World stocks awaiting economic recovery clues

LONDON – European stock markets fell modestly Tuesday ahead of an expected subdued open on Wall Street as investors awaited key data later this week for more clues about the speed of any potential recovery.

The FTSE 100 index of leading British shares was down 12.49 points, or 0.3 percent, at 4,281.54 while France's CAC-40 fell 7.93 points, or 0.3 percent, at 3,185.75. Germany's DAX was 9.20 points, or 0.2 percent, higher at 4,875.89.

The relatively lackluster tone was expected to continue at the U.S. open, with Dow futures up only 9 points, or 0.1 percent, at 8,467 while the broader Standard & Poor's 500 futures rose 1.5 point, or 0.2 percent, to 922.70.

"There seems to be a distinct lack of conviction in either direction for traders at the moment and low volatility is the order of the day," said Anthony Grech, market analyst at IG Index.

Investors were bracing themselves for volatility later as Tuesday marks the last day of the month, quarter and half-year. The coincidence of these fiscal period ends can create volatility as investors book profits, stake out new positions or alter their hedging strategies.

"The month and quarter-end could also see many traders out there looking to book whatever profits they can, again reigning in the upside potential," said Matt Buckland, a dealer at CMC Markets.

During June, stock markets in the developed world gave up around 5 percent of the gains that they had made since March and investors will be looking to see if this week's economic data can boost sentiment and renew the rally.

Looking ahead, Thursday is at the forefront of investors' attention as it brings the European Central Bank's latest interest late decision and the closely watched U.S. non-farm payrolls. Analysts expect June's U.S. unemployment rate to rise around 0.3 of a percentage point to 9.7 percent — President Barack Obama has warned that it will top 10 percent in the coming months.

Equities rose from the middle of March until the start of June on hopes that the U.S. economy in particular will recover from recession sooner than anticipated. Many investors saw fallen stocks as cheap and started buying into the market. However, a run of downbeat economic news brought an abrupt end to the rally and altered the general mood prevailing among investors.

Tuesday's news that the recession in Britain is even deeper than previously thought did little to alter the prevailing view in the markets that any recovery around the world will be a long, hard slog.

The U.K. office for National Statistics said gross domestic product fell 2.4 percent in the first quarter from the previous three month period, way more than the previous prediction of a 1.9 percent decline.

Renewed strength in oil prices, which powered to eight-month highs above $73 a barrel for a brief while, is considered a potential brake on economic recovery. Though higher oil prices can boost the earnings of oil companies, they have the capacity to rein in any recovery in consumer spending and stoke inflationary pressures.

By early afternoon London time, benchmark crude oil for August deliver was up 16 cents to $71.65 a barrel.

So far, however, falling prices remain at the forefront of central bankers' concerns. Figures earlier showed that prices in the 16 countries that use the euro fell 0.1 percent in the year to June, the first negative inflation rate in at least a decade.

In Asia, Japan's Nikkei 225 rose 174.97 points, or 1.8 percent, to 9,958.44, while Hong Kong's Hang Seng reversed early gains to close down 149.78, or 0.8 percent, at 18,378.73.

Elsewhere in Asia,South Korea's Kospi inched up 0.1 percent to 1,390.07 while Australia's benchmark rose 1.8 percent,

Singapore's market gained 0.4 percent but China's Shanghai index dropped 0.5 percent

Meanwhile, the dollar fell 0.3 percent to 95.80 yen while the euro gained 0.5 percent to $1.4145.

____

AP Business Writer Stephen Wright in Hong Kong contributed to this report.

World stocks awaiting economic recovery clues

Hot News: Few Bidders to Develop Iraqi Oil and Gas Fields

Bankruptcy court to rule on New GM plan

NEW YORK (Reuters) – General Motors Corp (GMGMQ.PK) is heading to bankruptcy court on Tuesday to seek approval to sell its assets to a "New GM" in a plan to reinvigorate the automaker under U.S. government ownership.

GM is seeking approval for the sale from U.S. bankruptcy Judge Robert Gerber just 30 days after filing for Chapter 11. Under the deal, brokered by the Obama administration's autos task force, the company would sell its assets under Section 363 of the bankruptcy code to a "New GM" and continue to operate its best assets, like Chevrolet and Cadillac, while gaining access to billions in funding from the U.S. Treasury.

GM's old assets would remain behind in bankruptcy court to be liquidated.

The deal faces several objections from bondholders and those concerned about the fate of its dealers, but no competing bidders have emerged as an alternative to the U.S. government's $60 billion financing for GM, including a proposed equity investment of $50 billion that would give the U.S. Treasury a 60 percent ownership stake.

If the sale goes through it would mark the second big win this month for the Obama administration's autos task force, which successfully brokered the sale of Chrysler LLC to a group led by Italy's Fiat SpA (FIA.MI). The U.S. Supreme Court cleared the way for that deal to go through on June 9.

"I think it is going even perhaps more smoothly than Chrysler, which is kind of interesting considering how much bigger GM is than Chrysler," said Stephen Lubben, a bankruptcy professor at Seton Hall Law School in New Jersey.

"Chrysler cleared the path for it and they're using pretty much the same strategy," he added.

GM said in court documents that the sale would avoid a "systemic failure" for the U.S. auto industry and that it is the only way to provide "a genuine opportunity for the business to survive and thrive in an economically viable entity."

The company has shut 13 of its U.S. assembly plants for up to 11 weeks as part of a bid to cut production and run down inventory while it seeks approval of the sale in bankruptcy court.

The company plans to shed dealer contracts and has deals to sell brands like Hummer and Saturn that will not be carried over to the new company. It also plans to shed the Pontiac brand and GM said on Monday that it would cut operational ties with a Northern California auto plant it had operated in a joint venture with Toyota Motor Corp (7203.T).

UPHILL BATTLE FOR CHALLENGERS

While dozens of objections have been filed in the bankruptcy case, some have already been resolved or withdrawn, and challengers to the deal could face an uphill battle since the same court has already approved the Chrysler sale.

"I think Judge Gonzalez kind of made life easier for Judge Gerber here," Lubben said, citing the New York bankruptcy judge who approved Chrysler's sale and the several higher courts that backed his decision.

"People basically know the Second Circuit has already largely blessed this structure," he added.

GM has said more than 50 percent of its bondholders support the deal and also argued that the sale would maximize recovery for its stakeholders. Under the plan, the U.S. government would take a 60 percent stake in the newly formed company, the United Auto Workers union would have a 17.5 percent stake, the Canadian government would own about 12 percent, and GM bondholders are expected to get about 10 percent.

A group of small bondholders, which calls itself the "Unofficial Committee of Family & Dissident GM Bondholders," have said they do expect to mount a challenge to the sale. They filed court papers last week saying they may seek to call GM CEO Fritz Henderson and Harry Wilson of the U.S. Auto Task Force to take the stand as witnesses as they mount their case.

While Judge Gerber has said the group is free to make its case in court, last week he rejected its request to become an "official committee," blocking the group's attempt to gain more funding to mount a legal battle.

Several other individual bondholders -- some representing themselves -- have filed objections to the sale, along with the State of Texas which is claiming that the sale illegally challenges state laws on dealerships, and a group representing about 300 Americans with lawsuits against GM for alleged product defects.

GM, however, resolved a key objection from nine state attorneys general over the weekend, saying in court papers that the "New GM" would accept liability for future product defects. The company also said it would address objections raised by over 20 of its parts suppliers.

The case is In re: General Motors Corp, U.S. Bankruptcy Court, Southern District of New York, No. 09-50026.

(Reporting by Emily Chasan; Editing by Richard Chang.)

Bankruptcy court to rule on "New GM" plan

Hot News: Irwin Kellner: The Fed is pushing on a string

Apple CEO Steve Jobs returns to work

SAN FRANCISCO (Reuters) – Apple Inc Chief Executive Steve Jobs is back at work following a near 6-month medical leave, though he will work at least initially from home for a few days a week, the company said on Monday.

The official word of his return followed months of speculation about the health of Jobs, a pancreatic cancer survivor, and his future with the company he co-founded more than 30 years ago.

Jobs, 54, underwent a liver transplant in Memphis, Tennessee, while on leave. He has remained involved in strategic decisions at Apple while away, according to the company, and he has been seen in recent weeks at Apple's headquarters in Cupertino, California.

"Steve is back to work," a company spokesman said. "He's currently at Apple a few days a week, and working from home the remaining days. We are very glad to have him back."

In January, after initially blaming his noticeable weight loss on a hormone imbalance, Jobs announced he was taking medical leave until the end of June, saying his health-related issues were "more complex" than originally thought.

Collins Stewart analyst Ashok Kumar said investors will be reassured that Jobs is back at the helm of the company he helped resuscitate over the past decade, with category-defining products like the iPod and, more recently, the iPhone.

Kumar noted that some investors had feared Jobs would never return. "In many ways he's irreplaceable," he said. "Having him back brings the halo back to the company."

Shares of Apple were roughly flat at $141.92 on Nasdaq at mid-afternoon. The stock used to sink and surge with every twist in Jobs' health, but has proved to be less volatile of late as investors got used to the idea of other executives running the company in his absence.

While Jobs was on leave, Chief Operating Officer Tim Cook handled Apple's day-to-day operations. Some analysts think Jobs may transition into an advisory role, focusing on products and strategy, and Cook would formally become CEO.

Jobs was treated for a rare form of pancreatic cancer in 2004. His gaunt appearance at an Apple event last summer spurred worries that the cancer had returned.

The hospital in Memphis that performed Jobs' liver transplant said he "is now recovering well and has an excellent prognosis," but has not provided further details.

(Reporting by Gabriel Madway, editing by Tiffany Wu, Derek Caney and Richard Chang)

Apple CEO Steve Jobs returns to work

Hot News: Porsche Rejects Volkswagen Offer

Microsoft to sell Razorfish: report

NEW YORK (Reuters) – Microsoft (MSFT.O) has hired Morgan Stanley (MS.N) to sell Razorfish, its digital agency, and French marketing company Publicis Groupe SA (PUBP.PA) is thought to be a possible bidder, the Financial Times said on its Website late Sunday.

Microsoft acquired the agency, formerly called Avenue A Razorfish, as part of its $6 billion takeover of aQuantive in 2007.

The report cited an analyst valuing Razorfish at $600 million to $700 million, based on sales of about $400 million last year and profit margins for similar businesses of 12 to 13 percent.

Publicis and Morgan Stanley were not immediately available for comment.

Microsoft declined comment.

Razorfish is one of the largest interactive advertising and marketing agencies, boasting a client list that includes McDonald's Corp (MCD.N), Starwood Hotels & Resorts (HOT.N), and Carnival Cruise Lines.

Microsoft and VivaKi, the digital arm of Publicis, last week unveiled a broad cooperation deal to develop new content, improve marketing performance and better target digital advertising audiences.

Microsoft to sell Razorfish: report

Hot News: Mainland official says willing to join hands with Taiwan to tackle downturn

Ecuador, Venezuela start joint gas exploration in Gulf of Guayaquil

QUITO, June 26 (Xinhua) -- Ecuador and Venezuela on Friday started their joint exploration for natural gas in the Gulf of Guayaquil, a large body of water in the Pacific Ocean in western South America.

The exploration, which is expected to last 90 days, will be done by Venezuela's state-owned oil firm Petroleos de Venezuela (PDVSA), said the company's Ecuadorian counterpart Petroecuador.

Under a plan, the PDVSA will drill a well of 3 km in depth in Puna Island, which is off the coast of southern Ecuador at the head of the Gulf of Guayaquil.

The investment for the exploration, totaling 32 million U.S. dollars, will be covered by the PDVSA, which has a strategic alliance with Petroecuador in hydrocarbon projects in both countries.

Petroecuador said oil might also be found during the exploration as seismic research indicates.

Ecuador, Venezuela start joint gas exploration in Gulf of Guayaquil

Hot News: Motoring: Toyota Tops Quality Study

Talking Business: Chasing Small Fry, S.E.C. Let Madoff Get Away

Three months ago, in a courtroom in Bridgeport, Conn., a 72-year-old former Morgan Stanley broker named Richard A. Kwak was cleared of any involvement in a small-time stock manipulation scheme.

The Boston office of the Securities and Exchange Commission began the investigation around 2001. Three years later, formal charges were brought against Mr. Kwak and seven others. By the time the case went to trial, in 2007, only three defendants were left; the others had settled with the S.E.C.

In that 2007 trial, Mr. Kwak and another defendant, Stephen J. Wilson, were cleared of one charge, with a hung jury on the remaining charges. (The third defendant, who foolishly acted as his own lawyer, was found liable and fined $10,000.)

The S.E.C. retried Mr. Wilson in 2008. He was cleared. Finally, in March 2009, the S.E.C. retried Mr. Kwak, with the same result. The jury took less than four hours to exonerate him.

Mr. Kwak’s life is now in tatters. He is around $1 million in debt and suffers from emotional problems. He has struggled to stay out of bankruptcy. Although he is still a broker — he certainly can’t afford to retire — he long ago lost his job with Morgan Stanley, where he had spent several decades without so much as a hint of impropriety. Needless to say, his business is a small fraction of what it once was.

“It pretty well wiped me out,” he said a few days ago. He is extremely bitter. The same is true of Mr. Wilson, who is also deeply in debt and struggling to reclaim his life.

I bring all this up because this Monday, Bernard L. Madoff, a contender for the title of greatest financial criminal in history, will be sentenced for the Ponzi scheme he ran for years. Mr. Madoff ruined lives, destroyed philanthropies and cost his investors billions of dollars — yet the S.E.C. was nowhere to be found, despite the repeated entreaties of a whistle-blower, Harry Markopolos.

Indeed, it was the agency’s Boston office — the same one that so relentlessly pursued Mr. Kwak — that Mr. Markopolos first approached about Mr. Madoff, whom he strongly suspected of financial chicanery. In 2000, 2001 and 2005, he peppered investigators with evidence that, while circumstantial, was far more compelling than anything the S.E.C. ever had on Mr. Kwak. In 2005, the Boston office finally referred the Madoff matter to the S.E.C.’s New York office, which did nothing.

After Mr. Madoff’s crimes were exposed, there was an outcry over the failure of the S.E.C. to uncover the Madoff scandal. What in the world was it doing all that time? Now we know the answer. Among other things, it was prosecuting two men who, in all likelihood, did nothing wrong.

•

When you talk to lawyers who defend people in trouble with the S.E.C., they tend to make several broad complaints. The first is that the agency spends too much time going after small fry like Mr. Kwak. “It happens more times than you can possibly imagine,” said Steven N. Fuller, one of the lawyers in the case.

This is an allegation the S.E.C. fiercely denies: “I have been at the agency for over 10 years, and I haven’t seen any evidence of that,” said Sylvester Fontes, who prosecuted Mr. Kwak.

But even the new S.E.C. enforcement chief, Robert Khuzami, acknowledges that the agency has for too long judged itself primarily on “quantitative metrics” — that is, the number of actions it brings and cases it settles — something he hopes to change. John A. Sten, a former S.E.C. lawyer who was Mr. Kwak’s lawyer during the second trial, said, “As an investigator, you are pressured to generate ‘stats.’ ” Clearly, it is far easier for the S.E.C. to add scalps by going after little guys, who will often agree to a settlement and a fine even when they are innocent. They either run out of money, or lose the will to keep fighting, or both.

A second issue is that the S.E.C. has a very difficult time shutting a case down once the commissioners have agreed to pursue it. Even if the facts start to look shaky, the internal dynamics of the agency push its lawyers to either settle or go to trial, but never to abandon it. “The staff has a real problem persuading the commission to cut off a case once it has begun,” Mr. Sten said.

Now that it has new leadership, the enforcement division is undergoing “a self-assessment of our management structure, process and operations,” Mr. Khuzami told me. He wants to make sure the agency puts a premium on cases that grew out of the financial crisis — such as the fraud and insider trading charges the S.E.C. recently brought against Angelo R. Mozilo, the former chief executive of Countrywide Financial.

But when I brought up the Kwak case, Mr. Khuzami cautioned me against “drawing any inference about how we handle all our cases from a single case.” I suppose he’s right about that. Still, even as a narrow window into the culture of the S.E.C., it is hard not to see the Kwak case as an example of misspent resources and misplaced priorities. It boggles the mind to think that the S.E.C. spent eight years pursuing this case while taking a pass on Mr. Madoff.

Of course, no stock manipulator should get a pass, no matter how small a fish. But in this case, even though five defendants settled with the agency and one was found liable, it is far from certain that a manipulation scheme even existed, much less that it involved Mr. Kwak and Mr. Wilson.

The supposed ringleader was a former Prudential broker named Chauncey D. Steele, who, everyone agrees, was enamored with Competitive Technologies, an over-the-counter stock with the symbol CTT. The company marketed university patents, and made money by taking a cut from licensing deals it negotiated.

In truth, the company has never amounted to much, but it’s always had fans like Mr. Steele, who think every new patent it acquires will be the road to riches. Mr. Kwak and Mr. Wilson were also fans of the stock, and they recommended it to clients and chatted about it incessantly with their fellow CTT aficionados. “These guys spent a tremendous amount of their time doing nothing else but talking about the company,” said Mr. Fuller.

To the government, all those phone calls — Mr. Steele called the others literally thousands of times over a three-year period — meant that the men were conspiring to drive up the stock. The S.E.C. claimed that the men were buying CTT in concert, especially at the end of the day, so the stock would end up on an uptick.

But the only evidence they had were those phone records, which didn’t tell the investigators anything about what the men actually said to one another. Mr. Wilson told me that many of the calls he got from Mr. Steele went straight into voice mail; he stopped taking them because Mr. Steele was driving him crazy. Mr. Kwak told me that although he spoke to Mr. Steele frequently, the conversations were always about the company, not about manipulating the stock.

Nor did the allegation that they were acting in concert hold up; the trading records showed occasional coincidental trades, but nothing that would suggest a systematic attempt to manipulate the market. Indeed, for people who were supposedly manipulating the stock, they lost their shirts because they never sold any shares, not even when it topped $17 a share during the Internet bubble. (It closed on Friday at $1.72.)

So why did five of the defendants settle with the government? None of them are allowed to contest the government’s allegations — that’s part of any S.E.C. settlement — but I came away convinced that they settled because they could no longer stand up to the pressure of an S.E.C. enforcement action. Only Mr. Steele was hit with a major fine, $150,000. Another man, Frank R. McPike, the former chief executive of Competitive Technologies, had insurance to cover his fine, but only if he settled “without admitting or denying the charges,” as the S.E.C. boilerplate reads. If he went to trial and lost, he would have to pay out of his own pocket. (Mr. McPike was ensnared because he was in charge of the company’s stock buyback program, which the government claimed was part of the scheme.)

Mr. Kwak and Mr. Wilson, however, refused to settle. Even though fighting to the bitter end had ruinous financial consequences, they couldn’t bear the thought of admitting to something they didn’t do. “For Richard Kwak, this was a matter of honor,” said Elliott Dudnick, who is one of his brokerage clients and testified on his behalf at the first trial.

Mr. Kwak, a former Marine, agreed. “The day they told me I was charged, I told them I would fight them until the day I died,” he said. “I would never be involved in timing a trade. I have always followed the rules.” Even though his wife and sons begged him to settle, he wouldn’t. He couldn’t.

So long as the case was going on, Mr. Kwak held himself together, but these last few months have been difficult. Several people who know him told me that he has shown symptoms of post-traumatic stress disorder.

There is one thing he did, though, early this year. He made tapes of the hearings in which the S.E.C. was excoriated by Congress for failing to uncover Mr. Madoff’s Ponzi scheme. “I’ve kept them,” he said. I asked him why.

“They chose me instead of Bernie Madoff.”

Talking Business: Chasing Small Fry, S.E.C. Let Madoff Get Away

Hot News: European stocks gain on US data

In India, Central Banker Played It Safe

MUMBAI — The financial crisis has tarred the reputation and ideology of free marketers and central bankers the world over, including Alan Greenspan, the former chairman of the Federal Reserve. But it has had the opposite effect on Yaga Venugopal Reddy, the former governor of the Reserve Bank of India.

While other central bankers are defending and apologizing for how they managed the financial system during good times, here in India, big banks have not sought succor from the government, and the economy is still growing, albeit less rapidly. And Mr. Reddy, with the conservatism he represents, is taking a victory lap. He is widely sought after on the global speaking circuit and sits on the United Nations panel that has proposed fixes for the global financial order. Newspapers here celebrated the recent publication of a book of his speeches, “India and the Global Financial Crisis: Managing Money and Finance,” with fawning coverage.

“If America had a central bank chief like Y. V. Reddy, the U.S. economy would not have been such a mess,” Joseph E. Stiglitz, the economist and Nobel laureate, has said.

Still, Mr. Reddy’s approach is not without controversy.

Some economists assert that under him the Reserve Bank of India blocked critical reforms — including opening the domestic bond market to foreign investors, allowing banks and businesses to trade more freely in currency markets and letting Indian institutions invest freely overseas.

“In the interest of safety, the R.B.I. under Reddy was too skeptical of industry-led innovation and too partial to officially led innovation, because that is the way things have been done around here,” said Suman K. Bery, an economist who was on a government-appointed committee that advocated more aggressive changes.

He said Mr. Reddy and the bank deserved praise for their response to excesses in markets like housing, but that their opposition to easing regulations of the financial system hurt the country.

“Where I do give them credit is they certainly were not in the Greenspan camp that said markets are self regulating,” said Mr. Bery, who is now the director general of the National Council of Applied Economic Research in New Delhi. “They were not afraid to call a bubble when they saw one in urban land.”

Mr. Reddy and his defenders respond that the central bank did a lot to advance financial reforms but resisted changes that could make India more vulnerable to crises.

And many Indian bankers who once chafed under the Reserve Bank of India’s restrictions today sing his praises, saying, in effect, that he saved them from themselves. Most Indian banks are doing reasonably well even though real estate and stock prices have fallen. Analysts estimate the economy will grow 5 to 7 percent this year.

But some often younger and more Western-oriented economists and policy makers assert that India needs to move forcefully to free the economy from government control, which they say would expedite growth.

They advocate lifting restrictions on bank lending and allowing the rupee to float freely against other currencies, for instance, arguing that such moves would make the Indian economy more efficient and force banks to be more responsive to the needs of the people, especially the poor.

The contrasting views highlight a larger debate about how fast India should move on the path of liberalization it embarked on in the early 1990s. Mr. Reddy, who helped shape that path as a senior official in the finance ministry, and much of India’s political establishment favor a moderate pace, placing a high value on stability.

Of course, India is not alone in struggling with such questions.

Many lawmakers in Washington are wary of giving the Fed too much power. Some policy makers blame it for setting the stage for the current crisis by not adequately supervising banks and by keeping money too cheap for too long, allowing bubbles to form in assets like real estate and stocks.

In Europe, leaders in Britain and the Continent are offering competing visions about who should regulate finance and how.

Mr. Reddy is lauded for, among other things, restricting bank lending to real estate developers, increasing the amount of money banks must set aside as reserves, and blocking the use of some derivatives.

Many analysts say that the tight leash he kept on banks, which once earned him the enmity of bankers and corporations, protected the banking system and the broader economy from the excesses that have ravaged the United States and Europe.

“He was a central banker from the old school of central banking,” said Tushar Poddar, an economist at Goldman Sachs in Mumbai. “He will come out in history, in my view, as more positive than negative."

During a recent interview over a breakfast of omelets and semolina porridge, Mr. Reddy, 67, said he had a “vague discomfort” with the notion that markets are always right.

Given that most Indians still live hand-to-mouth, he said, proposals to give freer rein to investors and banks to do as they see fit could backfire as they did in Southeast Asia in 1997 when the collapse of a credit bubble and a run on the Thai baht led to economic calamity in the region.

“We cannot afford to take the kind of risk that other countries can, because of our large population,” he said. “As a smaller emerging market economy, I might not be able to get the type of money that is required to get over a crisis.”

Now retired and living in the southern city of Hyderabad, which is geographically and culturally distant from the power centers of New Delhi and Mumbai, Mr. Reddy has no official role in Indian policy making. But he and his views are respected and shared by many political leaders, bankers and economists here.

He dismisses the calls for greater financial reform, which come from economists and some in the government. To be successful in India, he said, regulators must tailor proposals to fit the “time and context” in which they are working.

Given the crisis and the lively debate about how finance should be regulated, Mr. Reddy said India should think anew about how it should reform and at what pace. “We can’t rush in,” he said, adding, “We have to learn from the rest of the world.”

Right now, he says the government must focus on its fiscal health, invest in infrastructure and improve education, health care and governance. Until India addresses those issues, he said, further financial reforms will not be effective and, in fact, could make it more vulnerable to crises.

Mr. Reddy’s critics say they too want investment in all those areas, but that the wait for those improvements should not hold up needed changes in the financial sector.

“It’s an excuse for not moving,” said Ila Patnaik, a senior fellow at the National Institute of Public Finance and Policy, said about Mr. Reddy’s emphasis on other deficiencies. They “haven’t thought through financial sector reforms,” Ms. Patnaik said. “It would have been a very challenging task to do reforms.”

In India, Central Banker Played It Safe

Hot News: Bernanke testimony boosts Wall Street

Oil rises towards $69 on Nigeria attack

LONDON (Reuters) – Oil rose toward $69 a barrel on Thursday after Nigeria's main militant group shut down one of Royal Dutch Shell's pipeline junction points, heightening concerns about supplies from the region.

U.S. crude futures for August gained 27 cents to $68.94 a barrel by 0626 GMT (2:26 a.m. EDT), after falling to $68.11 earlier. London Brent crude rose 35 cents to $68.68.

In the latest in a string of attacks in Nigeria, Africa's biggest oil producer, the Movement for the Emancipation of the Niger Delta (MEND), said it had sabotaged the Billie-Krakama pipeline in Rivers State, which supplies one of the country's main export terminals.

Attacks from MEND have forced foreign oil companies, including U.S. oil major Chevron and Italy's Agip, to shut at least 133,000 barrels per day of oil production in the last month.

Shell said it had shut down one of its pipeline junction points Thursday but declined to say whether any oil production had been affected.

Analysts said the effect on prices had been subdued with plenty of spare supply capacity available around the world, as the global recession has cut demand for oil.

"The Nigerian attacks have definitely been supportive, but the impact is less in the current economic environment as there's plenty of spare capacity in the oil industry right now," Andrey Kryuchenkov, an analyst at VTB Capital in London, said.

"When we were rallying toward $150 a barrel last summer a small sneeze in Nigeria would send the market rallying at least $2 a barrel. There's less of a geopolitical premium in prices now."

Falling demand for oil sent oil prices crashing from record highs close to $150 a barrel last July toward $30 a barrel at the turn of the year. Since mid-April, however, prices have risen sharply on prospects for an economic recovery.

RISING INVENTORIES

Wednesday, U.S. government data showed stocks of gasoline in the world's largest energy consumer rose 3.9 million barrels last week, exceeding analysts' predictions. Stocks of distillates -- such as diesel and heating oil -- have risen to 10-year highs due to the recession.

But prices took support from a large drop in stockpiles of crude oil, which declined by 3.8 million barrels last week.

Production cuts from OPEC are expected to slowly drain global stocks of crude oil toward the end of this year, although economists have warned any subsequent rise in oil prices could derail any economic recovery.

Weakness in the dollar also supported prices Thursday as it slipped toward $1.40 against the euro. A weaker dollar tends to boost buying as it makes commodities priced in the greenback cheaper for holders of other currencies.

(Additional reporting by Ramthan Hussain in Singapore; Editing by Sue Thomas)

Oil rises towards $69 on Nigeria attack

Hot News: BP Selects Ericsson Chief as Next Chairman

Bill advances to require 401(k) fee disclosure

WASHINGTON (MarketWatch) -- A House panel approved a bill Wednesday that would require easily understandable fee disclosures for all 401(k) retirement accounts and would require that plans offer the option of an index-based investment.

Under the proposed law, investors would have to be told what fees are being charged to their 401(k) and would have to be told about any potential conflicts between the investors' financial interests and the interests of their employer.

The bill, called the 401(k) Fair Disclosure and Pension Security Act, was approved by the House Education and Labor Committee on a 29-17 vote. Read more about the bill.

"It is beyond time that American workers have basic and clear information on costs and choices contained in their 401(k) plan," said Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee.

Republicans said the bill would harm investors. Rep. John Kline, R-Minn., said the bill "would impact Americans' ability to save for retirement by making 401(k) plans more complex and costly while reducing workers' access to individualized investment advice."

The bill would require the financial companies servicing the retirement accounts to "unbundle," or separately list, their fees for different services: administrative, transactional or managerial.

Republicans wanted to eliminate the unbundling piece of the legislation, warning of cost hikes.

Once "bundled" service providers are forced to admit to what they charge to investors' savings accounts, investors are going to be surprised, said Jason Roberts, a financial-services lawyer with Reish & Riker.

"We know that fee disclosure and transparency are in our not-too-distant future," Roberts said, assuring that "one way or another," service providers of 401(k)s are going to have to disclose information to the government and investors. "We're ready to have some guidance, no matter what it looks like."

The bill may stir up financial-services firms and the battered retirement-savings category, which suffered billions of dollars in 401(k) losses and other funds earlier in the recession.

Most 401(k) plans are invested in mutual funds -- stocks, bonds and money-market funds. The plans defer income taxes on the savings until a person begins withdrawing, or upon retirement.

About 50 million Americans have 401(k) plans, according to a committee statement, and more than 80% of workers are unaware of how high aggregate fees reach on their accounts. The subcommittee said that even small fee charges can cost retirees billions each year.

Bill advances to require 401(k) fee disclosure

Hot News: Capitol Report: Credit-card industry woes will cost consumers

Currencies: Dollar gains on euro, yen, but in narrow ranges

TOKYO (MarketWatch) -- The dollar gained on its major counterparts in Asian trading Wednesday, but stuck to narrow ranges as investors awaited the outcome of the U.S. Federal Reserve's two-day policy meeting later in the global day.

The Federal Open Market Committee is widely expected to leave its fed funds rate target in a range of 0% to 0.25%, but investors will be watching to see whether the central bank unveils any changes to its Treasury and mortgage asset-purchase program to further boost liquidity.

"Given that the prerequisite for economic recovery has always been a snapback in credit growth, we judge the Fed will conclude that more non-traditional policy accommodation is required," Michael Gregory, senior economist at BMO Capital Markets, said in a note to clients.

The dollar was trading at 95.48 yen, up from 95.17 yen in late North American trading Tuesday.

The euro bought $1.4075, down from $1.4089 late Tuesday.

The yen's strength has been contributing to the erosion of Japan's trade surplus by reducing the value of exported goods.

Data on Wednesday showed the surplus contracted further in May, as exports withered in the wake of the global slowdown. The surplus for the month fell 12.1% from the year-ago period to 299.8 billion yen, the Ministry of Finance said.

Currencies: Dollar gains on euro, yen, but in narrow ranges

Hot News: Antigua Dismisses Regulator Charged in Stanford Case

Europe Markets: Stocks in Europe end lower for second day

LONDON (MarketWatch) - Stocks in Europe closed lower on Tuesday as worries about whether the economy will emerge out of recession offset rises for more defensive stocks like pharmaceuticals.

Coming off the worst one-day fall in two months, the pan-European Dow Jones Stoxx 600 index finished 0.5% lower to 201.40, as markets moved closer to the May closing low level of 200.72.

A weaker-than-expected rise in U.S. existing sales helped to send markets lower for the session.

On Tuesday, investors picked up shares of companies less sensitive to trends in economic growth, such as utility group E.On , up 1.6% in Frankfurt, and drugmaker GlaxoSmithKline , up 1.6% in London.

"It makes sense, during a consolidation phase when there's bound to be some volatility in a market that has lost some of its liquidity because of the time of year, for investors to refocus on the defensives," said Mike Lenhoff, chief strategist at Brewin Dolphin.

"What we need to see is a slightly more favorable turn in the economic news flow. Until that happens, we're going to see a bit more consolidation, a bit more profit taking," he added.

Banks, which are seen as among those most leveraged to growth trends and have seen their shares rise sharply since March, pared some of those gains on Tuesday as Credit Suisse traded down 1.8% and Societe Generale gave up 2%.

The French CAC-40 index slipped 0.2% to 3,116.82 and the U.K.'s FTSE 100 index slipped 0.1% to 4,230.02 while the German DAX index rose 0.3% to 4,707.15.

Peugeot updates investors

Autos were higher in Europe, with Peugeot shares up 0.5%.

The firm said that it's expecting to post an operating loss of between 1 billion euros and 2 billion euros in 2009 but revised higher its view of auto demand in Western Europe.

It also announced that it's launching a 500 million euro ($692 million) convertible-bond offering. See full story.

"We view PSA's updated guidance as still conservative," said analysts at Credit Suisse.

Elsewhere in the sector, shares of Daimler climbed 3.1% in Frankfurt and Volkswagen rising 2.2%.

Meanwhile, U.K.-domiciled shares of Thomson Reuters rose 3.6% on a plan to consolidate its separate share classes into a single one.

Thomson Reuters will drop its listings from the London Stock Exchange and the Nasdaq while continuing to trade on the Toronto Stock Exchange and the New York Stock Exchange. Read more in London Markets.

The firm will swap shares of Thomson Reuters Corp. for Thomson Reuters plc shares. Thomson Reuters said it may buy back $500 million of its shares.

Luxottica shares rose 3.6% after Merrill Lynch added the eyewear firm to its Europe 1 list.

"This reflects our view that Luxottica will emerge as an even more dominant force in its industry post-2009 while we also expect a gradual but constant improvement in news flow throughout the rest of this year," the broker said.

Shares of British Sky Broadcasting climbed 3.1% after ESPN acquired Setanta's Premier League soccer rights.

"We see this as a positive outcome insofar as the re-auctioning of the rights posed potential risks to Sky," said analysts at Jefferies International. Read more on BSkyB.

News Corp. owns a 39% stake in British Sky Broadcasting and is also the parent company of MarketWatch, the publisher of this report.

Legal & General, Anglo American weak

Insurance firm Legal & General fell 7.9%, retreating after Societe Generale cuts its rating to sell from hold.

The broker noted that a recent rebound for the shares has cut the risk of a capital increase, but L&G still has the highest exposure to equities among U.K. life insurers it covers. It also has lower provisions against bond defaults, the broker noted.

Also lower, mineral extractor Anglo American lost 2.7% after it rebuffed a merger approach from rival Xstrata late Monday. See full story.

"The content of this statement comes as little surprise to us, although the speed of the response is rather disappointing -- a little more consideration may have been warranted," said analysts at U.K. brokerage Killik & Co.

Xstrata shares rose 0.8%.

Europe Markets: Stocks in Europe end lower for second day

Hot News: Apple’s Secrecy on Products and Top Executives

Despite Law, Job Conditions Worsen in China, Experts Say

DONGGUAN, CHINA — Liu Pan, a 17-year-old factory worker, was crushed to death last April when the machine he was operating malfunctioned.

Somehow Mr. Liu became stuck in the machine, his sister Liu Yan recalled during a tearful interview in a village near the factory.

“When we got his body, his whole head was crushed,” Ms. Liu said. “We couldn’t even see his eyes.”

Investigating the accident, inspectors found a series of labor and safety violations at the factory, Yiuwah Stationery, which supplies cards, gift boxes and other paper goods to Disney, the British supermarket chain Tesco and other companies.

The investigators also discovered that Mr. Liu was hired illegally, at 15, below the legal age limit here. Disney has called the situation at the factory “unacceptable.”

In a statement, issued Wednesday, Disney said it had instructed its vendors and licensees to “cease new orders of any Disney-branded products in the Yiuwah factory” under conditions are improved.

A spokesman for Tesco said that company was also working to improve conditions at the factory.

But there is a broader issue at stake. A year and a half after a landmark labor law took effect in China, experts say conditions have actually deteriorated in southern China’s export-oriented factories, which produce many of America’s less expensive retail goods.

In fact, with China’s exports reeling and unemployment rising because of the global slowdown, there is growing evidence that factories are ignoring or evading the new contract labor law, and that the government is reluctant to enforce it.

Government critics says authorities fear that a crack down on violators could lead to mass layoffs and even social unrest.

“The economic downturn has given regulators the perfect excuse to ignore the law,” says Zhang Zhiru, director of the Shenzhen Chunfeng Labor Dispute Service, a non-profit group that supports workers. “I don’t see any fundamental change.”

But workers are fighting back. Earlier this month, the government said Chinese courts were trying to cope with a soaring number of labor disputes, apparently from workers emboldened by the promise of the new contract labor law.

The number of labor disputes in China doubled to 693,000 in 2008, the first year the law was in effect, and are rising sharply this year, the government says.

The law requires that all employees have a written contract that complies with minimum wage and safety requirements. It also strengthens the monopoly state-run labor union and makes it more difficult for companies to use temporary workers or to dismiss employees.

Western companies that outsource to China say they have stepped up their monitoring of supplier factories to ensure they comply with the law. But they admit ensuring compliance is challenging in China.

A spokesman for the local Dongguan government here said that they are strictly enforcing the new law. But in interviews, some factory owners acknowledged that they were seeking ways to get around it, complaining the law’s regulations are too costly and cumbersome.

Lawyers say some local governments have issued their own competing rules or interpretations of the law that weaken it, in order to aid factory owners.

“Many local governments want to develop their own versions of the law,” says Liu Cheng, a professor of law at Shanghai Normal University and one of the law’s authors.

China’s huge and complicated labor market has long thrived on cheap labor and lax regulation. In recent years, labor rights advocates say they have seen incremental gains for workers. But they say there are growing signs of labor abuse. They point to a string of recent cases:

Several weeks ago, police in southern China’s Anhui province said they had freed 30 mentally handicapped workers from what they called “slave conditions” in a brick kiln.

On the same day, police said a fire in the dormitory of an illegal factory in southern Guangdong province killed 13 female workers and seriously injured four others.

A few weeks earlier, 7,000 workers went on strike at a factory that supplies some of the world’s biggest technology companies, saying they were being cheated on overtime wages and fed unsanitary food.

Experts say cheating workers on wages, forcing them to log up to 200 hours of overtime a month and denying them health benefits is commonplace in China.

Many factories are violating not just the new contract labor law, but also an earlier 1994 labor law, which covered a broader set of labor and wage practices, they said.

“The employment contract in many factories here is a mere scrap of paper,” says Liu Kaiming, director of the Institute of Contemporary Observation, a labor rights group in Shenzhen. “Here is a common trick: the factory signs contracts with 1,000 workers but actually they’ve hired 2,000. The factory reports to the government saying they have 100 percent of their workers registered.”

Heather White, a consultant who has inspected factories in China for Tommy Hilfiger, Polo Ralph Lauren and other big companies, says many exporters evade the law by subcontracting to so-called “shadow factories,” which operate under illegal conditions.

“The market is penalizing anyone who complies with the law,” she says, meaning their products will be more expensive. “And so many companies are subcontracting” to shadow factories.

Labor rights groups that specialize in sneaking into Chinese factories and documenting their flaws say exporters’ multinational clients are also responsible for what their suppliers’ practices.

But factory owners say that for years labor law enforcement has been weak and selective, and changing the rules now could lead to chaos, drive up prices and force many factories out of business.

“The government hasn’t given us time to adjust,” says Huang Zhenyuan, vice president of the Taiwan Merchant Association of Dongguan, which represents thousands of factories. “When we came to China there was no legal environment. Now all has changed; it’s too sudden.”

Because of the downturn 20 million migrant workers have already lost their jobs, Beijing says. The government recently put rules in place restricting factories from making large-scale layoffs without giving the government notice.

But on an individual level, the struggle between having a job and economic security, and safety and personal dignity can be wrenching.

Liu Pan, the worker crushed to death, was hired shortly after he turned 15. He operated a giant machine that turned out boxes in a plant that Disney concedes had recently passed third-party audits. His salary was about $175 a month.

Workers found his mutilated body stuck in the machine on the afternoon of April 5.

Michael Li, a senior manager at Yiuwah, says the accident was not a reflection of labor conditions at the factory. He also said a Chinese government official helps manage the factory.

But China Labor Watch, a nonprofit group based in New York, says they investigated conditions at the factory shortly after the death and found widespread violations of the labor law, including the hiring of children as young as 13, forced overtime and the failure of many workers to sign labor contacts.

In a statement, Disney said only about 5 to 15 percent of the goods produced at Yiuwah were made for Disney and that Yiuwah had committed to correcting problems there.

“However, if improvement within acceptable and agreed upon time frames is not achieved,” Disney said it would stop doing business with the factory.

Yiuwah offered $22,000 to compensate for Mr. Liu’s death, his family said.

Liu Hong, Mr. Liu’s father, does not even know how to begin to measure such compensation.

“I’m falling apart,” he said as his wife tried to calm him. “We are in the lowest class. So I still don’t know if it’s the highest compensation. I still wonder, because a life, a young life, is only worth $22,000?"

He added, "He was my only son, and he’s the only grandson to my father.”

Xie Qing contributed research.

Despite Law, Job Conditions Worsen in China, Experts Say

Hot News: Financial Stocks: Sector pummeled by renewed economic concern

Breakingviews.com: Battle Is Brewing Over Watchdogs

Though the Obama administration’s plan to overhaul financial regulation appears intended to avoid some big battles, the president’s careful political calculus won’t spare him from sparring with lawmakers and financial firms.

First comes the brewing battle over the Federal Reserve. President Obama’s plan envisages the central bank with new powers over nearly any financial institution that it believes poses a systemic risk, among other things.

The Fed is the most logical regulator to keep tabs on systemwide risks, but a case can be made for doing the job elsewhere, too. Some lawmakers are already objecting to the possible expansion of the central bank’s powers. Sheila Bair, who runs the Federal Deposit Insurance Corporation, has said debate over the Fed’s new role is “legitimate.”

There’s an added wrinkle. Under the administration’s plan, advisory input on systemic oversight falls to a new Financial Services Oversight Council of eight regulators. The division of responsibilities with the Fed could result in dropped balls or a lack of accountability. That would be a disappointing echo of problems that currently exist.

A second series of fights, this time with the corporate sector, could follow from plans to reclassify financial firms and how they are regulated.

One of these concerns companies in the new “too big to fail” category. Being one of these entities is supposed to be a dubious honor. For example, banks like Citigroup would get a higher implicit level of government backing than other institutions, but would pay for it by having to hold more capital and abide by other more stringent rules.

If the government can strike the right balance, the idea makes sense. But there’s potential for market distortions and for some financial firms to shop around for the friendliest regulator — a current practice that Mr. Obama wants to sweep away.

General Electric, for one, is already opposing this aspect of the plan, which could force it to offload its GE Capital finance arm. Whether companies should have no option about such a split, even with a transition period, is arguable — though in G.E.’s case, it might not be a bad idea for shareholders as well as taxpayers given that the finance unit has lately dragged down the value of the industrial business.

G.E. could also be affected by heavier regulation of so-called industrial loan corporations. These businesses have historically been regulated lightly because of their traditionally small size and limited purposes. But the administration argues they resemble banks and should be regulated as such. That sounds right, but companies that own such entities are already on the warpath.

Then there are the gaps in Mr. Obama’s plan, which are mostly fights deferred.

One is the future of mortgage giants Fannie Mae and Freddie Mac. The right answer in a market-driven economy would be to have these flawed, state-sponsored behemoths wound down or broken up and sold. But they are politically powerful. Mr. Obama’s plan has effectively punted the issue.

There’s also a gap in the plan to bring privately traded derivatives under regulation. Which watchdog will take charge of these problematic products, and exactly how it will be done, isn’t clear. There are $450 trillion of these derivatives outstanding, according to the International Swaps and Derivatives Association. In such a huge and lucrative market, the shortage of details looks like a recipe for hot tempers later.

It also remains to be seen how Mr. Obama’s instructions to accounting standard-setters will translate into action. His plan hints that they should consider allowing financial firms more leeway in how they value assets, especially in volatile markets, thereby making balance sheets less susceptible to market swings.

Yet the Financial Accounting Standards Board in the United States and its international counterparts are supposed to be cushioned from political pressure. Changing that would probably be a bad idea, because politicians would be too prone to bending the rules in tough times.

The administration’s lengthy “white paper” will throw up other battles too, including over the newly proposed Consumer Financial Protection Agency, which some see as an unneeded layer of bureaucracy.

Mr. Obama has already backed off any serious consolidation of the confusing array of watchdogs. Now he has tried to pick his battles of substance, too. Whether he has done enough to get his big ideas through Congress — especially with a heavy agenda, including health care reform, vying for attention — is another matter. RICHARD BEALES

For more independent financial commentary and analysis, visit www.breakingviews.com.

Breakingviews.com: Battle Is Brewing Over Watchdogs

Hot News: Blavatnik to sue JPMorgan over investment losses: report

Spending expected to be low at Fathers Day in U.S.

LOS ANGELES, June 20 (Xinhua) -- Because of the economic recession, U.S. consumers are expected to spend less at the upcoming Father's Day which falls on June 21, said a survey published on Saturday.

Due to the recession, Father's Day-related spending will be lower this year than a year ago like other annual observances, according to the National Retail Federation's Father's Day Consumer Intentions and Actions Survey.

Father's Day-related consumer spending is expected to reach 9.4billion dollars, compared to 9.6 billion in 2008 and 10 billion in2007,

The study found that consumers are expected to spend an average90.89 dollars on Father's Day gifts and dining, compared to 94.54 last year and 98.34 in 2007.

Consumers will spend the most on a special outing, such as dinner or a sporting event, followed by clothing, a gift card, electronics, books or compact discs, home improvement items and sporting goods, said the survey.

Like in past years, about three-quarters of those surveyed said they would celebrate Father's Day.

The poll of 8,447 adults conducted between May 5-12 has a margin of error of plus or minus one percent.

A similar study conducted March 31-April 7 found that consumer spending for Mother's Day was expected to reach 14.1 billion dollars, 123.89 dollars per consumer, compared to 15.8 billion and138.63 per consumer in 2008 and 15.7 billion and 139.14 per consumer in 2007.

Spending expected to be low at Father's Day in U.S.

Hot News: Spotlight: Scion of Turkish Banking Family Stresses Traditional Values

Admiral Prueher, General Franks leave BofA board

NEW YORK (Reuters) – Bank of America Corp (BAC.N) said on Friday retired Army Gen. Tommy Franks and retired Navy Adm. Joseph Prueher have resigned from its board, meaning more than a third of its board has stepped aside since late April.

The departures were effective June 17 and come as the bank tries to improve corporate governance and bolster its board's banking and financial expertise at the behest of the U.S. government and investors.

Bank of America said the departures did not result from any disagreement with the company or management. The bank did not immediately return a call seeking further comment.

In the last two months, seven directors have left what had been a 19-person board, including lead director O. Temple Sloan, a longtime supporter of Chief Executive Kenneth Lewis.

The board now has 16 members, including four new directors with banking or regulatory experience. Among these are former Federal Reserve governor Susan Bies and former Federal Deposit Insurance Corp chairman Donald Powell.

Overhauling the board is expected to increase director scrutiny of Lewis, who was stripped in April of his role as chairman after criticism over the Charlotte, North Carolina- based bank's falling share price and the January 1 acquisition of Merrill Lynch & Co.

The bank has taken $45 billion of federal bailout money, including $20 billion to help absorb Merrill. It was not among the 10 large U.S. banks that regulators allowed this week to repay their infusions from the government's Troubled Asset Relief Program.

As part of the Merrill acquisition, three Merrill directors, including Prueher, joined the board. Prueher is the first of the three to step down.

Franks joined the board in January 2006 and is a former Commander in Chief of the U.S. Central Command. He oversaw the 2003 U.S. invasion of Iraq and overthrow of Saddam Hussein.

Prueher and Franks sat on the board's audit committee.

(Reporting by Jonathan Stempel and Phil Wahba; editing by Andre Grenon)

Admiral Prueher, General Franks leave BofA board

Hot News: Texas Financier and Antiguan Official Charged With Fraud

Markets Begins to Slip as Day Wears On

Gains in technology and health care shares are helping to support a cautious stock market.

Stocks were mixed Friday afternoon, unable to hold on to gains.

Traders had been encouraged by recent economic data, including better news on unemployment. But with the Standard & Poor’s still down 2.8 percent for the week, prospects seemed poor for restarting a rally that powered the market up as much as 40 percent this spring after hitting a 12-year low in March.

“The prevailing mood we had over the past few weeks to lock in some profits seems to be taking over,” Phil Orlando, chief equity market strategist at Federated Investors, said.

“There’s no question in my mind that the economy is improving,” Mr. Orlando said. “But investors are betting on some sideways consolidation rather than a continuation of a sharp spike in share prices.”

Trading volume was heavy because of the occurrence of a quarterly “quadruple witching,” which marks the simultaneous expiration of a four different kinds options and futures contracts in the stock market. Stocks are more likely to push higher during such periods, which can also bring jumpy trading.

Traders drew some optimism from European Union leaders who said at a financial summit in Brussels that the current round of economic stimulus measures are cushioning the worst effects of the downturn and that no new ones are needed.

Tech stocks rallied as Apple’s latest version of its popular iPhone hit store shelves, while shares of major health care companies were mostly higher as House Democrats prepared to unveil a draft of their version of a sweeping health care bill.

In early afternoon trading, the Dow Jones industrial average fell 20 points, after earlier rising as much as 61 points. The broader Standard & Poor’s 500-stock index and the technology-heavy Nasdaq were both flat.

Volume on the New York Stock Exchange came to a heavy 1.07 billion shares, compared with 523.5 million shares traded at the same time Thursday.

Stocks rose moderately Thursday after sliding earlier in the week. A private research group said its Leading Economic Indicators index, a forecast of economic activity, rose more than expected in May. And the overall number of people drawing unemployment benefits fell last week for the first time since early January.

Bond prices were higher after sliding Thursday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.79 percent from 3.81 percent late Thursday.

Investors have been keeping a close eye on the bonds market recently, concerned that a run-up in Treasury yields will lead to higher borrowing costs and potentially erode some of the economy’s progress. Long-term Treasury yields are closely linked to interest rates on mortgages, which have been rising in recent weeks.

Among health care stocks, the medical device maker Medtronic rose 72 cents, or 2.2 percent, to $34.07, while the drug maker Merck gained 65 cents, or 2.5 percent, to $26.30.

Shares of health care companies have been gaining in recent days as the Obama administration’s plans to overhaul the nation’s health care system make their way through Congress.

Apple shares added $1.78 to $137.66, while rival smart phone maker Palm Inc. jumped more than 10 percent, rising $1.33 to $14.39.

Oil prices reversed early gains and fell $1.01 to $70.36 a barrel in New York trading.

The dollar fell against other major currencies, while gold prices rose.

Overseas, Japan’s Nikkei stock average rose 0.9 percent. In afternoon trading, Britain’s FTSE 100 rose 1.5 percent, Germany’s DAX index rose 0.04 percent, and France’s CAC-40 rose 0.9 percent.

Markets Begins to Slip as Day Wears On

Hot News: House panel has busy schedule for financial reform

Advertising: Mercedes Campaign Focuses on Image, Not Recession

CAR companies like Hyundai and Ford have been showing solidarity with consumers recently, running ads promising that the companies will help them should they lose their jobs.

Mercedes-Benz USA is trying a different way to get customers to buy cars as it introduces its updated E-Class Series. The ad campaign for the midsize car, available as a sedan or a coupe, is the company’s biggest in two years, estimated at $75 million. It does not talk about great value or good deals. Instead, it focuses on the cars’ technology and heritage, a somewhat standard approach for the brand.

“Everyone has that trigger that’s going to get them out there in the marketplace again, assuming that they have the means and they’re just choosing not to spend it,” said Alex Gellert, the chief executive of Merkley & Partners, part of the Omnicom Group, which created the Mercedes print and television ads.

The E-Class update is meant to turn around an alarming sales slide for Mercedes, which is owned by Daimler. Its United States sales have declined 28.7 percent this year from the same time in 2008, according to the company. May sales were even further off, falling 33.4 percent from May 2008. The United States turned in the worst showing of any geographic region in May.

•

Even given the sales challenge, Steve Cannon, the vice president of marketing for Mercedes-Benz USA, decided not to echo the recession-conscious marketing that other car manufacturers have used. Hyundai promised to help customers pay for their cars if they lost their jobs, an offer Ford and General Motors soon matched. A recent spate of ads for Honda’s Insight described it as “designed and priced for us all.”

“I’d rather tell our brand story, our innovation story, our value story, than join the chorus of everyone else that’s screaming ‘sale’ — that’s about the only message that’s out there right now,” Mr. Cannon said. “Customers have told us, ‘we know there are deals out there,’ so just getting on television with an expensive media plan and shouting, ‘there’s a sale,’ they already know that.”

The television spots will begin running on Monday. One starts with scenes of families admiring classic Mercedes cars and trucks at the Mercedes-Benz museum in Stuttgart, Germany. These are interspersed with scenes of a coupe driving along a forested road. At the end, the car bursts through the museum’s glass wall and spins into place alongside the other Mercedes cars. “Taking its rightful place in a long line of amazing performance machines,” the narrator says.

A television commercial for the sedan highlights new technology in the cars, like “attention assist,” which helps alert sleepy drivers, and an automatic braking system that kicks in when a driver loses concentration and is about to hit something. The narrator promotes the E-Class as “the future of the automobile.”

•

Although Mercedes wanted to avoid emphasizing sale prices, it did place the starting price for the cars at the end of each television spot and in the print ads. At $48,600, it is almost 9 percent less than the starting price for the last set of E-Class cars, from the 2003 model year. The ads give just the price, though, not the discount. “For Mercedes-Benz customers, $48,600 is a huge value story, and those people know it, so I don’t have to go out and say, ‘value, value’ — that’s not appropriate for our brand,” Mr. Cannon said. “The folks that are looking for a midsize luxury sedan kind of understand the price points.”

The television ads will run in two phases: the one that starts Monday will run through July. The ads will resume in September, with the television networks’ season premieres. The ads will run on networks like Bravo and CNN and during news programs. Print ads will soon run in magazines like Architectural Digest, Golf Digest and Tennis. The online advertising, designed by Razorfish, a unit of Microsoft, includes home page advertisements on sites like Bloomberg.com and CNBC.com.

For his customers, “I think there’s a level of crisis fatigue and recession fatigue out there, marketing down to, ‘we feel your pain. We’re all in this together,’ versus, ‘this is who we are,’ ” Mr. Cannon said. “All the things that mattered to them before the recession, it still matters to them. But we have to work harder to break through, because the system has been shocked significantly.”

Advertising: Mercedes Campaign Focuses on Image, Not Recession

Hot News: AIG picks Deutsche, Morgan for joint AIA IPO role

Asian and European Shares Lose Ground

Filed at 6:10 a.m. ET

LONDON (AP) -- European stock markets were steady Thursday after sizable falls in Asia earlier as investors continued to worry that a global economic recovery later this year -- the main driver behind the rally since March -- could be choked off at birth by rising interest rates and oil prices.

In Europe, the FTSE 100 index of leading British shares was down only 1.71 points at 4,276.75 while France's CAC-40 index fell 3.20 points, or 0.1 percent, to 3,157.94. Germany's DAX was bucking the trend somewhat, trading 7.44 points, or 0.2 percent, higher at 4,807.42.

Earlier in Asia, Japan's benchmark Nikkei 225 stock average fell 137.13 points, or 1.4 percent, to 9,703.72, and Hong Kong's Hang Seng dropped 307.94, or 1.7 percent, to 17,776.66.

''Asian equity markets put in a mixed performance with equities generally unsettled by higher oil prices and upward pressure on long-term interest rates,'' said Neil Mackinnon, chief economist at ECU Group.

Interest rates, particularly on U.S. government bonds have been rising steadily over recent weeks on expectations that the U.S. Federal Reserve will raise borrowing costs sooner than previously anticipated. Meanwhile, oil prices have more than doubled over the past couple of months on hopes that a global economic rebound will boost demand for crude.

The stock market rally since March had been fueled by hopes that the U.S. economy will recover from recession sooner than anticipated. As equities usually start rising 6 to 9 months before actual recovery emerges in the official data, this suggests investors believed the massive sell-off in markets during the most acute phase of the financial crisis was overdone. Some of the world's major equity indexes are now in positive territory for 2009.

That optimism has dissipated in recent days, and analysts say investors need clearer evidence that the world economy and company earnings are recovering so that current stock valuations make sense. In March, many investors saw valuations around the world as particularly cheap and started buying into the market.

''There appears to be a creeping realization that equity markets had diverged with reality over recent months,'' said Mitul Kotecha, an analyst at Calyon Credit Agricole.

''Some justification for equity gains is evident from less negative economic data, but going forward less negative news will not maintain positive momentum -- instead, it will need positive as opposed to less negative to keep the rally going and it is difficult to see where this will come from,'' he added.

Wall Street is expected to open modestly higher later following a subdued performance on Wednesday. Dow futures were up 19 points, or 0.2 percent, at 8,456 while the broader Standard & Poor's 500 futures were up 2.4 points, or 0.3 percent, at 907.70.

Elsewhere in Asia, South Korea's Kospi lost 1.1 percent, while Australia's key index was down 0.3 percent and Taiwan's benchmark pulled back 0.8 percent.

But Shanghai shares defied the losses, with the benchmark climbing 1.6 percent to a 10-month high, as the World Bank raised its China 2009 economic growth forecast from 6.5 percent to 7.2 percent and the country's premier said the economy was showing ''positive changes.''

The World Bank said Beijing's stimulus-driven investment boom would help shield the world's third-largest economy from the downturn, but cautioned it was too soon to say a sustained recovery was on the way.

China's ability to prosper as overseas economies slump has been a popular theme among investors, helping drive mainland and Hong Kong shares -- as well as certain commodities -- to huge gains in recent months.

Oil prices lingered near $71 a barrel Thursday, with benchmark crude for July delivery up 46 cents to $71.49 a barrel.

The dollar was down 0.1 percent at 95.79 while the euro declined 0.3 percent to $1.3935.

--------

AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.

Asian and European Shares Lose Ground

Hot News: Europe Markets: Oil producers fall in weaker Europe

European shares drop

LONDON (AFP) – European equities slid on Wednesday after overnight losses on Wall Street, as investors braced for President Barack Obama to unveil financial system reforms aimed at preventing another crisis.

The mining sector sustained heavy losses as lower metal prices also weighed on markets.

In early afternoon trade, London's FTSE 100 index of leading shares fell 0.73 percent to 4,296.89 points.

In Frankfurt the DAX 30 shed 0.81 percent to 4,851.26 points and the Paris CAC 40 lost 0.79 percent to 3,188.40.

The DJ Euro Stoxx 50 index of leading eurozone shares retreated 0.86 percent to 2,405.08 points.

On the foreign exchange market, the European single currency rose to 1.3867 dollars.

"All attention falls to the United States... (as) fundamental change looms," said MF Global Spreads analyst Manus Cranny.

"Regulation and reporting (reforms) will deliver irrevocable change which will have a serious impact on leverage that Wall Street... has ever seen."

Obama will propose wide reforms later on Wednesday which will result in the Federal Reserve gaining broad powers and a national bank supervisor being created to avoid a repetition of the financial turmoil.

It will be the first major bid to overhaul the highly complex US financial regulatory network since a US home loan meltdown shook the core of the system and sent global markets into a tailspin.

"We're going to make sure that we've got a systemic regulator, somebody who can oversee the entire system and, when you start seeing the kinds of risks that we saw being taken in this last crisis, that we can catch it before the crisis occurs," Obama told Bloomberg Television.

Officials told a media briefing that Obama would propose a Financial Services Oversight Council led by the Treasury Department to oversee supervision of the financial system.

Wall Street had stumbled on Tuesday for the second straight day amid falling commodity prices and as investors braced for Obama's financial supervision reforms.

New York's Dow Jones Industrial Average dropped 1.25 percent to finish at 8,504.67 points. The Dow has posted triple-digit losses two days in a row after narrowly entering positive territory for 2009 on Friday.

In Asia on Wednesday, Tokyo's benchmark Nikkei-225 index closed up 0.90 percent to 9,840.85 points as investors hunted for bargains after two days of losses, dealers said.

Hong Kong share prices ended 0.45 percent lower on Wednesday, as falls in property counters wiped out any gains in Chinese banks.

European shares drop

Hot News: JP Morgan, Goldman Sachs, other banks, repay TARP

Stalking A Weaker Wall Street

Wall Street’s great investment houses have never faced a serious foreign challenge in their own backyard. But as tectonic shifts reverberate through the banking industry, their overseas rivals are edging into some of the most lucrative corners of American finance.

The Swiss, Germans, British and Japanese are grabbing business from once-swaggering American banks by taking companies public, underwriting new bonds and advising corporations on mergers and acquisitions. And they are hiring more of their rivals’ bankers and traders to continue their winning streak.

And while big American banks still tower over global finance, the latest shift, although subtle, is raising some uncomfortable questions, including the big one: Could foreign banks one day do to Wall Street what Japan once did to Detroit?

“There is evidence of traction in market share, and you can see that these banks have leapfrogged,” said Fiona Swaffield, an analyst at Execution Ltd., a brokerage firm based in London. “The issue is, how long can this last, and can anyone re-emerge?”

For the last decade, the strongest overseas rivals have tried to climb above their American competitors, often with mixed success. Credit Suisse of Switzerland sought to become a universal banking powerhouse with its purchase of the United States investment bank Donaldson, Lufkin & Jenrette in 2000, only to see the merger sour. Deutsche Bank of Germany tried to do the same with a 1998 merger with Bankers Trust, and met with similar troubles.

At the same time, foreign banks have become increasingly aggressive in such activities as debt and equity underwriting and mergers and acquisitions. Ten years ago, for instance, only one bank, Credit Suisse, ranked among the top 10 debt underwriters. This year, four foreign banks crowd the field. Similarly, Barclays Capital, Deutsche Bank, Credit Suisse and UBS now list among the top 10 global M.& A. advisers. A decade ago, the only non-United States firm was Dresdner Kleinwort.

More recently, overseas banks have hoped to capitalize on the turmoil convulsing the financial industry. The demise of Bear Stearns and Lehman Brothers, two of the oldest names on Wall Street, gave them a rare opportunity to press for advantage. So did messy distractions like Bank of America’s fraught takeover of Merrill Lynch. Meanwhile, many foreign banks have fortified their finances at their regulators’ behest, while avoiding the restrictions and stress tests required of many American rivals.

And even as American banks start to return to health, efforts by the Obama administration to rein in the industry are likely to shift the competitive landscape in new ways — a development closely watched by foreign contenders.

“What worries me is the competitive edge that non-U.S. banks have vis à vis U.S. banks,” said Eugene A. Ludwig, the comptroller of the currency under President Bill Clinton, who now runs the Promontory Financial Group, a Washington bank consultant group. “Non-U.S. banks generally operate under more coherent regulatory structures than U.S. banks do, which creates imbalances that non-U.S. banks can exploit, especially at a time when their U.S. counterparts are operating under extraordinary constraints.”

In the nine months since it snapped up Lehman’s core operations at a bargain-basement price, Barclays Capital, already one of the biggest risk management and financing firms in Europe, has jumped from a minor player to a major firm in the capital markets business.

The transaction was a rare chance for Robert E. Diamond Jr., the American president of Barclays, to take on rivals like Morgan Stanley. It brought the British bank business it never had in equities, M.& A. and equity research, while shoring up its debt underwriting and trading business.

Since Barclays almost doubled its United States work force overnight by buying the remnants of Lehman, the British bank has jumped to second place in global debt underwriting. It is No. 4 in America, with nearly a tenth of the market, more than Goldman Sachs or Morgan Stanley. This year alone, Barclays advised on $90 billion of mergers and acquisitions on this side of the Atlantic, more than Citigroup and on par with Bank of America, although it still trails the most powerful players, JPMorgan and Goldman Sachs.

“We are one of the few Wall Street firms focused on building this year versus consolidating,” said Jerry del Missier, president of Barclays Capital, based in New York.

Deutsche Bank, the biggest German bank, has had expansion in the United States “in sight since we bought Bankers Trust in 1998,” said Seth Waugh, chief executive of Deutsche Bank Americas. “We expect to win market share” in mergers and acquisitions, capital markets, trading and wealth management, he said.

Recently, it has gained lucrative prime brokerage business from hedge funds. And it has made strides in mergers and acquisitions, moving to fifth place globally in the first five months of this year, although it is still in only 11th place in the United States, according to Thomson Reuters. The bank recently added 90 new senior employees to its United States staff of more than 12,000 to broaden operations.

Credit Suisse has also wrested prime brokerage business from rivals while stepping up its United States activity in investment-grade corporate debt, earning $20 billion in the first five months, compared with $29 billion for Goldman Sachs. The second-largest Swiss bank gained ground after cutting costs, curbing risky activities and selling billions of dollars in problem assets to cleanse its balance sheet.

Brady W. Dougan, the chief executive, said the bank’s decision to refuse Swiss government support had given it strategic flexibility compared with its American competitors, which might remain restrained in how they expand or spend their money overseas.

Still, the bank has slipped in at least one field it used to dominate: high-yield capital markets, where it fell to seventh place in the first quarter behind JPMorgan and Bank of America, according to Thomson Reuters. But Mr. Dougan is continuing his push to bolster Credit Suisse’s overall business by aggressively hiring top talent from the investment and private banking divisions of Bank of America Merrill Lynch, Lehman, Citigroup and Goldman Sachs. The bank is also considering a “tactical acquisition” in private banking to siphon even more business from rivals, he added.

“Now we have an opportunity to increase, to really, really increase our position,” said Mr. Dougan.

Even the Japanese are muscling in on Wall Street’s turf. Nomura has added about 135 people in the United States since October, mainly in its equities division, augmenting its American work force by 10 percent and moving its global business head to New York, in a sign of the potential it sees.

Stalking A Weaker Wall Street

Hot News: Oil slides 4th day; resource shares fall in Asia

Wall Street Starts With a Modest Rise

New economic figures released Tuesday hinted that home construction was bottoming out and that inflation pressures were still modest, but Wall Street offered a muted response.

Stocks hovered slightly higher in mid-morning trading as investors bought shares of health care and pharmaceutical companies, computer makers and software firms. But investors seemed largely reluctant to rush back into the markets, one day after stocks fell the most since late May.

At 11 a.m., the Dow Jones industrial average and the broader Standard & Poor’s were each less than 0.5 percent higher. The technology heavy Nasdaq rose 0.6 percent.

On Monday, jitters about the prospects of a long, slow recovery helped pull the S.&P. 500 down 2.4 percent. The Dow Jones industrial average fell 2.1 percent to dip back into negative territory for the year.

European markets were mixed on Tuesday after stocks in Asia slid lower.

Other investments reversed course from a day earlier. Investors seized on a two-day dip in crude oil prices as a chance to buy, and pushed the price of oil futures $1.34 higher, to $71.95 a barrel. Copper and gold also regained some ground.

The dollar slid against the euro, yen and other major currencies as leaders from Brazil, China, India and Russia met at a financial summit meeting. Some traders have worried that emerging economies like China, Russia and others would reduce their investments in American bonds, weakening the dollar and hobbling its status as the world’s reserve currency.

The big winners in stock markets were home builders, whose shares rose solidly after the government’s latest report on new-home construction. Shares big builders like Pulte Homes, Centex and Lennar all rose after the Commerce Department said that housing starts had risen 17.2 percent in May from a month earlier.

The increase came a month after housing starts dropped sharply, largely because of a deep decline in construction of multifamily homes. Those numbers recovered slightly in May, and construction of single-family homes increased for a third month.

The government also said in that prices received by producers for finished goods rose a smaller-than-expected 0.2 percent in May, hinting that Wall Street’s fears of inflation may be exaggerated. Still, energy prices rose the most since January, with gasoline prices up nearly 14 percent for the month.

In a third report, the Federal Reserve said that industrial production fell 1.1 percent in May, more than expected.

In Europe, a widely watched German business confidence indicator offered investors some encouragement.

The ZEW Center for European Economic Research, based in Mannheim, Germany, said its monthly economic sentiment index rose to 44.8 in June, from 33.1 in May. Economists surveyed by Reuters had expected, on average, that the index would rise to 35. It was the eighth consecutive improvement in the indicator.

“The assessment of the experts indicates that the economic downturn dynamics are currently coming to rest. They further see tendencies for a recovery at the end of this year,” the ZEW president, Wolfgang Franz, said in a statement. “This cautious optimism should not be destroyed by overly pessimistic projections.”

In afternoon trading, the DJ Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 0.5 percent, while the FTSE 100 index in London was up 0.7 percent. The CAC 40 in Paris was up 0.6 percent, and the DAX in Frankfurt gained 0.5 percent.

Daimler fell 2.1 percent and Renault fell 3.4 percent after the European Manufacturers’ Association said new passenger car registrations fell 4.9 percent in May from a year earlier, the 13th consecutive month of contraction. In a hopeful sign, the association noted that the pace of decline had slowed from a 12.3 percent drop in April.

Volkswagen bucked the downtrend among carmakers, gaining more than 1 percent.

And General Motors, trying to restructure in bankruptcy court in Manhattan, announced that it had reached a tentative agreement to sell its Swedish unit, Saab Automobile, to a consortium led by the sports car maker Koenigsegg Automotive. The deal was contingent on $600 million of financing from the European Investment Bank that is to be guaranteed by the Swedish government.

Asian shares fell across the board. The S&P/ASX 200 in Sydney fell 1.7 percent. In Hong Kong, the Hang Seng index fell 1.8 percent, and in Shanghai the composite index fell 0.5 percent.

In Tokyo, the benchmark Nikkei 225 index dropped 2.9 percent on Tuesday, adding to a 1 percent decline the previous day, despite news that the country’s central bank was now more upbeat — or less downbeat — on the economy.

“Japan’s economic conditions, after deteriorating significantly, have begun to stop worsening,” the Bank of Japan said in a statement after leaving the overnight lending rate at 0.1 percent, as expected.

Domestic private demand has continued to weaken, corporate profits are declining and employment has worsened, the bank said.

“On the other hand, exports and production have begun to turn upward, and public investment has also increased. In the coming months, Japan’s economy is likely to show clearer evidence of leveling out over time,” the statement said.

Stock markets have taken such tentative signs of bottoming out to heart since mid-March, sending many indexes up 40 percent or more over the past three months.

But many analysts have long cautioned that the rally is likely to taper off as it becomes clear that actual recovery — and improved company earnings — remains months off. While it no longer appears that the financial system is in danger of collapse, unemployment is rising in many countries, and consumers and companies remain reluctant to spend.

David Jolly and Bettina Wassener contributed reporting.

Wall Street Starts With a Modest Rise

Hot News: Economic Report: Housing starts rebound off record low, U.S. says

Wall Street tumbles on stronger U.S. dollar, weak economic data

NEW YORK, June 15 (Xinhua) -- Wall Street tumbled on Monday as the U.S. dollar rose against most major currencies and the manufacturing sector in New York region contracted at a faster pace.

The U.S. dollar rose against most major currencies on Monday following comments from Russia's finance minister. Alexei Kudrin, the Russian minister, said at a weekend meeting of G-8 finance ministers in Italy that the dollar's status as the world's main reserve currency wasn't likely to change soon.

Commodity stocks were under pressure as the dollar perked up. And profit taking also weighed on commodity stocks. Exxon Mobil and Freeport-McMoRan Copper & Gold Inc. led energy and basic material shares lower.

The market has posted a huge rally after touching a 12-year low on March 9 on signs the economy was strengthening, but traded flat last week on concern that higher interest rates will slow the economic recovery.

The economic data released on Monday showed that manufacturing in the New York region contracted at a faster pace in June. The Federal Reserve Bank of New York said its general economic index fell to minus 9.4 from minus 4.6 in May. Economists had expected the index would hold unchanged.

The Dow Jones industrial average fell 187.13 points, or 2.13 percent, to 8,612.13. The Standard & Poor's 500 index was down 22.49 points, or 2.38 percent, to 923.72. The Nasdaq composite index dropped 42.42 points, or 2.28 percent, to 1,816.38.

Wall Street tumbles on stronger U.S. dollar, weak economic data

Hot News: Boeing Executive Optimistic Amid Gloom at Paris Air Show

Stock futures signal losses as oil retreats

(Reuters) – U.S. stock index futures pointed to a lower open on Wall Street on Monday, with futures for the S&P 500 down 1.2 percent, Dow Jones futures down 1 percent, and Nasdaq 100 futures down 1.1 percent at 0905 GMT.

The dollar rose broadly, boosted by comments from Russia's finance minister on the U.S. currency and as investors continued to take profits on other currencies that had climbed sharply early last week.

Oil fell to $71 a barrel on Monday, extending its retreat from eight-month highs as the dollar rose, though traders kept a close watch on OPEC member Iran, where contested election results sparked a weekend of violent protests.

China's economy will not experience a rapid recovery because it will take time to find a new growth engine to replace sagging exports, an influential economist said in remarks published on Monday.

The G8 countries have taken the first step toward winding down the measures designed to rescue their economies amid tentative signs of recovery, reassuring investors who had begun to fret about inflation, but they will not move to withdraw stimulus plans yet.

The commercial aircraft chief of U.S. planemaker Boeing (BA.N) expects growth to return to the industry in the middle of next year, he told a news conference at the Paris Air Show on Monday.

European stocks were down 1.5 percent in morning trade on Monday, as a drop in commodity prices prompted investors to book some of the recent hefty gains on resource-related stocks such as BP (BP.L), Rio Tinto (RIO.L) and Total (TOTF.PA), while banking stocks also retreated, with UBS (UBSN.VX) down 2.1 percent. (.EU)

Japan's Nikkei stock average fell nearly 1 percent on Monday, dragged lower by chipmakers after disappointing guidance from a U.S. peer and as investors booked profits after the Nikkei hit an eight-month high last week.

On the macro front, investors will keep an eye on the New York Empire State Manufacturing index for June, due at 1230 GMT, as well as the June NAHB housing market index, due at 1700 GMT.

On Friday, the Dow Jones industrial average (.DJI) swung into positive territory for the year for the first time since early January, bolstered by defensive sectors such as pharmaceuticals, while a disappointing outlook from National Semiconductor (NSM.N) weighed on technology stocks.

The Dow gained 28.34 points, or 0.32 percent, to 8,799.26. The Standard & Poor's 500 Index (.SPX) gained 1.32 points, or 0.14 percent, to 946.21. The Nasdaq Composite Index (.IXIC) dropped 3.57 points, or 0.19 percent, to 1,858.80.

For the week, the Dow gained 0.4 percent, the S&P 500 added 0.7 percent and the Nasdaq rose 0.5 percent.

(Reporting by Blaise Robinson, editing by Will Waterman)

Stock futures signal losses as oil retreats

Hot News: BRIC seeks global voice at first summit