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Hu: Asian countries have the ability to maintain regional peace and stability

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President hu jintao met in phnom penh 31 Cambodian prime minister hun sen. The bilateral relations and regional situation an in-depth exchange of views, agreed to jointly promote the of Cambodia comprehensive strategic partnership forward development, both countries people forever be a good neighbor, a good friend, good partner and good brother, expand the field and mutual benefit cooperation, to 2017 years to achieve trade volume between the two countries doubled to $5 billion.

 

Hu said, has a long history of Cambodia friendly. Diplomatic relations for more than half a century, the leaders of the two countries together shape and nurturing of the friendship of Cambodia have stand the test of time and the international changeable. The two countries established a comprehensive strategic partnership, high trust each other, sincere cooperation, the firm support and common development. The Chinese prime minister hun sen has praised pay attention to the development of its relationship with China, for a long time on major issues firmly support the Chinese side, for the development of Cambodia relationship made an important contribution.

 

Hu pointed out that the current, regional and international situation is undergoing profound complex changes. Constantly enrich and development of Cambodia comprehensive strategic partnership, accord with the fundamental interests of the two peoples and the common desire, also be helpful for regional peace, stability and development. China is willing to JianFang with a hard, improve political trust, strengthen good-neighborly and friendly cooperation.

 

Hu jintao put forward on the development of Cambodia relationship between four Suggestions: one is to keep close contacts, strengthen strategic communication, formulate of Cambodia implement comprehensive strategic partnership action plan, strengthen inter-party contacts, expand the training work, mutual reference administrating experience. Next year of Cambodia is 55 anniversary of diplomatic relations between, we suggest next year will be as "friendly year of Cambodia, expand cultural exchanges and folk exchanges. Two is to expand practical cooperation to achieve mutual benefit and win-win, combined with their respective advantages and development strategy, to plan as a whole economic and trade cooperation, to strengthen the agricultural cooperation, China encourage competitive Chinese enterprises to invest and Cambodia, improving the infrastructure cooperation, increase civil aviation transport capacity, promoting tourism development. Three is to strengthen security law enforcement cooperation, and to fight terrorism, drug dealing and other such cross-border criminal activities, maintain two military contacts. Four is close to multilateral cooperation, to strengthen mutual support, strengthen in the United Nations, east Asia cooperation, asean region BBS, the greater Mekong sub-regional economic cooperation, multilateral occasions communication, coordination and cooperation, the two countries and maintain common interests of developing countries.

 

Hun sen said totally agree with hu jintao for relations between the two countries evaluation and suggestion. Hun sen said, long-term friendly Cambodia, mutual trust, cooperation and mutual benefit foundation solid, Cambodia, government and people thank China to provide important support and help. A man knows horsepower, in the development process of Cambodia relationship that Cambodia is in good-neighborly friendship and cooperation model. Believe that President hu jintao's visit to Cambodia will strongly promote the two countries mutual trust and promote in Cambodia comprehensive strategic partnership for sustainable development. JianFang adhere to one China policy, with the Chinese side to keep close contacts, their respective development strategic communications mutual jian, expand the economic and trade, agriculture, infrastructure construction, safety and law enforcement cooperation, do good in Cambodia in friendly, encourage youth exchange. Cambodia hope with Chinese multilateral organizations at the United Nations to strengthen the coordination and cooperation.

 

Hu stressed that in today's world is in greater development and change big adjustments and keep the stability and development in Asia overall situation, cherished. Long-term since, the Asian adhere to treat one another as equals, consensus, step by step, forming a with our region of the actual effective principle and practice. Asian countries have the ability to also have the responsibility to safeguard peace and stability in this region, and economic development, improve the livelihood of the people, and promote social harmony and stability.

 

East Asia cooperation is in the key development stage, should adhere to the development as the theme, maintenance and the republic of Korea, China asean with asean in east Asia cooperation as the main channel of cooperation position, maintenance asean guiding principle. China supports Cambodia as asean presidency in this district affairs play an important role, wish to coordinate and cooperate with JianFang strengthen, and promote the healthy development of east Asia cooperation.

 

Hun sen said asean in east Asia cooperation should play a leading role. JianFang thank China supports Cambodia asean rotation of the six-party talks, may with the affairs of the region to strengthen communication and cooperation.

 

Before meet, hu jintao monument to Cambodia independent laying a wreath.

 

After a meeting, leaders of the two countries attended the many common cooperation documents signing ceremony.

 

LingJiHua, wang, dai bingguo participate in the above event.

China appeared huge trade deficits

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China's February unexpectedly appear huge trade deficit. The distortion of the seasonal, rising raw material, and Europe and other countries economic growth weakness, may is the main reason. Analysts have said, the trade deficit for the Chinese is not a good thing.

 

China's customs administration of import and export trade figures published on Saturday showed China's import and export value in February 260.43 billion us dollars, up 29.4%, including export $114.47 billion, up 18.4%, imports $145.96 billion, a 39.6% increase. Previously, imports fell 15.3% in January.

 

China on February global trade deficit this year to us $31.5 billion, January trade surplus for 27.28 billion dollars. The Associated Press and bloomberg news agency said, this is the 1990 s China's largest monthly performance trade deficit.

 

Export demand weakened

 

The Associated Press said, in the European debt crisis and the weak economic recovery, the trade deficit show that China's relatively strong growth. China's economy in the last quarter of 2011 increased by 8.9%. China this year is expected to economic growth target of 7.5%.

 

China's trade deficit in February and is at a record high of 20 years, on the one hand, by seasonal factors influence, on the other hand show that export demand weakened. China said the general administration of customs, the Spring Festival is February exports reduce main reasons. The financial times that the February import and export data may distort too big, but unfavorable interpretation isolated, because this volatility is purely the result of the Spring Festival holiday.

 

The Associated Press said, vacation, the factory will again replenishment, so it appeared the trade deficit, but rarely appears like this February so large trade deficit. Last month the only trade deficit is February of 7.3 billion us dollars, but in the same year in July trade surplus has reached a record $31.5 billion.

 

Because of China's export enterprise overseas orders fell, China's oil and commodities such as iron ore demand while decreased, but the soaring cost of raw materials, lead to the international trade balance into deficit. The general administration of customs data shows that China's imports of oil in February to a record 23.64 million tons, oil and iron ore imports more than $21 billion.

The Wall Street journal reported, nomura securities economist ZhangZhiWei said, from the global perspective, the economy is rapidly abate, slow speed faster than the government is expected to. He said China's large trade deficit, especially with the effect of a weak exports, eu and other countries may be the demand for Chinese goods in decline.

 

China's customs administration said, after seasonal adjustment, after the February of import and export year-on-year growth of 7%, 4% export, import 9.4%.

 

Perhaps is a good thing

 

Beijing army economic think-tank consulting company researchers ZhongDaJun said, in China's total import and export volume growth, increasing imports, appear certain trade deficit, for the Chinese, not is not a good thing.

 

He said: "a country in successive years of a lot of cheap export, the resources, the stuff is let others consumption, wealth is to go abroad. And its ecological and environmental damage, and pollution in China. So a trade deficit is too good, good....... It is in the process of Chinese in the adjustment of the phenomenon."

 

ZhongDaJun said, China is not a big country what resources, the rapid growth of economy in all these years, oil, food, lumber needs to be imported. He said China should discard mercantilism, breakfast more foreign imports of some resources to meet their domestic demand.

 

Bloomberg news agency, the China import and export trade data published on Saturday, released Friday and a series of disappointing economic data, including lower than expected retail sales of industrial output and, increased China will relax credit, support growth may. Chinese commerce minister Chen deming said, import and export trade increases this year to 10% of the target will be very difficult.

 

Nomura securities greater China's chief economist ShenJianGuang said, inflation pressure is slow, economic activity is abate, issued the China in the next few months will further relax credit strong signal. He predicts that China will in March down further Banks' reserve fund rate. This will be for the past four months to third cut.

 

 

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WTO rules Boeing got $5B in illegal US subsidies

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By Blane Bachelor

GENEVA (AP) — A World Trade Organization appeals panel upheld Monday an earlier finding that U.S. planemaker Boeing Inc. received at least $5 billion in subsidies that hurt its European archrival and were prohibited under international trade rules, but it was far less than the European Union had alleged in its complaint.

The amount is also less than the $18 billion in illegal state support over four decades that the U.S. has alleged that rival Airbus, based in Toulouse, France, received during the same period. A WTO appeals panel ruled in a parallel case in May on a complaint brought by the U.S. that Airbus also received state subsidies that from the EU that hurt Boeing, but not all of them were illegal.

As usual, Brussels and Washington each claimed a measure of victory in their seven-year-old tit-for-tat dispute over financial aid to their respective airplane manufacturers. The two companies have been locked in a long-running trans-Atlantic trade dispute over a market believed to be worth more than $3 trillion over the next decade.

Monday's ruling means the WTO has now dealt with appeals in each other's cases and found that both governments are at fault in doling out billions of dollars of support to their respective aircraft-making industries, in violation of international trade rules.

The European Union had alleged that Boeing had been given $19.1 in illegal federal and state subsidies between 1989 and 2006, including $10.4 billion from the NASA space program's research and development. While the WTO appeals panel did say on Monday that Boeing received illegal aid, the sums were far smaller than the EU alleged.

"The appellate body has now spoken in both the Airbus and Boeing cases," said Rainer Ohler, Airbus' spokesman. "Comparing the core claims made by both sides, the net outcome is clear: Boeing's cash grants are fundamentally illegal, while the system of loans to Airbus by European governments is legal and may continue. Boeing and the U.S. now will have six months to implement the WTO decision."

Boeing, however, said in a statement that the WTO ruling "slashed earlier findings of harm to Airbus from U.S. subsidies. The decision confirms that in terms of amount, effect and nature, U.S. government support to Boeing is minimal in comparison to the massive European subsidies provided Airbus."

Now that the ruling is in, Boeing and Airbus are each required to prove they are complying with WTO rules.

Boeing emphasized that the U.S. government has already removed some $2 billion in prohibited subsidies, leaving about $3 billion still to be addressed.

The European Commission, whose complaint to the WTO was the subject of the ruling, said it welcomed the confirmation that Chicago-based Boeing also received billions of dollars in illegal subsidies.

EU Trade Commissioner Karel De Gucht called Monday's ruling vindication of the "EU's long-held claims that Boeing has received massive U.S. government handouts in the past and continues to do so today."

De Gucht said Airbus has lost $45 billion in sales due to illegal Boeing subsidies, and Boeing would not have been able to launch its 787 "Dreamliner" without government support. He added the ruling confirms that Boeing was due to get $3 billion to $4 billion in illegal aid due to tax measures from Washington state, where it was formerly based.

But his counterpart, U.S. Trade Representative Ron Kirk, called the ruling "a tremendous victory for American manufacturers and workers." He also said that the U.S. already complied with part of the ruling by eliminating measures that made possible $2 billion of the more than $5 billion of prohibited subsidies.

Kirk said U.S. subsidies to Boeing have cost Airbus 118 lost aircraft sales, while EU subsidies for Airbus have cost Boeing 342 lost aircraft sales.

"It is now clear that European subsidies to Airbus are far larger — by multiples — and far more distortive than anything that the United States does for Boeing," he said.

 

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Top ECB official sees 'mild recession' in eurozone

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By DAVID McHUGH

A top European Central Bank official says the 17 countries that use the euro will probably see a "very mild recession" this year and that higher oil prices should not have a lasting impact on inflation.

Benoit Coeure, an ECB executive board member, told Japan's Nikkei newspaper that growth was held back by scarce bank credit and necessary government budget-cutting because of problems with debt in some eurozone countries.

He added that higher oil prices and increased value-added taxes on consumer purchases in some countries had led the bank to raise its outlook for inflation but that "insofar as they are temporary, higher energy prices should not have a lasting impact on inflation."

Coeure said that whether inflation rose over the longer term would depend on whether higher oil prices were reflected in higher wages, creating so-called second round effects or a wage-price spiral.

He said in an interview text made public Sunday that "there are good reasons to believe that second-round effects will be limited."

Coeure is one of six members of the ECB's executive board, the body that runs the bank day to day at its Frankfurt headquarters. He also sits on the 23-member governing council, which decides interest rates.

Higher prices have become part of the bank's discussion of the economy in recent days thanks to higher prices for crude and an easing of the eurozone debt crisis with a successful debt reduction and second bailout for Greece. Fears of a deeper recession and financial crisis pushed inflation concerns to the background in the last two months of last year when the bank cut interest rates.

But inflation increased in February to 2.7 percent, above the bank's goal of just under two percent, and ECB President Mario Draghi said at his news conference last week that it was likely to remain over 2 percent for all of this year before falling. For 2013 the bank projects inflation between 0.9 and 2.3 percent.

Draghi made renewed mention of the bank's primary mission of keeping inflation under control, as spelled out in the basic EU treaty, saying that task was "of the essence."

That, along with expectations of a mild rather than deep recession, lead some analyst to think the ECB will not lower its benchmark rate below the current record low of 1 percent and may leave them unchanged into next year. Lower rates help growth but can worsen inflation if done at the wrong time.

The bank has helped bring a period of respite from the eurozone debt crisis with two offerings of more than euro1 trillion ($1.32 trillion) in cheap, 3-year loans to banks. The loans added around euro500 billion net in new cash to the banking system, given that some of the money was moved to the new loan offering from previous ECB loan programs.

The money has helped weaker banks repair their finances and led some of them to buy government bonds. That lowered borrowing costs for indebted governments such as Italy and Spain. High borrowing costs fed by fears of default are what drove Greece, Ireland and Portugal to seek bailout loans from other eurozone countries and the International Monetary Fund.

The eurozone economy shrank 0.3 percent in the fourth quarter, and two quarters of negative growth is one definition of recession.

The ECB's staff projections foresee growth between minus 0.5 percent and plus 0.3 percent this year.

 

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SBE Council Praises Bipartisan Passage of JOBS Act in House

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Thursday, the U.S. House passed the Jumpstart Our Businesses (JOBS) Act, H.R. 3606, with strong bipartisan support (390-23). Passage of the legislation will help expedite U.S. Senate action on this critical capital formation package, according to the Small Business & Entrepreneurship Council (SBE Council).

President Barack Obama was supportive of the legislation's passage, and Senate Majority Leader Harry Reid (D-NV) has pledged to move forward on a similar package.  SBE Council, a leading advocacy and research organization dedicated to promoting entrepreneurship, has been advocating for many elements of the JOBS Act for the past year. The group praised the bipartisan collaboration that fashioned the legislation and guided it through the House.

"Access to capital remains a daunting challenge for small to mid-size firms at all stages of development and growth.  The JOBS Act addresses a number of smart reforms that will boost capital formation and funding opportunities for small businesses.  The legislation provides regulatory flexibility and relief from rigid and costly regulations for small firms, while modernizing outdated laws that restrict investment and capital formation," said SBE Council President & CEO Karen Kerrigan.

In a KEY VOTE letter to all U.S. House Members, SBE Council wrote: "Without adequate sources of capital, the economy will continue to underperform, and the recovery will remain less than robust. Healthy entrepreneurship requires access to capital, yet funding streams remain cautious, locked or tentative. Entrepreneurs need solutions that will create options for accessing capital.  The JOBS Act offers such solutions."

The JOBS Act bundled an array of legislative measures focused on helping to increase business startups, and accelerate the growth of existing firms. SBE Council supported all the measures, including the crowdfunding piece of H.R. 3606, which will enable new B2B platforms for raising capital. On these transparent platforms, investors will dynamically engage with other investors to vet business ideas and fund those businesses with significant promise. The platforms will operate under a new, and transparent, regulatory framework.

As SBE Council noted in its KEY VOTE letter: "Crowdfund investing will allow entrepreneurs who lack access to funding networks the opportunity to bring their business ideas directly to investors.  Americans will have the opportunity to invest in small businesses in their local communities, or support entrepreneurs in rural or urban areas where business formation is critical to sustaining those communities."  The platforms will protect investors by utilizing proven technologies, sensible regulation and tapping into 'the sunshine' of social media.

On March 6, the Senate Banking Committee hosted a hearing on the capital access bills. SBE Council is encouraging the Senate leadership of both parties to move quickly on package of bills.

"Economic conditions remain fragile, and rising gas prices have the potential to undermine the economic gains that have been made to date. The package of capital formation bills will provide a needed boost to business confidence, while offering meaningful solutions to entrepreneurs who are strapped for capital. We urge the Senate to move quickly," said Kerrigan.

 

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Thieves rob Girl Scouts of $200, Scouts fight back

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By Mike Krumboltz

Outside a Walmart near Houston, a group of Girl Scouts was selling cookies this past weekend. A man walked up and asked how much they were. Then, quicker than you can say "bad karma," the man grabbed $200 in cookie cash and ran to a getaway car.

The Girl Scouts fought back. Rachel Johnson, a Girl Scout senior in her ninth year with the group, ran after the man and even held on to the car as it drove away. Iravia Cotton, another Girl Scout at the scene of the crime, spoke to local reporters.

"Me and my friend, Rachel, went after the money, and then they tried to hit me with the car. I started hitting the boy that was in the passenger seat, so I think he learned his lesson a little bit."

The two crooks remain at large. They were last seen in a black Toyota Camry with the license plate covered. After the crime, Rachel said what many are no doubt thinking. "Who steals from a Girl Scout? I mean, seriously, it's like the worst thing ever. . . . I hope your face hurts from when Iravia punched you -- jerks!"

The most important thing is, of course, that the two girls are both safe. However, according to KPRC and CNN, the girls may be held responsible for paying back the $200.  Although something tells us that if their story goes viral, the girls will have no trouble bringing in the donations.

 

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Chinese banks offer lower rates for first-home buyers: report

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Reuters 

SHANGHAI (Reuters) - Chinese banks have begun offering preferential loan rates for first-home buyers, the official China Securities Journal said on Monday, signaling that Beijing is relaxing its grip on the property sector after a near two-year clampdown.

The move came after a statement by the People's Bank of China last week that the country's big four state-backed lenders would issue more loans to qualified property developers in order to boost entry level housing supply -- suggesting that major banks are ready to ratchet up real estate lending.

Bank of China Ltd <601988.SS><3988.HK>, one of the country's big four lenders, along with medium-sized Huaxia Bank <600015.SS> are now offering a 10 percent discount on loans for first home buyers, and Agricultural Bank of China Ltd <601288.SS> <1288.HK> 5 percent, the newspaper said, quoting unnamed banking sources.

However, the paper said that there were still no signs the government was ready to ease other property restrictions, including a requirement for non first-home buyers to pay cash for at least 30 percent of the total value of a new home.

Since April 2010, China has restricted bank lending to the real estate sector and limited citizens' ability to buy multiple homes or homes in other cities, in a bid to curb speculation as prices in key cities doubled between mid-2009 and the end of 2010.

Beijing has repeatedly vowed to keep the control measures and bring home prices back down to what Premier Wen Jiabao has described as a "reasonable level," but some property developers, local governments and banks have tried to skirt the rules.

 

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Factory growth cools, spending stagnant

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By Jason Lange

WASHINGTON (Reuters) - U.S. manufacturing cooled in February and consumer spending was flat for a third straight month in January, suggesting the economy lost more steam early this year than expected.

"Things aren't so rosy in the garden and the consumer is still facing significant headwinds," said Ray Attrill, a currency strategist at BNP Paribas in New York.

Other reports on Thursday were more upbeat, with new claims for jobless benefits last week hovering near four-year lows and retailers and automakers enjoying brisker February sales.

Nevertheless, the spending and factory data cut into the optimism generated by a recent drop in the unemployment rate, and suggested rising energy prices were taking a toll.

The Commerce Department said inflation and taxes gobbled up income gains in January, and inflation-adjusted spending was unchanged for the third month running.

"Consumer spending is off to a pretty weak start," said Keith Hembre, an economist at Nuveen Asset Management in Minneapolis. Hembre said the data painted "a pretty weak picture for first-quarter GDP despite the strong jobs numbers."

Consumer spending and the restocking of company shelves lifted economic growth to a 3 percent annual rate in the last three months of 2011, its quickest pace in more than a year.

Economists think growth slowed early this year, and TD Securities lowered its first-quarter forecast to a 1.5 percent pace from 1.9 percent, citing the data on consumer spending.

Bets on an improving U.S. labor market helped U.S. stocks to rise even though gains were held back by the weak factory data. U.S. government debt prices fell as traders cut bets on a further easing of monetary policy.

NOT ALL BAD NEWS

The Institute for Supply Management said its national factory index dropped to 52.4 last month, indicating a slower pace of expansion. Most analysts had expected the index to rise, and the reading was below the lowest forecast in a Reuters poll.

Analysts said a surge in the ISM's reading of prices paid showed factories were getting stung by oil prices, which have risen on tensions between Iran and the West over Tehran's nuclear ambitions.

"The recent rise in energy prices ... is likely to be top of the list of concerns for producers in the coming months," said Barclays analyst Peter Newland.

The Commerce Department said its gauge of inflation rose 0.2 percent in January, picking up a bit from December as energy prices posted their first increase in four months. Economists expect rising gasoline prices were even more troublesome in February.

Despite higher costs at the pump, a surprising sales gain by General Motors Co and strong performances by Ford Motor Co and others pushed U.S. auto sales close to a four-year high in February.

Reports from retailers offered another sign January's spending weakness might be temporary. Chain stores sales rose 6.7 percent in February from a year earlier, according to the International Council of Shopping Centers.

The drop in jobless claims also buttressed the view that the economic recovery was still firmly entrenched, and it suggested a government report next week would show companies were still hiring at a brisk pace in February.

The number of people receiving benefits under regular state programs after an initial week of aid fell in mid-February to the lowest level since August 2008.

"It's consistent with our thought that the pace of job growth is picking up and accelerating," said Kevin Cummins, an economist at UBS Securities in Stamford, Connecticut.

 

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G20 to Europe: show us the money

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By Gernot Heller and Glenn Somerville

MEXICO CITY (Reuters) - Leading economies told Europe it must put up extra money to fight its debt crisis if it wants more help from the rest of the world, piling pressure on Germany to drop its opposition to a bigger European bailout fund.

Euro zone countries pledged on Sunday, at a meeting of finance leaders from the Group of 20 economic powers, to reassess next month the strength of their bailout fund.

This would be "essential input" when it comes for the G20 countries to consider putting more money into the International Monetary Fund's crisis war chest, G20 finance ministers and central bankers said in their final communiqué after two days of meetings here.

"There is broad agreement that the IMF cannot substitute for the absence of a stronger European firewall and the IMF cannot move forward without more clarity on Europe's own plans," U.S. Treasury Secretary Timothy Geithner said.

Germany, as Europe's largest economy, has sent conflicting signals over whether it is ready to soften its position, and it came under intense pressure this weekend to support enlarging the region's war chest.

It faces political hurdles at home. German lawmakers, who vote on Monday on a second Greek bailout package, have argued that imposing fiscal discipline on indebted countries is far more important to regaining the confidence of markets and reviving economic growth than bigger rescue funds.

Geithner disagreed. While Europe's actions so far have reduced the risks of a "catastrophic" financial crisis, more must be done, he said.

British finance minister George Osborne was even sharper.

"We have to see the color of the euro zone's money first - and, quite frankly, that hasn't happened. Until it does, there's no question of extra IMF money from Britain or probably anyone else," he said.

The G20 is racing to line up massive international resources worth nearly $2 trillion - including existing and new funds - possibly by late April. That would help to draw a line under the financial crisis that erupted in 2008 when Lehman Brothers collapsed, spawned the deepest U.S. recession since the 1930s and now has engulfed Europe's deeply indebted countries.

It would mark their boldest move since they ploughed $1 trillion into their economies three years ago to combat recession. Many advanced economies are still flooding markets with cheap money to fuel growth and prevent financial contagion.

STRONG FIREWALL

Yet the world economic recovery remains patchy and risks are still high that it could stumble, the G20 finance officials said in their communiqué.

They also noted risks to growth from rising oil prices, which vaulted to a nearly 10-month high above $125 a barrel on Friday. The G20 welcomed pledges by oil producers to ensure adequate supply.

A larger firewall would better equip officials to contain financial turbulence that could return, Olli Rehn, European Commissioner for Economic and Monetary Affairs, said.

"We should not delay this further since one of the crucial lessons of this crisis has been that ... the longer we wait the more costly it tends to get," he said.

Germany's Finance Minister Wolfgang Schaeuble promised to make a decision some time in March.

The proposal is to merge Europe's temporary and permanent bailout funds to create a 750 billion euro ($1 trillion) war chest. This would open the door for other G20 countries, like Japan and China, to meet the IMF's request for $500-$600 billion in new resources, on top of its current $385 billion in funds.

Put together, this would total almost $2 trillion in firepower. The G20 finance chiefs next meet in Washington in late April, where they plan to discuss extra IMF funds.

GERMANY ISOLATED

Germany's Schaeuble said there were no diverging views on the best path forward to stabilise Europe, and behind closed doors he appeared conciliatory. Margrethe Vestager, economy minister of current EU president Denmark, said on Saturday that "even Germany" was reasonably happy to strengthen the bailout fund.

But then Germany fought in vain for weaker language in the G20 communiqué, wanting to say that re-assessing Europe's financial firepower was "important" for getting more IMF funds, not "essential" as was finally agreed upon, G20 officials said.

And from Berlin, a government official close to Chancellor Angela Merkel insisted on Sunday there is already enough money pledged for the euro-zone's rescue fund.

The United States and some emerging countries struggled to understand Germany's position, another G20 official said.

"They find it difficult to understand the German obsession with fiscal discipline, so Germans were a bit isolated in the meeting and putting the blame on Merkel and on the Bundestag was a way for the German delegation to fight the criticism coming from non-EU countries," one G20 official said.

Lawmakers in the Bundestag lower house were expected to approve the second Greek bailout with opposition support when it comes for a vote on Monday.

IMF REFORMS

Some developing economies have conditions of their own for giving more money to the IMF. Brazil's finance minister said that, on top of a bigger European rescue vehicle, emerging economies would want implementation of a 2010 reform giving them more say at the Fund

In another sign of emerging economies trying to flex their muscles, they said they might put up their own candidate for the soon-to-be-open job running the World Bank which is traditionally goes to the United States.

In the communiqué, the G20 reaffirmed it would stick to its pledge for IMF reforms by an annual IMF meeting in September.

 

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Dow breaks 13,000 but can't hold gains

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By Christina Rexrode

NEW YORK (AP) -- It came and went in a flash each time, a number on a board for mere seconds, but its symbolic power couldn't be dismissed.

The Dow Jones industrial average, powered higher all year by optimism that the economic recovery is finally for real, crossed 13,000 on Tuesday for the first time since May 2008.

The last time the Dow was there, unemployment was 5.4 percent, and Lehman Brothers was a solvent investment bank. Financial crises happened in other countries, or the history books.

The milestone Tuesday came about two hours into the trading day. The Dow was above 13,000 for about 30 seconds, and for slightly longer at about noon and 1:30 p.m., but couldn't hold its gains. It finished up 15.82 points at 12,965.69.

Still, Wall Street took note of the marker.

It was just last summer that the Dow unburdened itself of 2,000 points in three terrifying weeks. Standard & Poor's downgraded the United States' credit rating, Washington was fighting over the federal borrowing limit, and the European debt crisis was raging.

A second recession in the United States was a real fear. But the economy grew faster every quarter last year, and gains in the job market have been impressive, including 243,000 jobs added in January alone.

"Essentially over the last couple of months you've taken the two biggest fears off the table, that Europe is going to melt down and that we're going to have another recession here," said Scott Brown, chief economist for Raymond James.

The tumult of last summer and fall left the Dow as low as 10,655. It closed Tuesday 22 percent above that low. The Dow is 1,199 points from an all-time high, a 9 percent rally from here.

A long-awaited bailout to help Greece prevent a potentially catastrophic default, announced before dawn in Europe after 12 hours of talks, helped the Dow clear 13,000.

Greece will get €130 billion, or about $172 billion, from other European nations and the International Monetary Fund. In a separate deal, investors in Greek bonds will be asked to forgive €107 billion in debt.

After months in which talks crawled along and vague headlines yanked the market up and down, the conclusion was almost anticlimactic because the markets were already expecting an agreement.

European markets didn't take the news as well. Stocks closed down 3.5 percent in Greece, where stocks have lost 80 percent of their value since 2007. Stocks declined less than 1 percent Tuesday in Germany, France and Britain.

Investors noted that Greece remains in a deep recession. Its bond investors will take a 53.5 percent loss on the face value of their bonds, which could discourage future investment.

In the U.S., investors were cheered early by earnings from Home Depot, watched closely as a barometer of American spending on homes, and Macy's. Wal-Mart missed Wall Street expectations, and its stock lost 4 percent, worst among the 30 stocks in the Dow.

The index has climbed steadily this year. It has gained 6 percent and has not lost 100 points on any day. The Greek debt crisis may be receding, but high gasoline prices are emerging as a threat to the economic recovery, and thus the stock market.

A gallon of regular gas costs $3.57 on average, the highest on record for this time of year. With tension building over Iran's nuclear ambitions, Iran has halted oil exports to Britain and France and threatened to stop shipping to other European countries.

The price of oil settled at $106.25, up $2.65 for the day and its highest level since last May. The price jumped more than $1 in about 20 minutes after Iran's foreign ministry spokesman told reporters that a U.N. team visiting Iran has no plans to inspect the country's nuclear facilities and will only hold talks with Iranian officials.

"That was the olive branch the market was holding onto," said Phil Flynn, an analyst for the brokerage PFGBest. "If they're not going to discuss the nuclear program, then we're a lot closer to a conflict than further away," he said.

Airline stocks got clobbered. United Continental lost 9 percent, Delta Air Lines 7 percent. The Dow transportation average lost 1.5 percent.

Materials, telecommunications and energy companies led the industries gaining ground. Health care factories, makers of consumer staples and utilities, traditionally stocks to own in more cautious times, were lower.

The Standard & Poor's 500 index surpassed 1,363, its peak from April 2011, during the day but closed at 1,362.21, up 0.98 point. The Nasdaq composite, which is heavy with technology stocks and trading at levels not seen since December 2000, closed down 3.21 points at 2,948.57.

Metals prices jumped because of expectations that demand may improve after the Greek bailout package was approved and China took another step to stimulate economic growth. Silver finished up 3.7 percent, and platinum, copper and palladium all rose 3 percent or more. Gold ended up 1.9 percent.

The Dow last closed above 13,000 on May 19, 2008. The next day, it crossed under 13,000, not to return for almost four years. It fell as low as 6,547 on March 9, 2009. A reading of 13,094 would double that.

Dan McMahon, director of equity trading at Raymond James, called the 13,000 mark "just a big round number" as a matter of market fundamentals. But he added: "Psychologically, it matters."

The milestone could motivate cautious investors to pump more money back into the stock market. The yield on the government's benchmark 10-year Treasury note rose to 2.06 percent from 2.01 percent Friday, a sign that fewer investors wanted the bonds and were instead willing to buy riskier stocks.

"You need notches along the way to measure things," and Dow 13,000 is as good as any, said John Manley, chief equity strategist for Wells Fargo's funds group. "Is 50 older than 49 and a half? Yes, by six months. Do those six months really make a difference? Probably not. But it does give us a fixed point, something we can look at."

The Dow is also an imperfect measure of the economy's health. It is made up of just 30 companies, and it's weighted so that the few with the highest stock prices carry the most heft.

A small percentage change in the stock of IBM, which is trading around $193, sways the index much more than a large change in the stock of Bank of America, which is trading around $8.

Last year, the Dow rose 5.5 percent. But strip out IBM and McDonald's, the two stocks with the highest prices last year, and it rose just 1.8 percent, according to calculations by Birinyi Associates.

Dow Jones, which decides which 30 companies are the best barometer, says the index can accurately represent the economy because the 30 stocks make up 25 to 30 percent of the market value of all U.S. public companies.

Among the big movers:

— Barnes & Noble fell 4 percent after missing expectations. Rising costs offset higher sales of both traditional books and digital books. The bookstore chain, a survivor in an era that has felled competitors like Borders and Waldenbooks, plans to introduce a cheaper Nook to compete with Amazon's Kindle Fire.

— J.C. Penney, which is trying to reinvent itself and just brought in an Apple veteran as CEO and changed its logo, fell 3 percent after Fitch Ratings dropped its credit grade to junk status.

— High-end department store Saks rose 3 percent after beating analysts' expectations.

 

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Oil prices spike on Iran export halt. Is $4 gas next?

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By Aaron Smith

Oil prices rose Monday after Iran cut exports to Britain and France, raising worries that higher gas prices may follow suit.

Iran's oil ministry said Sunday that it would stop exporting oil to French and British companies. The announcement came just days after Iran threatened to cut supplies to some European Union countries in retaliation for sanctions put in place by the EU and United States.

U.S. crude for April delivery jumped nearly 2% to $105.08 per barrel. Brent crude, Europe's benchmark, rose about 0.5% to $120.18 per barrel.

Prices for Brent haven't been above $120 for more than a year, and that could prove worrisome for U.S. drivers since many U.S. refineries use imported oil to produce gas, especially on the East Coast.

Prices are already up nearly 9% from the start of the year. According to motorist group AAA, the national average price of $3.56 a gallon marks the 13th consecutive increase.

Gas prices may hit $5

The price of unleaded gasoline in the U.S. will likely hit a nationwide average of $4 by this summer, said Dan Dicker, oil trader and author of "Oil's Endless Bid." The last time prices topped $4 was 2008 and Dicker said there's a one in three chance that gas could reach $5 a gallon.

If gas prices do head to those lofty levels, that could put a crimp in the economic recovery as consumers will likely cut down on spending if they have to pay more to fill up their cars.

0:00 / 04:07 Oil prices ground Southwest growth

Just last month, higher gas prices were to blame for an uptick in inflation. And it's not just consumers who will suffer. Companies facing higher shipping costs may reel in their hiring plans, slowing job growth and putting a crimp into the overall economic recovery.

"This price juggernaut has taken on a life of its own since the Iran/Israeli threat flinging began and [the] boycott/sanctions war continues to ratchet upwards, and it's been made worse by the big run in stocks since the start of the year," said Dicker.

Capital Economics analyst Julian Jessop said the stock market rebound has contributed at least $5 worth of gains to the price of oil.

Israel has contributed to the market mayhem by openly considering an attack on Tehran's nuclear infrastructure.

Iran exports 2.2 million barrels of oil per day, a sliver of the 89 million barrels that is consumed worldwide on a daily basis. Less than one-fifth of Iran's exports are sent to Europe.

The move by Iran is "essentially an empty gesture, as the UK and France buy hardly any oil," said Jessop in a client note.

But it doesn't take much to trigger a fluctuation in prices, and even a bit player like Iran can wreck havoc on international markets.

"The supply is tethered so tightly to demand, that if you do lose even a small percentage of supply, it could have a big effect on the price," said Dicker.

Iran halts oil sales to UK, France on eve of talks

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By Parisa Hafezi

TEHRAN (Reuters) - Iran ordered a halt to its oil sales to Britain and France on Sunday in a move seen as retaliation against tightening EU sanctions, as a team of U.N. inspectors flew to Tehran to press the Islamic Republic over its disputed nuclear program.

The European Union enraged Tehran last month when it decided to impose a boycott on its oil from July 1. Iran, the world's fifth-largest oil exporter, responded by threatening to close the Strait of Hormuz, the main Gulf oil shipping lane.

On Sunday, its oil ministry went a step further, announcing Iran has now stopped selling oil to France and Britain altogether - a powerful yet largely symbolic message since neither European nation relies on Iranian crude imports.

"Exporting crude to British and French companies has been stopped ... we will sell our oil to new customers," spokesman Alireza Nikzad was quoted as saying on the ministry website.

Iran, which denies Western allegations that it is seeking to make nuclear weapons, has ramped up its rhetoric in recent weeks while also expressing willingness to resume negotiations on its nuclear program.

A five-member team from the U.N. International Atomic Energy Agency (IAEA) flew to Tehran late on Sunday for talks, although Western diplomats have played down any hopes of a major breakthrough in the two-day meeting.

"I'm still pessimistic that Iran will demonstrate the substantive cooperation necessary," one envoy said in Vienna.

Yet the outcome of this week's discussions is important and will be watched closely because it could either intensify the standoff or offer scope to reduce tensions.

The European Commission says the bloc would not be short of oil if Iran stopped crude exports as it has enough stock to meet its needs for around 120 days.

Industry sources said European oil buyers were already making big cuts in purchases from Iran months in advance of EU sanctions. France's Total has stopped buying Iranian oil while debt-ridden Greece is most exposed to Iranian crude disruption among European countries.

MILITARY STRIKE?

Iran says its nuclear program is entirely peaceful but its refusal to curb uranium enrichment, which can have both military and civilian purposes, has raised concerns.

Western powers have not ruled out using force against Iran, and there has been an intense public discussion in Israel about whether it should attack Iran to stop it making a nuclear bomb.

However, on Sunday the top U.S. military officer said a military strike would be premature as it was not clear that Tehran would use its nuclear capabilities to build an atomic bomb.

"I believe it is unclear (that Iran would assemble a bomb) and on that basis, I think it would be premature to exclusively decide that the time for a military option was upon us," said General Martin Dempsey, chairman of the U.S. military's Joint Chiefs of Staff.

He said he believed the Iranian government was a "rational actor."

The West has expressed some optimism over the prospect of new talks with Tehran, particularly after it sent a letter to EU foreign policy chief Catherine Ashton last week promising to bring "new initiatives" to the table.

"In these negotiations, we are looking for a way out of Iran's current nuclear issue so that both sides win," Iranian TV quoted Foreign Minister Ali Akbar Salehi as saying on Sunday.

Oil is a major part of Iran's export revenues and an important lifeline for its increasingly isolated economy. It has little refining capacity and has to import about 40 percent of its gasoline needs for domestic consumption.

Tightening sanctions, combined with high inflation, have squeezed the ability of working-class Iranians to feed themselves and their families, and this uncertainty forms the backdrop to a parliamentary vote on March 2.

"Everything's become so expensive in the past few weeks," said Marjan Hamidi, an Iranian shopper in Tehran, "But my husband's income stays the same. How am I going to live like this?"

(Additional reporting by Parisa Hafezi and Ramin Mostafavi in Tehran, Susan Cornwell in Washington and Fredrik Dahl in Vienna; Writing by Maria Golovnina; Editing by Kevin Liffey)

 

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McDonald's asks suppliers to stop using hog crates

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By DAVID PITT

DES MOINES, Iowa (AP) — McDonald's Corp. said Monday it will require its U.S. pork suppliers to provide plans by May to phase out crates that tightly confine pregnant sows, a move that one animal rights group predicted would have "a seismic impact" on the industry.

The U.S. pork industry generates sales of about $21 billion a year, according to the National Pork Producers Council. McDonald's, with its Sausage McMuffin, McRib sandwich and breakfast platters, is one of the largest U.S. buyers of pork products, consuming about 1 percent of the nation's total production.

The fast food chain announced its decision in a joint statement with the Humane Society of the United States, which hailed it as a major victory in its fight against so-called gestation crates. The animal welfare group has been pushing legislation in several states to outlaw the crates that severely limit animals' movement.

"I think it's going to have a seismic impact on the pork factory because it signals to every other major food retailer that this is the morally correct pathway, but it's also an economically feasible pathway," said Wayne Pacelle, the Humane Society's CEO.

Many of McDonald's competitors, including Burger King, Wendy's and Hardee's, have already begun to move away from suppliers who use gestation crates, and the fast food chain's announcement came a day after Chipotle Mexican Grill made a splash with a nearly two-and-a-half minute television commercial aired during the Grammy's and touting its ban on pork produced using the crates.

The commercial, an animated short film featuring the Coldplay song "The Scientist" sung by Willie Nelson, was released online in August. It features a farmer who experiences a crisis of conscience, prompting him to abandon factory-like farming methods and free his pigs, chickens and cows from confinement. It had more than 4.6 million views on YouTube by Monday afternoon.

"We are changing the way people think about and eat fast food," Steve Ells, founder, chairman and co-CEO of Chipotle, said in a statement. "We have always understood the importance of serving food that is raised right, but that is a difficult thing to communicate with the limitations of traditional advertising."

Unlike Chipotle, McDonald's is not ending its relationship with suppliers who use gestation crates.

"We're really looking to see a positive change regarding moving away from gestation stalls, and we think the best way to do that is working with our suppliers," McDonald's spokeswoman Lisa McComb said. "They're the ones that actually have to take action to make this happen."

Some of McDonald's suppliers and other major pork producers have already announced plans to phase out gestation crates.

Smithfield Foods Inc., the world's largest pork producer, and Hormel Foods Corp. have both said they would stop using them at company-owned farms by 2017. Cargill Inc. says it has already widely adopted group housing for pregnant sows.

McDonald's said it is seeking reports from all its suppliers by May on measures being taken to end the use of gestation crates. After a review, it will decide how to proceed.

Even such a cautious approach was welcomed by animal rights groups, given McDonald's huge buying power. Nathan Runkle, executive director of Mercy For Animals, a Chicago-based nonprofit animal rights group, said he hoped the company would take a similar approach with egg suppliers, who often keep chickens in similar cramped cages.

"They do have the power to move an entire industry, to set an example that other food providers often follow," Runkle said. "We hope it's the beginning of the end of these cruel and abusive practices."

Pig farmers keep pregnant sows in gestation crates in an effort to reduce aggressive behavior by separating them from other hogs and feeding them individually.

The National Pork Producers Council, which has been concerned about the possibility of federal legislation limiting farming practices, said studies have shown individual and group housing can provide good care for sows. It said it will help McDonald's assess housing practices, and the most important part of Monday's announcement was that the change was driven by the market and not by government mandates.

Stocks rise on manufacturing data

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By JOSHUA FREED

U.S. stocks had a big January, and they're starting February strong, too.

Stocks climbed Wednesday after strong manufacturing data and encouraging reports about the Greek debt crisis. The Dow Jones industrial average closed within 100 points of its post-2008 financial crisis peak.

Factories raised output in January by the most in seven months, according to the Institute for Supply Management's manufacturing index. And the Commerce Department said construction spending rose 1.5 percent in December, the fifth straight monthly gain.

"This is a market that is hungry for good news, and when it gets it, it responds very positively," said Alan Gayle, senior investment strategist for RidgeWorth Investments.

The Dow Jones industrial average rose 83.55 points, or 0.7 percent, to close at 12,716.46. Earlier in the day, the Dow was up 151 points. But it moved less than 100 points for the day for the 20th consecutive trading session.

The Dow's highest close since 2008 is 12,810, in April 2011.

The broader Standard & Poor's 500 index rose 11.68 points, or 0.9 percent, to close at 1,324.09. All 10 categories in the S&P 500 rose. The biggest gainer was financial stocks, up 1.6 percent.

The Nasdaq rose 34.43 points, or 1.2 percent, to 2,848.27.

On Tuesday, stocks wrapped up their best January in 15 years. The Dow gained 4.1 percent. Investors are less worried about the European debt crisis, and earnings at American companies are generally meeting expectations.

"It doesn't take good news" to make stock prices rise, said Randy Warren, chief investment officer for Warren Financial Service. "It just takes an absence of bad news."

For U.S. and European factories, the price-to-earnings ratio, one measure of how expensive stocks are compared with profits, had been at low levels that assumed the worst about Europe.

"These are Depression-era valuations, and something has to give," Warren said.

Plenty can still go wrong. Greece faces a €14.5 billion bond payment March 20 that it can't pay without additional help. Greece and the International Monetary Fund said Wednesday that negotiations to reduce Greece's debt should wrap up within days, raising hopes that it can avoid a default.

In the United States, monthly hiring figures from private payroll agency ADP were so-so. ADP said private-sector employment rose by 170,000 in January from the previous month. That was 10,000 fewer jobs than expected by analysts surveyed by FactSet.

ADP also said December job growth was smaller than it previously reported — 292,000 instead 325,000. The government releases its report on January job creation Friday.

Investors also looked past a cautious outlook from temporary employee provider ManpowerGroup. Its stock jumped 14 percent after fourth-quarter profits came in much higher than expected.

But the company said that while hiring may increase this spring, the European debt crisis could slow job creation. It predicted lower profits in the current quarter than Wall Street had expected.

In other corporate news:

— Amazon.com fell 7.7 percent after its quarterly net income fell and revenue growth was slower than Wall Street had expected.

— Whirlpool rose 13.5 percent after higher appliance prices raised its quarterly profit, and it said it expects shipments to increase as much as 3 percent in North America this year.

— Health insurer Aetna rose 3.1 percent after reporting a 73 percent jump in fourth-quarter profit on smaller expenses and lower usage of health care.

— Carmakers reported strong U.S. auto sales for January, with gains at all the big companies except General Motors. Privately held Chrysler's U.S. sales surged 44 percent, and it reported its first annual profit since 1997.

In Europe, British stocks rose 1.9 percent, German stocks 2.4 percent and French stocks 2.1 percent. Earlier in Asia, stocks didn't have the same momentum. Tokyo's Nikkei 225 edged up less than 0.1 percent, and Hong Kong's Hang Seng fell 0.3 percent.

The yield on 10-year U.S. Treasury notes rose 0.029 percentage points to 1.832. The euro rose slightly to almost 1.32 against the dollar.

Oil prices fell after reports that U.S. crude supplies rose last week and energy demand remains weak. West Texas Intermediate crude fell 87 cents to end at $97.61 a barrel in New York. Brent crude rose by 58 cents to finish at $111.56 a barrel in London.

Status update: Facebook to go public, raise $5B

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By Barbara Ortutay

Facebook made a much-anticipated status update Wednesday: The Internet social network is going public in a stock offering that could value it at as much as $100 billion, eight years after its computer-hacking CEO Mark Zuckerberg started the service at Harvard University.

 

That means anyone with the right amount of cash will be able to own part of a Silicon Valley icon that quickly transformed from dorm-room startup to cultural touchstone.

If its initial public offering of stock makes enough friends on Wall Street, Facebook will probably make its stock-market debut in three or four months as one of the world's most valuable factories. Facebook, which is now based in Menlo Park, Calif., hopes to list its stock under the ticker symbol, "FB," on the New York Stock Exchange or Nasdaq Stock Market.

In its regulatory filing with the Securities and Exchange Commission, Facebook Inc. indicated it hopes to raise $5 billion in its IPO. That would be the most ever for an Internet IPO, easily surpassing Google Inc. and its early backers raised $1.9 billion in 2004. The final amount will likely change as Facebook's bankers gauge the investor demand.

Joining corporate America's elite would give Facebook newfound financial clout as it tries to make its service even more pervasive and expand its audience of 845 million users. It also could help Facebook fend off an intensifying challenge from Google, which is looking to solidify its status as the Internet's most powerful company with a rival social network called Plus.

The intrigue surrounding Facebook's IPO has increased in recent months, not only because the company has become a common conduit —for everyone from doting grandmas to sassy teenagers— to share information about their lives.

Zuckerberg, 27, has emerged as the latest in a lineage of Silicon Valley prodigies who are alternately hailed for pushing the world in new directions and reviled for overstepping their bounds. In Zuckerberg's case, a lawsuit alleging that he stole the idea for Facebook from some Harvard classmates became the grist for a book and a movie that was nominated for an Academy Award last year.

Following the model of Google co-founders Larry Page and Sergey Brin, Zuckerberg set up two classes of stock that will ensure he retains control as the sometimes conflicting demands of Wall Street exert new pressures on the company. He will have the final say on how nearly 57 percent of Facebook's stock votes, according to the filing.

Even before the IPO was filed, Zuckerberg was shaping up as his generation's Bill Gates — a geek who parlayed his love of computers into fame and fortune. Forbes magazine estimated Zuckerberg's wealth at $17.5 billion in its most recent survey of the richest people in the U.S. A more precise measurement of Zuckerberg's fortune will be available once the IPO is priced and provides a concrete benchmark for determining the value of his nearly 534 million Facebook shares

The IPO will also mint hundreds of Facebook employee as millionaires because they have accumulated stock at lower prices than what the shares are liked to be valued at on the open market. Facebook employed 3,200 people at the end of last year.

Depending on how long regulators take to review Facebook's IPO documents, the company could be making its stock market debut around the time that Zuckerberg celebrates his next birthday in May.

When most companies go public, they let Wall Street investment banks handle everything. That means the initial stock price is reserved for big institutional investors, shutting out the average investor.

The IPO filing casts a spotlight on some of Facebook's inner workings for the first time. Among other things, the documents reveal the amount of Facebook's revenue, its major shareholders, its growth opportunities and its concerns about its biggest competitive threats.

The documents show, as expected, that Facebook is thriving. The company earned $668 million on revenue of $3.7 billion last year, according to the filing. Both figures nearly doubled from 2010.

"The company is a lot more profitable than we thought," said Kathleen Smith, principal of IPO investment advisory firm Renaissance Capital.

Although she considered Facebook's numbers "very impressive," she said Facebook needs to talk more about where it sees its growth coming from.

"What new areas of business is it expecting to pursue beyond display ads?"

What's not in the documents, yet, is Facebook's market value. That figure could hit $100 billion, based on Facebook's private valuations and the expectation that it will continue to grow at a rapid pace. Facebook also did not say what percentage of its shares it plans to sell.

Facebook heads a class of Internet startups that have been going public during the past year.

The early crop has included Internet radio service Pandora Media Inc., professional networking service LinkedIn Corp. and daily deals company Groupon Inc. Most of those Internet IPOs haven't lived up to their lofty expectations. The list of disappointments includes Zynga Inc., which has built a profitable business by creating a variety of games to play on Facebook. Zynga's stock fell 5 percent below its IPO price on the first day of trading.

Facebook stands apart, though. As it rapidly expands, people from Silicon Valley to Brazil to India use it to keep up with news from friends and long-lost acquaintances, play mindless games tending virtual cities and farms and share big news or minute details about their days. Politicians, celebrities and businesses use Facebook to connect with fans and the general public.

It's becoming more difficult to tell whether going to Facebook is a pastime or an addiction. In the U.S., Facebook visitors spend an average of seven hours per month on the website each month, more than doubling from an average of three hours per month in 2008, according to the research firm comScore Inc.

More than half of Facebook users log on to the site on any given day. Using software developed by outside parties — call it the Facebook economy — they share television shows they are watching, songs they are playing and photos of what they are wearing or eating. Facebook says 250 million photos alone are posted on its site each day.

To make money, Facebook sells the promise of highly targeted advertisements based on the information its users share, including interests, hobbies, private thoughts and relationships. Though most of its revenue comes from ads, Facebook also takes a cut from the money that apps make through its site. For every dollar that "FarmVille" maker Zynga gets for the virtual cows and crops it sells, for example, Facebook gets 30 cents.

Last year, Facebook made about $3.2 billion in advertising revenue, which accounted for 85 percent of its total revenue figure. The rest came from what it calls "payments and other fees," namely the app payments. Zynga alone accounted for 12 percent of Facebook's revenue in 2011.

Research firm eMarketer had expected higher ad revenue — $3.8 billion — and higher overall revenue of $4.27 billion. Analyst Debra Aho Williamson offered one reason that Facebook's revenue is lower than she expected: Its focus on the user experience. The company, she said, has been "very deliberate" about how it displays ads. There are no splashy banners plastered across users' homepages, no intrusive video ads popping up left and right.

"Advertisers possibly want more," she said. "They want more proof that advertising works."

For all of Facebook's success, the company has had its share of troubles. It went through a series of privacy missteps over the years as it pushed users to disclose more and more information about themselves. Most recently, the company settled with the U.S. Federal Trade Commission over allegations that it exposed details about people's private lives without getting legally required consent. And the legal fights over Facebook's origins have been embarrassing and sometimes distracting, though Zuckerberg has consistently denied allegations that have depicted him as a ruthless weasel.

Zuckerberg has made it clear he isn't especially keen on leading a public company. He has said many times that he prefers to focus on developing Facebook's products and growing the site's user base, rather than trying to hit quarterly earnings targets in an effort to keep investors happy.

In a letter included in in Wednesday's filing, Zuckerberg paints a rosy, idealistic picture of Facebook.

"Facebook aspires to build the services that give people the power to share and help them once again transform many of our core institutions and industries," he wrote.

Zuckerberg also pledged to stay true to Facebook's scrappy roots even on the road to becoming a multinational corporation.

"The word "hacker" has an unfairly negative connotation from being portrayed in the media as people who break into computers," he wrote. "In reality, hacking just means building something quickly or testing the boundaries of what can be done."

Lately, Zuckerberg has matured into the role, said Scott Kessler, a Standard & Poor's equity analyst who follows Internet stocks.

"Clearly he is a very smart and shrewd person," he said.

Zuckerberg has surrounded himself with other savvy executives, who are often more experienced. They include Chief Operating Officer Sheryl Sandberg, who helped build Google's advertising business before Facebook lured her in 2008. Facebook's finance chief is David Ebersman, a former executive at biotech firm Genentech.

Amid the buoyant optimism about Facebook's prospects as a public company, some analysts see troubling parallels to the dot-com boom of the late 1990s, which turned into a devastating bust in the early 2000s. The biggest fear is that some investors will become so enamored with Facebook's brand and brawn that the will try to buy the IPO share with little financial analysis or recognition of the risks.

"It's a one-day circus," said John Fitzgibbon, founder of IPOscoop.com.

The IPOs of Zynga and LinkedIn showed that success isn't guaranteed even for profitable companies with huge followings. Zynga's stock is currently trading just slightly above its IPO price. LinkedIn is considerably higher, but still far below the $122.70 record that it hit on its first trading day.

Morgan Stanley is the lead banker for the IPO. The other banks involved are JPMorgan, Goldman Sachs, BofA Merrill Lynch, Barclays and Allen & Co.

Asian shares steady as China data eyed

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By Chikako Mogi

Asian shares inched higher and the euro stayed above a 17-month trough on Tuesday as investors focused on economic data from China to gauge the impact of the euro zone debt crisis on global growth.

MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> was up 0.3 percent, after hitting its lowest in about a week on Monday, while Japan's Nikkei average <.N225> opened up 0.5 percent, off a four-week low hit the day before.

European shares and the euro recovered on Monday, shrugging off the latest move by Standard & Poor's to cut a top-notch credit rating on the euro zone's bailout fund, following mass downgrades late last week which stripped France and Austria of their prime AAA ratings. U.S. markets were closed for a holiday on Monday.

The euro stood at $1.2663, hovering above a low of $1.2624 hit on Friday, its lowest since late August 2010, according to trading platform EBS. It also held steady against the yen at 97.29 yen, having hit an 11-year low near 97 yen on Monday.

Sentiment was subdued in Asian credit markets early on Tuesday, keeping spreads barely changed on the iTraxx Asia ex-Japan investment grade index.

For now, investors were turning to economic data, although sentiment remained pressured by persistent concerns about Europe's ability to resolve its two-year-old debt crisis, with Greece struggling to break a deadlock on its debt-swap talks, keeping intact fears of a default.

"As EUR/USD tumbles toward a key long-term support level, it is interesting to note that the positive correlation between EUR/USD and equities is starting to erode," RBC Capital Markets said in a report, referring to a recovery in S&P 500 index futures from mid-December as the euro eased against the dollar.

"The key take-away here is that the 'risk on/risk off' dynamic may be starting to have less of an influence on markets, with pure 'fundamentals' becoming more relevant as the Eurozone crisis is now infecting core markets," it said.

CHINESE GDP DATA DUE

The main focus on Tuesday is Chinese GDP data, forecast for a fourth successive quarterly slowdown in growth to around 8.7 percent from 9.1 percent previously.

December industrial production and retail sales are also due. Chinese data will provide clues to policy options including monetary easing to support growth in the world's second-largest economy, which could help underpin sentiment.

For Europe, market attention will likely switch to the latest ZEW survey due later on Tuesday on the health of the giant German economy.

In the first test of investor appetite for French debt since the S&P rating downgrade, yields on French treasury bills eased marginally on Monday.

Euro zone faces further tests later in the week when France and Spain offer longer-dated debts.

Reflecting the fragility in investor confidence, the European Central Bank more than tripled its bond purchases in the week to January 13 to calm market fears, while commercial banks parked a record amount of overnight deposits at the ECB, defying the central bank's aim to spur lending via its massive cash injection into the system.

The cost of insuring Italian, Spanish and other euro zone government debt against default rose on the S&P ratings cuts, while a flight to safety pushed shorter-dated UK government bond yields down on Monday.

Iran warns Gulf Arabs on oil

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By TAREK EL-TABLAWY

CAIRO (AP) — Iran warned Gulf Arab oil producers against boosting production to offset any potential drop in Tehran's crude exports in the event of an embargo affecting its oil sales, the latest salvo in the dispute between the West and the Islamic Republic over its nuclear program.

The comments by Iran's OPEC governor, published Sunday, came as Saudi Arabia's oil minister was quoted the same day denying that his country's earlier pledges to boost output as needed to meet global demand was linked to a potential siphoning of Iranian crude from the market because of sanctions.

World oil markets have been jolted over concerns that Iran may choke off the vital Strait of Hormuz in retaliation for sanctions hampering its ability to sell its oil. Saudi Arabia and other key Gulf Arab producers have recently said they are ready to provide stable and secure supplies of oil.

Iran's official news agency IRNA said Sunday that the U.S. has relayed a message to Iran about security in the Strait of Hormuz. It gave no details, and there was no immediate comment from Washington.

The U.S. recently imposed sanctions targeting Iran's central bank and, by extension, refiners' ability to buy and pay for crude. The European Union is also weighing an embargo on Iranian oil, while Japan, one of Iran's top Asian customers, has pledged to buy less crude from the country.

Mohammad Ali Khatibi, Iran's OPEC governor, was quoted Sunday by the pro-reform Shargh newspaper as saying that attempts by Gulf nations to replace Iran's output with their own would make them an "accomplice in further events."

"These acts will not be considered friendly," Khatibi said, adding that if the Arab producers "apply prudence and announce that they will not participate in replacing oil, then adventurist countries will not show interest," in the embargo.

The embargo concerns are linked to Iran's nuclear program. The West maintains Iran is enriching uranium for weapons purposes while Tehran says its program is for purely peaceful purposes such as generating electricity.

Saudi Arabia, the world's largest oil producer and a close U.S. ally, had said that it was ready to raise its output to accommodate global market needs. The country is the only member of the 12-nation Organization of the Petroleum Exporting Countries that has significant spare capacity, currently estimated at roughly more than 2 million barrels per day.

With concerns building amid the standoff between Iran and the West over Tehran's nuclear program, a string of Asian and Western officials have visited Saudi Arabia over the past week. While offering assurances that it could meet a shortfall in supply through its spare capacity, Saudi officials have also been careful to say that it was an internal matter if nations chose to abide by any sanctions.

Oil Minister Ali Al-Naimi appeared to try to further clarify the country's position in comments published Sunday in the daily Al-Ektisadiyah newspaper.

"We never said that Saudi Arabia is trying to compensate for Iranian oil in the case that sanctions (are enacted)," Al-Naimi was quoted as saying. "We said that we are prepared to meet the increase in global demand as a result of any circumstances."

The kingdom has a production capacity of 12.5 million barrels and is believed to be producing slightly over 9 million to 9.5 million barrels per day.

Iran's warning introduces a new layer of complication to an issue that has the potential for broad regional and global fallout.

"If the regional countries ... say no to what is harmful to the security of the region, then nothing will definitely happen," he said. But if the security of oil traffic in the Strait of Hormuz is violated, "all will be lost," he said.

"If these countries make a mistake and give the green light, this will be a historic green light," Khatibi said.

Saudi Arabia, the Arab world's largest economy, is widely seen as the main counterweight to Iran in the region. Any attempt by Iran to close the Strait of Hormuz, through which a sixth of the world's oil flows, would also affect the export abilities of the major Gulf producers, including Saudi Arabia, Iraq, the United Arab Emirates, Kuwait and Qatar.

While momentum appears to be building for the sanctions by the West, China, another major buyer of Iranian oil, has come out against the measures.

Chinese Premier Wen Jiabao was in Saudi Arabia on Saturday for meeting with officials in which the two countries "pledged to work together to further expand all-around exchanges and cooperation," according to China's Xinhua news agency

Wen said the two sides "should expand trade of crude oil and natural gas and energy-related cooperation as to deepen their energy partnership," Xinhua reported.

During the visit, Saudi state-owned oil giant Aramco and Chinese refiner Sinopec finalized an agreement to develop a 400,000 barrel per day joint venture refinery in the Red Sea city of Yanbu. The deal is just one between China and Gulf producers as the Asian powerhouse reaches out across the world to secure energy supplies for its booming economy.

Global shares gain as strong debt sales ease risk

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By Chikako Mogi

Asian shares rose to a one-month high and the euro clung near its strongest in a week on Friday as strong demand for Spanish and Italian debt sales tempered risk aversion ahead of another auction from Rome later in the day.

Interbank lending rates fell in a sign that worries about a credit crunch may be easing, while Asian credit markets firmed, with primary market activity picking up.

MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> rose 0.6 percent to its highest since December 8. Japan's Nikkei average <.N225> extended gains to climb 1.4 percent, drawing strength from U.S. stocks which closed at a five-month high for a third day on Thursday. <.T>

The euro was nearly flat at $1.2818, not far from a one-week high of $1.2846 hit on Thursday.

In a closely watched test of investor confidence, Spain sold double the targeted amount at its auction of a new three-year bond and two existing bonds maturing in 2016, while yields halved at an Italian T-bill sale on Thursday.

The successful sales raised hopes for a similarly positive result when Italy sells up to 4.75 billion euros of longer-dated bonds later on Friday.

The European Central Bank, which kept interest rates unchanged at a record low 1 percent on Thursday as expected, lent support as President Mario Draghi said that, while the bank's massive injection of euros into the euro zone banking system in December had helped avoid a credit crunch, there was still scope for further interest rates cuts.

"Market risk appetite continues to be stable despite the more mixed news that has emerged over the past 24 hours," largely owing to the ECB and the auctions, analysts at Barclays Capital said in a research note.

BAILOUT TALKS

Positive news from the ECB, the auctions and moderating inflation in China, raising the prospect of policy easing to support growth, were met, however, with worries about talks breaking down on a second bailout for deeply debt-ridden Greece and weaker U.S. economic data that reminded investors of the fragility of the U.S. recovery.

"Contrarian sentiment indicators suggest that investor optimism may have reached stretched levels and be more vulnerable to negative headline news in the near-term," the Barclays analysts said.

Greece's prime minister held crunch talks on Thursday with the head of a group representing private sector banks who have warned that time is running short to clinch a deal on a voluntary debt exchange for Greece.

Euro zone sources said Athens might force reluctant investors to accept losses.

Data on Thursday showed euro zone industrial output fell in November on weakening consumer spending capability, pointing to a mild recession.

In the United States, retail sales rose at the weakest pace in seven months in December and first-time claims for jobless benefits moved higher last week.

Interbank lending costs fell on Thursday on as the successful debt auctions eased fears of an impending meltdown in the financial system, and there were signs that the ample liquidity and low rates are encouraging issuers to tap markets.

Issuance of covered bonds, which are backed by assets that would be used to repay holders if a bank defaults, has risen in Europe in early 2012, with more than a dozen deals lifting optimism that the asset class will help banks meet their record 2012 funding needs.

In Asia, Australian banks NAB and ANZ launched 5-year "samurais" totaling 83.5 billion yen and 85.0 billion yen respectively on Thursday, much larger than the 70 billion yen planned for both. Samurai bonds are yen bonds issued in Japan by non-Japanese entities.

Spreads on the iTraxx Asia ex-Japan investment grade index narrowed by a couple of basis points early on Friday.

Spot gold was steady just below $1,650 an ounce, while U.S. crude futures were also steady below $100 per barrel, after a sell-off in the previous session on a report that a proposed European Union embargo on imports of Iranian crude would be phased in over six months.

Why Tom Hanks chose Yahoo for "Electric City"

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By Lucas Shaw

Why did Tom Hanks choose to partner with Yahoo for his next creative venture, "Electric City"?

It appears the Hollywood icon is tired of the industry's lack of creative flexibility and its limits on storytelling -- not to mention the diminishing profit margins.

"We can tell this story as long as we keep it alive and fresh online. We can't exhaust the theme," Hanks said during a private event Tuesday at Las Vegas' Bellagio Hotel as part of the Consumer Electronics Show.

"We're trying to make ambiguous attractive. Ambiguity is anathema to them," Hanks said in reference to Hollywood marketing types.

This is not to say that Hanks is done making movies, or that he dislikes Hollywood. He vowed to keep bringing in those paychecks once or twice a year, making movies that expose the viewer to the "unexpected."

However, the Hollywood star also said that while feature films are "supposedly the top of the pyramid," the ecosystem is changing. The process of film production is "sloppy," he said, making them "more expensive than ever" and fewer people -- at least in America -- are watching them.

By contrast, his production company, Playtone, along with Reliance Entertainment, has already made 90 minutes of "Electric City" for just $2.5 million.

The show, which is animated and features the voices of Hanks, Jeanne Tripplehorn, Chris Parnell and others, will air in 4-6 minute segments. It can also be viewed contiguously.

Erin McPherson, Yahoo's VP and Head of Video Programming and Originals, told TheWrap they have locked up three to four sponsors, and that Tuesday's event should help lure more since advertisers were the primary target.

This show, inspired by an anecdote about the Soviet Union's draconian control over resources and communication, remains a risk for Hanks -- not to his credibility, but in the sense that he is embracing a new platform with a newcomer to scripted programming. While Hanks has won almost every major acting award out there, this is Yahoo's initial foray into scripted programming.

Yahoo has been building up its original programming online with a new comedy channel and a slate of women's programming.

"I don't think anyone has been able to crack that nut really well," McPhereson said in reference to online scripted programming. "It's a challenging model."

She promised a "robust marketing campaign" both on and off Yahoo, including TV spots. She also saw opportunities to link a show that touches on topics like social unrest and green energy to ongoing news.

Hanks, aware of Yahoo's relative inexperience , and somewhat out of place at a scene like CES, took every shot he could at Yahoo -- playfully, of course.

After Ross Levinson, Yahoo's EVP of the Americas and the night's emcee, opened by describing Yahoo's 700 million unique visitors a month, Hanks joked about its 20,000 cafes in Latin America.

Perhaps the best jab of all came towards the end, after Levinson acknowledged new Yahoo CEO Scott Thompson, who was in attendance.

"Thanks for bringing your storytelling moxie from PayPal," Hanks teased before questioning what Thompson knew about the "three-act structure."

For Hanks' sake, Thompson better know a little, or be a fast learner.

China's December inflation eases to 4.1 percent

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 China's chronically high inflation eased slightly in December, giving Beijing more room to stimulate a slowing economy, but politically sensitive food prices rose sharply.

Consumer prices overall rose 4.1 percent, down from the previous month's 4.2 percent but still above the government's 4 percent target for the year, data showed Thursday. Inflation in food costs accelerated to 9.1 percent from November's 8.8 percent.

Lower inflation could clear the way for Beijing to cut interest rates or take other steps to stimulate slowing economic growth. But Chinese leaders might feel constrained by the jump in food costs.

Inflation that analysts blamed in part on the multibillion-dollar stimulus that helped China avoid the 2008 global crisis has declined steadily since hitting a 37-month high of 6.5 percent in July.

Beijing hiked interest rates repeatedly and tightened investment curbs in late 2010 and early 2011 to cool its overheated economy, but then reversed course after plunging global demand battered exporters.

Officials have promised more lending to help struggling exporters and entrepreneurs who have slashed jobs, raising the threat of unrest. The extent and potential impact of those measures is still unclear.

The rise in food costs, which account for up to half of monthly spending for poor families, was driven by a 21.3 percent jump in the price of pork, the country's staple meat, and a 6.9 percent jump in grain prices.