Ahead of the Bell: Holiday retail sales

NEW YORK – With the holiday shopping season just under way, analysts are mixed as to whether retailers will fare better this season than last year.

While shopping held steady over the Thanksgiving weekend compared with last year, economic pressures remain as shoppers worry about unemployment levels. Consumers continued to hunt for bargains, with many sticking to their shopping lists and focusing on practical items.

Randal Konik of Jefferies & Co. said in a client note that nearly all specialty retailers appeared to be less promotional on Black Friday this year, which should lead to better margins and higher fourth-quarter earnings.

Konik said Gap Inc. did well, with strong pricing and a solid ad campaigns for its Old Navy and namesake stores. Teen retailers were the best Black Friday performers, he added. Konik's top holiday picks are Abercrombie & Fitch Co., Coach Inc., Gap and Urban Outfitters Inc.

Mike Baker of Deutsche Bank North America said it wasn't surprising that dollar stores were among the busiest retailers this weekend, as shoppers have consistently shown this year that they are trading down to less expensive items no teletrek payday advance. In consumer electronics, shoppers appear to be concentrating on new video games and flat panel televisions, he added.

Janney Capital Markets' Shawn Milne added that Black Friday appeared to be a good day for online retailers, with early signs indicating their sales were up more than 10 percent from last year. Milne said the strong sales may have been because many retailers put more of their Black Friday and Cyber Monday deals on their Web sites earlier this year.

But Edward Yruma of KeyBanc Capital Markets remains reserved, saying his checks showed traffic tapered off on Friday and was "tepid at best" over the weekend.

"While the weekend still pales in importance to the weekend before Christmas, we think that investors looking for significant year-over-year improvement could be disappointed," he wrote.

Yruma also likes Gap and Abercrombie & Fitch, with Tiffany & Co., Nordstrom Inc. and Lululemon Athletica Inc. also among his holiday favorites.

Ahead of the Bell: Holiday retail sales

Bernanke Warns of Risks in Push to Revamp the Fed

WASHINGTON — The chairman of the Federal Reserve Board warned bluntly on Saturday that provisions in financial legislation before the House and Senate would “seriously impair” the Fed as it struggled to maintain financial and economic stability.

In a column published on The Washington Post’s Web site and scheduled to appear on the op-ed page on Sunday, the chairman, Ben S. Bernanke, sharply criticized a Senate provision that he said “would strip the Fed of all its bank regulatory powers” and a House provision to repeal a 30-year-old law “to protect monetary policy from short-term political influence.”

The Federal Reserve’s jurisdiction to regulate banks has come under increasing attack in Congress in recent months, reflecting the anger of voters at the huge taxpayer costs of the bailout of Wall Street.

Mr. Bernanke repeated, as he has many times before, that while some of the measures in response to the financial crisis were “distasteful and unfair,” they were necessary.

The White House and senior Democratic lawmakers in both the House and the Senate have proposed eliminating the Fed’s current role of setting the rules for products like mortgages and credit cards. Instead, officials have proposed a new federal consumer financial protection agency to both set and enforce rules over such products fast cash advance.

The op-ed article was part of Mr. Bernanke’s running campaign to preserve the Fed’s powers and independence as the system of financial regulation is overhauled. In the past, it would have been unusual for a Fed chairman to make such pointed remarks in a public forum, but Mr. Bernanke has been more outspoken than most.

“Now more than ever, America needs a strong, nonpolitical and independent central bank with the tools to promote financial stability and to help steer our economy to recovery without inflation,” he said.

And when it comes to monetary policy, he said, “independent does not mean unaccountable.” He said the actions of the Fed were already thoroughly reviewed and needed to be protected from Congressional influence, “which would undermine the confidence the public and the markets have in the Fed.”

A House committee has already completed its first draft of the legislation, while a companion measure has been introduced in the Senate but not approved by a committee.

Bernanke Warns of Risks in Push to Revamp the Fed

Dubai struggles to ease debt default fears

DUBAI/LONDON (Reuters) – Dubai struggled to ease fears of debt default on Thursday after its move to delay repayments at two flagship firms shook confidence in the Middle East as a center for investment and a source of capital.

Dubai's debt problems, a hangover from a property boom that produced the world's tallest building, have shaken trust among Western investors who turned to the oil-exporting Gulf region for help during the global financial crisis.

The emirate said on Wednesday it would ask creditors of Dubai World, the conglomerate behind its rapid expansion, and Nakheel, builder of its palm-shaped islands, to agree to a standstill on billions of dollars of debt as a first step toward restructuring.

Dubai tried to revive confidence by saying on Thursday its profitable DP World (DPW.DI), which runs 49 ports around the world, would not be involved in the restructuring. DP World, which has $3.25 billion outstanding bonds, is majority owned by Dubai World but has shares listed on NASDAQDubai.

"It might be a move to distinguish the solvent from less solvent companies in an attempt to shift the weight away from the less exposed entities," said John Sfakianakis, chief economist at Saudi Fransi bank.

European bank shares, which had recovered in recent months on hopes that the worst of a global crisis was over, fell to lows not seen since May on Dubai's debt delay.

There was no immediate sign that U.S. banks were exposed, but it was difficult to ascertain, given Thursday's Thanksgiving holiday.

"It is not so much that Dubai did what they did, but how they did it ... with no notice," said Andrew Brenner, head of emerging markets at Guggenheim Securities. "Spreads on a lot of fixed income products have gotten to very rich levels and the Dubai default will force risk to get repriced downward. Either way, look for a flight to quality scenario tomorrow on a holiday-shortened day."

Shares in companies in which Gulf investors own big stakes -- including the London Stock Exchange (LSE.L), UK grocer J Sainsbury (SBRY.L) and German carmakers Porsche (PSHG_p.DE) and Daimler (DAIGn.DE) -- also fell sharply on concerns the holdings would be cut to meet obligations at home.

Britain's FTSE 100 (.FTSE) stock index dropped 3.2 percent to its lowest close since November 6, pressured by hefty falls in the banking sector due to concerns about Dubai's ability to pay debts.

Exposure to Dubai World could be as high as $12 billion in syndicated and bilateral loans, including existing loans for Nakheel and Istithmar, an investment arm of Dubai's government, banking sources told Thomson Reuters LPC.

International banks are seeking to clarify their position as they formulate their response to the standstill request and are assessing the implications for lending to Dubai and the Gulf.

"This is very serious and will have implications across the region," a senior banker said.

The Dubai news ricocheted through emerging markets. Stock markets around the world sank, with weakness extending to Latin America, where the Mexican peso was knocked off a 1-year high and Brazilian assets sank.

BONDS EXTEND LOSSES

In one of the first signs that Dubai's problems could hurt global fund-raising efforts for its neighbors, Saudi-backed Gulf International Bank pulled a bond sale due to priced this week.

Dubai's move will likely lead to a reassessment of the riskiness of debt issued by the region's sovereign-linked firms.

Ratings agency Standard & Poor's said on Thursday it had placed the ratings of four Dubai-based banks on negative outlook due to their exposure to Dubai World low interest auto loans.

S&P's and Moody's Investors Service severely downgraded several government-related entities on Wednesday.

Wednesday's announcement also sent the cost of insuring Dubai's debt against default soaring and bond prices tumbling.

Dubai World, whose slogan is "The sun never sets on Dubai World," has $59 billion of liabilities, a large proportion of Dubai's total debt of $80 billion.

Dubai's credit default swaps are being quoted as high as 500-550 basis points, some traders said, while the cost of insuring Qatari, Abu Dhabi and Bahrain debt also surged.

Analysts downplayed the fallout for the wider region, however, pointing out that Dubai funded its growth through loans, whereas its neighbors are mostly major oil and gas exporters.

"I would not rush into talking about contagion. Anything from Abu Dhabi or Qatar is backed by serious money. Dubai is a lot more leveraged," said Youssef Affany, a relationship manager at Citi who specializes in the region.

"There will be some level of solidarity from the emirates and the big neighbor, Saudi."

Analysts expect financial support from Abu Dhabi, a neighboring member of the United Arab Emirates and home to most of the country's oil, to keep Dubai afloat. But Dubai might have to abandon an economic model that focused on heavy real estate investment and inflows of foreign money and labor.

Earlier this year, Dubai headed off investor concerns that it would default on its debt by launching a $20 billion bond program in which the central bank of the UAE, the world's third-largest oil exporter, bought the first $10 billion slice.

Dubai said it had raised a further $5 billion as part of that program, placing the debt with two Abu Dhabi-controlled banks. But the move raised questions over why Dubai had not raised the entire $10 billion tranche it had planned to sell on the international market.

OPTIONS FOR DUBAI?

If creditors reject proposals to postpone near-term debt obligations until May 2010, the Dubai government could be forced to hold a firesale of its international real estate.

International property advisers are bracing for a potential slew of instructions to sell trophy assets owned by Dubai World.

"We do expect the Dubai government to step up efforts to raise capital via real estate sales, and sales of their UK assets in particular," James Lewis, a member of the Gulf capital markets team at property consultant Knight Frank, told Reuters.

One fund manager said Dubai could not separate the debts of DP World from the Nakheel bond at the heart of Dubai's problems.

The $3.52 billion bond, which was originally due to mature on December 14, 2009, traded as high as 110 percent of par value on Wednesday before the Dubai government said it would ask creditors for a standstill.

On Thursday, the bond traded at 72, and Nakheel's Islamic bond prices extended losses, reaching their lowest level since February.

"Trust is the basis of all credit. It can take decades to build up credit-worthiness and moments to destroy it. They have the money to pay the Nakheel bond," said the fund manager.

"DP World can't be kept separate. If that's an asset of Dubai World, ownership of that can presumably be attached by Nakheel creditors."

(Writing by Alistair Bell, Additional reporting by Ulf Laessing in Saudi Arabia, Sebastian Tong, Steve Slater, Kristen Donovan, Natsuko Waki and Sujata Rao in London; Phil Wahba in New York; editing by Elizabeth Piper, Erica Billingham,Andrew Callus and Dan Grebler)

Dubai struggles to ease debt default fears

Idaho joins fight against foreclosure fraud

BOISE, Idaho – Idaho Attorney General Lawrence Wasden is teaming with federal regulators and 26 other states to get tough on foreclosure rescue fraud.

The states and Federal Trade Commission are joining forces in Operation Stolen Hope, a nationwide program that combines law enforcement and public education.

Wasden says complaints this year about companies offering mortgage modification services are rising faster than any other type of business. His office has already sued two of these companies and launched investigations into others no credit check payday loan.

One lawsuit names APS Northwest Idaho, a Kootenai County mortgage modification company, over alleged violations of the state's consumer protection act. Another lawsuit names Apply 2 Save in Coeur d'Alene.

Investigators are focusing on companies requiring large, upfront payments or fees to modify mortgages.

Idaho joins fight against foreclosure fraud

Europe Markets: European shares pressured as banks decline

LONDON (MarketWatch) -- European shares weakened on Tuesday, with banks leading the decline after a report from ratings agency Standard & Poor's raised worries about capital levels in the sector.

The pan-European Dow Jones Stoxx 600 index fell 0.3% to 247.65, down for the fifth time in six sessions. It closed with a 2% gain on Monday.

The report from Standard & Poor's on the banking sector discussed the capital strength of lenders using a risk-adjusted capital ratio developed by the agency.

UBS , down 2.1%, BBVA , down 1.2%, and Allied Irish Banks , down 2.5%, were among the lenders with the lowest risk-adjusted capital ratios, according to the report.

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Overall, the French CAC-40 index declined 0.2% to 3,805.49, the German DAX index lost 0.1% to 5,794.95 while the U.K. FTSE 100 index traded flat at 5,357.18.

In Asian trading, Chinese shares also were hit by bank capital concerns, with the Shanghai Composite Index ending the day down 3.5%.

"A poor performance by Asian equity markets despite [the S&P 500] edging towards the yearly highs as well as some very early year-end position squaring have served to keep the U.S. dollar -- if not buoyant overnight -- at least in a position to tread water ahead of today's big data which is likely to be the U.S. GDP number," said foreign exchange strategists at Icap.

U.S. stock futures edged slightly higher.

On the economic front in Europe, the Ifo Institute's closely watched indicator of German business sentiment rose to its highest level in more than a year in November, boosted by a more positive outlook on exports and an improving view of the current business situation pay day loan lenders. Read more on Ifo.

Greek Tremors Reach Wall Street

Recent panic selling in Greek government bonds could offer a preview of how other markets might react to central banks' "exit strategy," reports Barron's Mike Santoli.

The euro traded down 0.1% to $1.4945 against the greenback, while sterling lost 0.5% to $1.6522.

Gold futures and miners staged a turnaround through the morning, with the precious metal up $6.00 at $1,170.80 in electronic trading and Anglo American shares up 2% in the mining sector.

Carrefour shares rose 3.4% to 32.62 euros after J.P. Morgan upgraded the French supermarket group to overweight from neutral on Tuesday and added it to its analyst focus list.

"We believe there is an 80% probability of a successful turnaround," the broker said and upped its target price to 40 euros a share, from a previous level of 33 euros.

"We view positively CEO Lars Olofsson's decision to undertake a profound category review," it added.

The broker believes that the worst of the deflationary cycle has passed and that the comparison base is set to get much easier.

It also believes there is a 20% probability of a partial break-up of the group, which it estimates would lead to a value of 52 euros a share.

Shares of Lloyds Banking Group managed to buck the lower banking sector trend, rising 1.3% after the lender priced its record 13.5 billion pound ($22.3 billion) share sale at 37 pence a share. Read more on Lloyds pricing.

Elsewhere, shares of Legrand fell 6.3% after Kohlberg Kravis Roberts & Co. and Wendel said that they will jointly sell 30 million shares, or 11%, of the electrical fittings firm.

Wendel shares rose 1.3% while KKR fell 0.3% in Amsterdam.

Europe Markets: European shares pressured as banks decline

Gold at record; resource plays boost stocks

SINGAPORE (Reuters) – Gold rose more than 1 percent to a record high on Monday as concerns about accelerating inflation and weak economic growth prompted investors to seek relatively safer assets, while supply concerns boosted oil and copper.

Asian stocks also rose, led by gains in Australia thanks to higher resource stocks, although volumes were light with Japan out on holiday.

Many investors have been reducing their positions and cutting risk as a strong year begins to wind down and with economic indicators still showing scant evidence of a sustained recovery.

Highlighting the growing concerns evident in the market, yields on U.S. 2-year Treasuries have fallen below 0.75 percent, approaching levels seen at the height of the financial crisis in December last year.

"It worries me that two-year yields are trading as they are plus (short-dated) bill rates went negative and gold is bid, bid, bid," said Robert Rennie, chief currency strategist at Westpac.

"It makes me think there is a huge flight to quality going on that hasn't hit FX yet...perhaps a bit of a warning sign."

The dollar, which often rises in times of increased uncertainty and worries about global growth, gave up early gains against a basket of currencies (.DXY), while the commodity-linked Australian dollar benefited from the strong gold price.

Spot gold was trading around $1,162 an ounce, having hit a peak around $1,163, up a third so far this year.

Helped by the safe haven bid and purchases by a number of central banks, gold has surged since the start of November, hitting nine record highs and gaining 11 percent in the past three weeks fast cash online.

STOCKS STALLED

The heightened sense of caution has stalled a rally in global stocks, which have traded in a broad range since mid-October.

After falling last week, MSCI's index of Asia-Pacific stocks outside of Japan (.MSCIAPJ) rose 0.7 percent, taking its gains so far this year to almost two-thirds.

Japanese markets were closed for a holiday.

Australian shares (.AXJO) rose 0.6 percent, with shares of Drillsearch Energy Ltd (DLS.AX) jumping more than 19 percent after the company reported a promising oil find.

Crude oil futures rose 1 percent to $78.24 a barrel, supported by heightened tensions between Iran and Western nations which raised speculation of a potential supply risk.

Iran's armed forces launched large-scale air defense war games on Sunday to show off the country's deterrence capabilities in the face of pressure from the West over its nuclear program, and a cleric in the Revolutionary Guards warned that the Islamic Republic would fire missiles at "the heart of Tel Aviv" if attacked.

"There's always a supply risk premium that can arise from these elevated tensions in the Middle East and that is a factor pushing up oil prices this morning," said Toby Hassall, a commodities analyst at the Commonwealth Bank of Australia.

Supply concerns also supported copper, which was testing $7,000 a metric tons amid strikes by workers in Chilean mines.

Gold at record; resource plays boost stocks

Your Money: Financial Advice From the Divorce Trenches

Nobody can relate to the raw, visceral experience of ending a marriage better than someone who has gone through it. So it only seemed right to end my series of columns on money and divorce with a few words of advice from financial experts about what they learned when their own marriages fell apart.

Some of them didn’t want to talk in anything but generalities. Picking at the emotional scabs, after all, is nobody’s idea of a good time. And one well-known financial pundit signed a divorce agreement forbidding any discussion of the former spouse whatsoever.

But many others opened up about what they got right and wrong. Some, inspired by the financial confusion they faced when their marriages were ending, even shifted their careers to specialize in helping others who were going through divorce.

Their advice on such things as choosing a lawyer and communicating with your former spouse can save you plenty, leaving more money for your children or rebuilding your financial life once your marriage is officially over.

CHOOSING A LAWYER I spoke to a number of accountants and financial planners who trained and took an exam to become Certified Divorce Financial Analysts during or after their marriage broke up. What many of them had in common, aside from a fiery conviction that you need an expert from their membership during your breakup, is a general dissatisfaction with the legal process.

And often, it was partly their own fault. “I was clueless,” said Scott D. Martin, who runs DivorceDirection, a financial advisory service in Lake Mary, Fla. “One way to achieve control over the process is by educating yourself about the different ways you can get divorced.” He added that no one told him about collaborative divorce, an increasingly popular process that tries to keep the case out of court.

So when interviewing lawyers, ask what they think of lower-cost mediation options and whether they have been trained to work collaboratively. How often do their cases go to trial and how many are they working on at any given moment? How do they bill? (To add to this list of questions, whether you’re a client or a lawyer, please see the related post on the Bucks blog.)

Once you’ve chosen a lawyer, you can also help by keeping the process moving along. “You need to be asking, ‘What do you lack, what do you need, what can I bring, where are the sticking points?’ ” said Cynthia Anderson Thompson, who runs Divorce Planning Solutions in White Plains.

PICKING FIGHTS When Michael A. Rogge began the divorce process, he said he figured he was in for some intense negotiations over financial issues, given that both he and his former wife are certified public accountants. What he didn’t realize, however, was how much the minor squabbling over their children could cost.

Once time, his now-former wife was out of town and left their children with her parents. He felt, however, that he should have been caring for them. So off went an angry letter from one lawyer to another, leading to hundreds of dollars in legal fees. And there were many such letters.

“A lot of these letters go unanswered,” said Mr. Rogge, who is based in Naples, Fla. and helps others navigate the financial minefields in divorce. “They’re just antagonistic. All they do is stir up too much emotion, and they’re not worth the value of the paper that they’re printed on. We spent way too much on attorneys’ fees bickering over things that didn’t matter.”

KEEPING RECORDS If you are the chief financial officer in the household, you may continue in that role during the divorce. But while your spouse may have never questioned your judgment during your marriage, you shouldn’t assume that will continue.

“You’ve gone from a position where during the marriage it’s absolute trust to a situation where that trust evaporates,” said James Sonneborn, a financial planner and divorce specialist with RegentAtlantic Capital in Morristown, N.J.

He recommends that you keep meticulous records and not make big decisions about investments, debt or other issues — even if that is the role you always played — without communicating with your estranged spouse, by e-mail if need be easy payday loan. “It can save you a whole lot of heartache down the road, so you won’t be paying an accountant to recreate all of that for you,” he said. “That was a lesson I learned the hard way.”

That communication, Mr. Sonneborn added, can save money later, too. Maintaining — or rebuilding — the ability to sit down with your former spouse over coffee, which he does every month or so, means that there is less of a chance of having to call the lawyers back in to settle disagreements later.

HITTING THE DETAILS While you can’t predict every expense you’ll encounter in the future and document how you will split those costs in the divorce agreement, you should certainly try. “If every single one of those things is not in the settlement agreement, you’ll either end up back in court or sucking it up and moving on,” said Stacey Welsh, managing partner with Sovereign Wealth Management in San Francisco.

She and her former husband laid down the ground rules for orthodontic bills ahead of time, but neglected to consider who would be financially responsible for their children’s dog. Does one parent have to shoulder the bill for dog sitters and boarding if the other one moves into a house where the children are welcome overnight but canines are not?

Ms. Welsh added that people who had anticipated all of the possible expenses would often give up what was rightfully theirs at the 11th hour, just to get the divorce over with. “I just try to make sure that we sit down with the lawyer, tally it up, figuring out if they were going to litigate it, what it would cost and what the likely outcome would be,” she said. “What I don’t want to happen is for someone to say two years later that it was a huge mistake.”

LIVING NEARBY Part of the point of ending a marriage may be to get physically as far away from a toxic relationship as you can. But if you have children, it may pay to stay close by.

Jonathan Clements, the director of financial guidance at Citi Personal Wealth Management, and his former wife have lived around the corner from one another in Metuchen, N.J., in the 11 years since they split up. “The reality is, I see relatively little of my ex-wife,” he said. “We never had weekly pickups and drop-offs, where everyone would gather uncomfortably around the front door. The kids just walk.”

One payoff, added Mr. Clements, the author of “The Little Book of Main Street Money” and a former colleague from The Wall Street Journal, comes from the flexibility that such proximity can make possible. If you need to leave town for work, it’s relatively easy for your former spouse to take care of the children. That can make it easier to get back in your boss’s good graces after spending so many hours with the divorce lawyers.

OVERSPENDING Whether you initiated the divorce or not, you probably feel some guilt that it has happened. So it’s natural to want to shower your children with gifts and trips to make up for it. “I was certainly guilty of overspending in the mall,” said Mr. Sonneborn. “But I’m proud that I was able to recognize that.”

Jean Chatzky, the financial editor for the “Today” show on NBC and author of a book about debt reduction called “Pay it Down,” said she had also noticed the tendency of people lavishing the money left after a divorce on themselves. “A lot of people think they need to put a lot of energy and money into making themselves look good and young and available again,” she said.

Ms. Chatzky, however, chose to move into a home that was less than she could afford after her divorce. “The thing that made me feel better and stronger, like a better parent and more powerful, was not to spend the money on highlights but to put it away,” she said. “And to frequently go to my online bank accounts and see that despite the fact that the markets were going down at the time, my balance in savings was going up.”

Your Money: Financial Advice From the Divorce Trenches

Conseco subsidiary reaches reinsurance agreement

CARMEL, Ind. – Conseco Inc. said Friday that a subsidiary has reached a reinsurance agreement with Wilton Reassurance Co. covering about 237,000 life insurance policies.

Wilton Re will pay a ceding commission of about $45 million and will 50 percent co-insure the policies with an effective date of Oct. 1, 2009, Conseco said.

Conseco's Bankers Life and Casualty subsidiary will continue to administer the policies, Carmel, Ind.-based Conseco said. Bankers Life also will transfer to Wilton Re about $95 million in investment securities and policy loans, and $140 million of statutory policy and other liabilities.

The transaction, expected to be completed in the current quarter, is subject to approval by insurance regulators in Illinois and Wisconsin.

Conseco CEO Jim Prieur said the transaction is expected to increase his company's consolidated risk-based capital ratio by 9 percentage points, and increase statutory capital easy payday loans.

Reinsurance is effectively insurance for insurers — it allows companies to transfer some of the risk associated with certain policies, in order to reduce the amount it might have to pay out in the event of an insurance claim.

As a result of the transaction, Conseco expects to record an increase to its deferred tax valuation allowance of about $19 million in the current quarter. Conseco also expects to record a pre-tax deferred cost of reinsurance of about $30 million.

Shares of Conseco fell 9 cents, or about 1.7 percent, to $5.09 in morning trading.

Conseco subsidiary reaches reinsurance agreement

Financial Stocks: Downdraft catches financial stocks Thursday

NEW YORK (MarketWatch) -- Shares of J.P. Morgan Chase fell with the broader financial sector Thursday after it said it will buy Cazenove, its U.K joint venture partner, for about 1 billion pounds ($1.67 billion).

The two firms have operated their joint venture for five years and said that the investment-banking business will continue to operate under the J.P. Morgan Cazenove brand, while the cash equities and research divisions will be combined into J.P. Morgan's existing operations covering Europe, the Middle East and Africa.

Shares of J payday loan companies.P. Morgan Chase , part of the Dow Jones Industrial Average, fell 2%, mirroring the decline in the broader financial sector as measured by the Financial Select Sector SPDR .

The Dow industrials fell about 150 points at late morning. Among the other financials in the blue-chip benchmark, American Express , Bank of America , and Travelers Cos. all fell.

Financial Stocks: Downdraft catches financial stocks Thursday

Europe Markets: Autos, miners help Europe to fifth gain in six

LONDON (MarketWatch) -- European shares gained on Wednesday, rising for the fifth time in six sessions, with companies leveraged to an improving economy performing well.

After posting small losses on Tuesday, the pan-European Dow Jones Stoxx 600 index rose 0.3% to 251.11.

Autos were higher, with Daimler shares up 1.2% and Peugeot shares up 1%.

Metal and mining firms were also strong. Anglo American shares rose 1.2% and Kazakhmys shares rose 1.2%.

"Industrial production is gaining momentum and therefore demand for intermediate products and for basic resources and basic materials is at very high levels. Earnings expectations for the sector have increased sharply," said Christian Stocker, strategist at UniCredit.

"We expect very strong fourth-quarter figures from companies. We see upside of around 15% from current levels for the Stoxx 600. We see highs in the first quarter of 2010," Stocker added

The euro gained ground against the dollar on Wednesday, up 0.3% at $1.4911, providing a bit of impetus for commodity buying. Oil futures pushed back towards $80 a barrel and gold futures rose $5.70 to $1,145.20 an ounce.

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On a regional level, the U.K. FTSE 100 index up 0.2% at 5,354.70, the German DAX 30 index rose 0.4% to 5,802.98 and the French CAC-40 index advanced 0.5% to 3,848.95.

Asian shares were mixed, with stocks in Korea, Taiwan and Australia shares up but China and Japan were lower paydayloans. U.S. stock futures were pointing to a steady start on Wall Street, with Dow Jones Industrial Average futures down 5 points.

Deal speculation helped Cadbury shares to climb 1.1% to 797p.

Hershey Co. is in preliminary talks with Italian chocolate maker Ferrero Spa about making a joint bid for Cadbury, the Wall Street Journal reported Tuesday, citing people familiar with the situation.

Cadbury is trying to fend off an unsolicited offer from Kraft Foods. See full story.

Banks were also in the news with Allied Irish Banks shares up 1.7% in Dublin after it said that it's expecting to generate an underlying operating profit of around 2 billion euros ($2.97 billion) in 2009 before the impact of bad debt provisions.

KBC Group shares were suspended in Brussels.

The European Commission is expected to decide later in the day on whether to approve the lender's restructuring plan. The plan sets out how the group will repay state aid and could include requirements to dispose of assets.

Shares of Air Berlin climbed 5.4% after the airline said late Tuesday that its third-quarter net profit more than doubled to 95.2 million euros ($141.8 million) from 45.1 million euros a year earlier.

The company confirmed its outlook that its 2009 operating profit will be better than in 2008.

ITV shares rose 4.3% after naming Archie Norman, the former Asda head and parliamentarian, as its chairman.

Europe Markets: Autos, miners help Europe to fifth gain in six

Retail Sales Numbers Give Markets a Lift

Shares on Wall Street rose sharply on Monday after a new report showed retail sales rebounded more than expected in October because of a increase in auto sales.

The United States market also followed overseas gains that were propelled by a weakening dollar and stronger gold prices, which again lifted commodities prices and shares of companies that produce raw material.

The Commerce Department said retail sales rose 1.4 percent in October, easily surpassing the 0.8 percent increase that economists polled by Thomson Reuters had forecast. It was a sharp rebound from a 2.3 percent decline seen in September.

However, excluding the autos, sales rose just 0.2 percent, half the increase economists predicted, tempering some of the excitement over the data. Futures pulled back slightly after the report.

Consumer spending accounts for about 70 percent of all economic activity. Analysts widely agree a recovery at the consumer level is needed for a strong recovery, especially as government stimulus programs expire and unemployment remains high.

At midmorning, the Dow Jones industrial average rose 123 points, or 1.2 percent. The Standard & Poor’s 500-stock index rose 16 points, or 1.5 percent, while Nasdaq rose 28 points, or 1.3 percent.

Before the markets opened, General Motors said it lost $1.2 billion in its first quarter since emerging from bankruptcy. Despite the loss, it said it will begin to repay $6.7 billion in government loans and was seeing a stabilization in its business.

The home improvement retailer Lowe’s said its profit dipped 30 percent in the third quarter, but it matched earnings expectations. Despite the declining earnings, Lowe’s said it is seeing stabilization in some of the hardest hit housing markets.

Corporate outlooks from the companies will be just as critical as actual quarterly results because they are entering the key holiday shopping season. Disappointing sales through the end of the year could put a halt to the market’s ongoing climb.

Other economic readings on inflation, housing starts and industrial production are due out later in the week and could provide further evidence of the speed of a recovery fast payday loan. The Labor Department also reports its weekly unemployment claims data on Thursday.

Bond prices were mixed Monday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.39 percent from 3.42 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.07 percent from 0.05 percent.

The dollar mostly fell against other major currencies, while gold prices continued to climb higher hitting another record. Gold rose $10.40 to $1,127.10 an ounce after hitting a new record of $1,133.50 earlier in the day.

In Europe and Asia, stock markets advanced after figures confirmed that Japan, the world’s second-biggest economy, was growing strongly.

European stocks tracked their Asian counterparts higher, with the FTSE 100 in London was shares up 59 points, or 1.1 percent. The DAX in Frankfurt rose 60 points, or 1. percent, while the CAC-40 in Paris was 30 points, or 1 percent, higher.

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ding teenage clothing retailer Abercrombie & Fitch and department-store chain J. C. Penney

Stocks have rallied strongly since March’s lows, with many of the world’s major indexes trading at or near their highest levels this year as investors reined in their economic doomsday expectations to factor in a swifter than anticipated global economic rebound.

Earlier, Japan’s Nikkei 225 stock average closed up 20.87 points, or 0.2 percent, to 9,791.18 after figures showed the Japanese economy expanded at an annual rate of 4.8 percent in the third quarter. That was the second straight quarter of expansion and the biggest rise since 2007.

Encouragingly, much of the growth in Japan was due to a rise in consumer spending as opposed to exports.

“Growth will inevitably slow in Q4 and beyond, but we expect Japan to continue to surprise the markets on the upside for a few quarters yet,” said Julian Jessop, international economist at Capital Economics.

Retail Sales Numbers Give Markets a Lift

Hot News: Lowes quarterly profit falls 30 percent

Breakingviews.com: A Sweet Union for Liberty Global

A Sweet Union For Liberty Global

John Malone, the American media mogul, has pulled off a piece of classic downturn deal-making. Mr. Malone’s Liberty Global agreed Friday to buy Unitymedia, Germany’s second-largest cable operator after Kabel Deutschland, for 3.5 billion euros ($5.2 billion).

He’s taking over from the private equity owners, BC Partners of London and Apollo Management of New York. Rare for a leveraged-buyout exit, both sides are getting what they want.

Mr. Malone has tried to get into German cable previously. Seven years ago, he bid for the Deutsche Telekom network from which Unitymedia eventually sprung. But regulators blocked the deal.

Now he is getting a nice consolation prize. Germany’s broadband market is still relatively immature, with 58 percent penetration, yet offers operating margins north of 40 percent.

The purchase price, including 1.5 billion euros of debt, is 7.4 times forecast earnings before interest, tax, depreciation and amortization. The multiple falls to 6.6 times if the planned synergies come through.

It is an unremarkable price — neatly in line with Telenet, the Belgian operator in which Liberty owns a 50 percent stake, and whose earnings margins are roughly equal to Unitymedia’s. That suggests Mr. Malone is paying little in the way of a takeover premium.

But BC Partners and Apollo have not exactly been robbed. They will have a clean break. Without Mr. Malone, they would have had to go through with an initial public offering of the business. That would have required the usual offering discount, and would have delivered only a partial exit.

Unitymedia may be a somewhat special case. Few private equity assets can claim to have so little leverage and offer so much growth.

But Liberty’s swoop suggests the merger market may have reached that moment deal makers long for in a downturn, when prices recover enough that sellers are prepared to sell, but not so much that buyers are reluctant to buy.

That moment may be short-lived.

Freedom’s Twist

Freedom Communications, the bankrupt publisher of The Orange County Register, has proposed a plan that would increase the interests of equity holders — including the heirs of its libertarian founder R payday loan company. C. Hoiles — over those of some creditors.

The move would not be just a distortion of the bankruptcy process. It would also seem to go against the tenets of personal freedom and responsibility on which Mr. Hoiles founded Freedom. The plan has been endorsed by the lead secured creditor, JPMorgan, but has been deemed “immoral and wicked” by Alan Bell, a former chief executive whose pension makes him an unsecured creditor pitted against his former employer.

The unsecured bunch, which includes pensioners owed up to $100 million, would get just $5 million under the restructuring plan put forward by Freedom. That looks to be less than equity holders, including the Hoiles family and Blackstone and Providence Equity Partners, would walk away with.

Secured lenders always make out best. They will receive 98 percent of Freedom’s equity when it exits from bankruptcy, which the plan says is worth from $90 million to $190 million. They will also receive a new $325 million loan, a package worth up to two-thirds of the $770 million they lent Freedom.

What’s surprising in the Freedom case is that the current equity holders are set to receive the remaining stock, worth about $3 million at the midpoint of the range. They will also get warrants that entitle them to buy up to 10 percent of the company. Making certain simplifying assumptions, the warrants should theoretically be worth at least $5 million. Added up, that’s more than what’s going to unsecured creditors, which normally are right behind secured lenders in dividing the spoils of bust companies.

It is hard to see why Freedom’s equity holders should get anything at all. It may be the result of something in its lending agreements, though the company and its lawyers won’t say. But in a free-market system — the kind that R. C. Hoiles advocated — a creditor should not be treated so poorly relative to a risk-taking stockholder. JOHN FOLEY and LAUREN SILVA LAUGHLIN

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

Breakingviews.com: A Sweet Union for Liberty Global

U.S. dollar falls as Eurozone exits recession

NEW YORK, Nov. 13 (Xinhua) -- The U.S. dollar fell against major currencies on Friday as reports of Eurozone economic growth boosted investors' risk appetite.

Gross Domestic Product (GDP) increased by 0.4 percent in the euro area, and by 0.2 percent in the 27-nation European Union (EU) during the third quarter of 2009, according to Eurostat, the Statistical Office of the European Communities.

The 0.4-percent growth, slightly lower than expected, showed that the Eurozone walked out of its first recession since the single currency was unveiled in 1999. The two largest economies in the Eurozone, German and France, grew by 0.7 percent and 0.3 percent respectively in the third quarter.

The Eurozone slipped into recession in the third quarter of 2008 with two consecutive quarters of negative growth. Its GDP contracted by a massive 2.5 percent in the first quarter of 2009 before showing signs of bottoming out.

Eurostat is yet to release a component breakdown of euro-zone GDP in the third quarter of 2009.

It is evident from all of the countries that have released data that a marked increase in exports contributed significantly to the return to growth, said analysts of IHS Global Insight. Consumer spending likely saw little or no growth across the euro zone in the third quarter personal business card.

Recovery in the euro zone could well lose momentum for a time in 2010 before growth starts to gradually pick up again, according to IHS Global Insight.

U.S. trade deficit widened by 18.2 percent to 36.5 billion dollars in September, with exports up 2.9 percent and imports rising 5.8 percent, the U.S. Commerce Department reported.

The trade figures signal a strong rebound in global trade, but are also a reminder that rising imports will be a drag on the U.S. recovery, analysts said.

The Nomura Economic Research estimated that U.S. GDP growth in the third quarter would be revised to 3.0 percent, down from 3.5 percent initially reported.

The euro bought 1.4893 dollars in late New York trading compared with 1.4866 dollars it bought late Thursday. The British pound rose to 1.6672 dollars from 1.6570 dollars.

The dollar fell to 1.0517 Canadian dollars from 1.0546 Canadian dollars, and fell to 1.0135 Swiss francs from 1.0162 Swiss francs. It fell to 89.63 Japanese yen from 90.32 Japanese yen. Special Report: Global Financial Crisis

U.S. dollar falls as Eurozone exits recession

Feds Evans: Policy to remain accommodative into 2010

PARIS (Reuters) – Chicago Federal Reserve President Charles Evans said on Friday that U.S. monetary policy was likely to remain accommodative well into next year, but that the tools for shifting gear were being explored.

With inflation "underrunning" and the economy underperforming, interest rates would remain low for an extended period of time as the U.S. Federal Reserve monitored developments, Evans told reporters.

But U.S. policy-makers were already exploring ways to eventually shift to more restrictive policy when the time was right, he said, adding that members of the U.S. central bank's Federal Open Market Committee still had different perspectives.

"Because we have a wide variety of tools, I am pretty confident that we can shift to a more restrictive policy when the time is appropriate. Presumably that is an extended period beyond where we are now," said Evans, a voting member of the FOMC in 2009.

"At the moment we are making sure that we understand the tools that are available to us and the pros and the cons of all of them. We could find that some of them dominate others."

Such tools could involve interest on excess reserves as a way of tightening policy and perhaps simultaneously reducing the Fed's swollen balance sheet through such actions as reverse repurchases, he said.

"There are a variety of things that we could do. Of course we could sell assets...we can always do that, we have done that in the past," he said.

NEAR ZERO

There were no clear preferences on how to proceed given that opinions among committee members differed, he said quick payday loans.

"In some sense, my own view is that if you are able to move from a highly accommodative policy to one that is simply accommodative because that is the right trajectory, any configuration of those actions would be equally OK," he said.

The Fed cut the benchmark the federal funds rate to near zero in December and put in place a vast array of emergency liquidity facilities in an effort to combat the worst financial crisis and recession since the 1930s.

As part of its efforts, it has bought long-term government and mortgage-related debt to try to drive down borrowing costs.

Last week, St. Louis Federal Reserve Bank President James Bullard told the Financial Times that the Fed could remove some of the extraordinary support it has extended to the U.S. economy once the recovery looks solid.

Evans said in Paris that core inflation in the United States was likely to run at a relatively modest rate of around 1.5 percent over the coming two years.

"I think that policy is going to be highly accommodative as it is now for quite some period of time," he added.

The unemployment rate in the United States was likely to rise over the coming two quarters, he said.

The U.S. economy was likely to grow by around three percent over the next 18 months and was expected to stage a modest recovery following a "dire recession," he added.

(Reporting by Tamora Vidaillet; editing by Crispian Balmer and Chizu Nomiyama)

Fed's Evans: Policy to remain accommodative into 2010

Hot News: Stocks fall as stronger dollar weighs

Stocks fall as stronger dollar weighs

NEW YORK (Reuters) – U.S. stocks fell on Thursday as a stronger dollar weighed on commodity-linked shares and a guarded outlook from Wal-Mart Stores Inc (WMT.N) led to worries about the strength of consumer spending.

The market declined from 13-month highs hit on Wednesday and threatened to snap a six-day streak of higher closes by the Dow industrials.

The dollar rose against other major currencies (.DXY), bolstered by a report showing initial U.S. weekly jobless claims had fallen to their lowest level since January.

The greenback's rise weighed on dollar-denominated commodities, including crude oil futures, which fell 2.7 percent. The S&P integrated oil and gas index (.GSPOILI) fell 1.4 percent, with shares of Chevron Corp (CVX.N), Hess Corp (HES.N) and Occidental Petroleum Corp (OXY.N) down more than 1 percent.

"As the S&P 500 has gone above 1,100, it has had a hard time holding on to gains," said Quincy Krosby, market strategist at Prudential Financial in Shelton, Connecticut.

"In order to get to the next level up, it does need a strong catalyst, and most of the time the stronger dollar has been a negative for the market."

The Dow Jones industrial average (.DJI) lost 25 points, or 0.58 percent, to 10,232.01. The Standard & Poor's 500 Index (.SPX) dropped 7.35 points, or 0.67 percent, to 1,091 pay day loans.16. The Nasdaq Composite Index (.IXIC) fell 9.90 points, or 0.46 percent, to 2,157.00.

Wal-Mart, the world's largest retailer, reported a higher quarterly profit and its shares rose 0.6 percent to $53.30, but it forecast earnings for the key holiday quarter that could miss Wall Street's consensus estimate.

Concern about consumer spending weighed on the S&P retail index (.RLX), which fell 0.4 percent.

Advance Micro Systems Inc (AMD.N) rose 22.6 percent to $6.52 and was the most traded stock on the New York Stock Exchange after it agreed with fellow chipmaker Intel Corp (INTC.O) to settle all outstanding legal disputes. Intel will pay AMD $1.25 billion as part of the settlement.

Network equipment maker 3Com Corp (COMS.O) gained 31.6 percent to $7.49 after Hewlett-Packard Co (HPQ.N) said on Wednesday it has agreed to buy the company for $2.7 billion. Hewlett-Packard shed 0.6 percent to $49.72.

Shares of Brocade Communications Systems Inc (BRCD.O) fell 13.3 percent to $8.02 after a brokerage questioned the company's ability to gain market share after news of the deal between Hewlett-Packard and 3Com.

(Editing by Kenneth Barry)

Stocks fall as stronger dollar weighs

Sub-Saharan Africa Econ Growth Forecast Drops To 1.3%

The fourth African Economic Conference is underway in Addis Ababa against a backdrop of declining growth across the continent. Forecasts for economic growth in sub-Saharan Africa this year have fallen well below the critical two percent mark.

Even though the global economic crisis is showing signs of subsiding, economists are continuing to lower expectations for growth in Africa.

As the annual conference began Wednesday, Abdul Kamara of the African Development Bank said forecasts of less than two percent growth indicate declining incomes, with millions of people slipping back into extreme poverty. "The crisis hit at a time when the continent was enjoying an average of six percent growth, and when the crisis hit we did estimates in November for growth of the continent overall, and at that time we were projecting three percent growth, and then in May we revised this projection to 2.3 percent growth. And currently as I speak, we have projections that range between about two percent growth for the continent as a whole, but if you look Sub-Saharan Africa, the growth figure is even below that. It is about 1.3 percent."

Kamara says the good news is that 2010 should bring the beginning of a turnaround that will bring with it many growth opportunities, if Africa is ready to seize them. "So 2010 would be a year we would see demand would start coming up paydayloans... but it would critically depend on two factors, what is happening in the developed world in terms of how economies are going to pick up and how that would translate into demand for our products. But more importantly what we Africans would do in the field of policy, diversification, but more importantly in the area of responding to opportunities that would be generated at the conclusion of this crisis."

This fourth annual conference will also take stock of the increasing recognition that while most development aid goes to the public sector, it is the private sector that is the primary engine of economic growth.

Among featured speakers will be William Easterly, the author of several provocative books that question whether development aid donors get their money's worth. The New York University professor argues that the real saviors of Africa are not aid agencies or government programs, but the people of Africa.

The conference is sponsored by the African Development Bank and the U.N. Economic Commission for Africa. This year's meeting is expected to draw 400 academics and policy makers, as well as public and private sector operators and lending institutions.

Sub-Saharan Africa Econ Growth Forecast Drops To 1.3%

Housing plan reaches 1 in 5 borrowers

WASHINGTON – After a slow start, the Obama administration's mortgage relief program has reached one in five eligible homeowners, a government report says.

More than 650,000 borrowers, or 20 percent of those eligible, have signed up for trials lasting up to five months, the Treasury Department said Tuesday. The modifications reduce monthly payments to more affordable levels.

Launched with great fanfare in March, the plan got off to a weak start, but now nearly 920,000 loan modification offers have been sent to more than 3.2 million eligible homeowners. That works out to 29 percent, up from 15 percent at the end of July.

In California, about 130,000 homeowners have been enrolled in the "Making Home Affordable" loan modification plan, which President Barack Obama unveiled in February. That works out to about 19 percent of homeowners who were either two payments behind or in foreclosure at the end of last month, according to Treasury Department data.

"We are reaching all the places that really got decimated," said Michael Barr, an assistant Treasury secretary. "The other basic story is we're reaching borrowers at a scale that has not been done by any other modification program."

Two other hard-hit states, Arizona and Nevada had similar rates of assistance as California, at 22 percent and 18 percent respectively. Florida, however, was much lower, at 12 percent, possibly because of high numbers of investor-owned properties that don't qualify for the program.

The $50 billion plan got off to a slow start, but government officials say they are pressing the industry hard to improve their performance payday loan lenders. Still, many housing advocates have been disappointed with the plan's progress and say that getting a loan modification is still a battle.

And economists doubt the Obama administration will reach its broad goal of helping 3 to 4 million borrowers within three years.

Most of the borrowers enrolled so far have been signed up for preliminary trial modifications for up to five months. To make the change permanent, though, they must complete a big stack of paperwork and show they can make their payments on time. The government expects to release details in the coming weeks on permanent modifications.

"We're seeing some early indications that the servicers haven't done enough to get all the documents in," Barr said.

Traditionally mortgage servicers were low-cost operations, with workers in collections departments trying to wring payments from tardy borrowers. Those workers, and thousands of new ones, are now engaged in a far different job — figuring out whether thousands of borrowers qualify for help or not.

Banks, for their part, have been slow to adapt to an unfamiliar climate of sinking home prices and soaring unemployment.

"Even as foreclosures and delinquencies were soaring, everybody underestimated how ugly the housing picture was," said Thomas Lawler, an independent housing economist in Virginia.

Housing plan reaches 1 in 5 borrowers

Burberry Looks Online for Ways to Gain Customers

LONDON — Angela Ahrendts still remembers when she bought her first Burberry trench coat. She was 21 years old, had just finished her studies in Indiana and was looking for a smart but warm coat to wear for her first job at a small men’s wear firm in New York.

Those raincoats, a 95-year-old fashion icon, remain Burberry’s best-selling item, and Ms. Ahrendts — who now runs the company — is hoping to move the quintessentially British brand into the age of the Internet to attract a new generation of shoppers.

On Monday, Burberry introduced a social networking site, artofthetrench.com, to encourage people to share their own trench coat stories. It is the latest step by Ms. Ahrendts and her creative director, Christopher Bailey, to build on the brand’s British heritage and trademark plaid with a more modern twist.

“It’s our differentiator,” Ms. Ahrendts said. “It’s not so different from what competitors do. Maybe one was born from shoes and another from luggage; we come from a coat. It’s our job to keep that category hot and cool and relevant for all ages.”

The step reflects a broader move by luxury goods companies, which have generally failed to figure out how to sell their wares online. Indeed, many have shunned the Web, seeing it as mostly a place for bargain hunters to search for knock-offs or counterfeits.

As highly affluent, but aging, customers in developed countries cut back on their purchases of luxury goods, the Web represents the prospect for growth.

Salvatore Ferragamo announced plans for an online store in October, following its Italian rivals Prada and Bulgari to the Net. Fabergé, creator of the legendary Imperial Easter eggs, started selling its new jewelry collection almost exclusively on the Web in September.

Ms. Ahrendts, who is tall, charismatic and often dresses head to toe in Burberry, used to work at Donna Karan and is bringing an American touch to the company based in London.

Burberry has been on the upswing for much of the decade, but since taking over three years ago, Ms. Ahrendts, 49, has cut $82 million in costs, expanded in the United States and Asia, and opened separate children’s fashion stores.

She also added more shoes and handbags, including the $6,200 “Beaton” bag worn by Victoria Beckham, and took greater control of pricing by opening more Burberry stores.

As a result, Burberry has done better than most of its competitors in steering through the Great Recession. Sales rose 4.6 percent to £343 million, or $568 million, in the three months to the end of September, beating analyst expectations. The price of its shares has doubled during the past year.

For years, Burberry was seen as a limited brand, a potential takeover target for the likes of Coach, Richemont and LVMH Moët Hennessy Louis Vuitton. But the increase in its share price during the past year has acted as a good defense.

Today, Burberry faces twin challenges: to maintain momentum amid a difficult economic recovery, and to keep the expansion drive from diluting the brand.

“The biggest thing that keeps me up at night is how can we continue to evolve this organization in order to stay ahead of the curve,” Ms. Ahrendts said during an interview at the company headquarters last month. “My job is to always look two to three years ahead and look round the corner and see what’s coming.”

The recession split luxury goods makers into different camps. Those more reliant on sales from jewelry and watches, like Bulgari, were hit harder than those selling clothes and less expensive or less ostentatious items. At the same time, companies that depended more on department stores suffered most of all, largely because they had less control over pricing and inventories.

After a roughly 8 percent decline this year, the $226 billion global market for luxury goods is expected to grow again next year as younger consumers and working women replace retiring baby boomers as the dominant consumer group, according to consulting firm Bain & Company loans until payday.

That’s one of the main reasons Burberry is now focusing on the Internet. Ms. Ahrendts said she gets a lot of inspiration from her three children, who spend time surfing the Web and buy most of their clothes online.

Ms. Ahrendts said she is proud that Burberry has more than 699,000 Facebook fans. The company, founded as a maker of outdoor wear in 1856 by the British draper’s apprentice, Thomas Burberry, is also attracting customers via Twitter and Youtube.

Burberry gets about two-thirds of its revenue from clothing. Ms. Ahrendts has sharply reduced Burberry’s reliance on department stores; this year, direct retail overtook wholesale as the company’s biggest sales channel. Burberry, which produces the trench coat in Britain, also benefited from a weaker pound that attracted euro-wielding tourists from mainland Europe.

But Burberry’s major dependence on tourists and the benefit it has derived lately from a favorable exchange rate worries some analysts.

To strengthen the brand, Ms. Ahrendts divided Burberry’s clothing lines more clearly. There’s Prorsum, which includes high-end couture and evening wear worn by celebrities like Gwyneth Paltrow and Liv Tyler. The classic Burberry London clothes are designed to be office and everyday wear, while Burberry Brit offers a more casual weekend look.

The separate children’s line was almost too successful for its own good: Burberry received so much demand this year that it ran into production and shipping problems.

Indeed, the trickiest balancing act is to manage further growth.

“They’ve got the balance sheet to expand when others in the industry can’t, which means they can really benefit once the market recovers,” said Katharine Wynne, an analyst at Investec in London. “But you have to make sure you keep that design heritage and retain that exclusivity.”

Its trench coat — originally designed for the British army in 1914 and later associated with Audrey Hepburn’s character in “Breakfast at Tiffany’s” and Humphrey Bogart’s in “Casablanca” — has come a long way since then.

Thanks to Mr. Bailey, the 38-year old British designer who also worked with Ms. Ahrendts at Donna Karan, there are now trench evening and mini dresses.

In Burberry’s new headquarters along the Thames, its heritage is still visible through the ultra-modern white-brown interior. Ms. Ahrendts recently revived a 108-year old company trademark of an equestrian knight carrying a flag with the words Prorsum — Latin for forward. The image now features prominently in the headquarters’ glass-walled entrance hall.

Inside, a photo of Emma Watson, the young British actress starring in the Harry Potter movies, modeling a $1,300 trench coat covers an entire wall. Next to it, a glass cube showcases a collection of the best-selling trench coat designs over the years.

Seeking to clearly separate Burberry’s different designs, the company is preparing to open its first stand-alone Burberry London and Burberry Brit stores this month, flanking the entrance to the company’s new Manhattan offices on Madison Avenue. It is also in talks with a licensing partner to add a make-up and beauty range next year, and is planning to offer more men’s accessories, such as bags and scarves.

Ms. Ahrendts recently renewed her contract and said she plans to be around for a while. Just like that first trench coat, which she still wears from time to time.

Burberry Looks Online for Ways to Gain Customers

China Offers Big Aid Package to Africa

SHARM EL-SHEIKH, EGYPT — Prime Minister Wen Jiabao of China on Sunday offered Africa $10 billion in concessional loans over the next three years, saying China was a “true and trusted friend” of the continent and its people.

The aid offer was double what was announced by President Hu Jintao at a meeting in Beijing in 2006, as China aims to bolster a relationship that politically goes back decades and is now economically booming, to the discomfort of some in the West.

Mr. Wen brushed aside concerns that China was interested only in Africa’s natural resources to help feed its booming economy. “China’s support for Africa’s development is real and solid and, in the future, no matter what turbulence the world undergoes, our friendship with the people of Africa will not change,” he said at this resort town.

In addition to the loans, Mr. Wen said China would help Africa develop clean energy and cope with climate change, encourage Chinese financial institutions to lend to smaller African firms and expand African products’ market access.

He also called for greater international help for the continent.

“Africa’s development is an essential part of achieving global development, and as the sincere and dependable friend of Africa, China deeply feels the difficulties and challenges faced by Africa,” Mr. Wen said. “China calls on the international community to enhance its sense of urgency and support Africa’s development in an even truer and more effective way.”

Blossoming trade and business ties have attracted Western criticism that Beijing is only interested in the resources of Africa, while Chinese commentators respond that envious Europeans still treat the continent like a colony.

China’s friendship with Africa dates from the 1950s, when Beijing backed some of the liberation movements fighting colonial rule no fax cash advance. Trade has risen sharply in the past decade, driven by China’s hunger for resources to power its economic boom and African demand for cheap Chinese products.

This has not been without its critics, who say China supports governments with dubious human rights practices as a means to get the resources it needs. The summit meeting was attended by the presidents of Zimbabwe and Sudan, both of which are under fire for their dismal human rights records.

Mr. Wen repeated that China would not interfere in the internal politics of any African country: “The Chinese government and people have always respected the autonomous right of the African people to choose their own social systems. China’s support and aid for Africa has never and will never attach any political conditions.”

Some Chinese commentators have said the West continues to view Africa as a series of colonies. “The West is envious of China and Africa drawing closer,” the Global Times, published by the People’s Daily, the Communist Party mouthpiece, wrote Tuesday.

“Europeans view Africa as their own backyard,” the newspaper quoted an Africa expert, Xu Weizhong, as saying. “Of course they feel uncomfortable about the arrival of the Chinese.”

Some Africans welcome China’s different approach. “China’s policy is based on mutual development. Few Western countries have a foreign policy like this. Most are about telling Africans what to do,” said Kwaku Atuahene-Gima, executive director of the Africa program at the China Europe International Business School in Shanghai.

Reuters

China Offers Big Aid Package to Africa

Chinas Premier Pledges $10 billion in Loans to Africa

Chinese Premier Wen Jiabao addresses the Arab League in Cairo, 7 Nov. 2009China's Premier Wen Jiabao has pledged $10 billion in loans to African countries over the next three years.Mr. Wen is in Cairo, where the two-day Forum on China-Africa Cooperation began Sunday in the Red Sea resort, Sharm el-Sheikh.The Chinese premier presented a plan to cancel the debts of some of Africa's poorest countries.  He also vowed to help set up 100 new clean energy projects in the continent.Leaders of 49 African countries are attending the summit to discuss economic and political cooperation with China.Chinese companies have invested billions of dollars in Africa to feed China's appetite for raw materials.  Trade between China and the continent has grown significantly over the past five years personal loans.   On Saturday, Mr. Wen held talks with Egyptian President Hosni Mubarak, where they discussed ways to improve bilateral relations.The Chinese leader also delivered a speech at the Arab League headquarters in Cairo.  He spoke about ways to promote the Middle East peace process and to further enhance friendly relations between China and the Arab world. The first China-Africa summit was held in 2006.

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

China's Premier Pledges $10 billion in Loans to Africa

U.S. jobless rate surges to 10.2 percent

WASHINGTON (Reuters) – The U.S. jobless rate unexpectedly jumped to a 26-1/2-year high of 10.2 percent last month, adding to pressure on the Obama administration to do more to tackle unemployment even as signs of recovery mount.

The Labor Department said Friday that employers cut 190,000 jobs in October, more than the 175,000 markets had expected but fewer than the 219,000 lost in September.

Taking some of the sting out of the report, job losses for August and September were revised to show 91,000 fewer jobs were lost than previously reported.

While that hinted at some improvement, economists had looked for the jobless rate to rise to 9.9 percent from September's 9.8 percent. A wider gauge of labor-market slack that includes unemployed Americans who have given up looking for work hit a record 17.5 percent.

Speaking at the White House, President Barack Obama said the administration was considering infrastructure investments and business tax cuts to aid the economy's recovery.

"I can promise you that I won't let up until the Americans who want to find work can find work and all Americans can earn enough to raise their families and keep their businesses open," he said.

The data initially pushed U.S. stocks down, but they erased losses to trade roughly flat at midday. U.S. government bond prices rose as traders saw the data suggesting a prolonged period of low interest rates.

"Unfortunately, the problem is becoming deeper and more protracted," Mohamed El-Erian, chief executive of bond giant Pacific Investment Management told Reuters.

"It's not just the increase in the headline number," he said. "It's also about the longer-term nature of unemployment, the increase in underemployment, and the prospect for only a very gradual recovery."

While Obama sees job creation as his top priority, the scope for further steps to lift the economy is limited by record budget deficits.

Mounting unemployment could pose problems for the Democrats who control Congress as they head into elections in November 2010. This week, Republicans wrested control of two state governorships away from Democrats in races where the weak economy figured prominently.

"President Obama promised jobs during his campaign for president, and the elections in Virginia and New Jersey on Tuesday were a clear referendum on his failure to deliver on this promise," Republican National Committee Chairman Michael Steele said in a statement reacting to the report.

ECONOMY GROWING, BUT LABOR MARKET LAGS

The U.S. economy grew at a 3.5 percent annual rate in the third quarter, likely ending the most painful recession in 70 years, but the jobs reports suggested employers are wary of the prospects for a strong, sustained recovery no fax needed payday loans.

There was also dismal news on the labor front in neighboring Canada, where the economy unexpectedly lost 43,200 jobs last month after two months of gains, pushing the jobless rate up to 8.6 percent from 8.4 percent.

Wednesday, the U.S. Federal Reserve held overnight interest rates close to zero and said it expected to keep them low for an "extended period."

Rate futures prices Friday showed the implied chances of a rate hike by mid-2010 slipped to about 66 percent from 84 percent late Thursday.

"I don't know how in the heck the Fed could justify tightening policy with the unemployment rate over 10 percent unless we have an imminent inflation danger," said Keith Hembre, chief economist at First American Funds in Minneapolis.

The U.S. Labor Department conducts two separate surveys.

Economists generally place more faith in the survey of employers, which found the loss of 190,000 jobs.

The unemployment rate, however, is based on a smaller household survey. That survey showed 589,000 jobs were lost, while few Americans left the labor force, leading to the big jump in the jobless rate.

Employer payrolls have declined for 22 consecutive months now and 7.3 million people have lost work since December 2007, when the recession started. However, the pace of layoffs has slowed sharply from early this year.

Job losses in October were widespread across almost all sectors, with education and health services and professional and business services bucking the trend.

Manufacturing employment fell 61,000 last month, while construction industries payrolls dropped 62,000. The service-providing sector cut 61,000 workers.

Offering a small glimmer of hope, temporary help jobs increased by 34,000. It was the biggest gain since the economy fell into recession and suggested companies needed extra hands even if they were not prepared to hire permanently.

The average workweek, which gives clues on when firms will start hiring, was steady at 33 hours. Average hourly earnings rose to $18.72 from $18.67 in September.

A separate report from the Commerce Department showed wholesalers reduced their stocks of unsold goods for the 13th straight month in September. Economists expect a rebuilding of depleted inventories to help support recovery.

(Additional reporting by Lisa Lambert and Alister Bull in Washington, Richard Leong and Jennifer Ablan in New York; Editing by Andrea Ricci)

U.S. jobless rate surges to 10.2 percent

FTSE 100 ends up on US jobs data

LONDON (AFP) – London shares ended higher on Thursday powered by positive US employment data.

The FTSE 100 index ended up 0.35 percent to close at 5,125.64.

RBS was the most traded stock, seeing 110 million units change hands, closely followed by Lloyds Banking Group (LBG), which saw 105 million shares switch owners.

Amec was top of the leader board, gaining 29.5 pence -- or 3.58 percent -- to finish at 852.5,followed by Autonomy shares gaining 45 pence -- or 3.34 percent -- to stand at 1,394.

The biggest casualties of the day were Cable and Wireless, which shed 9 payday loan.1 pence -- or 6.15 percent -- to finish at 138.9, and Whitbread Plc, which gave up 55 pence -- or 4.27 percent -- to end at 1,234.

Meanwhile, sterling edged up against the dollar and the euro.

The pound was worth $1.6563 at 15:58, up from $1.6553 at Wednesday's close, while it rose to 1.1141 euros from 1.1138 over the same period.

FTSE 100 ends up on US jobs data

Stocks rise on solid data; investors eye Fed

NEW YORK (Reuters) – U.S. stocks climbed on Wednesday on positive data about the services sector and employment, while investors awaited the Fed's assessment of the economic recovery.

Gains were broad-based, with the healthcare sector jumping on hopes the Obama administration's healthcare reforms may be delayed after Republicans scored some key election victories.

All eyes will be on the statement from the Federal Open Market Committee, due at about 2:15 p.m. EST (1915 GMT). The Fed is expected to keep U.S. benchmark interest rates near zero, and reaffirm that policies supporting the economy will stay in place for some time, even as signs of recovery mount.

"The market doesn't anticipate any big changes, but there's been a pause in the upward momentum in the last hour or so on concerns that there might be a material change in the extended period phrase ... the Fed may suggest to the market or hint at when they will be raising rates," said Jeff Kleintop, chief market strategist at LPL Financial in Boston.

The Dow Jones industrial average (.DJI) was up 121.29 points, or 1.24 percent, at 9,893.20. The Standard & Poor's 500 Index (.SPX) was up 10 best payday advance.65 points, or 1.02 percent, at 1,056.06. The Nasdaq Composite Index (.IXIC) was up 14.34 points, or 0.70 percent, at 2,071.66.

All three indexes were off slightly from session highs.

Data showed the services sector grew in October for a second straight month, while U.S. companies cut jobs last month at the slowest pace in more than a year.

Among gainers, Merck & Co Inc (MRK.N) was up 5.9 percent at $32.48, and Pfizer Inc (PFE.N) rose 1.8 percent to $17.03 as investors bet that U.S. President Barack Obama's healthcare plans would be slowed.

The Morgan Stanley Healthcare Payor index (.HMO) rose 5.4 percent, and the S&P healthcare index (.GSPA) added 1.8 percent.

Shares of Intel Corp (INTC.O) also gained 1.9 percent to $18.70 despite an antitrust lawsuit filed by the New York attorney general's office against the company, alleging Intel used payoffs, coercion and retribution to maintain monopoly power in microprocessors.

(Reporting by Angela Moon, Editing by Jan Paschal)

Stocks rise on solid data; investors eye Fed

On the Road: By Any Other Name, You May Not Fly

TWO weeks ago, I suggested here that I would rather get whacked upside the head with a baseball bat than have to visit either my state motor vehicle office or the passport office to make sure that the name on my driver’s license and passport was exactly the same on all my travel documents.

Michael Lichtenstein, an information technology executive, took issue with that. “Myself, I’d say a golf club instead of a baseball bat,” he wrote me. Mr. Lichtenstein is one of many people in the corporate world now working hard to ensure that come next year, when a new Transportation Security Administration program called Secure Flight is fully in effect, travelers won’t get delayed at airports because of variations in the way their names appear on boarding passes and their IDs.

Actually, as he pointed out, the program is pretty much in effect now. Most airlines and online booking sites already require that travelers fully comply with provisions of Secure Flight. Reservations must reflect the exact name as the ID to be used (John J. Smith, for instance, can’t appear on a boarding pass when the ID says John James Smith.)

The T.S.A. will start enforcing this requirement next year, and has said it will allow some flexibility for minor name variations in the start-up phase before everything must match up precisely. But right now, companies and travelers are running into some hurdles, even as they scramble to comply.

Take the hyphen. “There appears to be some kind of universal airline prohibition against hyphens,” Louise K. Davidson-Schmich, wrote to me. She said her name routinely assumed various odd configurations on boarding passes, none of which exactly matched her ID.

Michael Hernandez-Stern made a similar complaint. “Most airlines will not even let me enter my last name,” he told me. “Either their Web sites do not accept hyphens” or cut off the name entirely at 16 characters.

Even people with common first names can run into the space challenge. “It has always bothered me when an organization can’t be bothered to provide enough space,” wrote Chris Borstel, who bristles at seeing his proper name, Christopher, appear as “the Frenchified ‘Christophe.’ ”

Larry Nutson, whose proper name is L. Lawrence Nutson, has another concern. “The first ‘L’ does not stand for any name,” he said free business cards. Some computers call him “LLawrence,” and some call him plain old “L.” Until the data entry bugs get worked out, he wrote, “I may need to carry both my passport and driver’s license to try to minimize problems.”

Likewise, Rabbi Gary M. Bretton-Granatoor is perplexed by airline accounts that insist his name is “G Brettongranatoor.”

Apostrophes are another issue. “My Irish birth certificate shows that I was born Patrick O’Hare and my passport shows an identical name,” Patrick O’Hare wrote. “However, when trying to purchase an airline ticket online, the apostrophe is always rejected,” he added. A security screener — at O’Hare airport, no less — “pointed this out to me and suggested that I could be denied boarding, but he offered no solution. So what should we Irish, afflicted with apostrophes in our names, do to avoid this problem?” he asked.

Then there are those whose full names are long. Airlines, credit card companies and others “systematically cut the name, giving me and my family really funny names,” wrote Fernando Enriquez de Salamanca y Celada, who is not at all optimistic that this new system will work smoothly.

Airlines, government agencies, credit card companies and others all have different systems for name entry, though with one thing in common. All are vulnerable to typing errors by the person entering the information. “I manage well-meaning account manager folks in an Internet environment where awareness of data entry mistakes is probably higher than most places,” wrote Mark Hezinger. “You might want to interview folks in the credit bureau industry, an industry highly motivated to get it right, and ask them about data entry mistakes.”

Even people with short, easy-as-pie names can have problems. Alan Fern wrote to describe how he and his wife, Lois, have “tried in vain” so far to get their names on various airline accounts to match their driver’s license IDs.

“This process must be simplified,” Mr. Fern said.

E-mail: jsharkey@nytimes.com

On the Road: By Any Other Name, You May Not Fly

Hot News: Human Genome 2nd lupus trial succeeds

Excitement Fills New Chinese Exchange as Upstarts Sell Shares

SHANGHAI — The highly anticipated opening of China’s new Nasdaq-style stock exchange last Friday is already being seen as a watershed moment for the country’s capital markets, providing new opportunities for Chinese investors and an alternative source of financing for upstart companies.

Investors went on a wild buying spree during the first day of trading Friday on the Growth Enterprise Market, or GEM, sending the shares of some companies soaring as much as 210 percent.

“This is potentially a major game changer in China’s high-tech industry,” said Yu Zhou, a professor at Vassar College in Poughkeepsie, N.Y. “For about 10 years, the biggest problem for China’s innovative companies was finance. You know it is very hard for them to get loans from state-owned banks.”

The buying was so feverish that regulators, trying to calm the market, temporarily suspended trading in the shares of all 28 newly listed companies at different points on Friday, and analysts warned about the risks posed by excessive speculation and inflated stock prices.

The first batch of companies listed on the GEM — including film producers, software makers and pharmaceutical companies — raised about $2 billion in their initial public offerings, far more than the companies had hoped.

By the end of trading Friday, the combined market value of the newly listed companies was more than $20 billion, creating fortunes for the founders and investors in those companies.

China is already the world’s biggest market for initial public offerings, and its resurgent economy is flush with capital and investors with a big appetite for risk.

But trading experts have long complained that this country’s market system is seriously flawed, partly because of a misallocation of capital.

State-run banks lend primarily to state-owned companies, which tend to be inefficient. Listings on the Shanghai and Shenzhen stock exchanges are dominated by government enterprises. Young private Chinese companies generally list their shares overseas, in Hong Kong or on the Nasdaq or New York Stock Exchange, because there are few opportunities for stock listings inside the country.

But the government hopes to change that with the creation of the GEM, which is based in the southern boomtown of Shenzhen. The government is seeking to create a more efficient capital market system, one that would steer investment capital to small and midsize private enterprises — companies that can help reshape the economy through technology and innovation, rather than low-price exports.

Although the GEM, which is also known here as ChiNext, is tiny when compared with the Shanghai and Hong Kong stock exchanges, regulators hope it will eventually compete with Nasdaq and entice more Chinese companies to list with GEM.

The GEM is also expected to give a boost to China’s venture capital and private equity markets, which have been hampered by a system that until now has not provided wealthy investors with what industry insiders call an exit strategy, or a way to eventually cash out of their investments in small companies through a domestic stock market low fee pay day loans.

There are big hurdles to creating a stock exchange similar to Nasdaq, which includes companies like Microsoft, Intel and Google. For instance, volatile stock prices and high valuations could hurt the new bourse’s credibility with entrepreneurs and investors.

Chinese investors are known to speculate, favoring momentum buying and selling rather than the underlying fundamentals of a company, analysts say. Indeed, the casinolike nature of the Shanghai and existing Shenzhen exchanges, combined with government intervention, have added to the volatility of the Chinese markets.

Analysts warn that the GEM could also be prone to similar speculative frenzies.

Andy Xie, an economist who formerly worked at Morgan Stanley, is already calling the GEM a “V.I.P. table on top of a big casino.”

Chang Chun, an expert on financial markets at the China Europe International Business School in Shanghai, said that China needed a market to serve start-ups, but “the issue is the maturity of Chinese investors.”

Before trading opened Friday, he said, regulators created rules to guard against excessive volatility and even warned investors that they would crack down on aggressive speculation. Still, Friday’s opening — with 28 companies beginning to trade at once — was marked by wild price swings.

One cause of concern was the huge valuations of the first batch of stocks listed Friday.

The average GEM-listed company has a price-to-earnings ratio of about 100 — meaning investors are paying about $100 for every $1 of 2008 earnings. By comparison, the Standard & Poor’s 500-stock index of big American companies trades at closer to 20 times earnings.

GEM stocks are also priced far above Shanghai stocks, which have long been considered inflated by United States standards.

Still, hundreds of Chinese companies are eagerly awaiting their turn to list on the GEM, and many analysts say the exchange will fill an important need: directing financing toward smaller start-ups that help rebalance economic growth. Ms. Zhou at Vassar said she had heard that there were over 1,000 companies in Beijing’s high-tech district alone that met the requirements to list shares on the GEM exchange.

Analysts say many more start-ups will be eager to list after seeing the riches made by the first group of companies to go public on the GEM.

For instance, Wang Zhongjun and his brother Wang Zhonglei are the founders of Beijing-based Huayi Brothers Media, one of the country’s leading film producers. Shares in their company jumped 148 percent Friday, for a valuation of about $1.7 billion.

Excitement Fills New Chinese Exchange as Upstarts Sell Shares