Stock Exchange

Futures flat, credit downgrade for Ireland

noreply@blogger.com (Unknown) — Fri, 17 Dec 2010 06:23:00 -0800

NEW YORK (Reuters) – Stock index futures were little changed on Friday as wary investors kept their eyes on the euro zone debt crisis after Ireland's credit rating was slashed.

European Union leaders agreed to create a permanent financial safety net starting in 2013, and the European Central Bank will nearly double its capital to cope with bigger credit risk.

European bank stocks were hit hard after Moody's slashed Ireland's credit rating by five notches.

U.S.-listed shares of Allied Irish Bank (AIB.N) fell 4.6 percent to $1.24 in premarket trade, while Barclays (BCS.N) also fell 2.1 percent to $16.25.

"We are headed for a sluggish open because of European woes ... but since this isn't something we weren't expecting, I don't see the market selling off much," said Peter Cardillo, chief market economist at Avalon Partners in New York.

S&P 500 futures were down 0.2 point and below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 11 points, while Nasdaq 100 futures lost 0.75 point.

U.S. stocks, bucking a trend of late-day selloffs, ended higher Thursday as economic bellwether FedEx Corp (FDX.N) offered a bullish profit outlook that augured well for broad growth.

Market volume and volatility could increase later in the day as traders adjust or exercise derivative positions on four different types of expiring equity futures and options contracts, also know as "quadruple witching."

The U.S. House of Representatives approved a compromise deal between President Barack Obama and Republicans late Thursday to extend expiring tax cuts -- a high-stakes gamble to create jobs at a cost of deepening the U.S. debt. Congress was racing to enact the legislation as it faced an end-of-year deadline when the Bush-era tax cuts were set to expire.

The Conference Board releases its report on November leading economic indicators at 10:00 a.m. EST (1500 GMT). Economists in a Reuters survey forecast a 1.1 percent rise, compared with a 0.5 percent increase in the prior month.

Ford Motor Co (F.N) intends to raise its 30 percent stake in Jiangling Motors Corp (000550.SZ), a major Chinese light commercial vehicle maker, a source said.

Blackstone Group LP (BX.N) agreed to restructure about $7 billion of the remaining debt tied to its 2007 purchase of Equity Office Properties Trust, the largest leveraged buyout ever, the Wall Street Journal reported.

Oracle Corp (ORCL.O) forecast current-quarter profit will beat estimates as it reported that new software sales surged. Oracle rose 4.4 percent to $31.60 premarket.

(Reporting by Angela Moon; editing by Jeffrey Benkoe)

Futures flat ahead of housing data

noreply@blogger.com (Unknown) — Mon, 26 Jul 2010 05:08:00 -0700

NEW YORK (Reuters) – Stock index futures were little changed on Monday ahead of data on new home sales, following the best three-week period on the S&P 500 Index in almost a year.

S&P futures hovered around 1,100, a key level broken by the benchmark on Friday for the first time in a month. Some technical measures of both the S&P 500 (.SPX) and S&P futures are sending bullish signals, but charts also show further resistance roughly 1 percent above current levels. Recent economic data has also cut into the positive sentiment.

S&P 500 futures fell 1.7 2 points and were about even with fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 9 points and Nasdaq 100 futures shed 4.25 points.

BP Plc (BP.L)(BP.N) was up 2.6 percent in premarket trading as the British oil giant is expected to install an American troubleshooter as chief executive in the next 24 hours, replacing Tony Hayward, who has come under fire for his handling of the worst oil spill in U.S. history.

Pharmaceutical stocks will be in the spotlight The Wall Street Journal said Britain's GlaxoSmithKline Plc (GSK.L)(GSK.N) had recently made "a very casual approach," to Genzyme Corp (GENZ.O) but industry insiders and analysts said Glaxo's chief executive was unlikely to pursue a deal. U.S.-traded Glaxo shares dipped 1.4 percent to $35.99 premarket.

Sources familiar with the matter said on Friday that Sanofi-Aventis (SASY.PA)(SNY.N) was sounding out Genzyme, prompting a 15 percent jump in the U.S. biotech company's market value to $16.7 billion.

Investors will eye the U.S. Commerce Department's new home sales data for June, at 10 a.m. (1400 GMT). Economists in a Reuters survey forecast a total of 320,000 annualized units in June compared with 300,000 in May.

Legg Mason Inc (LM.N), Fluor Corp. (FLR.N), Lorillard Inc (LO.N), Masco Co (MAS.N), Plum Creek Timber Co Inc (PCL.N) and Range Resources Corp (RRC.N) are due to report results on Monday.

U.S. stocks rose on Friday as GE's (GE.N) dividend hike boosted investor sentiment, the Dow Jones industrial average gained 102.32 points, or 0.99 percent, to 10,424.62, and The Nasdaq Composite Index (.IXIC) added 23.58 points, or 1.05 percent, to 2,269.47.

The S&P 500 rose 8.99 points, or 0.82 percent, to 1,102.66, closing above the key 1,100 level for the first time in a month after coming close but failing four times in July.

EU companies: debt crisis is hurting recoverya

noreply@blogger.com (Unknown) — Mon, 14 Jun 2010 23:16:00 -0700

BRUSSELS: European companies warned Monday that the region's debt crisis risks damaging a fragile economic recovery by hiking costs for businesses to borrow and invest.

The euro has shed some 20 percent of its value over the past six months as financial markets lost confidence in European governments' ability to rein in massive debt levels while growth remains low.

Philippe de Buck, who heads the BusinessEurope group representing some 20 million companies, told reporters that "business is more than concerned about the credibility of the euro" after its sharp drop in value.

The group says that businesses are seeing the real impact of recent months' volatile markets in higher costs for borrowing and more difficulty in getting credit. It says this holds companies back from investing more in the economy.

It is calling on European Union leaders to bolster confidence in the euro currency and their own finances by making the public spending cuts they need to balance their books — and also make longer-term reforms to boost growth by opening up the labor market and shedding business barriers across the 27-nation bloc.

EU leaders meet for talks on June 17 on a new 10-year growth strategy for the region to build on a weak recovery.

Manufacturing is among the few sector picking up in Europe, fueled by exports that BusinessEurope says will grow 5 percent in 2010 and 2011 — and helped by the lower value of the euro which makes eurozone products cheaper for U.S. customers and Asian buyers using the dollar.

Eurozone industrial output grew 0.8 percent in April from the previous month, according to the EU statistics agency, and increased 0.5 percent in the entire EU.

But BusinessEurope says economic growth is stabilizing "at a too low level" — and companies are still very cautious about the recovery. The region's jobless rate will likely stay at record highs until employers start hiring again in late 2011, it forecasts.

The Spanish government was trying Monday to win back market confidence by pushing on with efforts to curb public spending, this time by selling crucial labor reforms to skeptical opposition parties that would loosen up rigid hiring and firing rules.

The ruling Socialist Party says this could encourage companies to hire more workers — reducing a jobless rate that is the highest in the eurozone — and help to kick start economic growth.

The measures also aim to appease markets and EU nations worried that Spain could be the next eurozone country to require a bailout. Spain must refinance €40 billion ($49 billion) in debt in June and July, according to Deutsche Bank.

Greece has already sought a bailout from other European Union nations and the International Monetary Fund and some economists believe other indebted nations — such as Spain and Portugal — may also need financial rescue if they can't borrow what they need from wary investors.

EU and German officials on Monday denied German media reports that Spain was likely to seek help soon.

European Commission Amadeu Altafaj Tardio told reporters in Brussels that there was "no such request and no plan whatsoever to provide financial assistance." German finance ministry spokesman Michael Offer also said "we see no need for action at this point."

Separately, French Prime Minister Francois Fillon expressed concern that Europe's drive toward austerity could go too far and trigger a new economic downturn.

"It is difficult for the European states to balance debt reduction ... while simultaneously tightening and not triggering a new recession," he told reporters in Oslo.

BusinessEurope's de Buck said government spending cuts had to be accompanied by moves to stoke growth.

"Discipline and growth can go hand in hand even it can be difficult," he said, calling for governments to shun "indulgence" and become more efficient with their spending.

Merkel, Sarkozy discussing the economy

noreply@blogger.com (Unknown) — Mon, 14 Jun 2010 23:15:00 -0700

BERLIN: The German chancellor and the French president met Monday to prepare for a European Union summit later this week, amid speculation of a rift in German-French views on economic policy.

Angela Merkel welcomed Nicolas Sarkozy to discuss a joint strategy on how to curb the debt crisis that has dragged down the common European currency and rattled economies across the continent.

The leaders of the eurozone's most important economies were to have held talks last week, but the meeting was canceled with only a few hours notice, fueling rumors the two are split on how Europe should best handle the financial crisis.

Germany is calling for sanctions on countries with high deficits and advocates the path of austerity as a model for Europe after presenting its own package of budget cuts on June 7, worth €80 billion ($97 billion) by 2014.

But the French government minister in charge of stimulus efforts, Patrick Devedjian, last week explicitly warned that German-style austerity measures "would be dangerous because it risks killing growth" in France.

The next test for the 16 countries sharing the euro currency — who passed a €110 billion rescue package for Greece and then set up a wider bailout found for countries in financial trouble worth €750 billion — could be ahead as pressure mounts on Spain to curb its deficit.

EU leaders meet for talks on June 17 on a new 10-year growth strategy for the region to build on a weak recovery.

While Sarkozy supporter creating an independent economic government for the eurozone, Merkel insists such decisions should be made by all EU leaders, such as the European Council.

Despite recent tension over the bailout packages for Greece and the eurozone, Sarkozy and Merkel last week showed that France and Germany were still working together closely, and wrote a joint letter urging the European Commission to speed up efforts to regulate financial markets.

The combined economic output of Germany and France, with their respective GDP in 2009 standing at €2,400 billion and €1,950 billion according to EU statistics, represents almost half of the eurozone's GDP of some €9,000 billion.

Asian stocks post tepid gains amid Europe anxiety

noreply@blogger.com (Unknown) — Mon, 14 Jun 2010 23:13:00 -0700

TOKYO: Asian shares rose Tuesday but gains were tepid after Wall Street succumbed to anxiety about Europe's economy.

Japan's Nikkei 225 stock average fell 0.2 percent to 9,861.87, with investors taking profits after Monday's jump of almost 2 percent. Australia's S&P/ASX 200 gained less than 0.1 percent to 4,507.70 while Hong Kong's Hang Seng added 0.1 percent to 20,075.11.

Elsewhere, South Korea's Kospi was fractionally higher at 1,691.47 and Singapore's market rose 0.1 percent. Taiwan's benchmark was 0.3 percent higher. Financial markets in mainland China were closed for a holiday.

In New York on Monday, the Dow Jones industrial average erased early gains to end down 0.2 percent at 10,190.89. The S&P 500 index fell 0.2 percent to 1,089.63, while the Nasdaq composite index rose less than 0.1 percent 2,243.96.

Stocks began higher following encouraging industrial production data from Europe. But that wasn't enough to overcome ongoing fears about the continent's problems, especially after Moody's lowered its rating on Greece's debt to "junk" status.

The fallout in Asia was mild, however, with most benchmarks showing little definitive direction ahead of U.S. industrial production numbers due Wednesday.

In Tokyo, insurance names were among the day's losers, with Tokio Marine Holdings Inc. down 1.8 percent. Tech shares were also having a lackluster day. Canon Inc. fell 1.1 percent, and Sony Corp. lost 0.6 percent.

In currencies, the dollar slipped to 91.43 yen from 91.58 yen late Monday in New York. The euro rose to $1.2217 from $1.2210.

Benchmark crude for July delivery was up 10 cents at $76.38 in electronic trading on the New York Mercantile Exchange.

NC congressman apologizes for behavior on video

noreply@blogger.com (Unknown) — Mon, 14 Jun 2010 23:09:00 -0700

RALEIGH, N.C. – A Democratic congressman apologized Monday after video posted online showed him swatting at the camera, demanding that two men taping him identify themselves and grabbing one of them by the wrist and neck.

"I deeply and profoundly regret my reaction and I apologize to all involved," Rep. Bob Etheridge of North Carolina said in a statement. "No matter how intrusive and partisan our politics can become, this does not justify a poor response."

The video was posted on websites owned by Andrew Breitbart, the conservative Web entrepreneur who also released video of workers for the community organizing group ACORN counseling actors posing as a pimp and prostitute.

It shows two men approaching Etheridge with a camera on a Washington street. He swats at the camera and repeatedly asks the men who they are. When they say they are students, he grabs one by the wrist and quickly by the back of the neck before pulling him against his side.

Etheridge, a congressman in the state since 1997, reiterated his apology at a hastily called news conference Monday afternoon.

"The truth is I had a long day," he said. "I've had bad days many times. It's not a good crutch to lean on and I won't use that."

The video is interspersed with several screens of text, including: "What happens when a US congressman meets a college kid on a street in Washington?" and a few frames later, "He goes BERSERK!"

In a telephone interview from London, Breitbart declined to name the students who recorded the video, saying he wanted to protect them. The two do not work for Breitbart and were not paid, he said.

A Breitbart employee found the video online, edited it and posted it, he said. A story accompanying the video on a Breitbart website says the video was recorded last week. Etheridge declined to say when the encounter occurred.

Asian stocks up despite Wall Street anxiety

noreply@blogger.com (Unknown) — Mon, 14 Jun 2010 23:07:00 -0700

BANGKOK – Asian shares rose slightly Tuesday as skittish investors came back to the market despite a drop on Wall Street triggered by anxieties over Europe's economy.

Oil rose past $75 per barrel, while key indexes in Japan, South Korea, Hong Kong and Australia rose tepidly. The dollar weakened against the yen and the euro slipped slightly against the greenback.

The Nikkei 225 stock average was up 0.3 percent, or 28.97 points, to 9,908.85. Australia's S&P/ASX 200 gained 0.2 percent to 4,512.3 while Hong Kong's Hang Seng added 0.4 percent to 20,129.24.

Elsewhere, Singapore's market rose 0.3 percent. Taiwan's benchmark was 1.4 percent higher. Stock indexes in India and Thailand were down by just a fraction of a percent.

Financial markets in mainland China were closed for a holiday.

In New York on Monday, the Dow Jones industrial average erased early gains to end down 0.2 percent at 10,190.89. The S&P 500 index fell 0.2 percent to 1,089.63, while the Nasdaq composite index rose less than 0.1 percent 2,243.96. Stocks began higher following encouraging industrial production data from Europe. But that wasn't enough to overcome ongoing fears about the continent's problems, especially after Moody's lowered its rating on Greece's debt to "junk" status.

The fallout in Asia was mild, however, with most benchmarks showing a small amount of buoyancy ahead of U.S. industrial production numbers due Wednesday.

"Overseas markets have regained some of their nerve," said Howard Gorges, vice chairman of South China Brokerage in Hong Kong. "People will still be wary because of what goes on in Greece or Spain, but there's been so much adverse news that markets are ignoring quite a lot of it."

While the euro has risen since hitting a four-year low earlier in June, it has dropped more than 15 percent this year and a strong rebound isn't expected in the near-term. Analysts also said traders remained a bit on edge, and markets could stay choppy.

"It is a seesaw situation," said Castor Pang, director of research at Cinda International in Hong Kong. "Most investors are still cautious."

In currencies, the dollar slipped to 91.50 yen from 91.58 yen late Monday in New York. The euro dipped to $1.2206 from $1.2210.

Benchmark crude for July delivery was up 9 cents to $75.21 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.34 to settle at $75.12 on Monday.

Documents: BP cut corners in days before blowout

noreply@blogger.com (Unknown) — Mon, 14 Jun 2010 23:06:00 -0700

NEW ORLEANS – BP made a series of money-saving shortcuts and blunders that dramatically increased the danger of a destructive oil spill in a well that an engineer ominously described as a "nightmare" just six days before the blowout, according to documents released Monday that provide new insight into the causes of the disaster.

The House Energy and Commerce Committee released dozens of internal documents that outline several problems on the deepsea rig in the days and weeks before the April 20 explosion that set in motion the largest environmental disaster in U.S. history. Investigators found that BP was badly behind schedule on the project and losing hundreds of thousands of dollars with each passing day, and responded by cutting corners in the well design, cementing and drilling mud efforts and the installation of key safety devices.

"Time after time, it appears that BP made decisions that increased the risk of a blowout to save the company time or expense. If this is what happened, BP's carelessness and complacency have inflicted a heavy toll on the Gulf, its inhabitants, and the workers on the rig," said Democratic Reps. Henry A. Waxman and Bart Stupak.

The missteps emerged on the same day that President Barack Obama made his fourth visit to the Gulf, where he sought to assure beleaguered residents that the government will "leave the Gulf Coast in better shape than it was before."

Obama's two-day trip to Mississippi, Alabama and Florida represents his latest attempt to persevere through a crisis that has served as an important early test of his presidency. The visit coincides with a national address from the Oval Office on Tuesday night in which he will announce new steps to restore the Gulf Coast ecosystem, according to a senior administration official who spoke on condition of anonymity so as not to upstage the president's announcements.

"I can't promise folks ... that the oil will be cleaned up overnight. It will not be," Obama said after encouraging workers in hard hats as they hosed off and repaired oil-blocking boom. "It's going to be painful for a lot of folks."

But, he said, "things are going to return to normal."

The breached well has dumped as much as 114 million gallons of oil into the Gulf under the worst-case scenario described by scientists — a rate of more than 2 million a day. BP has collected 5.6 million gallons of oil through its latest containment cap on top of the well, or about 630,000 gallons per day.

But BP believes it will see considerable improvements in the next two weeks. The company said Monday that it could trap a maximum of roughly 2.2 million gallons of oil each day by the end of June as it deploys additional containment efforts, including a system that could start burning off vast quantities as early as Tuesday. That would more than triple the amount of oil it is currently capturing — and be a huge relief for those trying to keep it from hitting the shore.

"It would be a game changer," said Coast Guard Chief Petty Officer Mark Boivin, deputy director for near-shore operations at a command center in Mobile. He works with a team that coordinates the efforts of roughly 80 skimming boats gathering oil off the coast.

Still, BP warned its containment efforts could face problems if hoses or pipes clog and engineers struggle to run the complicated collection system. Early efforts at the bottom of the Gulf failed to capture oil.

Meanwhile, congressional investigators have identified several mistakes by BP in the weeks leading up to the disaster as it fell way behind on drilling the well.

BP started drilling in October, only to have the rig damaged by Hurricane Ida in early November. The company switched to a new rig, the Deepwater Horizon, and resumed drilling on Feb. 6. The rig was 43 days late for its next drilling location by the time it exploded April 20, costing BP at least $500,000 each day it was overdue, congressional documents show.

As BP found itself in a frantic race against time to get the job done, engineers took several time-saving measures, according to congressional investigators.

In the design of the well, the company apparently chose a riskier option among two possibilities to provide a barrier to the flow of gas in space surrounding steel tubes in the well, documents and internal e-mails show. The decision saved BP $7 million to $10 million; the original cost estimate for the well was about $96 million.

In an e-mail, BP engineer Brian Morel told a fellow employee that the company is likely to make last-minute changes in the well.

"We could be running it in 2-3 days, so need a relative quick response. Sorry for the late notice, this has been nightmare well which has everyone all over the place," Morel wrote.

The e-mail chain culminated with the following message by another worker: "This has been a crazy well for sure."

BP also apparently rejected advice of a subcontractor, Halliburton Inc., in preparing for a cementing job to close up the well. BP rejected Halliburton's recommendation to use 21 "centralizers" to make sure the casing ran down the center of the well bore. Instead, BP used six centralizers.

In an e-mail on April 16, a BP official involved in the decision explained: "It will take 10 hours to install them. I do not like this." Later that day, another official recognized the risks of proceeding with insufficient centralizers but commented: "Who cares, it's done, end of story, will probably be fine."

The lawmakers also said BP also decided against a nine- to 12-hour procedure known as a "cement bond log" that would have tested the integrity of the cement. A team from Schlumberger, an oil services firm, was on board the rig, but BP sent the team home on a regularly scheduled helicopter flight the morning of April 20.

Less than 12 hours later, the rig exploded.

BP also failed to fully circulate drilling mud, a 12-hour procedure that could have helped detect gas pockets that later shot up the well and exploded on the drilling rig.

Asked about the details disclosed from the investigation, BP spokesman Mark Proegler said the company's main focus right now is on the response and stopping the flow of oil. "It would be inappropriate for us to comment while an investigation is ongoing," Proegler told AP. BP executives including CEO Tony Hayward will be questioned by Congress on Thursday.

The letter from Waxman and Stupak noted at least five questionable decisions BP made before the explosion, and was supplemented by 61 footnotes and dozens of documents.

"The common feature of these five decisions is that they posed a trade-off between cost and well safety," said Waxman and Stupak. Waxman, D-Calif., chairs the energy panel while Stupak, D-Mich., heads a subcommittee on oversight and investigations.

___

Associated Press Writers Erica Werner in Gulfport, Miss., and Harry R. Weber in Houston contributed to this report. Daly contributed from Washington, D.C.

Govt to hit airlines harder for bumping passengers

noreply@blogger.com (Unknown) — Mon, 31 May 2010 21:13:00 -0700

DALLAS – Giving up your airline seat may become a little less painful.

Federal officials are expected to announce this week a plan to raise the maximum amount that airlines must pay passengers who get bumped off an oversold flight, currently at $400 or $800 depending on how long a trip is delayed.

Bumpings rose in three of the past four years and jumped 10 percent to 762,422 in 2009, the highest total since 2002. They soared 17 percent in this year's first quarter.

The potential inconvenience is greater now too. Airlines have cut back on flights and planes are more crowded, so bumped passengers could wait hours or even days to find alternate arrangements.

Passenger-rights groups have pushed the Transportation Department to raise the payout limits to $800 and $1,200 per traveler if the airline bumps you involuntarily. The agency has signaled that it plans some type of inflation adjustment in the limits, which were last raised in 2008. Officials declined to provide details.

The issue is overbooked flights. Airlines are allowed to sell more tickets than they have seats on the assumption that some passengers — usually those with refundable tickets — won't show up. What travelers' groups such as FlyersRights want is a limit on how many extra seats airlines can sell per flight. But industry insiders say that may be impractical because no-show rates vary by route, day and even hour.

When a flight is overbooked, airlines must first ask for volunteers before involuntarily bumping ticket holders. While volunteers can get travel vouchers, people forced off flights must be paid in cash or check. Critics say airlines often flout that rule. The Transportation Department recently fined Southwest Airlines $200,000 for that and other shortcomings in its bumping practices.

In the first three months of this year, American Eagle, the regional affiliate of American Airlines, was most likely to bump passengers involuntarily. US Airways, Continental, ExpressJet and Southwest were next. For several years, JetBlue has been the least likely to bump — it says it gives customers $1,000 if they're booted off a flight.

The government has been moving to give airline customers more protections. One new rule prohibits the airlines from keeping passengers on a plane on the tarmac more than three hours. This week, the agency will also unveil proposed requirements for more information about advertised fares and checked-bag fees, and for contingency plans when aircraft are stuck on the tarmac for long delays.

Last year one in every 763 passengers got bumped from a flight, according to government figures. That includes volunteers and those forced to give up their seat. The numbers show that more passengers are volunteering to give up their seats, a reversal of the trend a few years ago.

Passenger-rights advocates say bigger payments to people forced to give up their seats could in turn force airlines to give volunteers more generous offers. But that remains to be seen.

Kate Hanni, who organized FlyersRights, says without limits on how many extra seats airlines can sell, "they'll find more deceptive ways to grab people's money and not give it back."

Relief for Gulf is 2 months away with another well

noreply@blogger.com (Unknown) — Mon, 31 May 2010 21:10:00 -0700

NEW ORLEANS – The best hope for stopping the flow of oil from the blown-out well at the bottom of the Gulf of Mexico has been compared to hitting a target the size of a dinner plate with a drill more than two miles into the earth, and is anything but a sure bet on the first attempt.

Bid after bid has failed to stanch what has already become the nation's worst-ever spill, and BP PLC is readying another patchwork attempt as early as Wednesday, this one a cut-and-cap process to put a lid on the leaking wellhead so oil can be siphoned to the surface.

But the best-case scenario of sealing the leak is two relief wells being drilled diagonally into the gushing well — tricky business that won't be ready until August.

"The probability of them hitting it on the very first shot is virtually nil," said David Rensink, incoming president of the American Association of Petroleum Geologists, who spent most of his 39 years in the oil industry in offshore exploration. "If they get it on the first three or four shots they'd be very lucky."

The relief well drilling and temporary fixes were being watched closely by President Barack Obama, who planned to meet for the first time Tuesday with the co-chairmen of an independent commission investigating the spill. A senior administration official said the meeting will take place at the White House. The official spoke on condition of anonymity because the meeting had not been formally announced.

For the relief well to succeed, the bore hole must precisely intersect the damaged well. If it misses, BP will have to back up its drill, plug the hole it just created, and try again.

The trial-and-error process could take weeks, but it will eventually work, scientists and BP said. Then engineers will then pump mud and cement through pipes to ultimately seal the well.

As the drilling reaches deeper into the earth, the process is slowed by building pressure and the increasing distance that well casings must travel before they can be set in place.

Still, the three months it could take to finish the relief wells — the first of which started May 2 — is quicker than a typical deep well, which can take four months or longer, said Tad Patzek, chair of the Petroleum and Geosystems Engineering Department at the University of Texas-Austin. BP already has a good picture of the different layers of sand and rock its drill bits will meet because of the work it did on the blown-out well.

On the slim chance the relief well doesn't work, scientists weren't sure exactly how much — or how long — the oil would flow. The gusher would continue until the well bore hole collapsed or pressure in the reservoir dropped to a point where oil was no longer pushed to the surface, Patzek said.

"I don't admit the possibility of it not working," he said.

A third well could be drilled if the first two fail.

"We don't know how much oil is down there, and hopefully we'll never know when the relief wells work," BP spokesman John Curry said.

The company was starting to collect and analyze data on how much oil might be in the reservoir when the rig exploded April 20, he said.

BP's uncertainty statement is reasonable, given they only had drilled one well, according to Doug Rader, an ocean scientist with the Environmental Defense Fund.

Two relief wells stopped the world's worst peacetime spill, from a Mexican rig called Ixtoc 1 that dumped 140 million gallons off the Yucatan Peninsula. That plug took nearly 10 months beginning in the summer of 1979. Drilling technology has vastly improved since then, however.

So far, the Gulf oil spill has leaked between 19.7 million and 43 million gallons, according to government estimates.

In the meantime, BP is turning to another risky procedure federal officials acknowledge will likely, at least temporarily, cause 20 percent more oil — at least 100,000 gallons a day — to add to the gusher.

Using robot submarines, BP plans to cut away the riser pipe this week and place a cap-like containment valve over the blowout preventer. On Monday, live video feeds showed robot submarines moving equipment around and using a circular saw-like device to cut small pipes at the bottom of the Gulf.

The crews will eventually cut the leaking riser and place the cap on top of it, the company hopes it will capture the majority of the oil, sending it to the surface.

"If you've got to cut that riser, that's risky. You could take a bad situation and make it worse," said Ed Overton, a Louisiana State University professor of environmental sciences.

BP failed to plug the leak Saturday with its top kill, which shot mud and pieces of rubber into the well but couldn't beat back the pressure of the oil.

Meanwhile, the location of the spill couldn't be worse.

To the south lies an essential spawning ground for imperiled Atlantic bluefin tuna and sperm whales. To the east and west, coral reefs and the coastal fisheries of Florida, Alabama, Mississippi and Texas. And to the north, Louisiana's coastal marshes.

More than 125 miles of Louisiana coastline already have been hit with oil. "It's just killing us by degrees," said Tulane University ecologist Tom Sherry.

It's an area that historically has been something of a superhighway for hurricanes, too.

If a major storm rolls in, the relief well operations would have to be suspended and then re-started, adding more time to the process. Plugging the Ixtoc was also hampered by hurricane season, which begins Tuesday and is predicted to be very active.

Three of the worst storms ever to hit the Gulf coast — Betsy in 1965, Camille in 1969 and Katrina in 2005 — all passed over the leak site.

On the Gulf coast beaches, tropical weather was far from some tourists' minds.

On Biloxi beach, Paul Dawa and his friend Ezekial Momgeri sipped Coronas after a night gambling at the Hard Rock Casino. Both men, originally from Kenya, drove from Memphis, Tenn., and were chased off the beach by a storm, not oil.

"We talked about it and we decided to come down and see for ourselves" whether there was oil, Momgeri said. "There's no oil here."

Though some tar balls have been found on Mississippi and Alabama barrier islands, oil from the spill has not significantly fouled the shores.

Still, the perception that it has soiled white sands and fishing areas threatens to cripple the tourist economy, said Linda Hornsby, executive director of the Mississippi Hotel and Lodging Association

"It's not here. It may never be here. It's costing a lot of money to counter that perception," Hornsby said. "First it was cancelations, but that evolved to a decrease in calls and there's no way to measure that."

Yet there was fear the oil would eventually hit the other Gulf coast states. Hentzel Yucles, of Gulfport, Miss., hung out on the beach with his wife and sons.

"Katrina was bad. I know this is a different type of situation, but it's going to affect everybody," he said.

Attorney General Eric Holder plans to visit the Gulf Coast on Tuesday and meet with state attorneys general. Several senators have asked the Justice Department to determine whether any laws were broken in the spill.

Aide: Abbas says no need to quit peace talks

noreply@blogger.com (Unknown) — Mon, 31 May 2010 21:07:00 -0700

RAMALLAH, West Bank – An adviser to Mahmoud Abbas says the Palestinian president sees no need to quit indirect Mideast peace talks over Israel's interception of a Gaza-bound ship.

The killing of nine pro-Palestinian activists in Monday's Israeli raid has raised concern that U.S.-led efforts to broker an Israeli-Palestinian peace deal could be disrupted.

Abbas met late Monday with senior PLO officials to assess the situation. Abbas adviser Mohammed Ishtayeh says Abbas told the group there is no need to quit the negotiations since the Palestinians are talking to the U.S. and not to Israel.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

JERUSALEM (AP) — Israeli commandos rappelled down to an aid flotilla sailing to thwart a Gaza blockade on Monday, clashing with pro-Palestinian activists on the lead ship in a botched raid that left at least nine passengers dead.

Bloodied passengers sprawled on the deck and troops dived into the sea to save themselves during several hours of hand-to-hand fighting that injured dozens of activists and six soldiers. Hundreds of activists — many of whom were apparently Turkish — were towed from the international waters to Israeli detention centers and hospitals.

International condemnation was swift and harsh as Israel scrambled to explain how what was meant to be a simple takeover of a civilian vessel went so badly awry.

Israeli Prime Minister Benjamin Netanyahu abruptly canceled a planned meeting with President Barack Obama in Washington to rush home. The global reaction appeared likely to increase pressure to end the embargo that has plunged Gaza's 1.5 million residents deeper into poverty.

Most of the information about what happened on the single ship where violence broke out came from Israel, which cut off all communication to and from the activists and provided testimony and video evidence that its soldiers came under attack by activists armed with metal rods, knives, slingshots and two pistols snatched from the troops.

Passengers reached at an Israeli hospital and journalists aboard the ship accused the soldiers of using excessive force. One passenger, who identified himself as American, spoke briefly with reporters.

"I'm not violent. What I can tell you is that there are bruises all over my body. They won't let me show them to you," he said before he was pushed away by a security escort.

A soldier identified only as a sergeant told reporters at a military briefing that the activists on board "were armed with knives, scissors, pepper spray and guns." He said he was armed only with a paintball rifle. "It was a civilian paintball gun that any 12-year-old can play with," he said. "I saw my friends on the deck spitting blood."

The high-seas confrontation was a nightmare scenario for Israel, which insisted its soldiers were simply unprepared for what awaited them on the Mavi Marmara, the ship carrying 600 of the 700 activists headed for Gaza. Instead of carrying their regular automatic rifles, the Israelis said they went in with non-lethal paintball guns and pistols they never expected to use.

Israel intercepted the six ships carrying some 10,000 tons of aid for the isolated seaside territory, which has been blockaded by Israel for three years, with Egypt's cooperation. The Israeli government had urged the flotilla not to try to breach the blockade before the ships set sail from waters off Cyprus on Sunday and offered to take some aid in for them.

Israel has allowed ships through five times, but has blocked them from entering Gaza waters since a three-week military offensive against Gaza's Hamas rulers in January 2009.

Key regional ally Turkey withdrew its ambassador on Monday, the U.N. Security Council held an emergency session, the British foreign secretary demanded an end to the blockade of Gaza, and Jordan called Israel's raid a "heinous crime."

An al-Jazeera journalist delivering a report before Israel cut communications said Israel fired at the vessel before boarding it. In one web posting, a Turkish television reporter on the boat cried out, "These savages are killing people here, please help" — a broadcast that ended with a voice shouting in Hebrew, "Everybody shut up!"

Al-Jazeera said that eight staff members were detained while covering the story, and asked for the Israeli government to release them immediately.

The military said naval commandos descending from a helicopter onto the deck of a Turkish-flagged ship were assaulted by armed activists. Military footage showed activists swarming around the commandos as they rappelled from a helicopter one by one, hitting them with sticks until they fell to the deck, throwing one off the ship and hurling what the military said was a firebomb.

Speaking alongside the Canadian prime minister, Netanyahu expressed "regret" for the loss of life but said the soldiers "had to defend themselves, defend their lives, or they would have been killed."

Activists said Israeli naval commandos stormed the ships after ordering them to stop in international waters, about 80 miles (130 kilometers) from Gaza's coast.

A spokeswoman for the Free Gaza movement, which organized the flotilla, said the group's goal — beyond just bringing supplies to the impoverished territory — was to shatter the blockade.

"What we're trying to do is open a sea lane between Gaza and the rest of the world," Greta Berlin said in Cyprus. "We're not trying to be a humanitarian mission. We're trying to say to the world, 'You have no right to imprison a million and a half Palestinians.'"

Israel's international image had already taken a beating from allegations that it committed war crimes during its 2008-2009 winter war in Gaza, and from widespread global opposition to the blockade. Hamas was also accused of rights violations in that conflict.

Relations with Turkey, a key supporter of the aid flotilla but also until recently Israel's staunchest ally in the Muslim world, were badly damaged by Monday's events, possibly irreparably. Ankara announced it would recall its ambassador and call off all military exercises with Israel. Around 10,000 Turks marched in protest.

At the U.N., Turkey's Foreign Minister Ahmet Davutoglu called the raid "murder conducted by a state" and demanded an immediate Israeli apology, international legal action and an end to the blockade.

The bloody showdown came at a sensitive time for Israeli-Palestinian peacemaking. Netanyahu had hoped to receive a high-profile expression of support from Obama after months of strained relations over Israeli settlement construction.

Obama voiced "deep regret," over the raids, and the White House said he and Netanyahu agreed by phone to reschedule White House talks. The U.S. recently began mediating indirect peace talks between Israel and the Palestinians following a 17-month breakdown in contacts.

Israel's immediate concern on Monday was what to do about the boats and their passengers. It ferried the wounded to hospitals by helicopter and towed the six ships to port, giving each of the activists a choice of deportation or detention.

By late Monday, about 150 of the activists — most from Turkey — had been taken off the boats, Israeli Interior Ministry spokeswoman Sabine Haddad said, adding the process would continue into Tuesday. She said about 30 had agreed to be deported, and the rest would be detained.

A commando who spoke to reporters on a naval vessel off the coast, identified only as "A," said he and his comrades were taken off guard by a group of Arabic-speaking men when they rappelled onto the deck. He said some of the soldiers were stripped of their helmets and their pistols and some had jumped overboard to escape the violence.

A high-ranking naval official displayed a box confiscated from the boat containing switchblades, slingshots, metal balls and metal bats.

Turkey's NTV network showed activists beating one commando with sticks as he landed on deck. Dr. Arnon Afek, deputy director of Chaim Sheba Medical Center outside Tel Aviv, said two commandos were brought in with gunshot wounds. Another had serious head wounds, Afek added.

At Barzilai hospital in the southern Israeli city of Ashkelon, a few activists trickled in under military escort, claiming they had been beaten during the assault.

Palestinian President Mahmoud Abbas condemned the Israeli "massacre" and declared three days of mourning across the West Bank.

Ismail Haniyeh, leader of the rival Hamas government in Gaza, condemned the "brutal" Israeli attack and called on U.N. Secretary-General Ban Ki-moon to intervene.

Ban condemned the violence.

"I am shocked by reports of killings," he said. "It is vital that there is a full investigation to determine exactly how this bloodshed took place."

After nightfall, Hamas-linked militants fired a rocket that exploded in Israel, the militants and the Israeli military said. Nobody was hurt. The militants said the rocket attack was in response to Israel's raid on the flotilla.

Iceland volcano 2010

noreply@blogger.com (Unknown) — Thu, 22 Apr 2010 01:46:00 -0700

REYKJAVIK, Iceland, April 21 (UPI) -- An estimated 75 percent of the usual number of passenger flights over Europe were expected back in the air Wednesday as skies clear from volcanic ash.

Officials reopened airports across the continent a week after the eruption of a volcano under Iceland's Eyjafjallajokull glacier sent a huge plume of smoke, ash and grit into the air.

The fear that a buildup of volcanic debris could cause jet engines to fail led authorities to ground thousands of flights into and out of European airports. Millions of passengers were affected and the airline industry losses could approach $2 billion.

Airlines worked to fit the passengers who had been stranded for days onto flights. It was expected to be several days before the backlog was met and air traffic returned to normal levels.

The bulk of the flights canceled Wednesday were shorter trips.

It wasn't only travelers who were inconvenienced. Industry was also affected, the BBC said. Grounded flowers and food from Africa will likely have to be thrown out as spoiled, parts from Germany for automakers in Japan were delayed, idling plants, and goods waiting to be shipped from China, the world's largest exporter, remained in Asia.

Scientists said Wednesday the volcano at Eyjafjallajokull wasn't as active as it had been over the last week but warned such eruptions are unpredictable and could cause other nearby volcanoes to also erupt, which could spew another ash cloud dangerous to air travel.

Airspace in Norway and Sweden shuts again

noreply@blogger.com (Unknown) — Thu, 22 Apr 2010 01:42:00 -0700

BRUSSELS – Aviation authorities say they have closed the airspace over parts of Norway and Sweden as shifting winds send a new cloud of volcanic ash over Scandinavia.

The Swedish aviation authority says airspace is still open over the capital Stockholm, but closed over the southern cities of Goteborg and Malmo, and large parts of western and northern Sweden.

Authority spokesman Bjorn Stenberg says changing winds meant the ash cloud over Sweden didn't disperse as forecast. Meanwhile, new ash clouds are blowing in over western Norway.

Norwegian authorities say Oslo remains open but airspace over western Norway has closed again, including Stavanger and Bergen.

Eurocontrol says it expects nearly 22,000 flights over Europe on Thursday.

Toyota to temporarily halt sales of Lexus GX 460

noreply@blogger.com (Unknown) — Tue, 13 Apr 2010 23:39:00 -0700

WASHINGTON – Toyota Motor Corp. is temporarily halting sales of the 2010 Lexus GX 460 after Consumer Reports issued a rare "Don't Buy" warning amid concerns the large SUV has handling problems that could cause it to roll over during sharp turns.

The Japanese automaker said Tuesday it had asked dealers to temporarily suspend sales of the SUV while it conducts its own tests on the GX 460.

"We are taking the situation with the GX 460 very seriously and are determined to identify and correct the issue Consumer Reports identified," said Mark Templin, Lexus vice president and general manager.

The decision to stop selling the SUV is the latest blow to Toyota's tarnished safety reputation after the recall of millions of cars and trucks over gas pedals that are too slow to retract or that can become stuck under floor mats. The GX 460 is not covered by the pedal recalls.

But it reflects Toyota's attempt to respond more quickly to safety concerns after federal investigators accused the automaker of dragging its feet on recalls to address the faulty gas pedals. Toyota faces a $16.4 million fine from the Transportation Department and has until April 19 to decide whether to contest the penalty or accept it.

Toyota said about 6,000 GX 460s from the 2010 model year have been sold since the vehicle went on sale in late December and an estimated 1,600 of the SUVs are at dealerships.

Consumer Reports is closely read by many car buyers before choosing a new car or truck. In January, it pulled its "recommended" rating on eight vehicles recalled by the automaker due to faulty gas pedals.

The magazine said the Lexus problem occurred during tests on its track. In a standard test, the driver approached a turn unusually fast, then released the accelerator pedal to simulate the response of an alarmed driver. This caused the rear of the vehicle to slide outward.

In normal cases, the electronic stability control should quickly correct the loss of control and keep the SUV on its intended path. But with the GX 460, the stability control took too long to adjust, which could cause a rollover accident if one of the sliding wheels were to strike the curb or another obstacle, said Gabriel Shenhar, Consumer Reports' senior auto test engineer who was one of four testers who experienced the problem.

The magazine said it is not aware of any reports of the GX 460 rolling over. It tested two separate vehicles, both of which experienced the problem, but neither rolled over.

The warning label on the model will remain until Toyota addresses the handling issue with the seven-seat SUV.

Templin said in a statement he was "confident that the GX meets our high safety standards" and said Toyota's engineering teams were testing the GX using Consumer Reports' specific parameters. Lexus will provide a loaner car for any customer who bought a 2010 GX 460 and is concerned about driving the vehicle, Templin said.

Customers who have questions or concerns about the GX 460 can call Lexus at (800) 255-3987.

The "Don't Buy" label is unlikely to hurt Toyota's broader sales since the GX 460 accounts for a fraction of its total, said Erich Merkle, president of the consulting company Autoconomy.com in Grand Rapids, Mich. However, it comes at an unfortunate time as the automaker tries to move beyond the recalls.

"I think it will have a bigger impact from a negative-PR perspective than from an actual sales perspective," Merkle said.

The GX 460, which starts at about $52,000, is built on the same platform as the Toyota 4Runner. However, Consumer Reports said the problem did not occur during similar tests on the 4Runner. According to Toyota's Web site, both vehicles are about six feet tall but the GX 460 is about 3 inches taller.

Consumer Reports said the last vehicle to receive such a safety warning was the 2001 Mitsubishi Montero Limited, a large SUV. In that case, testers said the wheels lifted off the road during standard avoidance-maneuver tests, which also posed a rollover risk.

At the time, Mitsubishi disputed the magazine's findings and did not make any modifications to the vehicle, Mitsubishi spokesman Dan Irvin said. The designation appeared to have little effect on the Montero's sales, which increased overall during the second half of 2001.

The Montero remained on sale in the U.S. until 2007 and continues to be sold overseas as the Mitsubishi Pajero.

Toyota shares traded in the U.S. fell 52 cents to $79.03.

Greek debt woes weigh on European stocks

noreply@blogger.com (Unknown) — Thu, 8 Apr 2010 03:56:00 -0700

LONDON: European stock markets fell Wednesday amid mounting concerns about Greece's debt crisis and a surprise downward revision to growth in the 16 countries that use the euro. Wall Street got off to a subdued start as the Dow Jones industrial average struggled to break above 11,000 for the first time in a year and a half.

In Europe, the FTSE 100 index of leading British shares was down 10.70 points, or 0.2 percent, at 5,769.65 while Germany's DAX fell 19.25 points, or 0.3 percent, at 6,232.96. The CAC-40 in France was 20.56 points, or 0.5 percent, lower at 4,033.38.

And on Wall Street, the Dow stock average faced resistance trying to break above 11,000, trading 21.38 points, or 0.2 percent, lower at 10,948.61 soon after the open. The broader Standard & Poor's 500 index fell 1.43 point, or 0.1 percent, to 1,188.01.

Once again, Greece took center stage as investors continued to fret about the country's ability to pay off its debts — the ten-year spread between Greek and Germany bond yields stood at 3.99 percentage points, just below Tuesday's all-time high but way up on the 3 percent level when the EU agreed on an aid program that would involve the International Monetary Fund.

Talk that Greece was looking to renegotiate the terms of the backstop agreement — denied by the finance ministry — as a technical team from the IMF arrived in Athens has fueled the spike in Greek borrowing costs.

"All of this puts a question mark over longer term debt sustainability as well as the threat of contagion elsewhere in the eurozone," said Neil Mackinnon, global macro strategist at VTB Capital.

With fiscal retrenchment due in Greece, as well as Portugal and Spain, there are also mounting concerns that the debt crisis will weigh on eurozone economic growth for a long time yet, particularly as lower demand for German goods could squeeze the eurozone's biggest economy.

"This does not look like a sensible strategy and will likely end up in economic slump for the eurozone generally alongside the risk of deflation," said Mackinnon.

Worries about the strength of the eurozone economy were stoked further on Wednesday with the news that economic growth ground to a halt in the last three months of 2009 as output stagnated in Germany and contracted once again in Italy.

In its latest estimate for the quarter, Eurostat, the EU's statistics office, said eurozone economic activity was flat, in contrast to its previous prediction of 0.1 percent quarterly growth.

The downward revision was unexpected and provides further evidence of how weak the recovery in the eurozone is — it was only in the third quarter of 2009 that the bloc emerged from recession with 0.4 percent growth.

"Today's data clearly highlight the fragile and unsustainable nature of the eurozone recovery," said Owen James, an economist at the Centre for Economic and Business Research.

The figures did little to entice any optimism regarding the euro. By mid afternoon London time the euro was trading 0.4 percent lower at $1.3342.

In contrast, data shows the U.S. economy is emerging more strongly from its recession. Figures last week showed that the U.S. created more jobs in March than at any time for over two years.

On Tuesday, stocks in the U.S. ended flat even though the U.S. Federal Reserve provided yet another indication that borrowing costs will not be rising any time soon — the benchmark Fed funds rate stands at a record low in a range between 0-0.25 percent.

The minutes to the last rate-setting meeting retained the phrase that interest rates should remain low "for an extended period," despite protestations from Thomas Hoenig that super-low borrowing costs would stoke trouble ahead.

"The one-line summary is that the Federal Reserve is not anywhere near raising rates," said Kit Juckes, chief economist at ECU Group.

Earlier in Asia, Hong Kong's Hang Seng stock index jumped 1.8 percent while Thailand rose 1.3 percent and Singapore gained 0.7 percent. China's Shanghai index fell 0.3 percent and Malaysia, Australia, India and South Korea were little changed.

Japan's Nikkei 225 stock average rose 0.1 percent to 11,292.83, as the country's central bank decided Wednesday to keep its key interest rate at 0.1 percent. The bank has not tweaked the overnight call rate target since December 2008.

Benchmark crude for May delivery fell 45 cents to $86.39 a barrel Wednesday.

United, US Airways in merger talks

noreply@blogger.com (Unknown) — Thu, 8 Apr 2010 03:54:00 -0700

MINNEAPOLIS: The CEOs of United Airlines and US Airways have both been up front about their desire to merge with another airline. Now it appears they're talking to each other.

The two are in talks about a combination that would create the nation's second-biggest airline, a person with knowledge of the situation told The Associated Press on Wednesday. The person insisted on anonymity because of the sensitive nature of the talks, which the person said appear to be getting more serious.

This person said a deal would be modeled on the Delta-Northwest combination, which was a stock swap without a cash component.

United Chairman and CEO Glenn Tilton and US Airways Chairman and CEO Doug Parker were both involved when their companies talked about combining in 2008. They walked away then citing high fuel prices, but didn't rule out a future deal. That same year, Continental Airlines Inc. rejected United's attempt at a combination.

"We don't comment on rumors or speculation," United spokeswoman Jean Medina said Wednesday. "We've been consistent on our position on consolidation generally for several years, and that position is well known."

US Airways spokesman Jim Olson also said the airline doesn't comment on rumors.

Integrating their unionized work forces would be one of the most difficult tasks if United Airlines and US Airways got together. The person who spoke to AP said the companies have a plan for dealing with that issue.

US Airways, which is based in Tempe, Ariz., still runs separate pilot and flight attendant groups after it was bought in 2005 by America West. And its pilots formed their own union after leaving the Air Line Pilots Association, the union that represents United aviators.

Executives at Delta and Northwest put their deal on hold in early 2008 so their pilots could work out an agreement on combining their ranks.

Pilots at US Airways have not been involved in any talks with United, said James Ray, a spokesman for the US Airline Pilots Association.

"We'll support anything that would be good for our pilot group," he said.

A spokesman for the United branch of the Air Line Pilots Association did not immediately return a phone message seeking comment.

"Mergers in the airline business are notoriously difficult," said Doug Abbey, an independent airline consultant in Washington. He added, though, that Delta's purchase of Northwest has gone well.

"The discussions certainly wouldn't surprise me," he said. "This is a combination that has been embraced as plausible by a lot of people."

Based on 2009 traffic, a combined United-US Airways would be nearly as big as Delta Air Lines Inc., which became the world's largest airline after buying Northwest. It is unclear which name would survive, where the combined company would be based, or who would run it.

Like Northwest before it, one of United's main attractions is its Pacific routes, which it bought from Pan-Am in 1985.

Both airlines have been shrinking to cope with the recession. United cut capacity 7.4 percent last year, while US Airways shrank 4.6 percent. US Airways is cutting most flying that doesn't pass through either Washington or its hubs in Charlotte, N.C., Philadelphia, or Phoenix.

US Airways lost $205 million in 2009, and revenue fell almost 14 percent to $10.46 billion. UAL lost $651 million, while revenue fell 19.1 percent to $16.34 billion.

Shares US Airways rose $1.39, or 20.4 percent, to $8.21 in after-hours trading Wednesday. United parent UAL Corp. fell 18 cents to $18.77.

Uruguay's new leader strengthens ties with Chavez

noreply@blogger.com (Unknown) — Thu, 8 Apr 2010 03:49:00 -0700

CARACAS, Venezuela – Venezuelan President Hugo Chavez offered Wednesday to help Uruguay expand a refinery and supply it with crude oil.

Chavez and visiting Uruguayan President Jose Mujica, popularly known as "Pepe," signed accords pledging to deepen trade and energy ties between the two South American nations.

Venezuela's president expressed admiration for the 74-year-old Mujica, a former leftist guerrilla leader who took office last month. Chavez embraced Mujica when he arrived at the presidential palace, affectionately calling him "a mentor."

Chavez presented Mujica with the Order of the Liberator — Venezuela's highest honor — and gave him a replica of a sword used by South American independence hero Simon Bolivar — the namesake of Chavez's socialist-inspired "Bolivarian Revolution."

Chavez said Venezuela will renew a deal to sell Uruguay up to 40,000 barrels of oil a day under preferential terms.

"The entire consumption of Uruguay doesn't surpass 40,000 barrels a day," Chavez said before he met with Mujica at the palace.

Chavez said he and Mujica also would discuss Venezuelan help in expanding Uruguay's La Teja refinery. He said it should be upgraded with equipment allowing it to refine heavy crude from Venezuela's eastern Orinoco River basin.

Under the accords, Uruguay will export 1,000 vehicles to Venezuela and help the oil-dependent country develop agriculture projects. The two nations also plan to cooperate in building glass and cement factories, producing software and establishing construction companies.

Since 2005, Venezuela has shipped 17,000 barrels a day of oil to Uruguay.

Under the 2005 agreement, Uruguay pays for 75 percent of the oil in cash. It can purchase the remaining 25 percent of the bill over a 15-year period at 2 percent interest. Since the shipments commenced five years ago, Uruguay has run up a $524 million debt, Uruguayan Economy Minister Fernando Lorenzo said.

The previous agreements were the product of Chavez's friendly relations with Mujica's predecessor, Tabare Vazquez.

While Mujica shares some of Chavez's leftist views, he has vowed to take a more moderate approach to politics.

Prior to his election in November, Mujica denied he would radically reform Uruguay's stable parliamentary democracy and push the country toward socialism — like Chavez. Mujica says he's more inspired by the performance of Brazilian President Luiz Inacio Lula da Silva.

Nearly half of US households escape fed income tax

noreply@blogger.com (Unknown) — Thu, 8 Apr 2010 03:47:00 -0700

WASHINGTON – Tax Day is a dreaded deadline for millions, but for nearly half of U.S. households it's simply somebody else's problem.

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization.

Most people still are required to file returns by the April 15 deadline. The penalty for skipping it is limited to the amount of taxes owed, but it's still almost always better to file: That's the only way to get a refund of all the income taxes withheld by employers.

In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax.

Tax cuts enacted in the past decade have been generous to wealthy taxpayers, too, making them a target for President Barack Obama and Democrats in Congress. Less noticed were tax cuts for low- and middle-income families, which were expanded when Obama signed the massive economic recovery package last year.

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners — households making an average of $366,400 in 2006 — paid about 73 percent of the income taxes collected by the federal government.

The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

"We have 50 percent of people who are getting something for nothing," said Curtis Dubay, senior tax policy analyst at the Heritage Foundation.

The vast majority of people who escape federal income taxes still pay other taxes, including federal payroll taxes that fund Social Security and Medicare, and excise taxes on gasoline, aviation, alcohol and cigarettes. Many also pay state or local taxes on sales, income and property.

That helps explain the country's aversion to taxes, said Clint Stretch, a tax policy expert Deloitte Tax. He said many people simply look at the difference between their gross pay and their take-home pay and blame the government for the disparity.

"It's not uncommon for people to think that their Social Security taxes, their 401(k) contributions, their share of employer health premiums, all of that stuff in their mind gets lumped into income taxes," Stretch said.

The federal income tax is the government's largest source of revenue, raising more than $900 billion — or a little less than half of all government receipts — in the budget year that ended last Sept. 30. But with deductions and credits, especially for families with children, there have long been people who don't pay it, mainly lower-income families.

The number of households that don't pay federal income taxes increased substantially in 2008, when the poor economy reduced incomes and Congress cut taxes in an attempt to help recovery.

In 2007, about 38 percent of households paid no federal income tax, a figure that jumped to 49 percent in 2008, according to estimates by the Tax Policy Center.

In 2008, President George W. Bush signed a law providing most families with rebate checks of $300 to $1,200. Last year, Obama signed the economic recovery law that expanded some tax credits and created others. Most targeted low- and middle-income families.

Obama's Making Work Pay credit provides as much as $800 to couples and $400 to individuals. The expanded child tax credit provides $1,000 for each child under 17. The Earned Income Tax Credit provides up to $5,657 to low-income families with at least three children.

There are also tax credits for college expenses, buying a new home and upgrading an existing home with energy-efficient doors, windows, furnaces and other appliances. Many of the credits are refundable, meaning if the credits exceed the amount of income taxes owed, the taxpayer gets a payment from the government for the difference.

"All these things are ways the government says, if you do this, we'll reduce your tax bill by some amount," said Roberton Williams, a senior fellow at the Tax Policy Center.

The government could provide the same benefits through spending programs, with the same effect on the federal budget, Williams said. But it sounds better for politicians to say they cut taxes rather than they started a new spending program, he added.

Obama has pushed tax cuts for low- and middle-income families and tax increases for the wealthy, arguing that wealthier taxpayers fared well in the past decade, so it's time to pay up. The nation's wealthiest taxpayers did get big tax breaks under Bush, with the top marginal tax rate reduced from 39.6 percent to 35 percent, and the second-highest rate reduced from 36 percent to 33 percent.

But income tax rates were lowered at every income level. The changes made it relatively easy for families of four making $50,000 to eliminate their income tax liability.

Here's how they did it, according to Deloitte Tax:

The family was entitled to a standard deduction of $11,400 and four personal exemptions of $3,650 apiece, leaving a taxable income of $24,000. The federal income tax on $24,000 is $2,769.

With two children younger than 17, the family qualified for two $1,000 child tax credits. Its Making Work Pay credit was $800 because the parents were married filing jointly.

The $2,800 in credits exceeds the $2,769 in taxes, so the family makes a $31 profit from the federal income tax. That ought to take the sting out of April 15.

Toyota exec urged automaker to 'come clean'b

noreply@blogger.com (Unknown) — Thu, 8 Apr 2010 03:45:00 -0700

WASHINGTON – In the days leading up to its massive recall in January, Toyota executives debated when they should inform the public about safety problems with accelerator pedals, prompting one executive to urge the company to "come clean," according to documents obtained by The Associated Press.

Irv Miller, Toyota's then-group vice president for environment and public affairs, warned his colleagues in an e-mail on Jan. 16, 2010: "We are not protecting our customers by keeping this quiet. The time to hide on this one is over. We need to come clean."

Five days later, Toyota announced it would recall 2.3 million vehicles to address sticking pedals on popular vehicles such as the Camry and Corolla.

As Toyota deals with a spate of recalls, the e-mail reveals serious concerns within the Japanese company's public relations leadership that it wasn't dealing with the safety problems squarely and could be inflicting damage to its long-standing reputation for safety and quality. Months earlier, in September 2009, the automaker had announced a recall of more than 4 million vehicles to replace gas pedals that could get stuck in floor mats and cause sudden acceleration.

Toyota has recalled more than 6 million vehicles in the U.S. and a total of more than 8 million worldwide because of acceleration problems in multiple models and braking issues in the Prius hybrid.

"We better just hope that they can get NHTSA (National Highway Traffic Safety Administration) to work with us in coming (up) with a workable solution that does not put us out of business," Miller wrote in the Jan. 16 e-mail. He noted that Jim Lentz, president of Toyota Motor Sales USA, and Yoshi Inaba, president of Toyota Motor North America, were traveling to Washington to meet with federal regulators.

In a memo earlier that day, Katsuhiko Koganei, executive coordinator for corporate communications at Toyota Motor Sales USA, suggested the company should not discuss mechanical failures in accelerator pedals.

In an e-mail to Mike Michels, vice president of external communications, which was copied to other Toyota officials, Koganei wrote, "Now I talked with you on the phone, we should not mention about the mechanical failures of acc. pedal because we have not clarified the real cause of the sticking acc pedal formally, and the remedy for the matter has not been confirmed."

Koganei added that Toyota executives were concerned that news of the mechanical failures "might raise another uneasiness of customers."

Koganei's e-mail prompted a strongly worded response from Miller. "Kogi, I hate to break this to you but WE HAVE A tendency for MECHANICAL failure in accelerator pedals of a certain manufacturer on certain models," Miller wrote, adding his concerns about customer safety. The e-mail's subject line said it was about a draft statement to respond to an ABC News story.

The documents obtained by the AP were among 70,000 pages of papers turned over to government investigators.

Toyota, in a statement, said it "does not comment on internal company communications" and declined comment on Miller's e-mail. But the automaker said, "we have publicly acknowledged on several occasions that the company did a poor job of communicating during the period preceding our recent recalls."

"We have subsequently taken a number of important steps to improve our communications with regulators and customers on safety-related matters to ensure that this does not happen again," Toyota said, adding that it appointed a chief quality officer for North America.

"As part of our heightened commitment to quality assurance, we are fully committed to being more transparent," the company said.

Miller, reached by phone at his home in Los Angeles, said he had no comment. His retirement was announced by Toyota on Dec. 16 and his retirement was effective Feb. 1.

The Transportation Department has assessed a record $16.4 million fine on Toyota for failing to alert the U.S. government to the safety problems about the sticking accelerator pedals quickly enough. Transportation Secretary Ray LaHood said Tuesday that Toyota made a "huge mistake" by not disclosing the safety problems sooner.

Concerns about sticking gas pedals and complaints from Toyota owners in the U.S. were rising at the end of 2009, according to documents obtained by the AP. The documents show that on Sept. 29, Toyota's European division issued technical information "identifying a production improvement and repair procedure to address complaints by customers in those countries of sticking accelerator pedals, sudden rpm increase and/or sudden vehicle acceleration."

Distributors throughout Europe and in Russia, Georgia, Kazakhstan, Turkey and Israel received the technical information.

In mid-January, Toyota held internal meetings "to discuss status of production changes and to prepare for meetings with NHTSA" on Jan. 19, according to the timeline. Two days later, Toyota announced it would recall 2.3 million vehicles to address the sticking pedals.

The Japanese automaker was still weighing its options Wednesday about whether to accept or contest the fine. It has also been named in 138 potential class-action lawsuits over falling vehicle values and nearly 100 personal injury and wrongful death cases in federal courts.

Water bills go up in down economy as usage drops

noreply@blogger.com (Unknown) — Mon, 5 Apr 2010 05:30:00 -0700

PORTLAND, Maine – The grim economy is hitting some consumers in the wallet in yet another way: their water bills.

Many water utilities are raising rates because water use is down, in part because manufacturers have closed or are cutting back, tourism has fallen and the real estate market is in the doldrums.

Water sales for the Kennebunk, Kennebunkport & Wells Water District in southern Maine fell 11 percent last year, to 1995 levels. The No. 1 reason is the sour economy, said superintendent Norm Labbe.

One of the utility's largest customers, a catalog printer, shut its doors last year, putting 374 people out of work. Tourism also has been down — meaning fewer tourists are taking showers and flushing toilets in the motels in the region's beachside communities.

"This is happening most everywhere. It's a regional thing, it's a national thing," Labbe said. "Many, many (water utilities) around the country are seeing decreases in revenues. Because if industry goes down, revenues go down."

A recent study by the Water Research Foundation, a Denver-based nonprofit, on the recession's impact on water utilities found that home foreclosures and business contractions have reduced water demand in many areas. Cities with high unemployment also have seen reduced water consumption as people move away in search of jobs, said Rob Renner, the foundation's executive director.

"It depends on where you are in the country. Regionally, the economy is better in some places than in others," he said.

Water companies for the most part get their money from customers. When water consumption goes up, revenues go up — but when consumption falls, so do revenues.

Water companies often raise rates to pay for high-priced capital expenditures, such as new water lines or treatment plant expansions. But they also have to hike rates when water use goes down to bring in enough money to pay their basic operating costs.

Water rates are based on a wide range of factors, such as infrastructure and water treatment costs as well as revenues from water use. When water use falls, that would be a reason to seek a rate increase, Renner said.

Water consumption can be influenced by the weather. In the Northeast, usage declined last summer in part because homeowners watered their lawns less with the rainy weather. The epic drought that gripped the Southeast in recent years also resulted in falling consumption as people were ordered to conserve water.

Nowadays, the bad economy is taking a toll.

Even after cutting costs 10 percent and laying off nine employees, the water utility in Mount Pleasant, S.C., recently raised rates 9 percent after its customer base and water sales tumbled. That amounts to about $50 a year for the average homeowner.

"We attribute our revenue decline to unoccupied homes due to foreclosures, and commercial businesses just going out of business," said Clay Duffie, Mount Pleasant Waterworks' general manager. "When you have fewer customers, you have less revenue."

At the same time, impact fees the utility collects from developers have dried up, from as much as $6 million a few years ago to $500,000 this fiscal year, Duffie said.

Mount Pleasant, outside of Charleston, has been one of the state's fastest-growing communities in the past 20 years, growing from about 30,000 to 65,000 residents. But development has come nearly to a halt with the down economy.

In New Jersey, the Sayreville water department recently raised rates 13 percent. One big reason was the department's biggest customer, a steel mill, suspended operations for several months because of lower demand for its products.

As a result, the water department's revenues fell $350,000 to $400,000, said Jeff Bertrand, the town's business administrator.

"That was because of the economy," Bertrand said. "Nobody was buying the rebar because nobody was doing construction."

And in California, water and sewer rates in tiny Davenport outside of Santa Cruz are going up because the economy has forced a shutdown of the local cement plant, built in 1906. Sewer rates will increase especially fast — up 74 percent to nearly $2,500 a year — because of the plant shutting down, said Rachel Lather of the Santa Cruz County Sanitation District.

When water rates go up, customers' bills might increase anywhere from a buck or two to $20 or more a month. That doesn't sound like it'll break the bank, but collectively the higher rates could amount to tens of millions of dollars.

And when jobs are scarce, every extra dollar hurts.

In the eastern Maine town of Baileyville along the Canadian border, residents faced the prospect of both lost jobs and higher water bills when the local pulp mill announced it was closing.

Baileyville's water utility proposed raising rates 80 percent after the Domtar Corp. mill, the utility's largest customer by far, said it would close because of the poor global economy. Domtar accounted for 52 percent of the utility's total sales, and residents would have seen their minimum quarterly bills go from $55 to nearly $97.

Domtar shut down last May, putting 300 employees out of work, but unexpectedly reopened two months later after business conditions improved. Even so, the Baileyville Utilities District had to raise rates 9 percent.

But the prospect of nearly doubled water rates when residents were losing their jobs was too much for Baileyville, a small town of about 1,500 people where employment largely revolves around the pulp mill.

"You've got to charge more when revenues go down," said water utility manager Gardner Ross. "But people don't have incomes coming in, so it's a double-whammy."

White House braces unemployed for slow job rebound

noreply@blogger.com (Unknown) — Mon, 5 Apr 2010 05:21:00 -0700

WASHINGTON – Buoyed by good news on the jobs front, the White House claimed credit Sunday for reversing the downward economic spiral while bracing out-of-work Americans for a slow recovery.

The Obama administration also eased away from confrontation with China over its artificially low currency. The U.S. wants to encourage Beijing's help on nuclear proliferation and new penalties against Iran for its perceived attempts to build a bomb.

Given the depth and length of the recession, the White House wants to cool expectations of a rapid economic recovery before the November elections that will determine whether Democrats retain control of the House and Senate.

The administration's line is that there's steady, if slow, progress in repairing the economic ruin President Barack Obama repeatedly blames on his predecessor, Republican George W. Bush.

The economy added about 162,000 jobs in March, the most in nearly three years. A large percentage of the gains were temporary census workers hired by the federal government, and the unemployment rate held firm at 9.7 percent. The additional 123,000 private-sector jobs were the most since May 2007.

The economy is growing again, but at a pace unlikely to quickly replace the 8.4 million jobs erased in the recession that began in late 2007. More than 11 million people are drawing unemployment insurance benefits.

"We've got a long way to go," said Lawrence Summers, director of the National Economic Council. "We've inherited a terrible situation, the most pressing economic problems since the Great Depression in our country."

Christina Romer, head of the White House Council of Economic Advisers, said consumers still face "a lot of head winds" from the financial crisis. For example, debt and credit difficulties are hampering stronger job growth.

They were echoing the words of Treasury Secretary Timothy Geithner, who said last week the administration was "very worried" about returning to a more normal jobless rate of around 5 percent.

Summers said Obama was preoccupied with creating jobs. "The trend has turned, but to get back to the surface, we've got a long way to go," Summers said.

As Obama moves on with his legislative agenda after victory on health care, Summers said he believed Congress would pass new oversight rules for the financial industry. The Wall Street meltdown was largely blamed for the recession and the near collapse of the global financial system.

"I expect that reform is going to pass," Summers said. Obama wants it on his desk within two weeks.

Arizona Sen. John Kyl, the No. 2 Senate GOP leader, accused Democrats of pulling out of bipartisan negotiations on the bill. Nonetheless, he said he thought there was "a substantial opportunity" for a bipartisan solution.

On the issue of Chinese currency manipulation, Summers denied that a delayed report to Congress amounted to a trade-off for Beijing's support for new penalties against Iran.

The report was due April 15 — just as China's president comes to Washington for a nuclear security summit. Geithner said Saturday it would come out after several high-level international meetings in the months ahead, when Washington would have the opportunity to continue pushing its position.

China keeps the value of its currency at an artificially low level, making its goods less expensive in the U.S. market and causing American exports to be too expensive for Chinese consumers. They result is an exploding U.S. trade deficit

The White House is pressing China and Russia, which normally oppose Iranian sanctions, to join the effort to punish Tehran. Iran is enriching uranium in violation of international agreements against nuclear proliferation; the Iranian government says its nuclear ambitions are limited to developing nuclear power for peaceful purposes.

The West, led by the United States, contends Iran is trying to build a nuclear bomb, an outcome that Washington contends would launch an arms race in the Middle East.

As China began showing a readiness to join discussions on punishing Iran and President Hu Jintao committed to participating in Obama's nuclear proliferation conference this month, the administration eased back on the threat to label China as a currency manipulator and the imposition of trade restrictions.

Even as the report was delayed, Romer acknowledged the currency issue remained important.

"We think it (the value of the yuan) needs to be more influenced by market forces," she said. "I think there's no question of that. ... We're going to be working to, to get the kind of result that we want, which is something more in alignment."

Summers spoke on ABC's "This Week" and CNN's "State of the Union." Romer appeared on NBC's "Meet the Press," and Kyl was on "Fox News Sunday.

Oil rises above $85 as US jobs market improves

noreply@blogger.com (Unknown) — Mon, 5 Apr 2010 05:19:00 -0700

Oil prices rose above $85 a barrel Monday, extending gains from last week as investors bet an improving U.S. job market will herald growing crude demand.

By early afternoon in Europe, benchmark crude for May delivery was up 56 cents to $85.43 a barrel in electronic trading on the New York Mercantile Exchange, but down from a peak of $85.89 earlier in the session. On Thursday, the contract climbed up $1.11 to settle at $84.87 following a gain of $1.39 on Wednesday.

Global oil trading was closed for the Good Friday holiday.

Crude has jumped from $69 a barrel in early February on expectations a growing U.S. economy will eventually spark higher oil consumption.

On Friday, the U.S. Labor Department said employers added 162,000 jobs in March, the largest job gain in three years. The unemployment rate stayed at 9.7 percent for the third straight month.

"The market was positive before but now it's been confirmed," said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore. "If the job growth can be sustained for several months, we'll definitely see crude demand pick up."

Analysts, however, warned that the rise in oil prices caused by speculative investments could harm the recuperation of the global economy.

"The last time we had oil prices at current levels, what followed was the worse recession ever and we will worry about what the combination of what is still high unemployment and higher fuel expenditure does to the economic recovery," said Olivier Jakob of Petromatrix in Switzerland. "On a fundamental basis we still do not see the indicators that would justify crude oil to trade at $90 a barrel."

"We still expect that this technical rally will start to work its way against the economic recovery," Jakob said.

Edward Meir, senior commodity analyst at MF Global in New York, said higher oil prices were part of an overall surge in the value of commodities, with investors betting that commodity prices will benefit as the global recovery picks up steam.

"The flip side to this argument is that the rally has already discounted a recovery, and that continued gains, particularly in energy, could potentially slow growth down, increase inflation and interest rates, and in a worst case, short-circuit the very recovery markets have been banking on," Meir said.

In the near term, nonetheless, oil prices will likely go higher.

"Technically, there is very little resistance showing on the charts given the upside breakout evident, which means that prices will likely have to define their own tops at this stage," Meir said.

In other Nymex trading in May contracts, heating oil rose 1.43 cents to $2.2310 a gallon, and gasoline gained 1.83 cents to $2.3420 a gallon. Natural gas fell 4.2 cents to $4.044 per 1,000 cubic feet.

In London, Brent crude was up 36 cents at $84.37 on the ICE futures exchange.

California rebound boosts 20-city home price index

noreply@blogger.com (Unknown) — Wed, 31 Mar 2010 04:05:00 -0700

LOS ANGELES – A surprisingly strong rebound in California's real estate market helped lift a key home price index for the eighth month in a row.

That's good news for people who plan to sell their homes this spring. Prices are now up almost 4 percent from the bottom in May 2009, but still almost 30 percent below the May 2006 peak.

Prices rose 0.3 percent from December to January on a seasonally adjusted basis, according to the Standard & Poor's/Case-Shiller 20-city home price index released Tuesday. Prices increased in 12 cities in the index.

The biggest monthly gain was in Los Angeles, where prices rose 1.8 percent from December. And real estate agents say there's a distinct sense the worst of the downturn is over.

Buyers are "seeing that prices are creeping up," said Tony Middleton, a real estate agent with ZIP Realty who concentrates on the San Fernando Valley. "They're losing bids on homes and they have to bid again."

Prices in San Diego, meanwhile, rose by almost 0.9 percent. Phoenix had the third-largest gain at 0.8 percent.

Compared with the same month last year, the 20-city index was off just 0.7 percent from last year at a reading of 146.32. That was the smallest decline in almost three years and in line with analysts' expectations, according to Thomson Reuters.

Rising home prices also could boost consumer optimism. For most Americans, their home is their largest asset, so as values climb from the depths of the housing bust, homeowners feel wealthier and more comfortable spending. And, for homeowners who owe more on their mortgages than their properties are worth, rising prices rebuild equity.

Consumer confidence rebounded in March after a February plunge, according to a survey released Tuesday. The Conference Board's Consumer Confidence Index rose to 52.5 in March, recovering about half of the nearly 11 points it lost in February.

Still, shoppers remain cautious and there are signs that last year's housing rebound won't last. Home sales sank during the winter, and government incentives that have propped up the market are ending.

Another reason for the positive news is simply that the Case-Shiller index measures a three-month average of home prices. So January's report included November's strong home sales.

However, bargain-hunting homebuyers continue to pack open houses in California, often facing off with investors for foreclosed homes.

"We're seeing multiple offers in most of the markets here in the San Francisco Bay area," said David Kerr, an agent with ZipRealty in Oakland, Calif. "People are getting off the fence."

In February, bank-owned properties made up 44 percent of all resales in the state, according to MDA DataQuick. In Southern California, they accounted for more than half of resales.

With such high demand, supply is dwindling, driving prices higher.

Meanwhile, the state's unemployment rate has flat-lined of late, and that's made buyers more comfortable about purchasing a home than they were just six months ago, said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California.

California home sales will likely get a boost in coming months thanks to a new serving of government stimulus.

Last week, state lawmakers enacted a tax credit of up to $10,000 for homebuyers that kicks in May 1. The state allotted $100 million for first-time buyers and another $100 million to anyone who buys a newly built home. California had a round of tax credits last year that proved to be popular; that program ended in July.

The latest incentive picks up where a federal first-time homebuyer tax credit of up to $8,000 is scheduled to leave off when it expires at the end of April. Should the Obama administration extend the federal tax break, that could give homebuyers in California even more reasons to buy.

Still, there remain pockets of weakness. Sales of homes priced above $500,000 are sluggish. And despite rising prices, more than one-third of all homeowners with a mortgage still owe more on their loans than their homes are worth, according to First American CoreLogic.

Among the cities showing monthly price declines in January, the biggest drop was in Portland, Ore., where prices fell 1.8 percent from December. Chicago and Seattle saw declines of 1.7 percent, while prices in Atlanta fell 1.5 percent.

Many analysts expect the Case-Shiller 20-city index will again turn downward in the coming months as more foreclosures in other states hit the market.

"It is only a matter of time before the index records a double-dip in prices," wrote Paul Dales, U.S. economist with Capital Economics, who forecasts a 5 percent drop. The market will be tested in the second half of the year, he wrote, when a tax credit that has boosted sales is gone.

The Case-Shiller index measures home price increases and decreases relative to prices in January 2000. The base reading is 100; so a reading of 150 would mean that home prices increased 50 percent since the beginning of the index.

European stocks up modestly ahead of US data

noreply@blogger.com (Unknown) — Wed, 31 Mar 2010 04:02:00 -0700

LONDON – European stock markets rose modestly Wednesday following a late rebound on Wall Street in the previous session and ahead of a raft of U.S. economic data, though the long Easter break kept trading volumes light.

The FTSE 100 index of leading British shares was up 13.76 points, or 0.2 percent, at 5,686.08 while Germany's DAX rose 13.16 points, or 0.2 percent, to 6,155.61. The CAC-40 in France was 7.64 points, or 0.2 percent, higher at 3,995.05.

Wall Street was poised to dip slightly following a flat performance on Tuesday — Dow futures were down 10 points, or 0.1 percent, at 10,844 while the broader Standard & Poor's 500 futures fell 1.5 point, or 0.1 percent, to 1,167.90.

Tim Hughes, head of sales trading at IG Index, said a raft of U.S. economic data later, including the monthly private payrolls report from ADP, a manufacturing survey for the Chicago region and crude oil inventory figures "all have the potential to add a small amount of volatility to an otherwise bland trading landscape later in the day."

The big event this week is Friday's U.S. nonfarm payrolls data for March — traditionally this can set the market tone for a week or two but this month's figures will be released as many traders head off for the Easter break. All major stock indexes in Europe and the U.S. are closed for Good Friday.

The report is expected to show employers added 170,000 jobs in March. That would be only the second increase since the recession began in late 2007.

The euro, meanwhile, rallied 0.4 percent to $1.3464 after official figures showed inflation in the 16 countries that use the euro spiked to its highest level in 15 months during March. The dollar rose 0.6 percent to 93.36 yen.

In its preliminary estimate for the year to March, Eurostat, the EU's statistics office, said consumer prices in the eurozone rose by 1.5 percent, way above February's equivalent rate of 0.9 percent and market expectations for a more modest increase to 1.2 percent.

Eurostat did not provide any more details but a fuller analysis of why inflation jumped to its highest level since December will emerge on April 16, when a broader analysis is published.

Despite the euro's advance Wednesday, the currency continues to be dogged by worries surrounding Greece's debt crisis.

Even though the European Union finally agreed a backstop for the debt-laden country last week, investors remain concerned about the Greek government's ability to tap the financial markets for more cash — two bond issues this week met with muted success.

The most visible sign of unease in the markets is in the spread between Greek and German 10-year bond yields — the so-called spread between the two is indicative of investor unease, rising as it has to over 3.4 percentage points.

The current spread is more or less the same as before the rescue plan's announcement last Thursday and up from the 3.06 percentage points on Monday.

In Asia, trading was fairly lackluster. Japan's benchmark Nikkei 225 stock average ended down 7.20 points, or less than 0.1 percent, at 11,089.94 while Hong Kong's Hang Seng fell 135.44 points, or 0.6 percent, at 21,239.35. south Korea's index fell less than 0.5 percent to 1,692.85.

Australia's benchmark dropped 0.8 percent and China's Shanghai index was off 0.6 percent.

Benchmark crude for May delivery was up 49 cents at $82.86 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 20 cents to settle at $82.37 on Tuesday.

China gold demand to double in a decade

noreply@blogger.com (Unknown) — Tue, 30 Mar 2010 03:22:00 -0700

BEIJING: China's gold demand is expected to double over the next decade from current levels due to jewellery consumption and investment needs, the World Gold Council (WGC) said in report released on Monday. Currently the world's second-largest gold consumer after India, China has seen its gold demand grow at an average rate of 13 percent per year over the past five years. Demand from China's two largest sectors -- jewellery and investment -- reached a combined total of 423 tonnes in 2009, with 314 tonnes supplied by domestic mines. "This shortfall creates a snowball effect as China's gold industry may not be able to keep pace with the annual leap in domestic consumption despite rising to be the world's largest gold producer since 2007," WGC said in the report. The Chinese per capita consumption of gold jewellery is one of the lowest, at 0.26 grams, compared with other major gold consuming countries. If gold were consumed at the same rate per capita as in India, Hong Kong or Saudi Arabia, annual Chinese demand could increase by at least 100 tonnes or as much as 4,000 tonnes in the sector alone, it said. If the central bank boosts gold holdings to 2.2 percent of forex reserves, a peak level seen in 2002, from the current 1.6 percent, China's total incremental demand would rise by 400 tonnes at the current gold price, the report added. China's share of global gold demand doubled from 5 percent in 2002 to 11 percent in 2009, and the council predicted that China's domestic gold mines could be exhausted within six years. "The Chinese gold industry is simply not responding fast enough to bring in new supply," it said.