7 cents last Friday or 4.90% to close at $1.36 a share. The New York Stock Exchange was closed, Monday in acknowledgement of the Martin Luther King Jr. holiday.

Austria Finance Minister: ECB VP To Be Decided In February

BRUSSELS -(Dow Jones)- Euro-zone finance ministers made no decision on a candidate for the vice president of the European Central Bank Monday and didn't discuss specific candidates in detail, Austrian Finance Minister Josef Proll said.

"We have made no decision today because we have to clarify what is the modus for the election... And we will take a decision in February," he said after the meeting of euro-zone finance ministers here.

The ministers had "no debate about specific candidates," he added.

BRUSSELS -(Dow Jones)- Euro-zone finance ministers made no decision on a candidate for the vice president of the European Central Bank Monday and didn't discuss specific candidates in detail, Austrian Finance Minister Josef Proll said.

"We have made no decision today because we have to clarify what is the modus for the election... And we will take a decision in February," he said after the meeting of euro-zone finance ministers here.

The ministers had "no debate about specific candidates," he added.

Copyright 2009 Dow Jones Newswires

S Korea Vice Finance Minister: Government Won’t Meddle In BOK’s PolicyObama takes softer tone with community banks

Chile Presidential Hopeful Frei Concedes Defeat To Pinera

SANTIAGO -(Dow Jones)- Chilean presidential candidate Eduardo Frei, of the center-left Concertacion coalition, conceded defeat to his rival, conservative billionaire Sebastian Pinera, Sunday night.

With votes from 60.3% of polling stations counted so far, Frei trailed behind Pinera with 48.3% of votes to his contender's 51.87%.

Pinera, a former Senator, will be the first right-leaning president since Gen. Augusto Pinochet's 1973-1990 dictatorship.

"I want to congratulate Sebastian Pinera and wish him success," said Frei, who was flanked by former Presidents Patricio Aylwin and Ricardo Lagos and his family.

Frei, President of Chile from 1994 to 2000, alluding to many voters' concerns that Pinera's supporters and possible cabinet members collaborated with the Pinochet regime, added that he hopes Pinera will uphold the "freedoms that we obtained with such hard work."

At the Pinera camp, meanwhile, his supporters called his victory a historic moment and said they would work for unity in the hopes of burying the ghost of Pinochet.

"Chile has shown the world that it wants to move forward and not govern looking at the past. Many of us in the center right were not involved in the military government," said Bruno Baranda, secretary general of the Renovacion Nacional party, which is part of the right-wing Alianza coalition backing Pinera.

Baranda noted that the election marked the end of the so-called "transition to democracy period" following the end of the Pinochet regime.

(Anthony Esposito contributed to this report)

Copyright 2009 Dow Jones Newswires

Millions in VW work approved for Chattanooga plantUPDATE: Chile’s President To Send Envoy To Assist In Haiti

Australia Government To Continue To Wind Down Stimulus - Treasurer

MELBOURNE -(Dow Jones)- The Australian government will continue to carefully wind down its economic stimulus measures, the nation's Treasurer, Wayne Swan, said Sunday.

"Our stimulus program was specifically designed to have its maximum impact in the June quarter of last year and then gradually phase down," Swan said in a statement.

He said some measures, including cash handouts to taxpayers and boosted housing grants, have already been fully withdrawn.

"Our fiscal stimulus will continue to carefully wind down as private demand recovers, subtracting from growth throughout 2010," Swan said.

The comments come as data continues to show Australia's economic situation is improving. Last week, official data showed the nation's unemployment rate fell to 5.5% as the economy continues to create jobs, and adding to expectations the Reserve Bank of Australia could again increase its official cash rate when board members meet early next month.

Swan also repeated that the government plans to re-introduce legislation for its planned carbon pollution reduction scheme "as soon as Parliament resumes in a bit over two weeks."

"Tackling climate change is one of the important items on a reform agenda that also includes tax and health reform," Swan said.

Copyright 2009 Dow Jones Newswires

Senators lash out at stimulus for struggling Oak Ridge mallCavuto: Let Us Do the Spending

2nd UPDATE:UK Brown Vows Social Mobility At Heart Of Election Race

(Updates with ComRes poll)

LONDON -(Dow Jones)- U.K. Prime Minister Gordon Brown sought to place his party back in the center-ground of politics on Saturday, promising to place middle class aspirations and social mobility at the heart of his Labour party's election agenda.

With his party still trailing the opposition Conservatives by some margin in opinion polls ahead of a general election which must be held by June, Brown said his party will continue the centrist New Labour agenda that has led Labour to three straight election wins since 1997.

"I believe in an aspirational Britain. Opportunity and reward cannot be hoarded at the top, and it is not enough just to protect people at the bottom," he said. "We have governed as New Labour and now we will campaign as new Labour."

Brown set as the party's defining mission of the coming years "a wave of social mobility not seen in this country since the immediate aftermath of the second world war" and said a Labour government would seek to not "only raise the glass ceiling" on people's aspirations but to "break it."

The speech was Brown's clearest signal yet that he hopes to recreate the broad coalition of political support that hoisted Labour to power in 1997. In recent weeks, Brown's hesitancy to talk openly about the need for spending cuts and his comments about opposition leader David Cameron's well-off background have led to charges that Labour was pursuing a campaign aimed at the core of its traditional working class voters.

Brown's centrist pitch was backed up by comments from Business Secretary Peter Mandelson in an interview with the Daily Telegraph in which he said that Labour was not "ideologically" committed to the new, 50% higher rate income tax. The government plans to institute the new higher rate in April, raising the top rate from the current 40%. When it came to power in 1997, Labour made a key promise to keep the highest level of income tax as low as possible.

In an interview, published Saturday, Mandelson said that it was "very important" to preserve competitive business tax rates.

"Personally, I would favor, when financial circumstances permit, for the top rate to come down, just as it has gone up when times were hard," he said. "If we had an ideological objection to the top rate being at 40%, why did we keep it there for so long?"

The 50% tax rate is for those earning over GBP150,000. It was introduced to help the government plug the deficit gap opened up by the financial crisis.

In his speech Saturday, Brown acknowledged the need for real cuts in some areas of government spending in order to pare down the U.K's soaring debt levels and he said that, just as financial services needed reform, so did government.

However he hit out at Conservative plans to scrap some tax credits and government support which currently goes to middle class families, accusing the Conservatives of planning "a raid on the quality of life of our middle classes."

"Ours is the only party that will protect and not squeeze the mainstream middle," he said in the speech to the center-left Fabian Society think tank.

The government has pledged to halve the U.K.'s budget deficit over the next four years but is facing calls to step up its deficit reduction ambitions if it is to protect the U.K.'s AAA sovereign rating.

The opposition Conservatives have said they want to reduce the U.K.'s debt faster than that but have yet to say how they will make the necessary savings.

However, a ComRes poll for the Independent on Sunday, released Saturday evening, shows how much Labour has to do to win reelection. The poll shows the Conservatives with 42% of support ahead of the election, up four points on a month earlier, Labour remaining with 29% and the Liberal Democrats with 19%. The support for other small parties slipped to 10% from 14% in a signal that voters are making up their minds about which party will have their support at the ballot box. The increase in the Conservative lead comes after Labour was rocked in early January by a call from two ex-ministers for a secret ballot on Brown's leadership.

Copyright 2009 Dow Jones Newswires

UK Mandelson: Didn’t Pressure Ministers To Back PM BrownExperts fear that U.S. is entering decade of job doldrums

Japan DPJ Ozawa: To Make Every Effort To Carry Out Duties

TOKYO -(Dow Jones)- Ichiro Ozawa, secretary general of the ruling Democratic Party of Japan, said Saturday that he won't step down from the post after the arrest of his three aides over a funding scandal.

"I have not done anything wrong. I will make every effort to carry out my duties," he said in a speech at the party's convention.

Ozawa's remarks came after his three current and former secretaries, one of whom is a DPJ lawmaker, were arrested on suspicion of violating political-funds rules.

Local media report that prosecutors believe Ozawa's political fund management organization failed to properly record the sources of funds used to purchase a piece of land in Tokyo for Y400 million ($4.4 million) in 2004 for the purpose of building a staff dormitory.

"I won't accept" such prosecutor's moves, Ozawa said, adding he will adopt a confrontational approach to them.

Copyright 2009 Dow Jones Newswires

Gold comforts uneasy investorsNavistar To Make Electric Light Trucks

CURRENCIES: Dollar Holds Gains After U.S. Data As Euro Falls

The U.S. dollar gained versus the euro amid worries about Greece's fiscal situation and refuted rumors that German Chancellor Angela Merkel was preparing to resign.

The U.S. currency held onto those gains and others against major currencies as reports showed tame inflation and improvements in manufacturing.

The dollar index (DXY), which gauges the performance of the greenback against a trade-weighted basket of six major currencies, rose to 77.232, up from 76.762 in North American trading late Thursday.

The euro slipped to $1.4373 from $1.4498 late Thursday. The European single currency fell 1% against the Japanese unit to change hands at 130.59 yen and declined 0.5% against the British pound to buy 88.30 pence.

The British pound fell 0.4% against the U.S. dollar to $1.6280.

The dollar slipped against its Japanese counterpart, buying 90.87 yen, down from 91.20 Japanese yen Thursday.

The U.S. government's consumer-price index rose 0.1% in December -- a slower pace than analysts expected. The report also showed prices rose 2.7% in 2009, while core prices, excluding food and energy, rose 1.8%.

Manufacturing activity in New York state strengthened in early January, the New York Federal Reserve said. The Empire State Index rose to 15.9 in January from an upwardly revised 4.5 in December. Readings above zero indicate more firms were growing than contracting.

The output of the nation's factories, mines and utilities rose a seasonally adjusted 0.6% in December, the sixth increase in a row following the worst downturn since the end of World War II, the Federal Reserve reported Friday.

The Reuters/University of Michigan gauge of consumer sentiment rose less than some economists expected.

The euro was the big loser versus the dollar and other major currencies, slipping as worries about Greece's fiscal situation persisted. The euro also saw pressure from rumors that German Chancellor Angela Merkel was preparing to resign.

Merkel subsequently said talk of resignation was "absurd." Earlier, a government spokesman said the rumors were "utterly unfounded."

Investors reacted skeptically to the Greek government's budget plan. Worries about Greece's financial woes and the risk of contagion and increased tensions within the single-currency region have served to put moderate pressure on the euro since December.

"The euro is coming under pressure as investors grapple with the possible ramifications of crippled public finances in Greece and whether this may spread to other countries," said Andrew Wilkinson, senior market analyst at Interactive Brokers.

Kenneth Broux, market economist at Lloyds TSB, said concerns about Greece continue to cloud the outlook for the euro. At the same time, expectations for rate increases by the U.S. Federal Reserve have been tamped down.

As a result, that's keeping the euro/U.S. dollar cross largely in balance, he said. The euro could slip toward $1.4280, but it's difficult to see a breakout either way in the near term, Broux said.

Copyright 2009 Dow Jones Newswires

FOCUS: Bulgaria Emerges As Fiscal Model, Launches Euro Bid3Q income up for Dollar General

EU Antitrust Chief Hauled Over Coals In Bid For New IT Post

BRUSSELS -(Dow Jones)- Neelie Kroes, Europe's tough antitrust tzar, has run into trouble in her bid to take on a new role as IT chief in a new European Commission line up.

The commissioner, who was dubbed "Steely Neelie" for her resoluteness in tackling market abuse by Microsoft, has failed to win immediate backing of key members of the European Parliament who must approve her new appointment.

After a three-hour hearing Friday, where Kroes was quizzed on such topics as broadband Internet for all and a single European market in online goods and services, many MEPs expressed "disappointment and frustration" that she had failed to make stronger impact.

"We were expecting a strong debate on issues concerning European citizens, economic recovery and investment in new communication technology," said French socialist MEP Catherine Trautmann.

"But the commissioner-designate didn't speak concretely on the social challenge for a guaranteed development of Internet, respecting fundamental rights and freedom of expression."

"Neelie Kroes' hearing didn't go well and the coordinators of the political group decided not to write the customary letter of evaluation afterwards," said Tony Robinson, spokesman for the parliament's socialist and democratic group, referring to a letter of recommendation or rejection to the parliament's president.

Instead, key members from the different parties will meet her again next week to try to resolve some of the issues, he said.

Kroes' press spokesman Jonathan Todd said there had been no official word from the parliament on the matter but the commissioner would cooperate with the parliament in any way she could.

"The commissioner designate is, of course, ready and willing to work with the parliament to clarify any outstanding issues," he said.

The antitrust chief isn't the only candidate to run into trouble during the parliament's vetting process.

Olli Rehn, the Finnish commissioner in charge of enlargement who has been nominated for the new Economic and Monetary policy role has also failed to win immediate endorsement. More discussions among key MEPs will take place next week, Robinson said.

And Rumiana Jeleva, the Bulgarian Foreign Minister put forward for the Humanitarian Aid post has been widely criticized as just not up to the job and is in line for rejection.

Socialist leader Martin Schulz said that Ms Jeleva would have to face a second parliamentary hearing if she remained a Commission nominee. "But I fear that a second hearing will be worse than the first," he said. "Her performance showed beyond doubt that she is incompetent."

Copyright 2009 Dow Jones Newswires

EU’s Rehn: EU Must Restabilize Public Finances In Coming YearsHigh court signals doubt NFL has antitrust protection

UPDATE: Chile's President To Send Envoy To Assist In Haiti

(updates with quotes from president and defense minister)

SANTIAGO -(Dow Jones)- Chilean President Michelle Bachelet said Wednesday she'll send a special envoy and humanitarian assistance to Haiti following the earthquake that shook the Caribbean nation.

Chile has a group of 505 military personnel in Haiti as part of a United Nations peacekeeping force there.

Bachelet tapped Juan Gabriel Valdes, a former Chilean foreign affairs minister who headed the U.N. Stabilization Mission in Haiti, or MINUSTAH, between 2004 and 2006, as her envoy.

"He has the necessary experience and the contacts to expedite assistance there," Bachelet said.

The government will send military airplanes with medical assistance, and a Navy vessel is also bound for Haiti, according to officials.

Two Chileans, one of them a member of MINUSTAH and the other the wife of a general deployed in Haiti, have been reported missing following the quake and the government is concerned about their whereabouts, Defense Minister Francisco Vidal said.

"Our troops haven't had any physical problems expect one soldier who sprained his elbow, but what's causing us anxiety, and we express our solidarity, are the missing women," he said.

Chilean troops in Haiti have been providing assistance since the quake hit Tuesday evening.

"Chilean forces immediately deployed their human and physical resources to reinforce the initial U.N. assistance tasks, through Air Force helicopter flights over the affected areas to determine the magnitude of the damages," the head of the Chilean Armed Forces staff said in a statement.

Copyright 2009 Dow Jones Newswires

For Ingram CEO, future of books is promisingCavuto: You Want the War, You Pay for It

BOE Barker: Don't See UK Economy Gathering Pace In 1st Half - Report

LONDON -(Dow Jones)- Bank of England Monetary Policy Committee member Kate Barker has said she doesn't expect the U.K. economy to gather momentum in the first six months of 2010, but that she's somewhat more optimistic about the latter half of the year.

U.K. output probably started to grow again in the final quarter of 2009, following a surprise contraction in the third quarter, Barker said in an interview with regional newspaper The News, published Wednesday, during a visit to the southern English city of Portsmouth.

The BOE is on track to complete a targeted GBP200 billion of quantitative-easing asset purchases by its meeting in early February. While economists won't rule out the possibility of further stimulus, many think that the MPC will refrain from additional action next month.

"I expect the first half of 2010 at least to be quite patchy and not gather pace. After that I'm a bit more optimistic," Barker was quoted as saying.

"The third quarter of 2009 was down, but I'd be very surprised if the fourth quarter doesn't see some positive growth [in output]," she added.

Barker also observed optimism among exporters in the area about the year ahead, due to the weakness of sterling.

Newspaper Web site: http://www.portsmouth.co.uk/biz/City-has-braved-downturn-well.5979339.jp

Copyright 2009 Dow Jones Newswires

Thanks to tax credit, home sales surge 7.4 percentS Korea Vice Finance Minister: Government Won’t Meddle In BOK’s Policy

Spain Signals Support For Constancio As New ECB Vice President

LISBON -(Dow Jones)- Spanish Finance Minister Elena Salgado Tuesday said Bank of Portugal Governor Vitor Constancio is an "excellent" candidate for the job of European Central Bank vice president.

Speaking at a meeting with local business leaders and journalists, Salgado was responding to a question whether Spain will support Constancio's candidacy for the number two job at the ECB.

Salgado said the decision will be made by consensus among euro-zone members, adding that "mutual support has been constant" between Spain and Portugal.

Copyright 2009 Dow Jones Newswires

S Korea Vice Finance Minister: Government Won’t Meddle In BOK’s PolicyNashville People in Business

Uncertainty Holds Back Hiring, Investment By Business-US Chamber

WASHINGTON -(Dow Jones)- Uncertainty over how a range of issues will be resolved by politicians in the nations' capital is preventing business owners from hiring new workers or expanding their businesses, the head of the U.S. Chamber of Commerce will say Tuesday.

Tom Donohue, the president and chief executive of the powerful business lobby, will detail the lengthy list of concerns that business owners have in a speech scheduled to begin shortly.

"While there has been some improvement in the economy, we must add another word when describing the state of American business today - and that word is 'uncertainty,'" Donohue will say, according to excerpts of the speech released by the Chamber.

These include the impact of the health care legislation, a possible climate change bill creating a cap and trade system, stringent rules on emissions from the Environmental Protection Agency, an effort to rewrite the financial regulatory framework, a push by labor for a measure making it easier for unions to organize in the workplace and the rise of trade isolationism, Donohue will say.

These are all set against a wider backdrop of unease in the business community over the federal government's fiscal imbalances, the chamber head will say.

Donohue will say that how this "laundry list" of issues plays out will determine whether it is a positive or negative year for the business community.

Copyright 2009 Dow Jones Newswires

Early-Market Movers: New York Community, Akamai TechnologiesNashville People in Business

FOCUS: Bulgaria Emerges As Fiscal Model, Launches Euro Bid

OF DOW JONES NEWSWIRES

SOFIA -(Dow Jones)- As the European Union struggles to avoid a full-blown debt crisis in 2010, an unlikely candidate has emerged as a fiscal model for the bloc - its newest and poorest member.

Bulgaria joined the EU in 2007, posted the smallest budget deficit of any of the 27 member states last year, and is tipped to be the only EU economy to balance its budget in 2010. Growth forecasts for this year have been revised up to predict an expansion, and credit ratings agencies have upgraded the EU newcomer's outlook from negative to stable.

Spearheading that austerity drive is Prime Minister Boyko Borisov, a tough-talking former karate champion who says his government will formally apply to join the euro zone by the end of January, setting it on course to adopt the single currency in 2013.

"We have everything in order and we're ready to start the road to the euro zone by the end of the month - it is now the first foreign policy priority of my government to enter the euro zone," Borisov said in an interview.

The Prime Minister's declaration ends months of speculation over when the Balkan state would formally apply to the bloc's exchange rate mechanism--a two-year currency stability test for euro hopefuls.

A successful application would boost confidence and foreign investment in Bulgaria, and mean that it would join the currency area before nearby Romania and Hungary.

But it must meet a number of criteria covering currency stability, public sector debt levels, interest rates and inflation. And its application must be approved by EU heads of government and European Central Bank President Jean-Claude Trichet.

Economists say Bulgaria's economic and fiscal management has made it a role model for other countries in Europe.

"Its experience has a lot to teach other EU economies preparing to cut spending," said Nigel Rendell, emerging markets economist at RBC Capital Markets.

But Borisov, who has drawn international accolades for cutting spending 15% while maintaining high levels of public support, fears Bulgaria's fiscal performance, which far outshines each of the 16 countries in the euro zone, won't make them a shoo-in to enter the currency club.

His fear is that an intensification of debt problems among some existing euro zone members may mean the bar is set even higher for new entrants, as nervous euro zone policymakers opt to consolidate existing borders rather than expand the bloc.

"I am afraid that the debt crisis in newer euro zone countries will negatively affect us," he said. "We hope that the authorities respect the admission criteria as we've worked hard to get here."

In a thinly veiled reference to Greece, which has struggled to convince investors it can cut its ballooning budget deficit from over 13% of GDP towards the EU's 3% ceiling, Borisov said he was making progress in persuading European leaders his government would be fiscally disciplined "now and in the future."

Greece joined the euro zone on the basis of public sector debt figures that were subsequently revealed to underestimate the true size of its budget deficit. It then failed to address underlying weaknesses in its public finances that led to the explosion in debt last year.

Government fears that Bulgaria's candidacy could be vetoed by policymakers anxious to avoid further expansion of the euro zone are shared by business leaders here.

"It makes sense for Bulgaria to apply--but I worry that at a time of crisis the European Central Bank could postpone the application on a technical point because they want to consolidate," said Ivo Prokopiev, chairman of industry group the Confederation of Bulgarian Employers and Industrialists. For the euro bid and beyond, policy analysts say Bulgaria's steps could provide a blueprint for policymakers across central and eastern Europe, which is likely to see a succession of new governments from the seven elections due this year alone.

"How Bulgaria is treated by the EU will send a message to all the other countries in the region - if Brussels doesn't reward their fiscal discipline then the message which goes is keep on spending," said Ivan Krastev, Chairman of the Sofia-based Center for Liberal Strategies.

Borisov, who's polling numbers have dipped modestly in recent months, indicates that his government's efforts to cut costs and balance the budget are not limitless.

"If fiscal discipline is still hitting people really hard in the years ahead, then we'll have to reconsider our approach," he said.

But for now, the government appears to be holding its nerve, with Borisov signaling he would extend the powers of his 'cost-cutter-in-chief,' Finance Minister Simeon Djankov, to add increased supervision of the real economy to his treasury portfolio.

Djankov, a former World Bank economist who's appointment steadied investor nerves about Borisov's incoming administration in July, said in an interview that fiscal credibility was "non-negotiable" and was essential to safely navigate Bulgaria's entry into the euro zone.

"We want to be very clear that we take fiscal credibility very seriously - its a fundamental part of repairing the credibility of Bulgaria which will allow us to work as equal partners within the EU," he said in an interview.

Copyright 2009 Dow Jones Newswires

EU’s Rehn: EU Must Restabilize Public Finances In Coming YearsSoaring U.S. debt could limit growth, history suggests

EU's Rehn: EU Must Restabilize Public Finances In Coming Years

BRUSSELS -(Dow Jones)- European Union countries need to restabilize their public finances over the next few years, Olli Rehn, European Commissioner-designate for economic and monetary affairs, said during testimony at the European Parliament.

Rehn, a Finn who just finished a five-year term as commissioner for EU enlargement, looks set to take over the bloc's economic portfolio at a difficult time.

All 27 EU countries appear to have had deficits above 3% of gross domestic product last year, breaking the EU's upper limit. Some countries, including Greece, which was on track for a deficit near 13% of GDP in 2009, are causing worries about the longer-term stability of EU public finances.

Rehn said the EU economy still needs stimulus measures to support economic growth, but added that state spending needs to be withdrawn "when the time is right."

The European Parliament is charged with final approval of the European Commissioners, who lead the European Union's executive arm--the body that steers EU trade policy, enforces antitrust laws and ensures countries follow the bloc's economic rules.

Copyright 2009 Dow Jones Newswires

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Pakistan December Trade Deficit Widens By 53% To $1.326 Billion

KARACHI -(Dow Jones)- Pakistan's trade deficit in December widened by 53% to $1.326 billion, as the country's imports rose more than exports.

December imports rose by 36.8% to $2.907 billion, while exports rose by 26% to $1.581 billion.

The trade deficit in the July to December period, first six months of the current fiscal year, amounted to $6.8 billion compared with $9.642 billion a year earlier, a statement posted on the Federal Bureau of Statistics web site said.

Imports in the July to December period fell 16% to $15.994 billion, and exports fell 3% to $9.190 billion, the statement said.

Copyright 2009 Dow Jones Newswires

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FSB Draghi: Situation May Not Be As Good As Market Thinks

BASEL, Switzerland -(Dow Jones)- Financial conditions have strengthened in recent months as the economic recovery takes hold, but financial market participants may be overrating the degree of improvements, Financial Stability Board Chairman Mario Draghi said Saturday.

"The general situation is much better than we could have expected a year ago, but at the same time, it is not as good as the market thinks it is," Draghi said at a press briefing.

The FSB, based at the Bank for International Settlements in Basel, includes central bank experts and regulators from around the world.

Following the collapse of major financial institutions in 2008 and a fast drying up of liquidity available to banks globally, the leaders of the world's 20 most important economies have charged the FSB to monitor progress in strengthening financial regulation.

With markets' confidence and risk appetite recovering fast, there is now a growing concern that lenders and investors may quickly return to their old habits and engage in excessive risk-taking.

The FSB's biannual plenary meeting Saturday comes ahead of regular gatherings of global central bankers and financiers at the Bank for International Settlements in Basel later this weekend and Monday.

Copyright 2009 Dow Jones Newswires

Bank bailout likely to pay offS Korea Vice Finance Minister: Government Won’t Meddle In BOK’s Policy

Immigration Overhaul Would Hike US GDP By $1.5 Trillion Over Decade-Report

WASHINGTON -(Dow Jones)- A comprehensive overhaul of U.S. immigration laws would increase the country's gross domestic product by $1.5 trillion over a decade, a new report from the Center for American Progress concluded Thursday.

Providing a path to legal residence for the roughly 8 million illegal immigrants currently in the U.S. would lead to higher wages for both them and other U.S. workers, increase tax revenue and result in higher consumption by immigrants, the report concluded.

The $1.5 trillion figure is reached by a calculation that an immigration overhaul would increase U.S. GDP by 0.84% annually.

The study considered three scenarios: one where comprehensive immigration law changes are implemented; a second where only a temporary worker program is created and a third where massive deportations of illegal immigrants is pursued. The second would increase U.S. GDP by $792 billion over the next decade, while the third would cost the economy $2.6 trillion over the same period.

The report looks at the economic impact that followed the last time a significant immigration shake-up was concluded in 1986 during the Reagan administration as a basis for its findings of what would occur as a result of an overhaul of immigration laws this year.

The Center for American Progress is a left-leaning think tank that is close to the Obama White House. Janet Napolitano, the Homeland Security secretary, chose a November event hosted by the Center to outline her views on change to immigration laws.

It is one of the many groups strongly pushing the administration to pursue immigration changes this year rather than waiting until 2011 after the mid-term elections in November 2010.

"The imperative is both a political one because of the elections, and a policy one because of the economics," Angela Kelley, vice president for immigration policy at the Center, said Thursday.

Immigration legislation was introduced in the House in December that has the backing of many liberals in the Democratic caucus. But given the difficulty of passing major legislation through the Senate, it is expected that any effort to tackle the immigration issue would begin there.

Sen. Charles Schumer (D., N.Y.), the chairman of the immigration subcommittee, is working with Sen. Lindsey Graham (R., S.C.) to draft legislation on the matter.

Given the bruising experience, the drive for sweeping health-care legislation has been for both the administration and congressional Democrats, there is some suggestion that they may not have the appetite for another significant fight before the November elections.

Copyright 2009 Dow Jones Newswires

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S Korea Vice Finance Minister: Government Won't Meddle In BOK's Policy

SEOUL -(Dow Jones)- The South Korean government won't meddle in Bank of Korea's monetary policy and respects its independence, Vice Finance Minister Hur Kyung-wook said Friday.

"What we learned from the latest global financial crisis is the need for close cooperation between the government and the central bank," he said at a BOK rate review. "Good communication between us will help manage risks surrounding the Korean economy."

Thursday, the Ministry of Strategy and Finance said that the vice finance minister would attend BOK policy meetings from now on, exercising a right the government hasn't used in more than a decade. The minister will share the government's assessment on the economy with the BOK.

The central bank is widely expected to leave its base rate at an all-time low of 2.00% at the review later this morning.

Copyright 2009 Dow Jones Newswires

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