Obama selects Yellen as No. 2 at Federal Reserve

WASHINGTON – Putting a bigger stamp on the Federal Reserve, President Barack Obama on Thursday chose Janet Yellen as vice chairwoman of the central bank and filled two other vacancies on the board, which has enormous power over Americans' pocketbooks.

The nominations are subject to Senate approval. If the Senate confirms all three nominees, Obama will have appointed five of the seven members of the Federal Reserve Board.

His moves come as the Fed, whose decisions influence economic activity, employment and inflation, is facing political and economic challenges.

The Fed is steering the economy out of the worst recession since the 1930s, and legislation to overhaul the financial system would eliminate some of the Fed's authority while giving it new responsibilities. Some lawmakers think the Fed overstepped its authority by bailing out some big financial firms during the 2008 financial crisis.

Fed interest rate decisions affect the rates consumers pay on home mortgages and other consumer and business loans. On Wednesday, the Fed ended a two-day meeting by sticking to its pledge to hold rates at historic lows for an "extended period" to help energize the recovery.

Yellen is president of the Federal Reserve Bank of San Francisco. As vice chair, the second-highest ranking Fed official, her duties would include helping build support for policy positions staked out by Fed Chairman Ben Bernanke, who has begun a second term.

Obama also nominated Sarah Raskin and Peter Diamond to the Fed board. Raskin is the Maryland commissioner of financial regulation. Diamond is an economist at the Massachusetts Institute of Technology.

"The depth of experience these individuals bring in economic and monetary policy, financial regulation, and consumer protection will make them tremendous assets at the Fed," the president said in a statement payday loan lenders. "I am grateful they have chosen to dedicate their talents to serving the American people."

Yellen was a top adviser to President Bill Clinton and is considered a dove on monetary policy. That means she would be expected to be more concerned about high unemployment, currently holding at 9.7 percent nationally, than about rising inflation.

She would succeed Donald Kohn, who plans to depart at the end of June. Kohn has been a member of the Fed board since 2002.

Yellen and Diamond, who is an authority on Social Security, pensions and taxation, are Ph.D. economists. With Kohn's departure, the Fed would have just one professional economist, Bernanke. Of its other current members, Daniel Tarullo was a Georgetown University law professor, Kevin Warsh brought Wall Street experience and Elizabeth Duke was a banker. Warsh and Duke were nominated by President George W. Bush.

Raskin, who served as counsel to the Senate Banking Committee, would expand the Fed's expertise over financial regulation. That would include consumer issues, which are important to Obama and Congress as they seek to impose tighter oversight on the financial industry.

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AP Economics Writer Jeannine Aversa contributed to this report.

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On the Net:

Federal Reserve: http://www.federalreserve.gov

Obama selects Yellen as No. 2 at Federal Reserve

Deutsche Profit Up by a Third

FRANKFURT — Deutsche Bank, Germany’s largest bank, said Tuesday that its profit rose by a third in the first quarter of 2010, well above expectations, driven by a revival in investment banking.

Pretax profit for the three months to March 31 was €2.8 billion, or $3.7 billion, compared to €1.8 billion a year earlier. Net profit rose to €1.8 billion versus €1.2 billion in the first quarter of 2009.

Analysts surveyed by Bloomberg expected the bank to report net income of €1.33 billion.

“The economic environment clearly stabilized in the first quarter 2010, but is not without some remaining vulnerability,” Josef Ackermann, the Deutsche Bank chief executive, said in a statement.

Net revenues rose 25 percent to €9 billion, after €7.2 billion a year earlier, the bank said. Deutsche Bank’s Tier 1 capital ratio, a measure of financial strength, fell to 11 cash advance payday loan.2 percent from 12.6 percent at the end of 2009. The decline stemmed from Deutsche Bank's acquisition last year of Sal. Oppenheim, an ailing private bank.

Most of the profit came from Deutsche Bank’s Corporate Banking and Securities unit, which boosted revenue 40 percent to €6 billion in the quarter, benefiting from a pickup in the global economy as well as gains in businesses such as bond issuance.

Deutsche Bank came through the financial crisis better than many peers and was profitable throughout 2009. However, as with other banks, profit growth could be hampered by new regulations on derivatives and other risky forms of trading for which banks often serve as intermediaries.

Deutsche Profit Up by a Third

Feds shuts down bank owned by Giannoulias

CHICAGO – Regulators shut down the bank owned by Illinois Treasurer Alexi Giannoulias' family on Friday, setting up an expected but daunting challenge in his bid to keep President Barack Obama's old Senate seat in Democratic hands.

Broadway Bank, which was heavy into real estate loans and lost $75 million last year, had been given until Monday to raise about $85 million in new capital, but the Federal Deposit Insurance Corp. announced at the close of business Friday that Broadway was among four banks, all in Illinois, that had failed.

Giannoulias, 34, worked at the bank as a senior loan officer until he ran for treasurer four years ago. He has tried to take some of the political and public relations sting out of a collapse, acknowledging the bank was likely to fail but blaming the bad economy. He also said it was financially healthy when he left four years ago.

Late Friday, Giannoulias voice broke as he talked about the collapse and vowed to work harder in his bid to win the Senate race. He said he knows first hand the impact that the economy has had on people and businesses in Illinois.

"There was no bailout for my father's bank. It is an incredibly sad and heartbreaking day for me and for my family. This bank has helped thousands of people when no one else would give them a chance," he said.

Giannoulias' family could collect millions in tax refunds by writing off Broadway Bank's losses. Giannoulias said he wouldn't take advantage of a special provision made available in the stimulus bill for writing off businesses losses. He couldn't say if others in his family would, but said his family "will be taking a massive financial loss."

His Republican opponent, U.S. Rep. Mark Kirk, has made the bank's finances a central issue in the Senate race.

"While years of risky lending schemes, hot money investments and loans to organized crime led to today's failure, it's a sad day for Broadway Bank employees who may lose their jobs due to Mr. Giannoulias' reckless business practices," Kirk spokeswoman Kirsten Kukowski said in a statement Friday night.

Regulators planned to work through the night to close out Broadway's books and the branches would open normally on Saturday, said FDIC ombudsman's office spokesman Rickey McCullough.

Some leading Republicans seemed reticent to score political points over the closure immediately after the announcement. Illinois Republican Party chairman Pat Brady declined to comment, as did former Republican Gov. Jim Thompson.

"I know Alexi," Thompson said. "I'm sure this is not an easy time for him."

Giannoulias' campaign and Democratic insiders have maintained he can still beat Kirk, a moderate Republican and an officer in the Naval Reserves. Democrats outnumber Republicans in Illinois, and Obama remains a popular figure in the state.

And on Friday, the White House said Obama intends to help Illinois Democrats "up and down the ballot free online credit report." Giannoulias campaign chairman, U.S. Sen. Dick Durbin, said Friday before the bank failure that the White House has asked about the state of Giannoulias' campaign. A spokeswoman contacted Friday evening said Durbin would not comment further.

Joey O'Neill, a Broadway customer for 20 years said Friday that he won't hold the bank's failure against Giannoulias.

"They've always been good to me," O'Neill said before the bank closure was announced.

Giannoulias' family could walk away with millions in tax refunds after writing off Broadway Bank's losses — giving Kirk the chance to paint him as a fat cat.

Kirk — who raised $2.2 million in the first quarter of the year compared to $1.2 million for Giannoulias — also has criticized some decisions made while Giannoulias worked at the bank, including revelations that it had loaned $20 million to two convicted felons.

The campaign portrayed the loans as old news that Giannoulias has addressed before. He has said the bank's relationship with one man started before he worked there.

But with the election nearly seven months away, the campaign has time on its side to try to repair any damage and change the focus of the race — and help Democrats avoid the embarrassing loss of another high-profile Senate seat.

"When I decided to run, I knew it was going to be tough," Giannoulias said this month in a speech to a Chicago civic club. "Examining my record is one thing, but putting your family in the line of fire is quite another. Believe me, it's not easy. But I didn't get into this race because I thought it was going to be easy."

Giannoulias' campaign has not talked specifically about the strategy for dealing with a bank failure. Spokeswoman Kathleen Strand said this week he will focus on the economy and creating jobs, arguing that the bank's problems are not major issue for some people.

All of Broadway's deposit accounts, excluding certain brokered deposits, were transferred to MB Financial. Former Broadway employees would become employees of MB Financial Bank, McCullough said.

Demetris Giannoulias, Alexi Giannoulias' brother and the bank's chief financial officer, issued a statement that said the family "fought to carry out the vision my father had when he founded Broadway Bank 30 years ago, but our bank — like many businesses — has struggled during these challenging times."

Six other banks also were closed in Illinois, the FDIC announced. Customer accounts are insured by the FDIC up to $250,000.

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Associated Press Writer Michael Tarm contributed to this report from Chicago.

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http://fdic.gov/

Feds shuts down bank owned by Giannoulias

Travelers 1Q profit slips on catastrophes

Travelers Cos. said Friday that costs of insuring against the damage caused by the Chilean earthquake and winter storms in the eastern United States led to a 2 percent decline in its first-quarter profit.

Those catastrophes were "unusually significant" during the first three months for Travelers as well as for the entire industry, the company said.

Even so, Travelers still raised its quarterly dividend 9 percent to 36 cents a share.

The commercial and property insurer, based in New York said its net income dipped to $647 million from $662 million a year ago. Nut earnings per share rose to $1.25 from $1.11 as the company had fewer shares outstanding.

Excluding items, it said operating profit totaled $1.22 cents per share. That is below analysts' average estimate of $1.36 per share, according to a survey by Thomson Reuters.

Travelers posted $6.1 billion in revenue during the first quarter, an increase of 6.7 percent from $5.4 billion a year earlier.

Travelers shares fell 76 cents, or 1.4 percent, to $53.03 in pre-opening trading.

The lower quarterly profit reflected $312 million, or 61 cents per share, in catastrophe losses tied to several severe winter, wind and hail storms in the eastern United States, as well as the Chilean earthquake.

Investment income rose 39 percent to $753 million.

Traveler's net written premiums edged up 1 percent to $5.25 billion in the first three months of the year, helped by the company's personal insurance and professional and international units no teletrek payday advance. Net written premiums decreased in the company's business insurance unit, largely because of economic activity as a whole has been muffled, the company said.

Travelers, like other insurers, continues to seek customers at time when employers have fewer workers and less valuable property to insurer.

The company's combined ratio for the quarter rose 5.8 points to 96.4 percent. Combined ratio measures the amount of money insurers pay out in claims and expenses compared with how much they receive from writing new business. A ratio above 100 means the insurer pays out more in claims and expenses than it takes in from writing new premiums.

Travelers is one of a handful of insurers that has resumed share buybacks, a sign of capital strength. The company said Friday it spent $1.4 billion to buy 27 million shares in the first quarter. It expects to buy back $3.5 billion to $4 billion shares this year.

Travelers also maintained its previous full-year earnings outlook, expecting operating profit to be in the range of $5.20 to $5.55 per share.

Analysts expect earnings of $5.76 per share for the year.

Travelers 1Q profit slips on catastrophes

Hot News: Month of Unrest Hits Thailand’s Economy

Airlines lose $1.7 billion, ash blame game begins

BERLIN – Airlines lost at least $1.7 billion in revenue during the volcanic ash crisis, an industry group said Wednesday as the debate heated up over whether European governments were justified in shutting down their airspace for so long.

Planes were flying into all of Europe's top airports — London's Heathrow, Paris' Charles de Gaulle and Frankfurt. Still experts predicted it could take days — even more than a week — to clear a backlog of stranded passengers after about 102,000 flights were canceled around the world.

Eurocontrol, the air traffic control agency in Brussels, said 21,000 of the continent's 28,000 scheduled flights were going ahead Wednesday. Air traffic controllers lifted all restrictions over German airspace, but some restrictions remained over parts of Britain, Ireland and France.

Giovanni Bisignani, the head of the International Air Transport Association, called the economic fallout from the six-day travel shutdown "devastating" and urged European governments to examine ways to compensate airlines for lost revenues, as the U.S. government did following the Sept. 11, 2001 terror attacks.

He said it would take three years for the industry to recover from the week of lost flying time.

Spain, which has remained mostly open throughout the crisis, developed into a key emergency travel hub, arranging for hundreds of special flights to move over 40,000 people stranded by the travel disruptions.

At Bilbao in northern Spain, more than 2,000 weary Britons packed a ferry Wednesday and headed for England after days of searching for an escape from the volcanic ash travel nightmare.

The ferry normally takes 1,000 people on its twice-weekly, 30-hour trip to Portsmouth in southern England. This time, however, it was carrying around 2,200 people and had to ask strangers to share sleeper cabins.

Sam Gunn, 42, from the English city of Birmingham, endured two hungry days sleeping at JFK Airport in New York after his flight home was canceled. He ultimately settled for a flight to Madrid, then caught a long bus up to Bilbao to get on the ferry.

"Oh, I've been traveling all over the world," he said, chuckling.

German aviation agency Deutsche Flugsicherung said the decision to reopen the country's airspace Wednesday was made based on weather data, not economics no fax pay day loans. It said the concentration of volcano ash in the sky "considerably decreased and will continue to dwindle."

"Bremen, Hamburg, Hannover, Berlin, Frankfurt and Munich are open again," said Axel Raab, a spokesman for German air traffic control.

"We cannot say what it will look like in the next few days. If the volcano becomes active again, new closures might happen," Raab added. "This is a decision that was made based on meteorological data."

A test flight carried out by the German Aerospace Center found various levels of volcanic ash at different sites over Germany. The highest concentration of ash was over eastern Germany, which the report said was comparable in density to a plume of dust above the Saharan desert. The airspace above the northern city of Hamburg was entirely free from ash.

The center reported no damage to the airplane that flew the test flight.

The Finnish Air Force said volcanic ash dust was found in the engine of an F-18 Hornet jet but it caused no significant damage to the aircraft. Officials say the fighter-bomber's engine had "contaminants on its inside surfaces" that would be further analyzed.

A French weather service plane also took samples of the air Tuesday and found no volcanic ash problems either, transport minister Dominique Bussereau said.

Emirates airline, the Mideast's biggest, sent 37 flights from Dubai to Europe, including 12 flights to Britain and seven to Germany. Its first flight to land in Britain was a double-decker Airbus A380 carrying more than 500 people.

Airlines lost $400 million each day during the first three days of grounding, Bisignani told a news conference Wednesday in Berlin. At one stage, 29 percent of global aviation and 1.2 million passengers a day were affected by the airspace closure ordered by European governments, who feared the risk that volcanic ash could pose to airplanes.

"For an industry that lost $9.4 billion last year and was forecast to lose a further $2.8 billion in 2010, this crisis is devastating," Bisignani said. "Governments should help carriers recover the cost of this disruption."

Airlines lose $1.7 billion, ash blame game begins

Authorities Criticized Over Handling of Air Crisis

LONDON — Stranded air travelers waited anxiously and impatiently for more European airports to reopen Monday, as governments faced growing criticism over their seemingly ponderous response to five straight days of flight chaos.

The International Air Transport Association criticized what it called a “lack of leadership” by European governments faced with a shutdown in the skies on an unparalleled scale caused by high-altitude ash billowing from an erupting Icelandic volcano then drifting south and east.

Such was the sense of crisis in London that the British government said it was deploying the Royal Navy to bring people home, as the National Air Traffic Service announced that British airspace, closed since last Thursday, would remain closed until early Tuesday.

Most of Asia’s largest carriers continued to cancel their flights into Europe, adding to the financial cost of the chaos, which one industry group estimated at $2 billion and climbing.

French, German and Dutch airspace also remained closed, although several major airports in southern Europe — notably Rome, Athens and Madrid — were operating. Airports in the Czech Republic were set to open at noon local time, authorities there said, according to the Czech news agency, and news reports said that the neighboring country of Slovakia were allowing flights over the eastern part of the country.

Aviation authorities in Hungary announced they had reopened the country’s airspace for aircraft flying at 24,600 feet or higher.

“We are far enough into this crisis to express our dissatisfaction on how governments have managed it, with no risk assessment, no consultation and no leadership,” said Giovanni Bisignani, the director general and chief executive of the International Air Transport Association. “This crisis is costing airlines at least $200 million a day in lost revenues and the European economy has already suffered billions of dollars in lost business.

“In the face of such dire economic consequences, it is incredible that Europe’s transports ministers have taken five days to organize a first teleconference.”

That ministerial meeting was to take place Monday in Brussels, with some ministers able to participate only by video-conferencing because they were grounded at home.

“The Ash Attack has already affected the travel plans of 8 million passengers in Europe and around the world,” the Centre for Asia Pacific Aviation, a consultancy based in Sydney, said Monday on its Web site. “The total cost for the aviation industry (airlines, airports, suppliers, freight operators, handlers, etc.) could be well over $2 billion.”

Several European airlines, the center said, were already considering emergency layoffs.

Airspace and airports in much of northern and central Europe stayed shut, or offered limited service on Monday and only about one third of flights scheduled for a normal day were expected to operate.

The airport in Vienna, Austria, officially opened at 5 a.m. Monday, although the arrivals and departures board showed that most flights remained canceled. The airport in Stockholm also opened with limited service.

Italian authorities opened the country’s principal northern airports, in Milan and Venice, at 7 a.m., but then closed them again 2 hours later, citing new and ominous weather reports, according to the ANSA news agency. Vito Riggio, the head of the civil aviation authority, said the airports would stay closed until at least 8 a.m. on Tuesday. But airports in Rome and the south of the country were open.

Among the Asian carriers that canceled their flights to Europe on Monday were Cathay Pacific, Qantas, Japan Airlines, Korean Air, Air New Zealand, Thai Airways and China Airlines of Taiwan. Cathay, based in Hong Kong, and Qantas of Australia also canceled several of their Tuesday flights.

Singapore Airlines also canceled all its flights to Europe, except those to Athens and Istanbul. Increasingly desperate airlines — among them Air France, Lufthansa, KLM and Air Berlin — ran test flights over the weekend to show that flying was safe, and they pressed aviation authorities to loosen the flight ban.

Mr. Bisignani told reporters in Paris that he hoped the chaos will lead to a new momentum on discussions about a unified air traffic control system in Europe, known as the Single European Sky, which have been going on for 20 years.

“This is really a failure of Europe,” he said. While Europe has been able to remove borders on the ground, he added, “we haven’t been able to take away the borders in the sky guaranteed personal loan approval.”

“In a couple of weeks, when this situation is resolved, this will be remembered as a very embarrassing episode for Europe,” Mr. Bisignani said, adding that he blamed the current disruptions on European transport ministers.

In its statement on Monday, the International Air Transport Association criticized the region’s decision-making process for closing airspace. “This not an acceptable system, particularly when the consequences for safety and the economy are so large,” Mr. Bisignani, the IATA chief, said of the methodology, which is based on computer models.

Airlines complained that European governments were overreacting to the threat. In a blunt statement Sunday, representatives of Europe’s airlines and airports called for “an immediate reassessment of the present restrictions.”

“It is clear that this is not sustainable,” the European Union’s transport commissioner, Siim Kallas, told reporters in Brussels. “We cannot just wait until this ash cloud dissipates.”

The transportation minister from the Netherlands, Camiel Eurlings, said in an interview Monday with public broadcaster NOS that Europe’s response to the ash cloud had gone too far.

But on Sunday the British transportation secretary, Andrew Adonis, had ruled out any immediate change, saying flights across northern Europe “will not be safe” on Monday.

Europe remained a scene of travel chaos. With airports deserted planes grounded, stranded travelers stormed ports and bus and train stations. London’s St. Pancras train station, where Eurostar trains leave for Paris and Brussels, was packed with people anxious to find a way to Continental Europe.

Prime Minister Gordon Brown said Monday that British authorities would deploy two Royal Navy vessels, including the Ark Royal aircraft carrier, to help bring Britons home.

He spoke after a meeting of the COBRA planning committee, which gathers in times of national emergency. The initials stand for Cabinet Office Briefing Room A.

Britain is particularly isolated because the country is cut off from continental land routes by the English Channel. London’s main airport, Heathrow, is one of the busiest hubs in the world. And with Britain in the throes of political fervor before a national election on May 6, the government’s handling of the crisis will be closely scrutinized by its opponents for missteps, political analysts said.

Mr. Brown said Britain was looking to Spain, where airports are open, as a potential transit point to get Britons home by ferry, road and rail, but he did not say exactly what part the navy vessels would play.

“We have large numbers of travelers who are trapped in Africa and Asia and the main route home at the moment is the airports that are open in Europe and that is in Spain,” Mr. Brown said, according to the Press Association news agency.

Tens of thousands of Britons stranded outside the country include school-teachers and pupils, supposed to be back in their classrooms on Monday after a vacation break, and British soldiers on their way home from Afghanistan by way of a British base in Cyprus.

One group of intrepid Samaritans has already tried to evacuate stranded travelers by dinghy from Calais, France, to Dover, England.

The crisis could wipe out weaker air carriers if it continues much longer, analysts say. Airlines have already suffered losses of $50 billion over the last decade after the attacks of Sept. 11, 2001, the SARS epidemics of 2004, the rise in fuel costs in 2008 and the recession.

Authorities are concerned that if an airplane moves through the ash cloud, which contains high levels of silica, a glasslike dust, the engines could seize or stall. But the airlines that sent up test flights on Sunday said they saw no damage to their planes. Complicating any decisions is the continued eruption of the volcano, Eyjafjallajokull.

While much of northern Europe’s airspace remained closed, the airport in Reykjavik, Iceland’s capital, was still open for business since southern winds were pushing ash away from the small rocky island in the North Atlantic.

Alan Cowell reported from London, Nicola Clark from Paris and Mark McDonald from Hong Kong. Jad Mouawad contributed reporting from New York and Bettina Wassener from Hong Kong.

Authorities Criticized Over Handling of Air Crisis

Safe-haven dollar gains as SEC accuses Goldman

NEW YORK – The dollar surged Friday as investors pared their exposure to risk after federal regulators accused Goldman Sachs of fraud in the subprime mortgage market.

"They've been the leading lights of the banking sector, which has been leading the stock market rally," said Brian Dolan, chief currency strategist at Forex.com. The dollar benefited from the flight from risk as stocks and commodities traded sharply lower.

More speculation about the Chinese government moving closer to allowing its currency to appreciate is also cutting down on traders' appetite for risk, Dolan said. A stronger yuan could mean a slowdown in China's breakneck economic growth, which would hurt the global recovery.

In late New York trading Friday, the euro dropped to $1.3497 from $1 allstate insurance company.3576 late Thursday. The euro jumped as high as $1.3691 this week after details were released about Europe's plan to bail out Greece.

But uncertainty over the effectiveness and scope of the plan is once again weighing on the euro. Greece has asked European Union and IMF officials to be in Athens for talks on Monday.

In other trading Friday, the British pound slid to $1.5394 from $1.5506 and the dollar dropped to 92.13 Japanese yen from 93.15 yen. The yen is also a safe-haven bid.

The dollar rose to 1.0615 Swiss francs from 1.0566 francs, and soared to 1.0145 Canadian dollars from 1.0022 Canadian dollars.

Safe-haven dollar gains as SEC accuses Goldman

London Markets: Carnival shares shine in mildly higher FTSE 100

LONDON (MarketWatch) -- Carnival Corp. shares led the top British share index higher on Thursday, after a broker said that the cruise operator could be one of the first to benefit from a recovery in the global economy.

Carnival shares were up 2.9% to 27.14 pence in the top British share index on Thursday.

The gains came after Morgan Stanley analysts lifted their price target on the firm to 32 pounds ($49.65) a share from 27 pounds, to reflect weaker sterling and "increased confidence in the stock as an early play on economic recovery."

The broker said leisure demand is holding up better than corporate demand and booking prices have risen on average by 17%.

"We see tremendous potential in Europe, where the source market will generate nearly half of Carnival's profit this year and demand actually grew 6% last year,"

Signs that an improvement in the economic backdrop is helping corporate profits started to appear this week, after Intel, J.P. Morgan and UPS put out strong results.

The FTSE 100 index , which closed on Wednesday at a level not seen since June 17, 2008, gained another 0.1%, or 8.42 points, to 5,804.84.

Other European shares were higher, while U.S. stock futures were pointing to a bit of consolidation on Wall Street. See Europe Markets.

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Asian shares were advancing. China's economy accelerated more than expected in the first quarter, while consumer and wholesale inflation -- though mixed -- indicated a broadly rising trend, stoking further that the world's third-largest economy might overheat.

Gross domestic product rose 11.9% from the year-ago period, accelerating from 10.7% in the last quarter of 2009. The expansion was the fastest in nearly three years. Read more on China data.

Worries that tightening in China's monetary policy will choke off economic growth in the region have periodically checked progress for the mining sector since the start of the year. The sector was lower again on Thursday, as were commodity futures,

Shares of BHP Billiton declined 1.3% and shares of Fresnillo declined 1.4%. Light sweet crude oil futures declined 23 cents to $85.59 a barrel and copper futures lost 2 cents to $3.59 a pound.

Banks were broadly higher, extending gains from the previous session made after J.P. Morgan's results. Shares of Barclays rose 2.2%.

Outside the top index, recruitment firm Michael Page International advanced 1.1% after it was upgraded to buy from hold at ING. The broker said it sees momentum accelerating beyond market expectations and believes that earnings power out of this recession is strongly underestimated.

Michael Page said that its business model is strong and its growth prospects are among the highest in its sector.

London Markets: Carnival shares shine in mildly higher FTSE 100

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Stocks and Bonds: Dow Closes Above 11,000

A few little points was all it took.

The Dow Jones industrial average inched above 11,000 on Monday — and, for the first time since the dark days of 2008, actually managed to stay there.

It was hardly a heady rally. The Dow Jones industrial average rose 8.62 points Monday, a mere 0.08 percent, to close at 11,005.97. But that modest gain, driven largely by news Sunday of a long-awaited financial rescue for the debt-ladenGreek government, was enough to help the market tick off yet another milestone in its long recovery.

“Nobody ever thought we’d ever get near this level this fast,” said William J. Schultz, chief investment officer for McQueen, Ball & Associates. “We’ve come a long way.”

A long way indeed. Since March 2009, the Dow has soared 68 percent. Even so, it remains some 3,100 points below the highs reached in 2007, before the economy sank into recession.

The question now is whether the stock market can hold its gains and push on to even greater heights. Some on Wall Street question whether this rally can endure as the government’s economic stimulus programs gradually draw to a close and interest rates begin to rise. That is especially so given that stubbornly high unemployment could hamper a broader economic recovery.

“From this point forward, it becomes more of a grind and a lot of hard work,” said Stephen P. Wood, chief market strategist for North America at Russell Investments. “There’s going to be volatility. It’s not going to be a smooth ride upward.”

Monday’s momentum came as Wall Street welcomed the European Union’s rescue plan for Greece. For months, investors had sought firm reassurance that Greece would avoid default. On Sunday, the European Union finally delivered: officials announced details of a $40 billion rescue package.

There was also renewed optimism on Monday about the strength of the American economy. Traders snapped up stocks in anticipation of what is expected to be a strong earnings season. Intel, Google, General Electric, Bank of America and JPMorgan Chase are scheduled to report results this week.

As analysts dissect financial statements, they are looking not just for signs of strong profit — forecasts call for 22.6 percent growth overall — but for companies to offer brighter forecasts for the rest of the year.

“The expectations are in the sky for this quarter and for the rest of the year,” said Bruce A. Bittles, chief investment strategist at Robert W. Baird & Company. “The market is going to continue to rally until that optimism becomes widespread and excessive.”

Other Wall Street indexes followed the Dow’s lead. The Standard & Poor’s 500-stock index climbed 2.11 points, or 0.18 percent, to 1,196.48. The Nasdaq composite index was up 3.82 points, or 0.16 percent, to 2,457.87. It was helped by reports that the smartphone maker Palm may be up for sale cheap payday advance. Shares of Palm surged more than 17 percent, to $6.04.

Shares of Alcoa rose 1.25 percent, to $14.57, ahead of the firm’s first-quarter results, which were released after the market closed Monday.

In Europe, markets were mixed as investors largely shrugged off the aid package for Greece. The plan would grant Greece as much as 30 billion euros ($40 billion), in loans at about 5 percent interest. That rate is significantly lower than the 7.5 percent at which Greek debt was trading last week. The International Monetary Fund could provide up to another 15 billion euros at even lower rates.

But analysts said many of the details had already been priced into markets.

“It’s a short-term fix and it doesn’t address the long-term problems of Greece or Europe,” Mr. Bittles said. “All of these countries that are strapped with debt, including the U.S., don’t want to face the reality or pain of trying to fundamentally fix the problem.”

The FTSE 100 index in London gained 0.12 percent, but the DAX in Frankfurt and the CAC 40 in Paris were flat.

The euro strengthened 0.6 percent against the dollar, to slightly less than $1.36. The currency has fallen about 5 percent this year against the dollar amid fears that Italy, Portugal and Spain could follow Greece into market disfavor, possibly undermining the foundation of the 16-nation currency.

As investors gained confidence in the ability of countries to pay back debt, the cost of insuring debt fell in Greece and across the Continent. The yield on the Greek government bond fell to 6.5 percent, after topping out last week above 7.5 percent.

Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels, said Greece’s problems were not over. “The more sound countries in Europe just lent money to Greece,” he said. “But you’ve not paid down one penny. You’re just moving around a big pile of debt.”

Questions about Germany’s enthusiasm for the rescue plan persisted, with a German government spokesman saying a full summit meeting of euro zone ministers would be needed to authorize any aid. That assertion was quickly denied by officials in Brussels, who said such a decision could be made in a conference call of leaders.

In a critical test of market confidence in the European Union’s aid package, the Greek government plans to auction 1.2 billion euros in Treasury bills Tuesday.

The price of oil fell 58 cents, to $84.34 a barrel.

Spot gold fell $5.80, to $1,156.20 an ounce.

The Treasury’s 10-year note rose 11/32, to 98 8/32. The yield fell to 3.84 percent, from 3.88 percent late Friday.

David Jolly and Matthew Saltmarsh contributed reporting.

Stocks and Bonds: Dow Closes Above 11,000

Gauging consumer sentiment? The plays the thing

NEW YORK (Reuters) – "There's No Business like Show Business" to figure out how the U.S. consumer is doing.

Broadway, the "Street of Dreams," is a good place to look for signs of renewed consumer confidence, says Nicholas Colas, chief market strategist at BNY ConvergEx Group in New York.

His analysis of the theater-going habits of the New York City natives and visitors over an eleven-week period in early 2010 has left him cautiously optimistic about the health of the consumer, with an emphasis on "cautious," said Colas.

It's a bad news/good news story.

For the first full eleven weeks of 2010, starting on January 4, the combined total attendance for eight of the larger shows on Broadway was down, compared to the eleven weeks starting January 5 last year, partly due to New York City's "Winter Wonderland" weather persisting through February, Colas said, citing data provided by The Broadway League and published on Playbill.com

But post-snowstorm demand bounced back nicely, Colas said.

The Broadway League, the official trade association for the Broadway theater industry, offered a more upbeat view, based on 13 weeks of gross revenues and attendance in the first quarter of 2010 versus 2009.

Including all shows currently running on Broadway, not just eight, the Broadway League, representing theater owners and operators, producers, presenters, general managers, and suppliers of theatrical goods and services, said Broadway's gross revenues and attendance in the first 13 weeks in 2010 topped a similar period in 2009 payday advance lenders.

The Broadway League said gross revenues for the entire Broadway theater community rose 4.4 percent in the first quarter of 2010 while attendance rose 1.7 percent.

"Mother Nature's numerous snowstorms caused the Great White Way to literally turn white quite a bit this winter, but Broadway still managed to be resilient during the toughest quarter of the year," said Charlotte St. Martin, executive director of The Broadway League.

"To truly gauge the health of our industry, one can't just examine a few shows or a few separate weeks -- it is more accurate to look at the collective data industry-wide," she said.

Forty-five different shows played on Broadway during the first quarter of 2010, versus 49 shows during the first quarter of 2009, the League said.

(Editing by Andrea Ricci)

Gauging consumer sentiment? The play's the thing

Retailers Reported a 9.1% Gain in March

The nation’s retailers reported their strongest monthly sales growth in a decade on Thursday, with robust gains in virtually every category of merchandise and every type of store.

The industry collectively posted a 9.1 percent sales increase at stores open at least a year, according to Thomson Reuters. That was the strongest result since the group began tracking the figures in 2000.

Analysts polled ahead of time by Thomson Reuters had lofty expectations for March, but the results released Thursday handily beat the 6.3 percent increase they had predicted.

“This really seems to herald the end of the consumer spending slowdown,” said Bill Dreher, senior research analyst at Deutsche Bank Securities. “Consumers across the entire spectrum are spending. It’s department stores, it’s discount stores, warehouse clubs — it’s in all subcategories in retailing, which is new.”

For many months, in the depths of the recession, discount chains were the sole type of retailers showing gains as consumers pinched pennies. A recovery in retailing has been gathering strength for months, showing up first at the high end; now stores catering to every class of shopper are benefiting.

Thursday’s results were the seventh consecutive month of gains in sales at stores open for more than 12 months.

Retailers urged a measure of caution in interpreting the results, however. While they are all relieved to be growing again, the recession was such a brutal experience that they are not quite ready to celebrate.

A major caveat was that Easter fell a week earlier this year, which retailers said helped drive March sales, most likely at the expense of their April results. A clearer picture of the industry’s health will emerge next month, when analysts are able to look at the combined results for March and April.

Sherif Mityas, a partner in the retail practice of A. T. Kearney, a management consulting company, described the industry mood as “muted exuberance.”

After all, retailers are comparing their results with those of March 2009, the bottom of the recession. At that time, the industry posted a 5 percent sales decline at stores open at least a year, a measure of retail health known as same-store sales, according to Thomson Reuters.

Discount chains like Costco and BJ’s Wholesale Club grew during the recession as consumers traded down, but most retailers’ sales fell sharply. Even with the recent gains, their dollar volume is still down from the height of the boom in 2006 and 2007.

For instance, in March 2007, Macy’s reported total sales of $2.288 billion. Its total sales in March were $2.143 billion. Saks had March 2007 sales of $284.3 million. Its sales last month were $238.2 million.

Still, many retailing analysts said last month’s results were too strong and too broad to be dismissed as merely the result of Easter shopping or easy year-over-year comparisons. They do not expect the April numbers to be as good as those in March, but they think consumer psychology has turned a corner.

“This is no flash in the pan,” Mr free credit report online. Dreher said. “This is the beginning of a new trend.”

There have been other broad signs of economic recovery too, like improving sales of automobiles and a better job market. Retailing analysts pointed out that major chains were now selling more merchandise at full price, which bodes well for their next reporting periods.

Target said in a news release that it was on track to exceed profit plans for the quarter, by 10 cents or more. Other chains, like Macy’s, Bon-Ton and Ross Stores, also said their results exceeded expectations. Some raised their predictions about future earnings, including J. C. Penney and Aeropostale.

“Consumers are generally feeling better about their plight and are finally making discretionary purchases,” Ken Perkins, president of Retail Metrics, a research firm, said Thursday in a report.

That was reflected in sales of clothing. Even department stores, a sector that had been struggling for years, are showing gains.

“Those are some stellar results for chains that were a bit beaten up even before the recession,” Mr. Mityas said. “They’re hitting the ground running almost better than the specialty apparel retailers and the discounters.”

Sales climbed year-over-year at Nordstrom (up 16.8 percent), Saks (up 12.7 percent), and Neiman Marcus (up 9.2 percent).

Midrange chains were also strong. Same-store sales increased at Bon-Ton (up 11.4 percent), Macy’s (up 10.8 percent), Dillard’s (up 9 percent), and J. C. Penney (up 5.4 percent). Kohl’s was a standout, with same-store sales up 22.5 percent compared with a year ago. In a news release, the chain said higher customer traffic drove the double-digit increase.

In fact, same-store sales at all sorts of clothing chains, be they in a mall or a big box, were healthy: up 19 percent at Aeropostale, up 15 percent at American Eagle and Limited Brands (which owns Victoria’s Secret and Bath & Body Works), up 14 percent at the discount chain Ross Stores, up 12 percent at TJX (which owns chains including TJ Maxx and Marshalls), up 11 percent at Gap and up 5 percent at Abercrombie & Fitch.

The exception was Hot Topic, which posted a 7.5 percent same-store sales decline. Last year the chain’s March sales had increased 7.1 percent, a result that was outside the industry norm and driven in part by movie-related vampire merchandise.

Discount chains continued to do well, as they did throughout the recession, though they were outperformed last month by clothing stores. Same-store sales increased 10.6 percent at BJ’s Wholesale Club, 10.3 percent at Target and 10 percent at Costco.

Wal-Mart, the nation’s largest retailer, does not report monthly sales. The International Council of Shopping Centers, an industry group, expects April same-store sales for the retailing industry to be flat to down about 3 percent.

Retailers Reported a 9.1% Gain in March

South Africa Energy Needs Collide With U.S. Policy

JOHANNESBURG — The Obama administration, caught in an awkward bind between its own ambitions on climate change and Africa’s pressing energy needs, is facing the first test of its new guidelines discouraging coal-fired power projects in developing nations.

This week, the World Bank will vote on a $3.75 billion loan to South Africa, most of it to help build the world’s seventh-largest coal plant. The bank’s own experts concede that the giant plant will “produce large quantities of carbon dioxide that will contribute to global climate change.”

But the bank’s largest shareholder — the United States — has enacted guidelines to push for “no or low carbon” ways of meeting the energy needs of developing nations that rely on international financial institutions.

Construction of the plant is well under way, so it is too late for the steps advocated in the Obama administration’s guidelines to ensure that coal is a last resort. Treasury Department officials have declined to say how the United States will vote when the loan is before the bank’s board on Thursday, with one describing the decision as “challenging.”

South African officials contend that the plant is desperately needed to help the country’s economy, the largest on the continent, and those of six neighboring nations generate growth and combat poverty. The loan is the first South Africa has sought from the World Bank since apartheid ended in 1994.

Officials here also note that the project includes $745 million for wind and solar power and efficiency measures, in addition to $3 billion for the coal plant. Without the loan, South Africa would have to turn to commercial markets to finance the rest of the coal plant’s cost, a step that Public Enterprises Minister Barbara Hogan said would be “punitively expensive” and would probably delay the plant’s completion.

“We run the most sophisticated economy in Africa,” she said. “We supply 60 percent of southern Africa’s energy. If we’re not able to come to the table, the consequences are huge. This is big. And renewable energy cannot provide us with that scale.”

The fate of the loan matters to a group of developing countries that will continue to rely on coal in the coming years, even as researchers rush to devise cleaner, more commercially feasible alternatives, said Jairam Ramesh, India’s environment minister. He said officials from India, China, Brazil and South Africa would meet this month in Cape Town to coordinate their positions on just such climate change issues.

“For the next five to seven years, we must not stop the use of present coal technologies, even as we work on developing new clean technologies,” Mr. Ramesh said. In 2008, during President George W. Bush’s administration, the International Finance Corporation and the Asian Development Bank provided $850 million to help finance an Indian coal-fired plant in Gujarat State.

International public financial institutions, supported by the world’s richest nations, have invested $37 billion to help finance 88 coal plants over the past 15 years, many in Asia, according to a 2009 report by the Environmental Defense Fund. The plants’ annual carbon dioxide emissions equal three-quarters of those from coal-fired power in the European Union, the report said fast cash advance loan.

The South Africa loan has set off the latest skirmish in a long-running conflict between multilateral lending institutions and environmental groups. The Environmental Defense Fund, the Sierra Club and Friends of the Earth, as well as a variety of South African civic groups, oppose the loan to Eskom, South Africa’s government-controlled utility.

Environmentalists say that people in Africa, and especially its millions of poor farmers, have more to lose from warming temperatures — and the droughts and extreme weather they will bring — than people in any other part of the world. And coal plants also pollute scarce water, they say.

Shadowing the debate here are memories of the weeks in 2008 when South Africa went dark for long stretches as Eskom ran out of juice. Businesses shut their doors. The mining industry virtually closed for days. Traffic clogged the roads as traffic lights blinked off.

A combination of bad management and faulty planning led to the crisis, experts say.

Eskom is now embarked on a $50 billion program to expand its capacity, paid for in part by a painful 25 percent to 26 percent annual electricity rate increase for each of the next three years.

Still, the new power plant, known as Medupi, has drawn sharp opposition here on political as well as environmental grounds. Through its investment arm, the African National Congress, the governing party, has a 25 percent stake in the consortium that won a lucrative contract for boilers at the plant. A report by the public prosecutor, released two weeks ago in Parliament, found a conflict of interest in the awarding of the contract because a member of the tender committee was also on the party’s national executive panel, but the report turned up no evidence that this questionable situation had influenced the outcome.

Helen Zille, who leads the opposition Democratic Alliance, wrote last week that if the loan were approved, profits would flow to into the governing party’s political operations. “The A.N.C. will entrench its single-party dominance and, in doing so, gravely weaken our democracy,” Ms. Zille said.

World Bank officials reply that the bank’s loan will not pay for the component of the deal in question. And they defend the project’s environmental contributions, including the 100-megawatt solar project. They noted that South Africa had committed to reduce its greenhouse gas emissions 34 percent by 2020.

Bank officials also say their commitment to environmentally sound energy policy has gotten short shrift. Of the $8.2 billion in energy projects it financed last year, the bank said 76 percent went for nonfossil fuels; 40 percent of it went toward renewable energy and efficiency improvements.

“The question is how Africa can get the understanding and support of its partners to strike the right balance between two objectives — economic growth and climate change — so they can light up Africa rather than keeping it literally as the dark continent,” said Obiageli Ezekwesili, the bank’s vice president for Africa.

South Africa Energy Needs Collide With U.S. Policy

Community colleges like attention, need money

Politicians and policymakers are lavishing unprecedented attention on community colleges, promoting them as engines to train workers in the recession and boost the country's college graduation rates.

Where rhetoric meets reality on campus, you'll find people like Tania DeLeon, a student at Folsom Lake College in California who can't get into the classes she wants, must shuttle between two campuses 45 minutes apart and is spending spring break earning a paycheck so she can pay for gas and graduate on time.

Grappling with soaring enrollment and plummeting state support, community colleges are grateful for the higher profile but disappointed money has yet to materialize to help them keep up with demand, let alone meet ambitious Obama administration goals to make the U.S. the global leader in college graduates again by 2020.

"It's a difficult, challenging time for us," said George Boggs, president and CEO of the American Association of Community Colleges. "But in the longer term view, we've never seen the image of community colleges as high as it is right now. Overall, I'm optimistic for the future."

No longer the afterthought of higher education, the nation's 1,200 community, technical and junior colleges enroll more than 6 million students — almost half the nation's college population. Public colleges' open-door policies and low fees draw many low-income, first-generation, immigrant and Hispanic students.

The economic downturn has pressured both schools and their students, most of whom work long hours. Sinking tax revenues at state and local levels have forced public colleges to cut courses or schedule them around the clock, slash summer sessions, eliminate academic programs and even restrict enrollment.

In Detroit, record demand prompted the Wayne County Community College District to cap student enrollment this spring for the first time in its 40-year history. Louisiana's community and technical colleges, facing a 4.5 percent state budget cut, have slashed 100 academic programs in the past year.

A survey of 128 community college systems released last week found that 52 percent reported reductions in their operating budgets this year, a slight improvement over last year's grim numbers. But those facing cuts face steeper ones: the number of campuses with cuts exceeding 10 percent more than doubled.

The crunch leaves little money for remedial education reform, counseling to better prepare students for college's challenges and other innovations to improve completion rates. Just 35 percent of community college entrants earn a certificate or an associate or bachelor's degree within six years, estimates say.

"You put all these factors together, it's sort of a perfect storm," said Michael Kirst, professor emeritus of education and business administration at Stanford University. "One would predict our graduation rates will decline, not increase, from the community colleges. We'll move backwards."

Consider the challenges facing DeLeon, who like many community college students is trying to become the first in her family to graduate college.

When she started at Folsom Lake College outside Sacramento in 2007, DeLeon had no problem finding courses. She finished school by mid-day and went to work. Then the budget crisis struck California.

"Now I'm taking a class that ends at 10 o'clock at night," she said.

DeLeon commuted between two different campuses in the Los Rios Community College system — California's second largest — to get courses she need to finish in time. She persevered: DeLeon will graduate in May and transfer to California State University, Sacramento to pursue a career in juvenile justice.

The picture is even bleaker for some schools that rely on local as well as state tax dollars.

Montgomery College in Maryland, renowned for its engineering program, is facing a proposed 12 percent cut in county money and $14.5 million less than it requested — the cost of operating one of its three campuses.

"Everyone talks about jobs, jobs, jobs," interim president Hercules Pinkney said. "Well, we're the ones training the work force quick guaranteed personal loans. Hopefully that argument will win the day."

The timing couldn't be worse coming off a record fall enrollment of 26,000, state budget cuts and proposed tuition increases. Nursing student Brenique Lewis devised a strategy for the class crunch: she waits until just before classes start and snatches up vacancies left by students who don't pay and get dropped.

"I was lucky," said Lewis, 19, a recent immigrant from Jamaica who works part time at a car dealership. "If tuition increases, if there are more cuts, more people are going to drop out."

Community colleges' latest lesson in economic and political realities came last week, when President Barack Obama signed legislation overhauling the federal student loan program.

The law, a centerpiece of Obama's education agenda, strips banks of their role as middlemen in the loan business and puts the government in charge, saving an estimated $61 million over 10 years.

The House version approved last fall called for community colleges to receive $10 billion to help fulfill the White House's American Graduation Initiative, providing an infusion of federal cash for job training, building projects and initiatives to get more students out the door with degrees or certificates.

But because the projected savings from axing the bank subsidies were less than anticipated, community colleges instead will only get $2 billion for job training alone.

Most of the money from the overhaul will go to expand the maximum size of Pell grants for needy students, and additional money set aside for Hispanic-serving institutions also will benefit community colleges.

Will Holcombe, chancellor of the Florida College System, echoed many of his colleagues by saying he's happy to come away with something but disappointed in the scaled-down vision.

"Federal money and grant money, it seems, are about the only two vehicles we have for innovation these days," Holcombe said. "Our states are struggling to provide us with just the basic funding."

Frank Chong, the U.S. Department of Education's deputy assistant secretary for community colleges, said the $2 billion is "something of a down payment" on the graduation initiative.

"We need to use those funds to move the cause forward," said Chong, former president of Laney College, the flagship of California's Peralta Community College District. "We know our work is not done yet."

Given the economic climate, community colleges' role in job development is rightly the top priority, said Jamie Merisotis, president of the Indianapolis-based Lumina Foundation for Education, one of several foundations that have invested heavily in community colleges and boosted their profile.

Merisotis and others are pushing for accelerated programs to get students through community colleges faster, which would both improve graduation rates and ease space pressures. But, he said, that would require colleges to find money to realign curriculum and give stipends to students so they don't work so much.

For now, community colleges are doing what they've always done — more with less.

One case in point is Northern Virginia Community College, the setting for Obama's student loan bill-signing ceremony. (The White House also used the opportunity to announce that Jill Biden, the vice president's wife and an instructor at the college, will convene a summit on community colleges this fall).

The Virginia school has experienced a 23 percent cut in state funding and 24 percent enrollment growth in the past three years. Yet it has expanded online offerings to better combine e-learning with classroom instruction and used its world language program to attract international students who pay higher tuition.

"A significant portion of higher education is hunkered down, trying to wait out the storm," said college president Robert Templin. "We've taken the approach that while things will get better, they will never get back to the way they were. We're going to have to find new ways to do our work."

Community colleges like attention, need money

Oil settles near $85, higher fuel costs ahead

Oil prices have been stuck in a range of about $70 to $85 a barrel for months. That may be changing and it could mean higher fuel costs before long.

Crude pushed to an 18-month high Thursday. It passed $85 a barrel at one point, driven by optimism that the world will need more oil as it pulls out of the Great Recession.

Continued signals of strength in the manufacturing industry helped extend a recent rally. Oil prices have risen about 23 percent from early February as the industrial sector leads a gradual recovery in the U.S. economy. Some analysts are becoming worried, however, that too steep of a climb in oil prices could choke off the economic rebound.

Motorists are already feeling the effects at the pump, where the average nationwide retail price of gasoline is at the highest level since October 2008 and is expected to top $3 per gallon this spring or summer. Tom Kloza, chief oil analyst for Oil Price Information Service, expects motorists will pay a little more than $300 million more for gas this Easter Sunday than they did on Easter Sunday last year. That's the difference between gas at a national average of $2.05 in 2009 and about $2.84 by this Easter, according to Kloza.

That doesn't bode well for consumer spending, which only recently has shown signs of picking up. If that trend were to reverse, the strength in manufacturing could ebb.

Pump prices rose half a penny to a nationwide average of $2.803 per gallon on Thursday, according to AAA, Wright Express and Oil Price Information Service. Prices are up 10 cents over the past month and 75.6 cents higher than they were a year ago.

Oil prices have jumped from $69 a barrel in early February on expectations of a recovery, albeit gradual, in the U.S. economy. Prices also tend to move up in the spring as demand improves for fuel with the warmer weather.

So far, though, consumption of gasoline, diesel fuel, heating oil and jet fuel remains sluggish and markets are well supplied. The biggest sign of strength is from manufacturers using growing amounts of oil to restart the nation's factories.

The Institute for Supply Management, a trade group of purchasing executives, said Thursday that its gauge of industrial activity rose for the eighth straight month with the fastest growth since July 2004.

That report, coupled with a rising stock market and more signs of economic growth in China, helped pushed benchmark crude for May delivery up $1 guaranteed pay day loans.11 to settle at $84.87 a barrel on the New York Mercantile Exchange. Prices have about doubled in the past year.

Volume has been weak this week because of the Easter holiday. The market is closed Friday for Good Friday.

Analysts are trying to discern the next move for prices. Could oil hit $100 for the first time since October 2008?

Adam Sieminski, chief energy economist for Deutsche Bank, said he worries that triple-digit oil prices would push the global recovery back into recession. Prices are higher than he thought they'd be this year, but he can't predict where they may end up because a lot depends on sellers and buyers.

If China continues growing while oil supplies come down, "presumably you might be able to get $100 per barrel," Sieminski said.

Other traders look at the range in prices. If oil again breaks through $85 and stays there, the next range could be $85 to $95 a barrel.

"With the break of the previous highs, the positive momentum is starting to be created," said Olivier Jakob of Petromatrix. "Above $85.70 there will be no solid resistance until $90 a barrel."

Phil Flynn of PFGBest said this week's jump in prices has been fueled by reports showing unemployment is staying stubbornly high and, as a result, federal policymakers will keep interest rates low.

Nearly zero percent interest rates have helped keep the dollar weak. Because crude is traded in dollars, it becomes more expensive when the dollar falls and allows investors holding other currencies like the euro to get more oil for less.

Throw in government stimulus programs in China, the U.S. and elsewhere, and oil prices are probably $10 to $15 per barrel higher than what they otherwise would be, he said.

"This oil price is supported by the biggest global economic steroid that the world has even seen," Flynn said.

In other Nymex trading in May contracts, heating oil rose 3.77 cents to settle at $2.2167 a gallon, and gasoline gained 1.65 cents to settle at $2.3237 a gallon. Natural gas added 2.17 cents to settle at $4.086 per 1,000 cubic feet.

In London, Brent crude rose $1.31 to settle at $84.01 on the ICE futures exchange.

___

Associated Press writers Pablo Gorondi in Budapest, Hungary, and Alex Kennedy in Singapore contributed to this report.

Oil settles near $85, higher fuel costs ahead

Energy Star program is under fire

CHICAGO (MarketWatch) -- The Energy Star program may be overhauled in the wake of a scathing government report that found the certification process vulnerable to fraud and abuse, calling into doubt the worthiness of the label that directs shoppers to energy-saving products that last year cut as much as $17 billion from consumers' utility bills.

Sen. Susan Collins, R-Maine, said she plans this week to propose changes to the program, which is operated by the U.S. Environmental Protection Agency and Energy Department. Since 1992, the Energy Star label has been slapped on more than 40,000 products from more than 2,400 manufacturers.

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Collins's proposals, coupled with steps the EPA and Energy Department recently said they will take, will shift the program from one that's largely been dependent on self-policing to one that depends on third-party testing and accreditation.

"I will push for increased oversight and aggressive internal controls to verify product claims on energy efficiency," Collins said in a press release. "I want to make sure we pursue changes that are more than window dressing."

The call for major changes comes in the wake of the Government Accountability Office's report on March 26 after a nine-month investigation of the Energy Star certification process. The GAO is a nonpartisan watchdog agency that reports directly to Congress. Collins requested the GAO investigation.

To test the Energy Star program, the GAO created fake products, including a gas-powered alarm clock and an air cleaner that was actually a space heater with a feather duster and fly strips taped to it.

The Energy Star program approved both products, thus revealing the program's lax standards and controls, the GAO said.

"We found that for most of the bogus products we submitted, the Energy Star program's preventive controls were ineffective, rendering the program vulnerable to fraud and abuse," the GAO report said.

What's more, companies that become Energy Star manufacturing partners are given unlimited access to a secure section of the Energy Star site that carries logos and other promotional resources -- even without first having qualified products, according to the report. That access to labels mars what the GAO called "a cornerstone in protecting the integrity of the Energy Star label."

Products that carry the Energy Star label generally are 10% to 25% more efficient than minimum federal standards. They also tend to cost more as manufacturers demand a premium for that higher efficiency. Still, government rebate and tax-credit programs, including about $300 million from the American Recovery and Reinvestment Act, help offset those costs for consumers. Manufacturers are also eligible for federal tax credits for certain energy-efficient products. The EPA and Energy Department said the GAO report and subsequent corrective steps won't affect rebate and tax-credit funds already set aside for consumers.

Automated approval process

The speed with which some of the GAO's 20 fake products got the nod and were added to the Energy Star Web site -- where consumers go before making purchases of major appliances such as refrigerators, dishwashers, washing machines and dryers -- was also alarming, the GAO said. Some products were certified automatically and were never reviewed by human eyes, according to the report.

A refrigerator that the GAO's faux company merely claimed was energy efficient was submitted, qualified and listed on the site within 24 hours free online credit report. A computer monitor went through the same process in 30 minutes.

"That's the part I quite honestly found most disturbing," said Celia Kuperszmid Lehrman, deputy home editor of Consumer Reports. "A consumer who would be looking for products would see it on the Web site and assume that it is qualified."

Indeed, GAO said other companies contacted the bogus firms for product and service requests because of the Web site. "These solicitations are an example of the value placed on being an Energy Star partner and emphasize why rigorous screening in necessary," the report said.

All but five of the products GAO submitted received the coveted label. Of those that didn't, the Energy Star program required two of them to submit independent verification of the GAO's energy-efficiency claims. Critics of the program have long said that all products should have third-party reviews before certification is granted. With the three remaining products, the GAO never received responses from Energy Star and withdrew them when the investigation ended.

The GAO's gas-powered alarm clock, called "Black-Gold," met Energy Star efficiency standards. The product stood 18 inches high, 15 inches wide and 10 inches deep, more closely resembling a small generator. Moreover, the marketing description clearly described it as a gas-powered clock radio that's "easy on your electric bill."

The GAO alerted the EPA and Energy Department about the results ahead of releasing them March 26. On March 19, the EPA and Energy Department announced they would expand testing through third-party, independent laboratories for about 200 of the most common products, such as freezers, refrigerators and room air conditioners, that already have been certified.

In an email statement this week, the EPA and the Energy Department said a recent review found 98% of the products tested met or beat the program's requirements.

"We will continue to eliminate loopholes and strengthen this program, but consumers should have no doubt that the Energy Star label will save them money and reduce carbon pollution," the statement said.

As for new products, the program is developing a system that will require all products to be tested by independent parties before seeking certification. It also will demand ongoing verification testing to insure products stay in compliance as new ones come on the market and it will monitor testing, verification and enforcement to deter exploitation.

"That's a really good step in the right direction," Lehrman said. "We've always had an issue that manufacturers can self-certify their products and have called for independent verification."

Consumer Reports questioned the Energy Star certification process in an exhaustive article in October 2008 and continues to test qualified products. Since then, the Energy Star program has made moves to enforce efficiency standards, including a November 2008 action with LG Electronics that resulted in an order to remove the Energy Star label from some of its refrigerators this year. The parties are in litigation over a dispute of the testing methods LG uses.

In the last four months alone, the EPA and Energy Dept. said they had taken steps ranging from issuing subpoenas to disqualifying products that fell short of standards from 35 manufacturers.

"The good news for consumers," Lehrman said, "is I don't think [companies defrauding the system] is rampant in the Energy Star program and our testing hasn't found that it's rampant."

Energy Star program is under fire