Wall Street Tries to Rebound From a Down Week

Shares on Wall Street opened higher Monday, rebounding strongly from the market’s worst week since early July.

A push higher was expected after the latest rally stalled in response to disappointing housing and manufacturing data last week. Investors are trying to decide whether it is wise to commit much money to the market while the economic recovery looks more tentative.

Stock markets in Europe and Asia were mixed, reacting to the reports issued in the United States last week. Investors feel they got little direction over the weekend from leaders of the Group of 20 nations, who said they would keep stimulus plans. Asian markets sank on fears that a stronger yen will hurt its key exports sector.

Before the markets opened in New York, Xerox, the global copier and imaging giant, announced that it would pay $6.4 billion to acquire the outsourcing company Affiliated Computer Services, expanding its foothold in a growing industry. The news had little effect on trading, as investors appeared more concerned with the economy than pleased about the continued reawakening of the market for takeovers.

In early trading, Dow Jones industrial average rose 1.2 percent. The Standard & Poor’s 500-stock index rose 1.3 percent, while the Nasdaq was 1.6 percent higher.

Investors are waiting for critical economic data this week to help them determine what direction the market should take. The crucial report comes Friday when the Labor Department provides its monthly reading on employment. The market is waiting to see if there will be a significant decline in the number of jobs cut during September.

Although unemployment tends to keep rising after an economic recovery has begun, the concern now is that consumers who have curbed their spending drastically amid fears of losing their jobs will continue to cut back. That could stymie the recovery that economists believe has only recently begun.

The market was trying to bounce back from a rough week, which sent the Dow down 1.6 percent and the S.&P. down 2.2 percent. On Friday, disappointing manufacturing and home sales data renewed concerns that any economic recovery may be slow and week. A report on durable goods orders fell unexpectedly in August, when economists were expecting an increase.

European stock markets also rose Monday. German stocks were the best-performing after Chancellor Angela Merkel said she wanted to form a new center-right government swiftly my credit score.

The FTSE 100 in London was up 1.3 percent while the CAC-40 in Paris rose 1.6 percent.

In Frankfurt, the DAX index rose 2.1 percent after Sunday’s election gave Ms. Merkel a second four-year term. Her Christian Democrats have enough seats to end the “grand coalition” with the center-left Social Democrats and are expected to form a new government with the pro-business Free Democrats.

Ms. Merkel said she wanted to have a new center-right government in place by the time Germany celebrates the 20th anniversary of the fall of the Berlin Wall on Nov. 9.

Marc Ostwald, a strategist at Monument Securities, cautioned against too much investor euphoria, as Peer Steinbrück of the Social Democrats will no longer be finance minister.

“She will be without the services as a finance minister of Peer Steinbrück, who has been among the very best performers in that post for many a decade,” Mr. Ostwald said.

“The only real hope is that the greater common ground between the new coalition partners will allow them to address the pressing problem of reforming” the regional banks, Mr. Ostwald said.

Other analysts were a little bit more optimistic and argued that German economic policies may shift toward a pro-growth strategy as the new coalition will probably pursue tax cuts, spending restraint and more structural reforms.

Earlier in Asia, Japan’s Nikkei fell 256.46 points, or 2.5 percent, to 10,009.52, at one point dipping below the 10,000-point level for the first time in two months, after the yen reached a nine-month high versus the dollar.

The dollar was trading at 89.60 yen after hitting 89.20 on Monday, the highest level since December.

A stronger yen can hurt Japanese exporters by reducing the value of overseas profits when sent back home and can make their products less price competitive. Many Japanese exporters have based their earnings forecasts on the assumption that $1 buys an average of 95 yen.

Hong Kong’s Hang Seng index declined 435.99, or 2.1 percent, while Singapore’s benchmark declined 1.3 percent. China’s Shanghai index surrendered early gains to fall 2.7 percent.

Wall Street Tries to Rebound From a Down Week

Many Investors Still Avoiding Risks of Iraq

BAQUBA, Iraq — The Diyala State Company for Electrical Industries here staggers along, making transformers, spark plugs, ceiling fans and steam irons that few want or can afford anymore.

Its labor force has tripled in size, even as production has slumped. A deal to lure $60 million in foreign capital — one of only a handful of foreign investments in Iraq’s state-owned industries — collapsed. The American government recently gave the company $2.5 million to keep its main production line operating and its workers out of penury and, perhaps, insurgency.

Next month the United States and Iraq will gather hundreds of officials and company executives for a two-day conference in Washington intended to send a message that after six years of war, Iraq is open for business, and not just in oil. Now more than ever before, Iraqi officials boast that a trickle of foreign investment — including the first new hotel in Baghdad since Saddam Hussein’s government fell — is at last poised to be a flood.

The experience of the company here, though, shows that economic development and foreign investment face more obstacles than security alone.

The state-owned industries that dominate the country’s economy — from oil fields to dairies to textile factories — are as bloated and inefficient as they were in Mr. Hussein’s time, arguably more so. They are hobbled by corruption, still sporadic electricity and poor roads and bound by bureaucracy and central planning that leave them unable to compete with a flood of cheap imports from Iran, Turkey and beyond.

New legislation intended to regulate investments, land rights, taxes, financial services and consumer protections remains stalled in Parliament. The mere mention of the sort of privatization that swept Eastern Europe and the former Soviet Union after the collapse of Communism is anathema to officials here.

“We are not after shock therapy,” Sami al-Araji, the chairman of Iraq’s national investment commission, said in an interview.

“We are after a gradual change from a centrally controlled economy to an open one.”

Prime Minister Nuri Kamal al-Maliki publicly pressed Vice President Joseph R. Biden Jr. earlier this month about “the need for this conference to be a success.”

Privately, though, American officials express concern that it will be little more than a political exercise before Mr. Maliki’s re-election campaign unless the Iraqis do more to create a solid foundation for foreign investors willing to take a risk on the country’s prospects.

Mr. Biden, in his meetings with Mr. Maliki and other senior leaders, stressed the need for better regulatory and financial systems, according to a senior official traveling with him. The official said that reforms would, for example, allow the Overseas Private Investment Corporation to extend loan guarantees to American companies interested in investing in Iraq.

Few, though, expect the legislation to proceed before next year’s parliamentary elections and the inevitable political bargaining that will follow, putting off significant reforms, and thus investment, for at least a year.

“Capital is cowardly,” said Mejul Mahdi Ali, the president of Diyala’s newly created investment commission. “It is always looking for a safe place.”

As he spoke, an explosion reverberated through Baquba; a roadside bomb killed three police officers.

Mr. Ali complained that many government ministers showed little interest in foreign or private investment, or actively opposed it. The commission was kicked out of two government offices before moving to a shabby villa, equipped not by the provincial government, but the American reconstruction team at Forward Operating Base Warhorse, which is nearby. He has not been paid in three months, he said.

The provincial government’s idea of economic development, he said, is a plan to buy 10,000 taxis and lease them to drivers, against his advice. Baquba might soon be the easiest place in the world to catch a cab, but he said, “That’s not investment.”

Still, even with uncertain security and insufficient legal protections, Iraq has started attracting the attention of investors.

Daimler AG signed an agreement with Iraq last year and opened an office in Baghdad cash advance america. Case New Holland, the international tractor maker, began building the first of 1,250 tractors for the Iraqi government at a factory in Iskandariya, once a center of the insurgency in an area south of Baghdad known as the “triangle of death.”

Workers broke ground in July on a high-end $100 million hotel near the “crossed swords” monument in Baghdad’s international zone.

“Potential investors have a virtual open landscape to develop projects that will fill the needs of Iraq’s expanding and demanding population,” Dr. Araji of the national investment commission wrote in an investors guide published this year.

Optimism has been premature before.

The Ministry of Industry last year solicited bids for more than 40 projects involving partnerships with state-owned enterprises, but received them for only 11. Most of those have since failed to come to fruition, including the $60 million proposal for the electrical company here in Baquba.

The plant, with eight separate factories, was originally built in 1982 and equipped with machines by Mitsubishi that are now out of date. They still function only because workers have cannibalized parts.

When the war in Diyala was at its worst in 2007, the company shut down; the Islamic Army of Iraq, one of the leading insurgent factions, established its headquarters nearby. The director, Abdul Wadoud al-Sattar Mahmoud, went into hiding; his personal assistant was killed.

The violence ultimately eased, and the factory began to operate again, though largely with the help of the American reconstruction team at Warhorse and the Task Force for Business Stability Operations, a Pentagon agency that supports economic development in Iraq. The task force’s function has been to restore production at Iraq’s state-owned enterprises, after American officials initially sought to shut them immediately after the invasion in 2003.

A report by the task force in 2007 criticized the factory’s management and described the factory’s “most insidious” problem as “a general lack of industriousness.”

Government policies have not helped make it profitable either.

The Ministry of Industry has vastly expanded its payroll to 3,400 workers, compared with 1,200 after the invasion, and raised salaries, driving up the costs of its products. At the same time, a decision by the Coalition Provisional Authority to lower customs duties has meant cheaper foreign products. The factory now has 12,000 unsold ceiling fans and one million spark plugs stored in its warehouses.

Mr. Mahmoud said that while one ministry drove up costs, another, the Ministry of Electricity, complained that it could buy cheaper transformers from abroad. “The competition here is very difficult for me,” he said.

Iraqi law forbids foreign companies from owning equity in state-owned enterprises. The Ministry of Industry also forbids wholesale restructuring of companies that would require dismissing workers.

Even worse, in the case of the factory here, when the Ministry of Industry initialed the $60 million investment deal with an Egyptian-Iraqi consortium last year, it suspended its subsidies for the steel needed to make electrical transformers, potentially its most lucrative product in a country starved for power.

The consortium, however, pulled out of the deal earlier this year — because of the general international economic crisis, officials said — and the supply of steel necessary to keep production going dwindled. The production line would have ground to a halt if the Americans had not stepped in with the grant.

“We could produce more if we had raw materials,” the line’s manager, Abdul Salam Mohammed, said plaintively.

The director, Mr. Mahmoud, has begun to personally lobby provincial governments for business, deeply discounting the transformers and worsening the company’s losses, something he never had to do before.

“This is a new experience for us,” he said.

Many Investors Still Avoiding Risks of Iraq

Crawford says Time Warner will sell magazine unit

CHICAGO (Reuters) – Time Warner Inc (TWX.N) will eventually sell the Time Inc magazine unit and could buy holdings in its core entertainment category, Gordon Crawford, its largest shareholder, said during a presentation this week.

"Time Warner just spun off their cable division, they are going to sell their print division, they are going to spin off AOL and they're just going to be Warner Brothers, HBO and the Turner Networks," said Crawford, managing director of The Capital Group.

"Now, they will make acquisitions ... but they're probably going to buy just stuff in their wheel house of those businesses. They're not going to, I don't think, go very far afield from their core competency."

Crawford made the comments during a September 24 discussion at University of Southern California's Annenberg School for Communication entitled "The Art of the Long View: The Media Company of 2020 cash advance."

Spokesmen for Time Warner could not be immediately reached for comment Saturday.

Time Inc's magazines include popular titles such as People and Sports Illustrated. In the second quarter, revenue at Time Inc publishing, the largest U.S. magazine publisher, fell 22 percent to $915 million due to a 26 percent decline in advertising revenue.

While Crawford did not name specific acquisition targets, he did say there would be a "winnowing process" during which weaker companies in the sector would be gobbled up.

The presentation, which was available online, was discussed in a BusinessWeek blog posted Friday.

(Reporting by Jessica Wohl, Editing by Sandra Maler)

Crawford says Time Warner will sell magazine unit

Hot News: Russia Invites Foreign Oil Firms to Discuss Developing Siberian Gas Fields

Another UBS Client Pleads Guilty to Tax Evasion

A wealthy UBS private banking client who owns a building material company in New Jersey pleaded guilty on Friday to tax evasion, the fourth American caught in a widening investigation into the giant Swiss bank over its offshore services.

Juergen Homann, 66, of Saddle River, N.J., pleaded guilty in Federal District Court in Newark to one count of failing to file a special tax form disclosing the foreign assets.

Mr. Homann is a dual citizen of the United States and Germany. He pleaded guilty before Judge Stanley R. Chesler in exchange for agreeing to cooperate with a widening investigation into UBS and the law firms, accountants and advisers that prosecutors say helped scores of wealthy American clients of UBS evade taxes through secret private banking services.

In court filings, federal prosecutors accused Mr. Homann of deliberately failing to submit a form known as an F-bar in 2007 disclosing his UBS accounts and of using a foundation in Liechtenstein, a noted tax haven, to conceal the trail. The filings said that Mr. Homann concealed $5 million from United States tax authorities by shifting that amount from his UBS account to a sham corporation, ELM Finance, set up in Hong Kong in 2005.

The court papers did not identify Mr. Homann’s private banker at UBS.

But they said that Mr. Homann worked with a Swiss lawyer, Matthias Rickenbach, to set up sham corporations overseas to funnel his UBS money to accounts he could then access without alerting the Internal Revenue Service.

Mr. Rickenbach, a partner of the Rickenbach & Partner law firm in Zurich and Geneva, was indicted in August by federal prosecutors who accused him of conspiring to defraud the United States by selling tax evasion services.

The Rickenbach indictment came after the indictment of another UBS client, Jeffrey Chernick, of Stanfordville, N.Y., in July. In his case, Mr. Rickenbach was accused of working with a Swiss banking executive to pay $45,000 to a “high-ranking Swiss government official” in 2008 to learn whether Mr. Chernick was on a list of 285 names to be disclosed to American authorities in February as part of a broad settlement with UBS instant payday loans completely online. Mr. Chernick, who owns a company that does business with toy makers in Hong Kong, reimbursed the fee to Mr. Rickenbach and the banking executive.

Mr. Homann’s plea comes as scores of wealthy clients of UBS and other foreign private banks are voluntarily disclosing their identities to the I.R.S. in hope of facing lesser penalties and avoiding prosecution.

The tax agency on Monday extended an amnesty program intended to identify those suspected of tax evasion through secret offshore accounts. American taxpayers now have until Oct. 15 to disclose their accounts. The voluntary disclosure program, which began in March, has attracted about 3,000 taxpayers so far, according to the I.R.S.

UBS, in a significant blow to Swiss banking secrecy, is preparing to hand over 4,450 client names under a deal reached last month with the I.R.S. and the Justice Department, which is investigating the bank’s offshore services. In February, UBS admitted criminal wrongdoing and paid a $780 million fine. Mr. Homann’s name was on the list of 285 names that were turned over as part of the deal, according to a senior government official who spoke on the condition of anonymity. The Justice Department is conducting criminal investigations into about 100 UBS clients.

Two other American clients of UBS have pleaded guilty to tax evasion in recent months.

In August, John McCarthy of Malibu, Calif., pleaded guilty to a charge of failing to file a tax report for an offshore UBS account that held more than $1 million.

In June, Steven Michael Rubinstein, an accountant involved in the yacht industry, avoided an indictment by entering a guilty plea in Federal District Court in Fort Lauderdale, Fla., to a single information count of filing a false tax return in 2004 that did not disclose his offshore UBS accounts.

Another UBS Client Pleads Guilty to Tax Evasion

SEC charges Perot worker with insider trading

WASHINGTON, D.C. – The Securities and Exchange Commission said Wednesday it has charged Reza Saleh, an employee of a Perot Systems Corp. affiliate, with insider trading related to Dell Inc.'s offer to buy Perot Systems earlier this week.

In a complaint filed in Dallas, the SEC said Saleh, 53, reaped about $8.6 million in "illicit profits" based on his knowledge of "material, non-public information that he learned in the course of his employment with, or duties for, two Perot-related private companies and Perot Systems."

The SEC is seeking a court order to freeze Saleh's assets.

A message left under a listing for Reza Saleh in Richardson, Texas, was not immediately returned Wednesday.

Saleh works for Parkcentral Capital Management LP, the Plano, Texas-based investment firm of former presidential candidate and Perot Systems Chairman Emeritus Ross Perot. Saleh also works for Perot Investments, which manages Ross' personal financial affairs, and has sometimes attended Perot Systems planning meetings, according to the complaint.

Dell said Monday it will pay $3.9 billion — a hefty premium — for the technology services company. The move is part of Dell's attempt to expand beyond the PC business and compete more aggressively with Hewlett-Packard Co.

The SEC's complaint, filed the U.S. District Court for the Northern District of Texas, alleges that Saleh learned nonpublic information about the Dell offer on Sept. 4 through his work. The agency said Saleh made "extremely large" purchases of call options for Perot Systems common stock between Sept. 4 and Sept payday loans. 18, and then sold all of the 9,332 call options on Monday after Perot Systems' stock soared on the official merger announcement.

The resulting $8.6 million profit was distributed between two TDAmeritrade accounts, the SEC said. On the same day, Saleh withdrew $5,000 from one of his accounts and attempted to pull out another $55,000, but was denied after the SEC contacted the brokerage, the complaint said.

"The overwhelming evidence in this case allowed the SEC to move quickly against the trader before he could spend the huge profits from his illegal trading," said Rose Romero, director of the SEC's Fort Worth Regional office, in a statement.

The SEC says Saleh on or before Sept. 8 asked a Perot Systems director — unnamed in the complaint — certain questions that demonstrated that he was aware of the Dell deal. After he was contacted by the SEC on Monday after trying to withdraw funds from his accounts, the SEC said Saleh acknowledged to the Perot Systems director and a Perot Investments worker that his call options purchases were based on prior knowledge of the merger deal. Such actions would violate the companies' trading policy.

Saleh has been placed on administrative leave from Parkcentral, the agency said.

The SEC complaint also names Amir Saleh, 49, as a defendant. The agency said he resides at the same address as Reza Saleh, and a joint account holds some of the allegedly illicit profits.

SEC charges Perot worker with insider trading

Hot News: Asia stocks at 13-month high

U.S. credit card defaults rise to record: Moodys

NEW YORK (Reuters) – The U.S. credit card charge-off rate rose to a record high in August, as more Americans lost their jobs, Moody's Investors Service said on Wednesday, in another sign consumers remain under stress.

The Moody's credit card charge-off index -- which measures credit card loans that banks do not expect to be repaid -- rose to 11.49 percent in August from 10.52 percent in July.

The index resumed an upward trend after declining in July for the first time in almost a year, vanishing hopes of stabilization in the industry after record high credit losses.

"We continue to call for a recovery of the credit card sector to begin once industry average charge-offs peak in mid-2010 between 12 percent and 13 percent," Moody's said in a report.

Credit card losses usually follow the trend of unemployment, which rose in August to 9.7 percent, the highest level in 26 years. Moody's estimated unemployment will peak next year at 10 percent to 10 No teletrack payday loans.5 percent.

The Moody's index showed credit card delinquencies -- payments more than 30 days late -- rose to 5.80 percent in August from 5.73 percent in July.

"Even early-stage delinquencies rose, ending a trend of four consecutive months of improvement," Moody's said in a report.

Data released by companies earlier this month based on the performance of credit card loans that were securitized showed defaults rose to record highs at Bank of America Corp (BAC.N) and Citigroup Inc (C.N), among some of the biggest card issuers.

Both Citigroup and Bank of America hold the highest exposure to riskier credit card borrowers.

However, American Express Co (AXP.N) and Capital One Financial Corp (COF.N) posted monthly declines in chargeoffs.

(Reporting by Juan Lagorio; Editing by Richard Chang)

U.S. credit card defaults rise to record: Moody's

Wall Street ends higher on recovery bets

NEW YORK (Reuters) – Stocks rose on Tuesday, as investors bet the Federal Reserve will stick to its accommodative policy to foster economic recovery, boosting growth-sensitive sectors such as financials, technology and industrials.

The Dow Jones industrial average (.DJI) was up 51.01 points, or 0.52 percent, to end unofficially at 9,829.87. The Standard & Poor's 500 Index ( Payday Loan for Bad Credit.SPX) gained 7.00 points, or 0.66 percent, to finish unofficially at 1,071.66. The Nasdaq Composite Index (.IXIC) rose 8.26 points, or 0.39 percent, to close unofficially at 2,146.30.

(Reporting by Angela Moon; Editing by Jan Paschal)

Wall Street ends higher on recovery bets

Dow, S&P hit by commodities; Nasdaq up on biotech

NEW YORK (Reuters) – The Dow industrials and the S&P 500 index fell on Monday as a drop in oil and other commodity prices hurt energy and materials stocks.

But the Nasdaq rose, buoyed by a broker's upgrade in the biotechnology sector.

Light crude futures fell more than 3 percent, settling below $70 a barrel, hurt by concerns about demand despite hopes for economic recovery. The Reuters-Jefferies CRB index of commodities (.CRB) tumbled 2.2 percent, its largest percentage drop in five weeks.

The dollar index (.DXY) rose 0.5 percent after three weeks of declines and further hurt commodity prices, as investors scaled back short positions in anticipation of the Federal Reserve's decision on interest rates later this week.

Energy (.GSPE) and materials (.GSPM) ranked among the S&P 500's worst-performing sectors, with oil services company Halliburton Co (HAL.N) down 2.5 percent at $27.45 and petroleum refiner Sunoco (SUN.N) off 2.3 percent at $27.79. Shares of diversified chemicals company Dow Chemical (DOW.N) lost 2.8 percent to $26.00.

"The market has risen in the last several months, based on the idea of the reflation trade," said Chip Hanlon, referring to bets on rising prices of hard assets as the economy recovers.

Hanlon, president of Delta Global Advisors Inc in Huntington Beach, California, said people can expect that when stocks sell off, the U.S. dollar will rally, which "will inflict particular pain on raw materials."

The Dow Jones industrial average (.DJI) dropped 41.34 points, or 0.42 percent, to end at 9,778.86. The Standard & Poor's 500 Index (.SPX) fell 3.64 points, or 0.34 percent, to 1,064.66. But the Nasdaq Composite Index (.IXIC) gained 5.18 points, or 0.24 percent, to close at 2,138.04.

The benchmark S&P 500 has risen 57.4 percent off a 12-year closing low in early March, partly because of a strong earnings season that is winding down and optimism that an economic recovery is gaining strength. Investors' appetite for riskier assets had reduced the U instant credit report.S. dollar's safe-haven appeal.

Adding to the overall negative tone in Monday's session, the Conference Board's index of leading indicators posted a slightly weaker-than-expected gain in August.

Among the top drags on the Dow Jones industrial average was Caterpillar (CAT.N), down 1.8 percent at $52.46 after it said dealer sales of its heavy machinery, engines and turbines fell 48 percent in August, though many markets showed signs of stabilization.

The Dow's leading laggard was American Express Co (AXP.N), down 2.9 percent at $33.76.

The Nasdaq rose slightly after Robert W. Baird upgraded Celgene Corp (CELG.O), pushing the stock up 5 percent to $55.19. The AMEX Biotech index (.BTK) gained 0.8 percent.

Computer maker Dell Inc (DELL.O) announced a $3.9 billion proposal to take over Perot Systems Corp (PER.N). Perot soared 65.1 percent to $29.56 on the New York Stock Exchange, while Dell's stock slid 4.1 percent to $16.01 on Nasdaq.

Shares of American International Group Inc (AIG.N) shot up 21.3 percent to $48.40 after the Government Accountability Office, the watchdog agency of Congress, said the insurer's once desperate financial state has started to stabilize. Representative Congressman Edolphus Towns, a Democrat who chairs the Government Reform Committee, said he would look at easing the terms of the insurer's federal bailout once more.

Volume was below average on the New York Stock Exchange, with about 1.20 billion shares changing hands, compared with last year's estimated daily average of 1.49 billion. On the Nasdaq, about 2.42 billion shares traded, above last year's daily average of 2.28 billion.

Declining stocks outnumbered advancers on the NYSE by a ratio of 2 to 1, while on the Nasdaq, about seven stocks fell for every six that rose.

(Editing by Jan Paschal)

Dow, S&P hit by commodities; Nasdaq up on biotech

Obama wants G20 to discuss rethink of global economy

WASHINGTON/BERLIN (Reuters) – U.S. President Barack Obama said on Sunday he would push world leaders this week for a reshaping of the global economy in response to the deepest financial crisis in decades.

In Europe, officials kept up pressure for a deal to curb bankers' pay and bonuses at a two-day summit of leaders from the Group of 20 countries which begins on Thursday.

The summit will be held in the former steelmaking center of Pittsburgh, Pennsylvania, marking the third time in less than a year that leaders of countries accounting for about 85 percent of the world economy will have met to coordinate their responses to the crisis.

Obama said the U.S. economy was recovering, even if unemployment remained high, and now was the time to rebalance the global economy after decades of U.S. over-consumption.

"We can't go back to the era where the Chinese or the Germans or other countries just are selling everything to us, we're taking out a bunch of credit card debt or home equity loans, but we're not selling anything to them," Obama said in an interview with CNN television.

For years before the financial crisis erupted in 2007, economists had warned of the dangers of imbalances in the global economy -- namely huge trade surpluses and currency reserves built up by exporters like China, and similarly big deficits in the United States and other economies.

With U.S. consumers now holding back on spending after house prices plunged and as unemployment climbs, Washington wants other countries to become engines of growth.

"That's part of what the G20 meeting in Pittsburgh is going to be about, making sure that there's a more balanced economy," Obama told CNN.

China has long been the target of calls from the West to get its massive population to spend more. It is unlikely to offer a significant change in economic policy when Chinese President Hu Jintao meets Obama this week.

China's government reacted angrily this month when Obama imposed emergency import tariffs on Chinese tires.

Some economists worry that the dispute over tires could make it hard for leaders to renew their pledges to avoid protectionism when they meet in Pittsburgh, let alone discuss a major rethink of the world economy.

Nonetheless, calls for a new equilibrium are growing.

"We need to have rebalancing of growth and increase in consumption in the emerging markets to have enough growth in the short term," International Monetary Fund chief Dominique Strauss-Kahn told the Financial Times.

In Pittsburgh, the first of several expected anti-G20 protest marches took place with hundreds of demonstrators demanding governments create more jobs by spending more money on public works payday loans in one hour.

"(This) is a jobless recovery and there is the prospect of a permanent high unemployment economy." said Larry Holmes, of protest organizers Bail Out the People Movement.

Bigger protests are expected on Thursday and Friday.

EUROPE PRESSES ON BONUSES

European officials renewed calls on the summit to curb bonuses paid to bankers. Massive payouts linked to risky investments are widely seen as a factor in the credit crisis.

German Finance Minister Peer Steinbrueck said he supported a Dutch proposal to limit banking executives' bonuses to the level of their fixed annual salary, the kind of idea that U.S. officials, mindful of Wall Street's concerns, oppose.

German Chancellor Angela Merkel, who is seeking re-election next weekend, said on Saturday she was "thoroughly optimistic" that a deal could be done on reforming financial markets.

French President Nicolas Sarkozy has tempered his calls for bonus caps, possibly paving the way for a G20 deal tying payouts to bankers' long-term performance, not quick bets.

Steinbrueck, a member of the center-left Social Democrats, said he would press G20 countries to examine the idea of a global tax on financial transactions to curb excesses.

A U.S. draft of the summit communique did not mention this plan, German magazine Der Spiegel said. But G20 sources told Reuters the idea would be discussed by leaders.

The European Union should impose limits on bankers' bonuses even if the United States does not, European Commission President Jose Manuel Barroso said on Sunday.

The United States is keen to show Europe that it is taking steps to rein in excesses in financial markets.

But the pace of U.S. regulatory reform has been slow, hindered by opposition from a powerful banking lobby and the Obama administration's focus on healthcare reform.

Those delays could get longer still because the Senate's top legislator on financial regulation favors a more radical streamlining of bank supervisory agencies than the changes proposed by Obama.

The G20 leaders are due to discuss other issues in Pittsburgh, including climate change ahead of important United Nations negotiations on emissions levels in December.

The EU's Barroso will warn on Monday that the talks "are dangerously close to deadlock at the moment ... and the world cannot afford such a disastrous outcome," according to excerpts of a speech he will make in New York.

(Additional reporting by Michelle Nichols in Pittsburgh and Gregory Blachier and Anna Willard in Paris; Writing by William Schomberg in New York; Editing by Chris Wilson and Eric Walsh)

Obama wants G20 to discuss rethink of global economy

Hot News: Fed policymakers likely to maintain aid programs

Off The Shelf: The Search for a Hero on Wall Street

HEROIC figures have been a rarity amid the evils and embarrassments of the current economic crisis. Duff McDonald claims to have found one in the form of the chairman and chief executive of JPMorgan Chase.

In “Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase” (Simon and Schuster, $28), Mr. McDonald describes the defining events in Mr. Dimon’s life and career that led him to become such a powerful force during the financial crisis.

Mr. McDonald boasts some solid journalistic credentials. He is a contributing editor at New York magazine, and he has written for Vanity Fair, Time, Condé Nast Portfolio, GQ and Wired. He has also won two Canadian National Magazine Awards for business and investigative reporting.

While Mr. McDonald is not uncritical of Mr. Dimon, “Last Man Standing” (to be released Oct. 6) is largely positive. Mr. Dimon was “quite literally the only chief of a major bank to have properly prepared for the hundred-year storm” that hit Wall Street, Mr. McDonald writes, and this put him in a position to help rescue the rest of the financial system.

Mr. Dimon, 53, is in the third major act of a career that has been chronicled by virtually every major financial publication, and in books about his former mentor, Sanford I. Weill.

Act I, the story of Mr. Dimon’s symbiotic, strife-torn relationship with Mr. Weill, remains as compelling as ever in Mr. McDonald’s retelling.

Fresh out of Harvard Business School, Mr. Dimon turned down a lucrative offer from Goldman Sachs to become a personal aide to Mr. Weill, a friend of his parents. Mr. Weill, his elder by more than two decades, had the vision and experience. Mr. Dimon had the energy and the attention to detail; he also had a notoriously short temper.

Through a bold series of mergers and acquisitions, Mr. Weill and Mr. Dimon built a sleepy subprime credit company in Baltimore into a towering financial conglomerate that combined insurance (Travelers), investment banking (Salomon Brothers) and brokerage (Smith Barney).

“Weill had a peculiar style of mentoring,” Mr. McDonald notes. “He regularly rewarded Dimon, but at the same time, he often found subtle ways to impede the young man’s progress by forcing power sharing arrangements on Dimon at every turn.”

According to Mr. McDonald, Mr. Dimon responded by challenging Mr. Weill at every turn, and ultimately forcing Mr. Weill’s daughter out of a top executive position. As negotiations to complete the crowning merger of Travelers and Citigroup came to fruition, Mr. Weill informed Mr. Dimon he would not be on the new board.

But Mr. Dimon’s reputation on Wall Street — what Mr. McDonald calls the “Jamie premium” — was only magnified. After Mr. Dimon’s resignation, Citigroup stock fell 2 percent, while JPMorgan Chase stock jumped 10 percent on rumors that he would land there.

In fact, Mr. Dimon wound up in Chicago, where he devoted the second major act of his career to resuscitating Bank One allied insurance.

He began Act III in 2003 when he agreed to sell Bank One to JPMorgan Chase at a relatively meager 10 percent premium over its stock price with the provision that he would become the leader of the combined company after two years.

“He justified the deal with JPMorgan Chase as the best fit for Bank One,” Mr. Mc Donald writes, adding parenthetically, “Others would snipe that it was also the best fit for Jamie Dimon.”

After Mr. Dimon returned to New York, he confronted the most severe economic crisis since the Great Depression. But in contrast to many of his peers, Mr. Dimon had steadfastly focused on cost cutting and reducing bureaucracy. Although JPMorgan Chase traded in derivatives, he kept the bank’s exposure relatively limited.

IN the spring of 2008, at the behest of the Treasury secretary, Henry M. Paulson Jr., JPMorgan Chase bought the failing Bear Stearns for $10 a share (up from an original offer of $2 a share). In the fall of 2008, after passing on Mr. Paulson’s proposal to take over Morgan Stanley (which survived anyway), Mr. Dimon acquired Washington Mutual, which was then on the brink of insolvency.

Mr. McDonald notes that Mr. Dimon’s deals for Bear Stearns and Washington Mutual were widely regarded as helping to save the financial system from collapse. He also praises Mr. Dimon for declaring a moratorium on foreclosures on owner-occupied homes with JPMorgan Chase mortgages from the fall of 2008 through March.

Mr. Dimon subsequently came under fire for allegedly putting Lehman Brothers out of business and driving Merrill Lynch into the arms of Bank of America by raising collateral on loans that the two institutions had with JPMorgan Chase. While Mr. Dimon admits raising collateral requirements, he denies causing the demise of Lehman or Merrill.

“Last Man Standing” offers a useful recounting of Mr. Dimon’s role in a continuing financial epic, but it has its flaws. It is filled with parenthetical passages apparently intended to add balance but that sometimes end up contradicting other passages. Along with supplying numerous anecdotes about Mr. Dimon’s temperamental tirades, for example, Mr. Mc Donald notes that “he is not a bully. He hates bullies.”

In addition, despite having much access to his subject, Mr. McDonald fails to press Mr. Dimon for specific details about his personal roles in controversial episodes like the Lehman debacle.

In the end, the question remains: is Jamie Dimon the selfless savior of American capitalism or is he just another self-aggrandizer who benefited by going against the prevailing industry trends?

Mr. McDonald calls Mr. Dimon a “hero,” but the rest of us may wish to withhold judgment until this financial Hercules completes his labors.

Off The Shelf: The Search for a Hero on Wall Street

F.C.C. Chairman Seeks to Protect Free Flow of Internet Data

In a move to make good on one of President Obama’s campaign promises, Julius Genachowski, the chairman of the Federal Communications Commission, will propose Monday that the agency expand and formalize rules meant to keep Internet providers from discriminating against certain content flowing over their networks, according to several officials briefed on his plans.

In 2005, the commission adopted four broad principles relating to the idea of network neutrality as part of a move to deregulate the Internet services provided by telephone companies. Those principles declared that consumers have the right to use the content, applications, services and devices of their choice using the Internet. They also promoted competition between Internet providers.

In a speech Monday at the Brookings Institution, Mr. Genachowski is expected to outline a proposal to add a fifth principle that will prevent Internet providers from discriminating against certain services or applications. Consumer advocates are concerned that Internet providers might ban or degrade services that compete with their own offerings, such as television shows delivered over the Web.

He is also expected to propose that the rules explicitly apply to wireless Internet services, something that has been unclear until now.

A commission spokeswoman declined to discuss Mr no fax cash loans. Genachowski’s speech.

Perhaps most significantly, Mr. Genachowski will propose that the broad principles be formally adopted as commission rules, a lengthy procedure that involves several rounds of public comment. His predecessor, Kevin Martin, avoided making formal rules, arguing that the industry changes too quickly to have rules on the books. He preferred to respond to complaints when they were filed.

Indeed, the commission relied on its net neutrality principles when it sanctioned Comcast last year for impeding the Internet connections of some customers who were using certain file-sharing software. The cable company has appealed that ruling, challenging the principles as invalid because the commission adopted them without a formal rule-making process.

Other cable and phone companies have distanced themselves from Comcast’s actions. They argue that vague guidelines are prefereable to formal rules. Indeed, some lobbyists see Mr. Genachowski’s move as in part as a way to prevent a court from diminishing the commission’s powers as a result of Comcast’s suit.

F.C.C. Chairman Seeks to Protect Free Flow of Internet Data

Oil edges lower as equities decline

NEW YORK, Sept. 17 (Xinhua) -- Oil prices dropped slightly on Thursday as equities fell after a three-day rally.

Light, sweet crude for October delivery ended 4 cents lower to settle at 72.47 U.S. dollars a barrel on the New York Mercantile Exchange.

Oil prices seesawed as investors struggled to gauge how robust the economic recovery would be. Viewed as a leading indicator, U.S. stocks fell after touching a fresh 2009 high, spurring concerns about the outlook of the economy and also dragging crude prices to negative territory flexcheck cash advance.

Oil's losses was tempered by the news that household wealth in the United States increased by 2 trillion dollars in the second quarter, which was regarded as a good sign toward the recovery of consumer spending.

In London, Brent Crude for November delivery slipped 12 cents to settle at 71.55 dollars a barrel on the ICE Futures exchange.

Oil edges lower as equities decline

Retailer Kingfishers first-half profits jump

LONDON (AFP) – Kingfisher, the biggest home-improvements retailer in Europe, said on Thursday its first-half net profits leapt more than a third due to improved trading at B&Q and cost-cutting.

Despite the upbeat performance, the group sounded a cautious note and forecast "challenging times" ahead because of the global economic outlook.

Profits after tax rallied 36.7 percent to 201 million pounds in the 26 weeks to August 1, compared with the same period of the previous financial year.

Total sales increased by 7.3 percent to 5.502 billion pounds, Kingfisher added in a results statement.

The group, which operates more than 820 stores in eight countries across Europe and Asia, also owns Castorama and Brico Depot stores in France No teletrack payday loans.

"We have delivered a strong set of results against a generally tough economic backdrop in our major markets," said Chief Executive Ian Cheshire in the earnings release.

"We grew market share and our self-help initiatives are working, particularly in the UK, where a stronger B&Q was able to capitalise on better weather and the renewed consumer interest in the home and DIY."

He added: "Looking forward, given widespread economic uncertainty, we continue to plan for challenging times."

Retailer Kingfisher's first-half profits jump

European stocks steady on grim Lehman date

LONDON (AFP) – European equities paused on Tuesday as investors mulled the one-year anniversary of the collapse of US investment bank Lehman Brothers which devastated the financial sector and the global economy.

Frankfurt, London and Paris stabilised in late morning trade, after overnight gains in New York and a mixed performance in Tokyo, as traders also awaited the latest economic data from the United States.

The London FTSE 100 index rose 0.06 percent to 5,021.63 points and the Paris CAC 40 firmed by 0.09 percent to 3,734.08, while Frankfurt's DAX 30 shed 0.37 percent to 5,599.18 points.

The DJ Euro Stoxx 50 index of leading eurozone shares eased 0.10 percent lower to 2,826.38.

Lehman, once the darling of Wall Street, collapsed on September 15, 2008, ultimately pushing the world economy into its worst slump since the 1930s.

"In marked contrast to a year ago on the day Lehman collapsed, it has been a quiet start to the trading day in Europe," said analyst Richard Griffiths at financial betting company Spreadex on Tuesday.

"With very little company news, all eyes will be on important economic news to give some direction a market that seems for the minute to have run out of steam."

Later today, Wall Street investors will digest producer price inflation and retail sales figures.

"Market reaction to them will be an important indicator of underlying sentiment," added Griffiths.

On Monday, US President Barack Obama bluntly warned that some Wall Street bosses were ignoring lessons of the financial crisis, as he demanded a new age of prudence one year after the demise of Lehman Brothers Payday Loan for Bad Credit.

"The old ways that led to this crisis cannot stand," Obama said, in an outspoken address delivered in the shadow of US finance firms he blamed for unleashing global contagion. "History cannot be allowed to repeat itself."

New York stocks had finished higher in calm trade on Monday as the upbeat mood on economic recovery helped the market shrug off an escalating trade dispute between the United States and China.

The US market recouped early losses, and the Dow Jones Industrial Average rose 0.22 percent to close at 9,626.80.

Market action came as China filed a World Trade Organization complaint over what it alleged were unfair tariffs imposed by Washington on Chinese tyre imports.

In Asia on Tuesday, Japanese shares ended narrowly mixed with many investors waiting on the sidelines because of concerns about the stronger yen and uncertainty over the incoming government's policies.

Tokyo's benchmark Nikkei-225 index rose 0.15 percent to 10,217.62 points, while the broader Topix index of all first section shares fell 0.16 percent to 932.52.

Hong Kong shares fell 0.31 percent on concern about trade tensions between China and the United States and their potential impact on the recovery of the world economy. Trading was cancelled for the morning session due to a typhoon overnight.

European stocks steady on grim Lehman date

Hot News: Intel Says Europe Erred in Levying $1.4 Billion Fine

Japan Airlines to Cut Routes and 6,800 Jobs

TOKYO — Japan Airlines is prepared to undergo its largest-ever downsizing, cutting thousands of jobs and many of its routes, the struggling company’s chief executive said Tuesday.

Haruka Nishimatsu said JAL would cut up to 6,800 jobs. He spoke to reporters after attending a meeting of an independent panel that is reviewing the company’s turnaround plan.

Yasuhiro Shinohara, director of the Transport Ministry’s aviation industries division, said that JAL plans to reduce the number of its international routes to less than half of its total routes.

Delta Airlines, American Airlines and Air France-KLM are in rival talks to invest in JAL to expand in Asian market via code-sharing agreements, according to people familiar with the matter. Each airline is discussing an investment of $200 million to $300 million free credit report and score.

Mr. Nishimatsu said that he wants to conclude tie-up talks with foreign carriers by mid-October.

He also said the loss-making airline was likely to pick Delta Airlines or American Airlines for a tie-up partner, but only if an “open skies” agreement could be reached. The U.S. and Japan are discussing an “open skies” agreement that would allow closer cooperation on flight scheduling and profit sharing.

The chief executive also told reporters JAL has not begun talks with some tie-up candidates. But when he was later asked if JAL was in talks with multiple candidates, he declined comment.

Reuters

Japan Airlines to Cut Routes and 6,800 Jobs

UK mortgage lending rises in July

LONDON – U.K. mortgage lending rose significantly in July for the second straight month but the market is likely to remain subdued for some time, the Council of Mortgage Lenders said Monday.

The number of loans for house purchases rose 24 percent from June to 56,000, and the value rose 27 percent to 7.5 billion pounds ($12.4 billion), the council said. The value of home purchase loans in July was 6 percent higher than a year earlier, the first monthly year-on-year increase in two years.

Loans for refinancing (remortgaging) were worth 4.7 billion pounds, up 12 percent from June but 61 percent below a year ago.

Total gross lending, including equity withdrawal loans and buy-to-rent mortgages, was 14.5 billion, or 42 percent below a year ago best payday loan.

"It's tempting to call the turn in the mortgage market at this point, and there is certainly concrete evidence that lending for house purchase is increasing," said CML economist Paul Samter.

"But there are still constraints affecting the lending industry's capacity to fund increased lending, as well as less consumer motivation to remortgage for the time being. The overall lending picture is likely to stay relatively subdued for some time, especially as the wider economy is far from robust as yet."

___

On the Net: http://www.cml.org.uk

UK mortgage lending rises in July

Stocks rise on China data, Geithner remarks

LONDON – European and Asian stocks rose Friday ahead of expected gains on Wall Street, as investors cheered Chinese economic data and comments by U.S. Treasury Secretary Timothy Geithner that the financial sector no longer required some government support measures.

Germany's DAX rose 0.6 percent to 5,629.12 while Britain's FTSE 100 gained 0.7 percent to 5,022.47. France's CAC-40 was up 0.9 percent at 3,737.56.

In Asia, most indexes closed higher, while Wall Street appeared ready to edge up on the open. Dow Jones industrial average futures rose 0.1 percent to 9,614 and Standard & Poor's 500 futures rose 0.1 percent to 1,038.70.

Shanghai's index jumped over 2 percent after China said industrial output, investment, loans and retail sales remained strong in August, supported by colossal stimulus measures.

The figures showed China's fast-growing economy was keeping up its momentum despite still-lackluster exports as Western demand continues to flag. The news also eased investor worries that the government was moving to restrict the surge in bank lending that's been behind this year's growth and stock market and property boom.

"There's still a lot of momentum in China's economy," said Kelvin Lau, regional economist at Standard Chartered Bank in Hong Kong. "Going forward the question will be whether they can achieve a more balanced and stable recovery."

Also boosting investor confidence was the U.S. Treasury's announcement that the government will unwind some of its programs to support the financial system and that banks will repay $50 billion in rescue funds over the next 18 months.

Geithner, testifying before a congressional panel, said the nation still has a ways to go before "true recovery takes hold." But he said improved conditions in the banking industry have prompted Treasury to begin winding down emergency support programs implemented after the collapse of Lehman Brothers a year ago allied insurance.

"The U.S. administration seems increasingly confident that the recovery is well engaged," said Sebastien Barbe, analyst at Calyon.

Earlier, markets were helped by data released Thursday showing a drop in weekly U.S. unemployment claims, which helped allay concerns about consumer spending in the world's largest economy.

Confirmation of a slow recovery is expected from the University of Michigan consumer confidence index later in the day. The reading for September is expected to improve somewhat from August but still remain weak by historical averages.

In Asia, China's Shanghai index surged 64.91 points, or 2.2 percent, to 2,989.79. Hong Kong's Hang Seng rose 91.86 points, or 0.4 percent, to 21,161.42. South Korea's Kospi climbed 0.4 percent and Australia's benchmark gained 0.6 percent.

Japan's market, however, bucked the upward trend as the dollar continued to lose ground against the yen, feeding worries the country's major exporters might take a hit when converting their overseas revenues and profits. New figures indicating the economy grew at a weaker pace than initially estimated in the second quarter didn't help matters.

The Nikkei 225 stock average lost 69.34 points, or 0.7 percent, to 10,444.33.

The dollar sank to 90.87 yen from 91.72 yen on Thursday. The euro traded higher at $1.4592 from $1.4574.

The suffering U.S. currency has this week boosted oil prices, which are priced in dollars, as did a drop in U.S. crude inventories, which suggested demand may be picking up. But crude gave up some of those gains in European morning trade, with the benchmark contract trading down 25 cents at $71.69 a barrel. The contract rose 63 cents overnight.

___

Associated Press writer Jeremiah Marquez in Hong Kong contributed to this report.

Stocks rise on China data, Geithner remarks

Cadbury chairman Carr says Kraft bid unappealing

LONDON (Reuters) – Cadbury (CBRY.L) turned up the heat in its defense against a takeover bid from Kraft (KFT.N) on Saturday as its Chairman Roger Carr said it was an "unappealing prospect" being absorbed into Kraft's low growth conglomerate business model.

In the letter to Kraft's Chairman and CEO Irene Rosenfeld, Carr reaffirmed the British confectionery group's rejection of Kraft's bid, initially valued at 10.2 billion pounds ($17 billion), saying it fundamentally undervalues Cadbury.

"Under your proposal, Cadbury would be absorbed into Kraft's low growth, conglomerate business model, an unappealing prospect which contrasts sharply with our strategy to be a pure play confectionery company," Carr said in the letter payday loan companies.

"We are committed to the delivery of optimum value to our shareholders and our board remains convinced that this is achieved through continuing to deliver our standalone pure play confectionery strategy," Carr added. (Reporting by David Jones; editing by Andy Bruce)

Cadbury chairman Carr says Kraft bid unappealing

Wall Street set for flat open after 5-day run

NEW YORK (Reuters) – Wall Street was poised for a flat to higher open on Friday as positive remarks from Treasury Secretary Timothy Geithner supported optimism for a recovery, but stocks could stall after five days of gains.

Surprisingly strong industrial output and other economic data from China underscored optimism that the global economy is pulling out of a slump.

Geithner said on Thursday that with a strengthening economy the government can end some of the extraordinary support put in place for markets and prepare for a slow recovery.

Appearing before the Congressional Oversight Panel for the $700 billion Troubled Asset Relief Program, Geithner said the economy was in far better shape now than a year ago, when it was "on the verge of collapse," though it still had problems.

Analysts said his comments were helping markets. "The general economic recovery -- which you get more and more testimony on every day -- is causing investors to rebuild equity portfolios and continue to buy stocks," said Rick Meckler, president of investment firm LibertyView Capital Management in New York.

"Geithner only helped support that idea that things in general are improving and it has led to a period of a very sustained rally."

But stocks could be ripe for profit taking after racking up a fifth day of gains on Thursday, the longest winning streak since November.

S&P 500 futures rose 1.60 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract cash advance no fax. Dow Jones industrial average futures gained 11 point, and Nasdaq 100 futures added 3 points.

Data on tap includes the Reuters/University of Michigan Surveys of Consumers preliminary September consumer sentiment index at 9:55 a.m. EDT (1355 GMT). Economists in a Reuters survey expect a reading of 67.3 compared with 65.7 in the final August report.

Investors have been looking for any signs of life from the consumer as anemic spending remains one of the biggest challenges facing a strong recovery.

Morgan Stanley (MS.N) Chief Executive John Mack is stepping down and will be replaced by retail brokerage head James Gorman as the bank embraces stable businesses after losing big on risky ones.

National Semiconductor Corp (NSM.N) slipped 2.9 percent to $15.50 in premarket trading after the chipmaker reported better-than-expected first-quarter results. National Semi's stock has gained more than 30 percent in the past two months.

Shares of American International Group Inc (AIG.N) tumbled 2.9 percent to $36.75 before the bell after Wells Fargo Securities downgraded the insurer to "underperform." The brokerage said AIG has virtually no tangible book value at the moment and that its shares are overpriced.

Campbell Soup Co's (CPB.N) shares gained 1.1 percent to $33.50 shortly after the company reported fourth-quarter results Friday.

(Reporting by Leah Schnurr; editing by Jeffrey Benkoe)

Wall Street set for flat open after 5-day run

Hot News: High Fashion Faces a Redefining Moment

States Face Drop in Gambling Revenues

CINCINNATI — Casinos and lotteries in most states are reporting a downturn in revenue for the first time, resulting in a drop in the money collected by state and local governments, according to new state data.

The decline comes as states are rapidly expanding gambling in hopes of stemming severe budget shortfalls, and it indicates that gambling is not insulated from broader economic forces like recessions, as has been argued in the past.

The drop has led some gambling experts to wonder whether the industry is reaching market saturation, whereby a limited number of gamblers with a fixed amount of money to bet is being split across a growing number of gambling options.

States that have been invested in gambling the longest have been hit hardest. Illinois reported a $166 million drop in tax revenue in fiscal year 2009, from 2008; Nevada had a $122 million drop, and New Jersey $62 million.

In hopes of enticing more gamblers, New Jersey lawmakers have repealed a smoking ban, and in Illinois they are considering allowing free drinks on riverboat casinos.

“The data shows that states take a real chance in depending on gambling because this revenue is not likely to keep pace with growing budgetary needs,” said Lucy Dadayan, a senior analyst at the Nelson A. Rockefeller Institute of Government at the State University at Albany, which will release a report on the subject next week.

“In the absence of new types of gambling, it can become a zero-sum game as states compete for the same pot.”

Others, however, argue that the current decline is temporary, and that the industry has plenty of room to expand. Some experts expect revenues to bounce back, but doubt they will be as robust as they were before the recession.

The 12 states that have casinos made $4.5 billion in fiscal year 2009, which ended June 30, a 7.4 percent drop from last year, according to the state data. Among the roughly 42 states with lotteries, 38 reported data indicating that they made $14.5 billion this year, a 2.6 percent drop compared with the earnings from the same states last year.

Gambling critics have long maintained that it provides short-term revenue at the expense of long-term social costs, like increased crime and addiction. But the new data also shows that the revenue collected by states and local governments is decreasing while competition for it is on the rise. Still, state leaders are looking for ways to get a piece of the earnings.

Here in Ohio, Gov. Ted Strickland, a Democrat and former Methodist minister, reversed his opposition to gambling and, in conjunction with the legislature, issued a directive allowing video slots at the state’s seven racetracks.

In Colorado, voters last year backed an increase in betting limits at casinos, and Missouri voters approved the end of limits on how much a gambler can lose. “We need those slots like nobody’s business,” said Mildred Cox, 77, who for 28 years has run the concession stand at River Downs here, one of the seven horse racing tracks slated to receive some of the state’s 17,500 proposed new slot machines. “Look at this place, it’s desolate.”

Across from her, a crowd of older men, betting tickets in hand, stood staring at several televisions mounted on the wall showing races in other states and Canada.

As a bell rang, the horses sprinted by, competing for a winning prize of $4,600. But the men barely broke their concentration from the televisions.

“You can’t attract the best horses and the biggest bettors with purses like that,” said Ms fast cash without a hassle. Cox, pointing outside at a largely empty grandstand.

Thirty years ago, gamblers had to go to Las Vegas or Atlantic City to bet legally. Now, a dozen states have commercial casinos, 12 have “racinos,” or slot machines and other games that are installed at racetracks, 29 states have Indian casinos, and at least 42 states and the District of Columbia, have lotteries.

“When budgets get tight, expanding gambling always looks to lawmakers like the perfect quick-fix solution,” said John Kindt, a professor of business and legal policy at the University of Illinois who studies the impact of state-sponsored gambling. “But in the end, it so often proves to be neither quick nor a fix.”

Crime jumps 10 percent in areas with casinos, personal bankruptcies soar 18 percent to 42 percent and the number of new gambling addicts doubles, Mr. Kindt said. Predicted state revenue often falls short and plans frequently get tripped up by legal fights or popular opposition, he said.

In Delaware, for example, Gov. Jack Markell said in March that he wanted to legalize sports betting in casinos, which he said would bring in $53 million in the first year to help plug an $800 million budget shortfall. But the plan was blocked by a federal court in Philadelphia on Aug. 24 on the grounds that it would undermine confidence in professional sports.

In Ohio, Governor Strickland reversed his stance on video slots at racetracks based on a “conservative” estimate that the new machines would net more than $760 million to the state.

But the slots are not likely to arrive here any time soon because a lawsuit is pending before the Ohio Supreme Court that argues that the plan should be placed before the voters. The slots may also get overtaken by a proposed constitutional amendment that will be on the November ballot and would allow four full-fledged casinos, one each in Cincinnati, Cleveland, Columbus and Toledo.

Still, Frank J. Fahrenkopf Jr., president of the American Gaming Association, said states had plenty of reasons to want to expand gambling.

“Even though our revenues are down during the recession, bringing a casino into a community will still provide new jobs, new tax revenues, new opportunities for local vendors and other benefits that didn’t exist before,” Mr. Fahrenkopf said. “It isn’t surprising that as consumers are tightening their wallets, and with less discretionary spending for entertainment, they are spending less when they visit casinos, too.”

About 60 percent of people who participate in casino gambling have cut back on spending on the activity, according to a 2008 national survey conducted by the association.

Despite the downturn, revenue from racinos grew this fiscal year, producing $2.9 billion in taxes and fees in 12 states compared with $2.7 billion the year before, a 6.7 percent increase.

But Ms. Dadayan of the Rockefeller Institute said the racino windfalls might be short-lived because slot profits usually soften with time as their novelty wears off and more states add machines.

If Pennsylvania and Indiana, where slots are new, are excluded, the total slot revenue from the other 10 states with racinos actually fell by $76 million in fiscal year 2009, a 4 percent decline.

States Face Drop in Gambling Revenues

Wall Street lifted by industrial, tech shares

NEW YORK (Reuters) – U.S. stocks rose on Wednesday after positive broker comments buoyed industrial shares, while an upgrade for eBay Inc (EBAY.O) helped the technology sector.

Boeing Co (BA.N) was the Dow's biggest lift after a senior executive said the aerospace giant expects global air cargo traffic to return to growth next year. Boeing jumped 2.3 percent to $50.67.

United Technologies Corp (UTX.N) gained 1 percent to $60.94 after Goldman Sachs raised its price target on the stock to $77 from $60. In the same sector, 3M (MMM.N) rose 1 percent to $72.42.

Goldman upgraded the multi-industry sector to "attractive" from "neutral," given the group's tendency for outperformance when the Institute for Supply Management manufacturing index makes a sustainable move above 50.

EBay rose 3.4 percent to $22.58 after Bernstein raised its rating to "outperform" from "market perform," and upped its price target to $28 from $24.

McDonald's Corp (MCD.N) limited gains on the Dow, falling 1.9 percent to $55.13, after the hamburger chain reported a rise in sales at existing restaurants worldwide that missed some analysts' expectations payday loan.

Anemic consumer spending remains a major headwind for a sustainable economic turnaround.

"It's pretty evident the consumer is not going to be leading the current economic recovery," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

"The major question from the market's point of view is will the consumer participate in the economic recovery or will they cause the economic expansion to falter during the first half of 2010?"

The Dow Jones industrial average (.DJI) added 37.34 points, or 0.39 percent, to 9,534.68. The Standard & Poor's 500 Index (.SPX) gained 4.72 points, or 0.46 percent, to 1,030.11. The Nasdaq Composite Index (.IXIC) put on 13.15 points, or 0.65 percent, to 2,050.92.

(Reporting by Leah Schnurr; editing by Jeffrey Benkoe)

Wall Street lifted by industrial, tech shares

Merger Would Create Mobile Giant in Britain

BERLIN — Deutsche Telekom and France Telecom said Tuesday that they were planning to merge their struggling mobile operations in Britain, creating the largest mobile operator there.

The companies said the 50-50 venture, combining Britain’s third- and fourth-largest operators, would have 28.4 million customers and a 37 percent market share, according to Gartner, leapfrogging the market leader, O2, with 27 percent, and Vodafone, with 25 percent. The companies said they expected to sign an agreement by the end of next month.

One analyst, John Strand, a mobile industry consultant based in Copenhagen, said it was a sign of a coming wave of mergers as operators struggled to survive in the saturated markets of the European mobile industry.

“Many operators are having a difficult time competing in the current climate with the increased regulation and the intense competition over the price of mobile broadband, which many are now selling below cost,” he said.

Deutsche Telekom and France Telecom’s plans need approval from each company’s supervisory board and from British and European regulators. They said they planned to maintain their brands in Britain for 18 months before choosing a final brand, which could be the French one, Orange; the German one, T-Mobile; or something else.

The companies said they planned to spend £600 million to £800 million, or $984 million to $1.3 billion, through 2014 to eliminate unneeded mobile base stations, close retail stores and streamline administrative operations. In a conference call, Tom Alexander, chief executive of Orange in Britain, said the merger would lead to layoffs but declined to be more specific.

The operators predicted the venture would eventually generate €4 billion, or $5.7 billion, in savings. “We needed the scale to run a very efficient business,” Gervais Pellissier, the France Telecom chief financial officer, said.

Both operators had reported declining profit and sales at their British businesses this year. In the first quarter, Deutsche Telekom wrote down $1.8 billion of the value of T-Mobile U.K.

“We evaluated all options over the last months and came to the conclusion that this would have the most value for our shareholders,” Timotheus Höttges, the Deutsche Telekom chief financial officer, said payday loans for bad credit. “This will give us a stronger foothold in the U.K. market than we had before.”

Ernest Doku, an analyst with Omio, an online handset retailer in Britain, said T-Mobile and Orange would be able to use their combined market strength to pry customers away from O2 and Vodafone.

“For these two networks to merge makes simple business sense, bringing operating costs down,” he said. “They instantly turn from a bit part into a big player.”

T-Mobile and Orange have struggled to keep pace in Britain with O2, owned by Telefónica of Spain, and Vodafone, the largest operator in Europe, which is based in Newbury, England.

The crowded mobile market in Britain, the largest in Europe after Germany’s, has five network operators (the other being 3 U.K.) and multiple resellers. The British market has been saturated for more than a decade, and competition has grown so intense that Orange is giving away netbook computers to win long-term customers. Most Britons can buy mobile phone service through no-strings-attached, pre-paid packages for as little as £10.

With similar saturation in other European countries, more mergers are expected, said Katja Ruud, an analyst with Gartner in Stockholm. She said consolidation is especially possible in Spain and Sweden.

“Consolidation in general is never ‘done,’ so to speak, and in markets where there are three or more operators, you can expect this to happen,” she said.

Similar competitive pressures forced Orange to sell its Dutch business in 2007 to T-Mobile. Orange sold its Danish operation in 2004 to TeliaSonera, the Swedish-Finnish mobile operator. Over the past three years, the number of mobile network operators has fallen from five to three in the Netherlands and from five to four in Denmark.

Merger Would Create Mobile Giant in Britain

Hot News: China and U.S. Company Plan a Big Solar Project

Financial Crisis Nears One-Year Anniversary

The venerable Wall Street firm Lehman Brothers collapsed into bankruptcy nearly one year ago, sparking the worst financial crisis since the Great Depression.The court action on September 15, 2008 shook bankers, officials and investors, and caused one of the worst stock market declines in history.The global crisis in confidence meant banks were reluctant to make loans, investors pulled money out of markets, and economic activity slowed.Over the following weeks and months, economic officials tried to restore lending by slashing interest rates, making emergency loans to banks and using other means to prop up other faltering banks, money-market funds and other institutions.  After one year, many economies appear to be returning to growth, though unemployment is high in many nations and is likely to continue rising in the United States payday loan lenders.The crisis prompted calls for more effective regulation of financial markets, and demands that banks hold larger reserves to cover possible loan defaults. There also is debate over changing the huge bonuses paid to bank executives so top bankers are rewarded for the long-term growth of the company -- not just short-term profits at high risk.

Some information for this report was provided by AFP and Reuters.

Financial Crisis Nears One-Year Anniversary

WTO raps European export aid for Airbus: sources

PARIS (Reuters) – The WTO has found that loans from European governments to Airbus were not only unfair subsidies but in some cases violated a tougher ban on export aid, according to sources familiar with a report that also rejected some U.S. complaints.

The findings are contained in a confidential interim report distributed by the World Trade Organization to the parties in a row between the United States and European Union over aircraft subsidies that could affect planemakers worldwide.

U.S. lawmakers briefed on the report said on Friday that the WTO had ruled against European government loans for Airbus, backing claims that they harmed Boeing. European sources denied there had been a clear-cut result.

Picking apart the contrasting claims, two sources familiar with the case told Reuters the draft conclusions of a five-year WTO probe overwhelmingly backed U.S. charges that the dozen or so loans were "actionable" subsidies that harmed Boeing.

Washington won a partial victory on a second key claim: that most of the same loans further violated WTO rules by amounting to prohibited export subsidies, the sources said. The extent of the U.S. victory on this point remained unclear.

SUPERJUMBO

Under trade rules, "prohibited" subsidies must be dismantled or amended swiftly after the conclusion of a case without the complainant needing to prove its firms were harmed. "Actionable" subsidies are seen as harder to attack and remedies are slower.

At least one of four loans given by European governments to help fund the A380 superjumbo was cleared of being a banned export subsidy, but the rest were found illegal, sources said.

Washington however lost a third claim: that the overall use of European loans was an invalid program of support in its own right, several sources familiar with the matter said totally free credit score.

The United States had not only attacked the individual loans but claimed they were part of a concerted and open-ended system in a bid to implicate future loans for Airbus's future A350, which fell outside the jurisdiction of the WTO complaint.

Washington is expected to protest those loans separately.

The United States broadly won its case against European Union research and development funding for Airbus, as well as infrastructure projects that Washington regards as a covert boost for the European planemaker, two of the sources said.

R&D spending and infrastructure projects in the United States are also at the center of an EU counter-claim against the United States. The process is about six months behind the U.S. case against Airbus, though the two are not officially linked.

The United States lost its case against loans by the European Investment Bank awarded to Airbus, the sources said.

None of the sources agreed to be identified because no one is authorized to speak publicly about the WTO findings ahead of their publication in several months.

The United States and European Union said on Friday they would not comment on the findings in the 1,000-plus page report, which was passed to them for comments ahead of a final ruling.

Airbus and Boeing declined comment. The European Investment Bank was unavailable for comment.

WTO raps European export aid for Airbus: sources

G20 tackles bank pay, lending rules

LONDON (Reuters) – G20 finance leaders struggled on Saturday to pin down specific measures to tighten bank pay and lending rules to prevent a repeat of the financial chaos that triggered the worst global recession in decades.

The economy looked brighter than it had in April when Group of 20 finance ministers and central bankers last met, shifting the focus from crisis fighting to figuring out how to establish a safer financial system.

On the public stage, the message was one of solidarity as policymakers agreed they must spend the $5 trillion committed to economic stimulus to secure the recovery, and delay unwinding emergency measures until economies are sturdy enough to stand on their own.

But behind the scenes, some G20 sources expressed frustration that there was not more progress made in curbing excessive pay packages for bankers -- particularly those employed by firms that have received billions of dollars in government support.

"It is offensive to the public whose taxpayers' money in different ways has helped (keep) many banks from collapsing and is now underpinning their recovery," British Prime Minister Gordon Brown said at the start of Saturday's meetings.

Finance leaders broadly agreed that banks ought to hold more capital as a cushion against the sort of catastrophic losses that led to bank failures and bailouts. It was unclear whether any specific rules would be agreed at this gathering.

One source told Reuters the G20 supported a U.S. proposal requiring banks to hold more and better quality capital. The idea is to provide greater protection against the sort of catastrophic losses that caused bank failures and bailouts of the past two years.

"Banks will have tighter constraints on the high quality of core Tier One capital," the source said. "This means banks will have to hold more capital and higher capital to act as a buffer."

A draft communique seen by Reuters made no mention of the capital rules instant payday loans completely online. It did discuss the matter of bankers' compensation, and said that the leaders planned to ask the Financial Stability Board to examine how to cap bankers' pay.

That was seen as a compromise between countries including France and Germany that had pushed hard for pay limits and Britain, the United States and Canada which were opposed to caps.

Another area where the G20 appeared to make some progress was on a provision that would force bankers to give back bonuses if they were based on performance that later proved to be bad.

CHANGING WORLD ORDER

The draft statement showed agreement that emerging nations like India and China should have a greater say in the running of the International Monetary Fund and World Bank but did not offer up any formula of how this should be achieved.

It said only that their voice in global economic policymaking would grow "significantly" and that it expected "substantial progress" to be made on the issue at a summit of world leaders in Pittsburgh later this month.

The BRIC group of leading emerging powers -- India, China, Russia and Brazil -- had laid out Friday concrete targets for how much movement they wanted in IMF and World Bank quotas.

While G20 countries agree that banks need more money set aside in reserves to cushion against losses, how much is needed and how that is calculated appears to be in dispute.

Washington's proposal has raised concerns that the United States is pulling back from the G20's April pledge to tackle the issue within the existing framework, known as Basel II.

However, a Treasury official said the United States remained committed to implementing Basel II rules.

(Writing by Emily Kaiser; editing by Mike Dolan and Keith Weir)

G20 tackles bank pay, lending rules

W.T.O. Ruling Says Airbus Got Some Illegal Subsidies

PARIS — A preliminary report by the World Trade Organization has found that Airbus received some illegal subsidies for the $13 billion A380 superjumbo jet and other programs, but the trade body rejected most of a five-year-old complaint brought by the United States, three people with knowledge of the report said Friday.

Most of the European aircraft financing programs reviewed in the 1,000-page report were found to be in compliance with W.T.O rules and the trade group did not find that low-cost government loans, known as “launch aid,” constituted a formal European Union program to support Airbus, the people said, who requested anonymity because the report is confidential.

It was unclear at this point what portion of the subsidies were found to be considered illegal. Beside launch aid, the United States had claimed that Airbus received about $8 billion in research and development funding and financing of infrastructure like runways and manufacturing operations in Germany and France.

Both Airbus and Boeing have about six weeks to review the finding and comment on it. The trade body is expected to issue a formal ruling by the end of the year. Both sides can appeal that ruling, but W.T.O. rules limit the process to 90 days, making a final outcome likely in the spring.

Representatives for the United States trade representative, the European trade commission, Boeing and Airbus all said Friday that they were studying the report, but declined to give any immediate comment.

Friday’s report is a response to a 2005 complaint filed by the United States on behalf of Boeing that argues that the European Union and its member governments funneled billions of dollars in illegal subsidies to Airbus from 1970 to 2004.

The most critical charge, legal experts said, involved about $15 billion in low-cost government loans to develop Airbus planes. Roughly $4 billion of the loans in question went to the twin-deck A380 jet, which entered service in 2007.

Boeing lawyers had said that Friday’s report could mean that Airbus will be required to either refinance those outstanding loans on commercial terms or otherwise restructure them. Under the current terms of the loans, Airbus makes its repayments as its planes are delivered to customers. So far, Airbus has delivered 18 of 200 A380s on order.

But European officials who had been briefed on the report said that the W.T.O. panel had rejected 70 percent of the claims in the American complaint.

“Reimbursable investment loans for the A380 were not judged to be prohibited in their totality,” said one person with knowledge of the report’s contents.

The report also specifically excluded any application of its finding in the case to European pledges of loans for Airbus’s forthcoming A350 widebody jet, this person said quick guaranteed personal loans. France, Germany and Britain have already pledged a combined 2.9 billion euros, or $4.1 billion, to finance the A350, which is still in the early design phase and is not expected to see its first delivery until 2013.

“I suspect Boeing will not be rushing to open the Champagne tonight,” said a British official, who requested anonymity because the report is confidential. “This will be seen as quite a rebuff for the United States and their decision to engage in this long and costly procedure at the W.T.O.”

Maria Cantwell, a Democratic senator from Washington State, rejected the European characterization of the W.T.O. report as a defeat for the United States.

Representative Norman D. Dicks, also a Democrat from Washington State, said that W.T.O. had found that European Union loans to Airbus had caused Boeing “material harm,” though he did not elaborate. He also argued that it would be “inconceivable” for the United States Air Force to re-open the bidding for a new air refueling tanker later this year without considering the W.T.O. panel’s findings.

“The U.S. government cannot reward illegal market actions that have harmed U.S. manufacturers and stolen U.S. aerospace jobs,” Mr. Dicks said in a statement. “The tanker contract must be awarded on the basis of a level playing field.”

Meanwhile, a counterclaim by the European Union is being reviewed by a separate W.T.O. panel. That suit contends that Boeing has received at least $24 billion in backdoor subsidies through generous contracts with the United States military and space programs, as well as significant tax breaks from Washington State, the site of Boeing’s largest assembly lines. An interim report on that case is expected in six to nine months and would be subject to the same comment and appeals process.

“It is important to recall that this report is only half the story and must be read together with an interim report on the E.U. case against the U.S. over aid to Boeing,” said Lutz Güllner, a spokesman for the European trade commissioner, Catherine Ashton.

Governments in Brazil, Canada, China and Japan — all W.T.O. members with homegrown civil aircraft industries — will be closely following the outcome of the dispute, as will Russia, which has been negotiating to enter the W.T.O. All five countries have invested significant amounts of government money in their aircraft programs and some have ambitions of competing with Boeing and Airbus in the market for 150-200 seat jets.

W.T.O. Ruling Says Airbus Got Some Illegal Subsidies

Breakingviews.com: Ominous Signals From Bonds Data

The worst is over. At least until about a week ago, that was what most investors seemed to be thinking. Prices and hopes were rising with almost every statistical release and earnings report. But one important market has been stuck in a gloomier mood.

Government bond yields have fallen significantly in the last month or so: to 3.4 percent, from 3.9 percent, on 10-year notes in the United States; to 3.2 percent, from 3.7 percent, in the euro zone; and to 3.6 percent, from 4 percent, in Britain. That sort of decline sits uneasily with rising economic optimism.

Why? There are several theories.

One is the expectation of deflation or something like it. Japanese consumer prices are the same now as they were in 1993, when its financial bubble had fully burst. Even if future Western gross domestic product growth proves stronger than it has been in Japan — an annual rate of 0.6 percent from 1993 to before the latest recession — financial pressure could keep retail prices from rising. In that environment, a risk-free interest rate of 3 to 4 percent doesn’t sound too bad.

Another explanation is more mechanical. Thanks to the “nearly free money” programs of central banks around the world, including some purchases of government-backed securities, there may be more buying power in the markets than can be absorbed by a record supply of new government debt, forcing prices up and yields down.

Finally, there is the dark future theory. Bond buyers may think investors in other markets, principally the stock exchanges, have misread the economic data. What looks like a recovery could actually be an inventory correction that will be followed by another recession. Therefore, government bonds would represent a safe haven.

Whatever is actually moving bond investors to push down yields, one thing is clear. If they are right, the world’s financial woes are unlikely to be over. Either flat consumer prices or a new recession would make more loans go bad, straining bank and government balance sheets. Conversely, if excess money is piling up, the funds could easily push up other prices, creating another asset price bubble or a bout of uncomfortable inflation.

The bond market may be hard to read, but none of its signals look to be telling a happy story no fax cash loans.

The Register Shrugged

Is libertarianism’s flag-bearer about to become a welfare queen? The collapse of the media chain Freedom Communications, named in honor of the philosophy that its founder championed, makes it appear so. The sanctity of private contracts was an important tenet of its late founder, R. C. Hoiles. Filing for protection from creditors appears to fly in the face of all he stood for.

The owner of The Orange County Register of California and more than 100 other publications and television stations filed for bankruptcy protection on Tuesday after agreeing with lenders on a plan to restructure its $771 million in debt after its cash flow fell about 75 percent over the last five years.

Up until now, the company was run by Mr. Hoiles’s heirs, who sought to uphold his fiery advocacy of libertarianism. But control will now pass to its lenders. Mr. Hoiles, who died in 1970, was an ardent fan of Ayn Rand and inspired free-marketeers like Alan Greenspan and Barry Goldwater. His successors even held seminars in the philosophy for Freedom’s employees.

Mr. Hoiles’s belief in limited government and individual responsibility informed his paper’s editorial policies through the New Deal and Great Society programs he opposed. But Freedom was caught out more recently by the precipitous industrywide decline in advertising revenue.

Squaring libertarians’ belief in individual responsibility and the sanctity of private contracts with a bankruptcy filing isn’t easy. But lenders willingly, if implicitly, assume some credit risk by charging more for debt that falls further back in the payoff queue should a default occur. If the bankruptcy court divides the spoils accordingly, the sanctity of the contracts could be viewed as intact.

The intellectually unforgiving Mr. Hoiles would probably have little patience for such hairsplitting. But it might give his offspring some comfort.

EDWARD HADAS and DWIGHT CASS

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

Breakingviews.com: Ominous Signals From Bonds Data

Wall Street ends down for 4th day; caution prevails

NEW YORK (Reuters) – U.S. stocks fell on Wednesday as jitters about the economy prompted investors to unload some shares for a fourth-straight day even after a sharp drop in the previous session.

Major indexes fluctuated between positive and negative territory throughout the day before closing in the red, with S&P 500 posting its worst losing streak since late May.

A labor-market report showing more private-sector job losses in August than forecast made investors nervous ahead of Friday's highly anticipated monthly jobs data from the U.S. Labor Department.

The weak data also prompted stock investors to shift some of their money into assets deemed safe such as precious metals, sending gold futures up to their highest level in almost three months.

"Investors are turning to gold as a hedge" against financial malady, said Chad Morganlander, portfolio manager at Stifel, Nicolaus & Co in Florham Park in New Jersey.

Financial stocks once again were top decliners. The KBW Bank Index (.BKX) lost 2.3 percent, with regional banks, such as SunTrust Banks (STI.N) down 7.2 percent at $20.17.

Regions Financials (RF.N) was down 6.3 percent at $5.19.

Moving up were shares of gold producers as the price of gold rallied to $981.50 an ounce. Shares of Gold Fields Ltd. (GFI.N) gained 11.3 percent to $13.20 and the NYSE Arca Gold Bugs Index (.HUI) rose 9.3 percent to 383.66.

The Dow Jones industrial average (.DJI) closed down 29.93 points, or 0.32 percent, at 9,280.67. The Standard & Poor's 500 Index (.SPX) lost 3.29 points, or 0.33 percent, to 994.75. The Nasdaq Composite Index (.IXIC) fell 1.82 points, or 0.09 percent, to 1,967.07.

The current mean estimate of economists polled by Reuters is for a loss of 225,000 jobs in Friday's non-farm payrolls report for August free business cards.

"The (non-farm payrolls) numbers don't have to be great, but the market needs a confirmation that the trend is improving" to see a rebound, said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in New York.

The S&P 500 has climbed about 47 percent from a 12-year closing low in early March, leading some investors to speculate that a correction may be on the way.

Minutes from the most recent meeting of the Federal Reserve, released earlier in the day, showed improved outlook in August, but market reaction was muted.

On the Nasdaq, Dell Inc (DELL.O) was up 0.9 percent at $15.35, helping the tech-heavy index cap some losses. Shares of Leap Wireless International (LEAP.O) also climbed 7.5 percent to $17.71 on speculation that AT&T (T.N) was interested in buying the wireless service provider.

Another bright spot in Wednesday's market was the health insurance group. WellCare Health (WCG.N) gained 1.9 percent to $23.62 while Aetna Inc (AET.N) climbed 2.9 percent to $28.68.

Volume was light on the New York Stock Exchange, where 1.38 billion shares changed hands, below last year's estimated daily average of 1.49 billion.

On the Nasdaq, about 2.00 billion shares traded, below last year's daily average of 2.28 billion.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 3 to 2. On the Nasdaq, about 14 stocks fell for every 13 that rose.

Wall Street ends down for 4th day; caution prevails

Hot News: Yen rallies as investors seek safe bet