Life in OUR America, The Livyjr Files Volume 7 Options

[Livyjr]

"Oil fall as dollar shows new strength"

By JOHN WILEN, Associated Press

Last updated: 5:43 p.m., Monday, March 24, 2008

NEW YORK -- Oil prices fell Monday, dropping closer to $100 a barrel as a stronger dollar diminished the appeal of energy and other commodities futures.

Retail gas prices, meanwhile, fell further from recent records, while diesel prices dipped slightly.

Many investors view commodities such as oil as a hedge against inflation and a falling dollar, so the greenback's advance Monday, which followed a stronger showing the past few trading days as well, made oil lose some of its recent allure.

A stronger dollar also makes oil more expensive to overseas investors.

Many analysts believe the dollar's decline was the primary reason oil surged to a record near $112 a barrel early last week.

But the effect tends to reverse when the dollar rises.

"Overall direction is still likely to be set by the course of the dollar," said Addison Armstrong, director of exchange traded markets at TFS Energy Futures LLC in Stamford, Conn., in a research note.

Light, sweet crude for May delivery fell 98 cents to settle at $100.86 a barrel on the New York Mercantile Exchange.

However, Monday's decline was far from decisive, and there were signs that some investors are willing to look beyond the dollar for future price direction.

Prices alternated between gains and losses all day long as a tug of war took place between the speculators who sold as the dollar gained strength, and investors who bought on a view that the economy -- and demand for oil and gasoline -- may not be as weak as initially thought.

Earlier in the day, prices followed the stock market higher after JPMorgan Chase & Co. raised its offer for Bear Stearns Cos. to $10 a share from $2, and a report that existing home sales rose unexpectedly last month.

Energy investors often view stocks as a proxy of the economy's health.

Last week, oil prices dipped in part on concerns that Bear Stearns' near-collapse was a sign of significant economic problems.

Exaggerating Monday's price gyrations were lower than normal trading volumes due to a holiday in Europe, analysts said.

Still, Monday's trend of back-and-forth trading could continue.

There are still investors willing to bet that the strong global economy will boost demand for oil and push prices higher.

Some analysts believe oil's recent declines are temporary -- a correction in a bull market -- and that prices will forge higher again when the Federal Reserve cuts interest rates again, as is widely expected.

Lower interest rates tend to further weaken the dollar.

But there is an opposing school of thought that argues prices have risen far higher than can be justified by the oil market's underlying supply and demand fundamentals.

These analysts believe prices will fall soon and sharply -- regardless of what happens to the dollar.

Falling oil, gasoline and diesel prices would be a welcome relief for consumers who are also paying higher prices for food and feeling the pinch of falling home values.

At the pump, gas prices slipped 0.4 cent Monday to a national average of $3.26 a gallon, according to AAA and the Oil Price Information Service.

And, for a change, diesel prices also slipped 0.7 cent from their most recent record to a national average of $4.029 a gallon.

Gasoline and diesel prices followed oil's surge to a series of records in recent weeks.

But that march higher has halted, at least temporarily, as oil's rally has stalled.

Diesel, used to transport the vast majority of the nation's goods, is a large part of the reason food prices are rising.

Other energy futures were mixed Monday.

April heating oil futures fell 1.41 cents to settle at $2.9631 a gallon on the Nymex, while April gasoline futures rose 3.61 cents to settle at $2.6412 a gallon.

April natural gas futures rose 26.4 cents to settle at $9.329 per 1,000 cubic feet.

In London, May Brent crude fell 52 cents to settle at $99.86 barrel on the ICE Futures exchange.

[Livyjr]

That evening (March 19, 2003, just as the Iraq War was about to begin, on George W. Bush's command), a Pentagon aide passed a message to a senior military public affairs officer in the Gulf from Torie Clarke, the Pentagon spokesperson.

POTUS, the president of the United States (George W. Bush) wanted the military to facilitate three types of news reports:

* Of Iraqis celebrating the arrival of the victorious American troops;

* Of allied shipments of humanitarian assistance to the Iraqi population; and

* Of the newly discovered arsenals of WMD.

The White House seemed secure in its cause and confident of victory.

BUSH WAS CONVINCED THAT GRATEFUL IRAQIS AND DISCLOSED WMD WOULD PROVIDE THE WHITE HOUSE WITH THE ULTIMATE PHOTO-OP.

The administration's allies in Washington were calm and confident.

In a conference call with a Wall Street firm, RICHARD PEARLE predicted a quick war AND AN EASY OCCUPATION.

"THERE IS NO PLAN FOR AN EXTENDED OCCUPATION OF IRAQ," Pearle assured the investors.

"THE SIZE OF THE FORCE TO MAINTAIN ORDER WILL BE MUCH SMALLER THAN PEOPLE BELIEVE."

The Iraqis, Pearle said, would greet the Americans as liberators, and government functions would be turned over as quickly as possible.

As for the Iraqi army, secret police, and intelligence services, "there will be a process akin to de-Nazification after World War II, in which we will attempt to identify and root out people who cannot be allowed to remain in authority."

THE PRESIDENT'S DECISION TO INVADE WOULD SOON BE VINDICATED.

"THERE IS NO QUESTION THAT WE WILL FIND WEAPONS OF MASS DESTRUCTION."

- pages 168-69, Cobra II: The Inside Story of the Invasion and Occupation of Iraq by Michael R. Gordon and General Bernard E. Trainor ......

As a Viet Nam combat veteran, here is THE MILESTONE which I have been looking for with respect to George W. Bush's war in Iraqinam ...

In Baghdad, members of Sunni awakening councils in the west of the capital have complained that they have not been paid for months and have threatened to withdraw their support for the government unless they receive their money within days.

- From "US deaths in Iraq approach 4,000" by ROBERT H. REID, Associated Press Writer, 22 March 2008

Those "Awakening Councils", of course, are the Sunni bad boys that we are paying to NOT FIGHT us ...

Or WHOOPS!

Those are the Sunni Bad Boys WE WERE PAYING to NOT FIGHT us ...

BUT ...

When things got peaceful, the BEAN COUNTERS shifted priorities for the money ...

So there are these company grade officers out there in the field right now who may well be @#$%ed as we Viet Nam infantrymen would say ...

They are right there on MAIN STREET in Dodge City, and the gunfight is going to take place with them in the middle ...

I wonder how many of you out there have ever fought in a war where all of a sudden, your funds are cut off so that you are allotted five 105 rounds for that day, because the artillery units are being rationed ...

Does anyone really think that when you are in another country, that the people don't know that you are having economic troubles back home big time, and that they can't notice how much lighter your re-supply convoys have been lately?

They will hit you then to make you use up the ammo you have, knowing or betting that you won't be able to get more ...

As to how many men under arms we are talking about putting back into play here, we have from "Iraq gov't vows to disband Sunni groups" by DIAA HADID, Associated Press, last updated: 5:52 a.m., Sunday, December 23, 2007, as follows:

Defense Minister Abdul-Qadir al-Obaidi's statement Saturday regarding the Sunni groups was the government's most explicit declaration yet of its intent to eventually dismantle the organizations, which are funded by the United States as a vital tool for reducing violence.

The militias, more than 70,000 strong and often made up of former insurgents, are known as Awakening Councils, or Concerned Local Citizens.

end quotes

So, 70,000 armed men who are also experienced guerilla fighters are now no longer getting paid not to fight us, at a time when we are economically weak in the world, and at a time when violence in Iraq is escalating ....

With respect to where we are right now in Iraq with respect to these Awakening councils, from the article "Sunni fighters need political role" by BRADLEY BROOKS, Associated Press, last updated: 5:12 p.m., Sunday, December 23, 2007, we have as follows:

Deborah D. Avant, director of international studies at the University of California-Irvine and author of the book "The Market for Force: The Consequences of Privatizing Security," said there are ominous similarities between the awakening councils and armed groups in past conflicts that were used for short-term military gains but ended up being roadblocks for state building.

The awakening groups represent a deadly force that authorities probably cannot control, which "isn't a good thing for the long-term prospects of a central government in Iraq," Avant said.

"I think it is just one more way in which the U.S. is inhibiting the consolidation of a central state in Iraq," Avant said of the U.S. embrace of the awakening groups.

"To the degree that the U.S. is trying to build a state -- which it says it is trying to do -- then these types of efforts are counterproductive."

end quotes

Especially when the only tie that binds them to you is money ...

And the money is now running out ...

In the article "Reward Sunni fighters, US commander says" by PATRICK QUINN, Associated Press, last updated: 4:32 p.m., Tuesday, December 25, 2007, Maj, Gen. Rick Lynch had this to say about the situation:

YOUSSIFIYAH, Iraq -- A top U.S. commander warned Tuesday that Sunnis who fight al-Qaida in Iraq must be rewarded and recognized as legitimate members of Iraqi society -- or else the hard-fought security gains of the past six months could be lost.

But the Shiite-dominated government is deeply concerned about the Sunni tribal groups, made up of men who in the past also fought against them -- not just the Americans.

The warning from Maj. Gen. Rick Lynch, the commander of U.S. forces south of Baghdad, came as two separate suicide attacks killed at least 35 people around Iraq and injured scores of others.

Lynch has credited these groups for much of the improvement in security in the region he commands, an area about the size of West Virginia and stretching to the Iranian and Saudi Arabian borders.

"The people say security is good now, but we need jobs."

"It's all about jobs and we have to create them," he told The Associated Press as he flew into patrol base Salie, just south of Baghdad -- where U.S. troops fund about 150 members of the tribal groups.

"We are in a tenuous situation."

"We need to give jobs to the citizens (groups) or they will go back to fighting."

Lynch, who leads the 3rd Infantry Division, said he had 26,000 members of the groups in the area he controls and that they have given U.S. and Iraqi forces a key advantage in seeking to clear extremist-held pockets.

They number about 70,000 countrywide, and are expected to grow by another 45,000 in coming months.

The U.S. military now funds the groups, known as Awakening Councils, Concerned Citizens and other names.

But they expect to be rewarded for their efforts with jobs, either in the Iraqi security forces or elsewhere.

"They want to be recognized as legitimate members of society and that has to happen," Lynch said as he flew over an area south of Baghdad once known as the "triangle of death."

According to Lynch, the groups helped reduce violence in his area, a former Sunni insurgent hotbed, by 75 percent in the past six months.

end quotes

In the article "2007 deadliest for US troops in Iraq" by BRADLEY BROOKS, Associated Press, last updated: 3:12 p.m., Sunday, December 30, 2007, what Gen Lynch was speaking about was amplified:

BAGHDAD -- The second half of 2007 saw violence drop dramatically in Iraq, but the progress came at a high price: The year was the deadliest for the U.S. military since the 2003 invasion, with 899 troops killed.

American commanders and diplomats, however, say the battlefield gains against insurgents such as al-Qaida in Iraq offer only a partial picture of where the country stands as the war moves toward its five-year mark in March.

Two critical shifts that boosted U.S.-led forces in 2007 -- a self-imposed cease-fire by a main Shiite militia and a grassroots Sunni revolt against extremists -- could still unravel unless serious unity efforts are made by the Iraqi government.

Those numbers paint an increasingly optimistic picture, but James Carafano, a security expert with the Heritage Foundation think-tank in Washington, D.C., warned dangers lurk.

"The number of people who have the power to turns things around appears to be dwindling," he said regarding extremists.

"But there are still people in Iraq that could string together a week of really bad days."

While that might not mean a return to the bloodiest moments of the Iraq war, Carafano said it could seriously rattle the Iraqi government as it tries to bring about some form of political reconciliation in 2008, a key to long-term security.

"People have to be really careful about over-promising that this is an irreversible trend -- I think it is a soft trend," he said of the declining violence.

Carafano pointed to the problem of integrating the Sunni awakening councils into Iraqi society and keeping the Shiite militias out of the fight.

If either of those situations changes, he said, increased bloodshed in the country is likely.

end quotes

With respect to the company grade officers who will have to face these Awakening Councils with empty hands, we have:

"The U.S. Financial Crisis - in Iraq" by DANIEL PEPPER/BAGHDAD,

Wed Jan 23, 2008 11:55 AM ET

The U.S. military in Iraq has been extolling the achievements of its cooperation with civilians in the fight against extremists and insurgents.

The mechanism of that cooperation, however, is greased by cash - and the budgetary spigot for it has been tightening in recent months.

That does not sit well for officers like Captain Joel Brown, in charge of Eagle company for the 2-2 Styker Cavalry Regiment.

For him, money spent bankrolling the Sunni al-Sahwa ("Awakening") movement is money well spent.

Al-Sahwa patrols neighborhoods in his area and effectively works as a local muscle, beating back insurgents and keeping the peace where local law enforcement has long since abandoned.

When Brown's company arrived in southern Baghdad in August they found 50 roadside bombs in one day; they would sometime engage in two or three firefights daily.

Now he pays nine Sunni contractors to manage 10 checkpoints with about 300 guards, in the process protecting schools, clinics and key intersections 24 hours a day.

Soon there will be a total of 1,000 guards.

When these so-called "Concerned Citizens' League" (CLC) programs began, attacks against his men started decreasing.

For Brown, the calculus is clear:

"Every time we loose one of our guys it costs us $400,000 [in life insurance paid to family members]."

"Each Hellfire missile is $60,000 and we've used a ton of those."

"What's the price of peace?"

"It's probably not as costly as the price of unrest."

"Money is my non-lethal ammunition."

"I'd rather give somebody a job than have to fight them."

That sentiment is echoed by captain David Dehart, a military intelligence officer working with Brown and other commanders in an area of southern Baghdad that used to be a no-go zone for U.S. troops.

"A lot of these guys are $50 away from either putting in an IED [roadside bomb] or standing on a checkpoint with an AK" guarding the neighborhood for us, says Dehart.

Commanders on the ground draw their money from CERP (Commander's Emergency Response Program) funds.

CERP funds are meant to cover everything from condolence payments to water and electricity infrastructure improvements.

They also can give out micro-grants to neighborhood patrol and checkpoint contracts.

The CERP budget for fiscal year 2007 was $750 million and while no cutbacks are expected for 2008 the money hasn't been authorized yet by Congress, which means the army's top brass is playing it safe and tightening its belt.

According to Lt. Col. Gerry Messmer, A U.S. civil military operations officer in Baghdad, there is no problem with funding.

"We are reviewing all requests for funds and asking the important question of how can we help [Iraqis] help themselves."

But the military bureaucracy can itself be a threat to the funds.

A recent turnover of generals in Baghdad has led to a routine review of guidelines, regulations and spending.

But what the incoming generals might view as cutting the fat off programs, lower-ranking officers see as a threat to the very goodwill and positive rapport they've worked months to established between themselves and community leaders.

For captain Douglas Willig, who is in charge of an area adjacent to Brown's, the new CLC contracts will mean that 30% of all his workers will take a 30% pay cut next month.

"My CLCs are going to change pretty drastically," says Willig.

Previously Willig thought he could at least rely upon funds for micro-grants project to spark economic activity by helping Iraqis who wouldn't transition from the CLCs to the army or police to segue into small business.

"The feeling was [micro-grants] was the best thing going," says Willig.

He has received application packets for $150,000 in grants, but the colonel overseeing his command has only $200,000 in grant money for an area that is more than four times as large as Willig's.

The colonel told Willig he will receive $25,000 in grant money, a fifth what he was expecting.

Another line of CERP funding is supposed to provide Willig with $10,000 from which to draw up to $1,000 at a time to pay Iraqis whose property has been damaged during operations.

Two families seeking damages - one for $400 and one for $450 for windows blown out and walls broken down during different operations have been waiting for months because Willig's funding has run dry.

"I've been telling them to come back later - I haven't had [this line of CERP funding] since October."

"There's bureaucracy involved and reviews and allocation at different levels."

"Two months ago I would have said come back tomorrow [to pick up the payment]", says Willig.

"Today I've got no idea."

And without funds to encourage cooperation, the fragile peace of the last few months may come undone.

end quotes

And that's where things are in IRAQINAM as I see them, anyway ...

And so ...

[Livyjr]

"Rivers keep rising in Arkansas, Missouri"

By JON GAMBRELL, Associated Press

Last updated: 6:52 a.m., Tuesday, March 25, 2008

DES ARC, Ark. -- Forecasters issued flash-flood warnings for parts of Arkansas' prairie as the state's largest water surge in a quarter-century continued its way downstream.

Swollen by last week's storms that devastated large parts of the Midwest, the fast-rising White River had risen about 7 feet in four days and was expected to crest Tuesday at 33.5 feet, the National Weather Service estimated.

Water poured into Bayou Des Arc, an area just north of the town of 1,900, damaging scattered homes and cabins.

"It's the worst," Trey Newby, 17, said as he piloted a small boat with an outboard motor through the brown water in an RV park along Bayou Des Arc.

He and a friend pointed to a pole and a U.S. flag hanging partially in the water.

"That's probably 10, 15 feet off the ground right there," Newby said.

Prairie County Sheriff Gary Burnett, a lifelong resident of the area, about 60 miles northeast of Little Rock, said he had never seen the river flood so quickly.

"It came up just so fast," said Burnett, 37.

"I'd never seen it come up so fast."

No flood-related injuries were reported, Burnett said.

Downtown Des Arc is on a rise and was not in immediate danger.

Just south of town and beyond a levee, Rick Thompson, 38, stood looking at his flooded mobile home.

He said he had no flood insurance and had yet to go inside.

"I'm going to come back with my boat and get my pictures and Bibles and things like that out of there and pray on the rest of it," Thompson said.

Last week's torrential rain in the Midwest also caused flooding in parts of Ohio, Indiana and southern Illinois, and in wide areas of Missouri.

At least 17 deaths have been linked to the weather and thousands of people evacuated, most of them in Missouri.

David Maxwell, the Arkansas emergency management director, said state and federal emergency workers would visit flood-damaged areas of the state Tuesday.

Arkansas Gov. Mike Beebe has declared 35 counties disaster areas.

Although wide areas of Missouri were especially hard-hit, the city of Cape Girardeau, which had record flooding in 1993, narrowly escaped serious problems this time.

The Mississippi River crested there early Monday at 41.04 feet, a foot shy of the level that signals serious flooding, the Weather Service said.

Flood gates protecting the city's business district were closed Monday and will stay closed until the river drops to below 36 feet.

There was some minor flooding Monday in Cape Girardeau's northeast section.

River towns south of the point where the Ohio and Mississippi rivers meet at Cairo, Ill., could see flooding in the next few days.

The Mississippi River is expected to crest Thursday at 42 feet at New Madrid, Mo., an hour south of Cape Girardeau, and at 41 feet Friday in Caruthersville, Mo., enough to cause moderate flooding in both areas, meteorologists said.

Rain is forecast in the region Wednesday and could produce localized flooding.

"There'll be a lot of runoff in creeks and smaller tributaries again, but there's not much of a place to drain into with the rivers running so high," said Mary Lamm, a Weather Service hydrologist in Paducah, Ky.

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Associated Press writer Cheryl Wittenauer in Pacific, Mo., contributed to this report.
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On the Net:

Arkansas Emergency Management: http://www.adem.arkansas.gov/

Weather Service Arkansas flood map: http://tinyurl.com/2ujyrw

[Livyjr]

"World markets rally on easing US worries"

By TOBY ANDERSON, Associated Press

Last updated: 8:02 a.m., Tuesday, March 25, 2008

LONDON -- European and Asian markets surged Tuesday as investors returned from the Easter holiday in a mood to buy, encouraged by upbeat U.S. housing numbers and overnight gains on Wall Street.

U.S. stocks headed for a moderately higher as investors awaited readings on consumer sentiment and housing.

Investors also were heartened by news that JP Morgan Chase & Co. raised its offer for Bear Stearns fivefold to $10 a share from $2 a share.

The new offer signals that investors' losses might not be as sizable as feared.

"Yesterday saw strong gains on Wall Street with the Dow Jones closing up 187 points, putting on over 400 points since Thursday afternoon," said Claire Collingwood, a dealer at CMC Markets in London.

"A re-evaluation of the Bear Stearns deal price by JP Morgan gave investors added belief that the credit crunch was coming to an end."

In Europe, stocks advanced strongly in early trading as markets reopened after the Easter Monday holiday.

In the U.K., the FTSE 100 rose 3.1 percent to 5,666.1, while Germany's DAX gained 2.7 percent.

France's CAC 40 climbed 3.1 percent.

In Asia, markets in Hong Kong and Australia, both of which had been closed since Thursday for the Easter holiday, jumped on easing concerns about the global credit crisis that has battered stocks since the start of the year.

"I think this is the beginning of a rally," said Francis Lun, a general manager at Fulbright Securities in Hong Kong.

"We have gone down low enough and the market is ready for a rebound."

"Banks will lead the rally."

Hong Kong's benchmark Hang Seng index jumped 6.4 percent to 22,464.52, while Australia's S&P/ASX 200 index rose 3.7 percent to finish at 5,318.4.

Japan's Nikkei 225 index climbed 2.2 percent to 12,745.2 after closing flat Monday, and India's Sensex was up more than 6 percent in late afternoon trading.

Investors got an unexpected dose of positive news about the U.S. housing sector, which has been at the heart of the credit problems.

The National Association of Realtors said Monday sales of existing homes rose 2.9 percent in February, the first gain since July.

The Dow Jones industrial average rose 187.32, or 1.52 percent, to 12,548.64 on Monday, after rising more than 260 points on Thursday, the last day of trading before the Easter weekend.

On Tuesday, investors will be examining the U.S. Conference Board's survey on consumer confidence for March as well as the Standard & Poor's/Case-Shiller index on housing prices.

In Tokyo, electronics and trading companies were buoyed by the recent recovery in the U.S. dollar, which was trading at 100.20 yen.

Last week, it dropped below 96 yen for the first time since August 1995.

Gainers in Tokyo included Canon Inc., which rose 3.9 percent, and Itochu Corp., up 4.8 percent.

In Australia, banks led the market higher.

National Australia Bank, the nation's largest lender, rose 5.1 percent, while Australia and New Zealand Banking Group added 5.9 percent.

Still, some analysts warned that the declines in regional markets may not be over.

"It's too early to conclude an end of the prevailing bear market," said Ernie Hon, a strategist at ICEA Securities in Hong Kong.

The mainland Chinese market recovered from an early drop to close nearly flat, as a rally in airlines offset a continued decline in PetroChina on views the stock is overvalued.

The Shanghai Composite Index rose 0.1 percent to 3,629.62.

Speculation that China's central bank may hike interest rates again continues to dampen buying sentiment, analysts said.

Taiwan bucked the regional trend.

Its main index slid 0.8 percent after surging 4 percent Monday amid expectations that president-elect Ma Ying-jeou will bring greater economic engagement with China.

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AP Business Writer Malcolm Foster in Bangkok contributed to this report.

[Livyjr]

"Oil drops near $100 on stronger dollar"

By GILLIAN WONG, Associated Press

Last updated: 4:12 a.m., Tuesday, March 25, 2008

SINGAPORE -- Oil prices fell to hover above $100 a barrel Tuesday as a stronger U.S. dollar made energy futures less attractive to investors.

The greenback's advance Monday made dollar-denominated oil lose some of its recent appeal to investors.

Many analysts believe the dollar's recent depreciation was the primary reason oil surged to a record near $112 a barrel last week, since oil and other commodities are seen as a hedge against inflation and a falling dollar.

Now that the dollar is rising, the effect is reversing.

Light, sweet crude for May delivery fell 57 cents to $100.29 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore.

The contract fell 98 cents to settle at $100.86 a barrel on Monday.

The recent decline in oil prices has been far from decisive, and there are signs that some investors are willing to look beyond the dollar for future price direction.

Some investors have sold contracts on concerns that a slowing U.S. economy would dampen crude oil demand.

Last week, oil prices dipped in part on worry that Bear Stearns' near-collapse was a sign of significant economic problems.

Some analysts believe oil's recent declines are temporary -- a correction in a bull market -- and that prices will forge higher again when the Federal Reserve cuts interest rates again, as is widely expected.

Lower interest rates tend to weaken the dollar.

"It's quite possible for the conditions that have pushed oil prices higher to be re-established," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney.

"U.S. interest rates are low and they will be cut further."

"In this situation it's possible we'll see renewed vulnerability of the U.S. dollar at some point."

But there is an opposing school of thought that argues prices have risen far higher than can be justified by the oil market's underlying supply and demand fundamentals.

These analysts believe prices will fall soon and sharply -- regardless of what happens to the dollar.

"One of the things that may count against oil somewhat is the fact that we're now entering into a sort of lower demand part of the year, and they will see some inventory building occurring," Moore added.

In other Nymex trading, heating oil futures lost 0.96 cent to $2.9535 a gallon while gasoline prices rose 5.8 cents to $2.6470 a gallon.

Natural gas futures rose 1.6 cents to $9.345 per 1,000 cubic feet.

In London, Brent crude fell 50 cents to $99.36 a barrel on the ICE Futures exchange.

[Livyjr]

"Stocks head for moderately higher open"

By TIM PARADIS, Associated Press

Last updated: 7:32 a.m., Tuesday, March 25, 2008

NEW YORK -- U.S. stocks headed for a moderately higher open Tuesday as investors awaited readings on consumer sentiment and housing.

Investors overseas remained upbeat following the U.S. rallies Monday and last week.

Rallies abroad appeared to help embolden U.S. investors early Tuesday.

Japan's Nikkei stock average finished up 2.12 percent.

In morning trading, Britain's FTSE 100 jumped 3.15 percent, Germany's DAX index rose 3.21 percent, and France's CAC-40 rose 3.62 percent.

Beyond the gains abroad, U.S. investors are looking for insights into whether the easing of some of Wall Street's fears in recent sessions is well-founded or overly optimistic.

Stocks have charged higher in the days following the Federal Reserve's decision to aid investment banks and orchestrate a buyout deal for a near-collapsed Bear Stearns Cos.

The Fed's actions helped shore up confidence in the market and quieted a notion that losses among Wall Street companies would turn cataclysmic.

On Tuesday, investors will be examining the Conference Board's survey on consumer confidence for March as well as the Standard & Poor's/Case-Shiller index on housing prices.

The mood on Main Street is key as consumer spending makes up about 70 percent of economic activity.

Wall Street worries that consumers uneasy about the economy and their financial well-being are more likely to pare their spending.

Some consumers might be worried about the state of the housing market, which is the root of much of the troubles Wall Street is now grappling with.

So any sign the housing market is on the mend -- or has at least seen the worst of its decline -- would be welcome news.

The readings come a day after a surprise uptick in sales of existing homes helped send the Dow Jones industrial average up 187 points.

Early Tuesday, Dow futures rose 30, or 0.24 percent, to 12,570.

Standard & Poor's 500 index futures advanced 4.20, or 0.31 percent, to 1,355.80.

Nasdaq 100 index futures rose 6.80, or 0.37 percent, to 1,826.00.

Still, some profit-taking was to be expected after a two-day rally sent the Dow up nearly 450 points.

Bond prices rose.

The yield on the benchmark 10-year Treasury note fell to 3.512 percent from 3.55 percent late Monday.

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

Light, sweet crude fell 2 cents to $100.84 in premarket electronic trading on the New York Mercantile Exchange.

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On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

[Livyjr]

"Dollar sinks ahead of housing report"

Associated Press

Last updated: 7:12 a.m., Tuesday, March 25, 2008

BERLIN -- The dollar was mostly lower in early trading Tuesday ahead of a report on U.S. housing that is expected to show further declines.

The 15-nation currency bought $1.5550 in midmorning trading compared with $1.5418 in trading Monday when markets in Europe were closed for the Easter holidays.

There was little economic data from the euro zone on Tuesday but on Wednesday, Germany's Ifo institute will release its monthly survey of German investor sentiment, including a six-month forecast of business confidence in Europe's biggest economy.

"With currency markets doubtless distorted by thinner volumes over the long weekend break, many will be eyeing today's return to work with interest, looking to see if the recent shift against the dollar can be sustained as we move toward the end of the quarter," said James Hughes of CMC Markets in London.

"There was little on the economic calendar yesterday but the release of the U.S. existing home sales figures for February did draw some attention, coming in higher than expected," he said.

The Standard & Poor's/Case-Schiller home-price index is to be released Tuesday, with further declines for the 12 months ended January expected.

The National Association of Realtors said Tuesday that sales of existing homes rose by 2.9 percent in February to a seasonally adjusted annual rate of just more than 5 million units.

In the previous six months, sales had fallen, something analysts had been expecting again last month.

The dollar was lower against the Japanese currency, buying 100.52 yen Tuesday, down from the 101.01 Japanese yen it bought on Monday.

The British pound traded for $1.9924 on Tuesday, up from from the $1.9841 it purchased Monday.

[Livyjr]

"Exec. denies trying to bribe witness"

By ANDREW WELSH-HUGGINS, Associated Press

Last updated: 9:32 p.m., Monday, March 24, 2008

COLUMBUS, Ohio -- The government's chief target in a $1.9 billion corporate fraud case on Monday repeatedly denied trying to bribe a key witness to give favorable testimony.

Former health care executive Lance Poulsen said the witness, former employee Sherry Gibson, misunderstood his attempts to help her.

"I never asked Sherry to lie," Poulsen said during testimony that stretched over several hours in federal court.

"I never asked her to forget anything."

Poulsen testified for the first time in a case that dates to National Century Financial Enterprises' 2002 bankruptcy, a stunning downfall for a corporation that once boasted it was the country's largest health care financing company.

Poulsen founded National Century and was its chief executive officer.

The company's demise led to a host of civil lawsuits, including one by the Securities and Exchange Commission, and to criminal convictions of at least nine former employees, including Gibson, a former executive vice president.

Prosecutors allege Poulsen and other former executives of National Century moved money to cover up shortfalls, fabricated data and lied to investors.

Poulsen said Monday he was innocent of any crime related to the fraud allegations.

"I had not done anything wrong," Poulsen said.

"It was bogus all the way."

He faces an August trial on multiple counts of wire and securities fraud and money laundering.

Before that trial, he and longtime acquaintance Karl Demmler, a Columbus bar and restaurant owner, are defending themselves against a witness tampering charge involving attempts to change Gibson's testimony during the upcoming trial.

Poulsen was the last witness to testify in the witness tampering trial.

Both sides were scheduled to give closing arguments Tuesday.

Poulsen's attorney, William Terpening, said his client was trying to make the point that he felt comfortable about the case and so wouldn't have had any reason to try to influence Gibson.

Poulsen said despite her cooperation with the government, he wanted to try to help Gibson recoup money she had lost as a result of the company's problems.

"I felt she had been shafted royally," Poulsen said.

"I wanted to make her whole."

Poulsen's use of the phrase "make her whole" was significant.

Prosecutors have quoted the same phrase, but allege that it was a reference to bribing Gibson.

Gibson testified last week that that was how she understood the phrase.

Poulsen testified he never offered to pay Gibson money.

He said offers of monthly installments of $5,000 were meant to pay for a new attorney for Gibson because Poulsen felt she had had poor legal representation.

Poulsen's defense suffered a blow late in the afternoon when U.S. Judge Algenon Marbley refused his attorney's request to instruct the jury they could consider whether the government entrapped Poulsen.

Marbley said there was enough evidence that the offers to pay Gibson originated with Poulsen and Demmler, not Gibson.

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On the Net:

U.S. Attorney's Office, Southern District of Ohio: http://www.usdoj.gov/usao/ohs/index.html

[Livyjr]

"U.S. news video contradicts Clinton on Bosnia visit"

Tue Mar 25, 3:13 AM ET

WASHINGTON (Reuters) - CBS News Video from Hillary Clinton's 1996 visit to Bosnia as first lady contradicts a more dramatic description the Democratic presidential candidate gave in a recent campaign speech.

In news video shown on CBS on Monday, Clinton is seen casually walking from her plane and greeting a young girl.

CBS said the pictures were recorded at a greeting ceremony when the plane landed.

At a recent campaign event, Clinton, who was accompanied by her daughter Chelsea, said she remembered landing under sniper fire.

"There was supposed to be some kind of a greeting ceremony at the airport, but instead we just ran with our heads down to get into the vehicles to get to our base," Clinton said.

At the time of the trip, the Bosnia war was over but hostilities continued.

CBS reported that Clinton aides said the video "was not quite as dramatic as Clinton put it."

"She meant that there was fire on the hillside around the area when we landed, which was the case," campaign spokeswoman Lissa Muscatine told CBS.

(Reporting by Joanne Allen, editing by Vicki Allen)

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"Stocks pause after big two-day rally"

By JOE BEL BRUNO, Associated Press

Last updated: 5:53 p.m., Tuesday, March 25, 2008

NEW YORK -- Wall Street paused after a huge two-session rally Tuesday but closed mostly higher, holding on to almost all its gains even after disappointing reports on consumer sentiment and the housing market.

Stocks pulled past profit-taking that was due in part to the Conference Board's report that consumer confidence sank to a five-year low in March.

The index has been weakening since July, and is closely watched to determine the future of consumer spending, perhaps the most critical part of the economy.

Meanwhile, the Standard & Poor's/Case-Shiller home price index indicated that U.S. home prices fell 11.4 percent in January, the steepest drop since data was first collected in 1987.

The latest decline means prices have been growing more slowly or dropping for 19 consecutive months.

Volume was light, with many investors holding off any big moves while the market sought a direction; trading remained uneasy amid the ongoing uncertainty about the economy and credit markets.

Still, the fact that stocks didn't suffer a huge pullback, which has been the market's pattern for months after a big gain, indicated that at least for the time being Wall Street seems more capable of handling bad news.

Stocks had charged higher in the days following the Federal Reserve's decision to aid investment banks and orchestrate a buyout deal for a near-collapsed Bear Stearns Cos.

The Dow Jones industrials shot up nearly 450 points in the previous two sessions.

"There is a lot of cash on the sidelines right now, and they're really waiting to see if there's another shoe to drop," said Todd Leone, managing director of equity trading at Cowen & Co.

"Bear Stearns has taken a lot of fear out of the market, and the Fed is doing what it can for the credit crunch, but I think there's still uncertainty."

The Dow fell 16.04, or 0.13 percent, to 12,532.60.

The blue chip index was actually the laggard in Tuesday's session -- the broader Standard & Poor's 500 and Nasdaq composite indexes had more robust gains.

The S&P rose 3.11, or 0.23 percent, to 1,352.99; the Nasdaq added 14.30, or 0.61 percent, to 2,341.05.

Advancing issues led decliners by 2 to 1 on the New York Stock Exchange, where consolidated volume came to 3.99 billion shares from 4.37 billion on Monday.

Bond prices rose, regaining ground after a huge decline on Monday that accompanied the rally on Wall Street.

The yield on the benchmark 10-year Treasury note fell to 3.49 percent from late Monday's 3.55 percent.

The yield moved to 3.51 percent in after-hours trading.

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

Oil futures wobbled, with some investors selling on new worries about the economy and buying in response to the dollar's latest decline.

Light, sweet crude rose 36 cents to settle at $101.22 a barrel on the New York Mercantile Exchange.

Though many on Wall Street expected the latest batch of economic data to be negative -- and that might have helped investors shake off the bad news -- there continues to be lingering concerns about consumer spending.

The mood on Main Street is critical because consumer spending makes up about 70 percent of economic activity.

The Conference Board said its Consumer Confidence Index plunged to 64.5 in March from a revised 76.4 in February.

The reading -- a five-year low -- was far below the 73.0 expected by analysts surveyed by Thomson/IFR.

"What is troubling is that consumer confidence took a plunge, and I think we're going to see consumer spending weaken as we go forward," said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners.

Meanwhile, Standard & Poor's/Case-Shiller index showed U.S. home prices declined 11.4 percent in January from a year earlier.

In corporate news, Monsanto Co. shares jumped almost 10 percent after the agricultural products company said earnings per share for the second quarter and for all of fiscal 2008 will be stronger than originally projected.

Shares rose $10.29, or 9.9 percent, to $114.54, and also helped boost others in the sector.

JPMorgan Chase & Co. shares fell 49 cents to $46.06 after a securities analyst said the bank will end up paying about $65 per share for Bear Stearns.

That amount, which includes costs to bring the two companies together, was labeled too high a price for a "deeply troubled company," the Punk, Ziegel & Co. analyst said.

Bear Stearns fell 31 cents, or 2.8 percent, to $10.94 -- above the $10 per share buyout price being offered by JPMorgan.

There has been some speculation in the market that a higher offer might come before the deal closes.

Yahoo Inc. rose $1.21, or 4.4 percent, to $28.73 on speculation Microsoft Inc. will raise its takeover price for the Internet company beyond $31 per share.

Microsoft fell 3 cents to $29.14.

The Russell 2000 index of smaller companies rose 3.99, or 0.57 percent, to 705.27.

Investors overseas remained upbeat following the U.S. rallies Monday and last week.

Japan's Nikkei stock average finished up 2.12 percent.

Britain's FTSE 100 fell 0.91 percent, Germany's DAX index rose 3.24 percent, and France's CAC-40 rose 3.49 percent.

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On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

[Livyjr]

"Home price drop signals tough spring"

By VINNEE TONG, Associated Press

Last updated: 5:53 p.m., Tuesday, March 25, 2008

NEW YORK -- Home prices plunged by record levels in January from a year ago, with almost no major cities immune from the spiraling market.

Analysts worried that even the usually reliable spring selling season would fall flat.

The closely watched Standard & Poor's/Case-Shiller index of home prices in 20 cities fell nearly 11 percent in January from a year earlier, the biggest drop in its two-decade history.

Prices were down about 20 percent in Las Vegas and Miami, both paying the price for especially rampant speculation and too much new construction during the housing boom.

Fourteen other cities posted record declines in the Tuesday report.

The only bright spot was a 1.8 percent increase in Charlotte, N.C., where real estate agents say prices rose more modestly during the boom years and the regional economy is relatively strong.

Everywhere else, mounting foreclosures, falling consumer confidence and sellers slashing their asking prices are taking an increasing toll on the market.

"It's just a spiral that will end up taking this year to get out of," said Pava Leyrer, president of Heritage National Mortgage in Detroit, adding that the market there is not expected to improve until the spring of 2009.

In Las Vegas alone, nearly half the homes currently on the market have seen their prices reduced at least once, according to an analysis by ZipRealty, a discount real-estate firm.

Greg and Barbara Abbott have already cut the price twice on the two-bedroom condominium they are trying to sell on the Las Vegas strip.

They're asking $669,900 now -- and an offer in the $650,000 range means they'll lose money.

Abbott thinks hesitant buyers don't realize how reasonable the current price is.

"They're not really being realistic about what the place is worth," he said.

Rising foreclosures have become the biggest factor driving prices lower, Moody's Economy.com chief economist Mark Zandi said.

There were already too many homes on the market, and foreclosures bring even more property -- priced at a deep discount -- into the mix.

Zandi said while prices are still falling steeply, demand seems to have stabilized.

"The psychology of the market has completely shifted," Zandi said.

"Sellers do realize that homes are worth fundamentally less than they thought."

Meanwhile, consumer confidence is spiraling down as buyers worry about tighter credit and the weaker job market.

The Conference Board reported Tuesday that confidence sank to a five-year low in March.

On Wednesday, economists will watch a Commerce Department report on February new-home sales for any improvement in volume.

Those figures are more forward-looking than existing-home sales.

Economists are already worried that the usually busy spring season could be in jeopardy.

"I wouldn't be looking for a pattern of improvement until April, May or June," said Brian Bethune, chief U.S. economist at Global Insight.

On Monday, new data for February showed the biggest drop in at least nine years in the median sales price of existing homes.

Still, more homes were sold in February -- 3 percent more, the first increase in seven months.

"Home prices continue to fall, decelerate and reach record lows across the nation," said David Blitzer, index committee chairman at S&P.

"No markets seem to be completely immune from the housing crisis."

Prices have fallen month-to-month for five straight months in all 20 cities tracked by S&P.

And the declines are getting steeper, with 13 of the 20 cities reporting their biggest single monthly decline in January.

The vast majority of homes in the U.S. are not in danger of foreclosure.

But the housing slump has raised concerns about a recession and has had ripple effects across the economy.

A separate survey Tuesday from the Office of Federal Housing Enterprise Oversight said home prices fell 3 percent in January from the same month last year.

That index is calculated using mortgages of $417,000 or less that are bought or backed by Fannie Mae or Freddie Mac.

With prices falling, more would-be buyers have decided to rent.

Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors in Miami, said three-quarters of all transactions in the past few months were for rentals and the rest were for home sales, a reversal of historical trends.

Abbott, the condo owner in Las Vegas, is asking a monthly rent of $2,300, down from the $3,500 he had originally wanted.

"It's empty at the moment," Abbott said.

"We'd intended to rent it, but the timing, of course, was bad."

His broker, Bruce Hiatt of the Luxury Realty Group in Las Vegas, said there was no shortage of interested buyers -- but none had decided to buy.

"They're all waiting for the magic bottom," he said.

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AP Business Writer Dan Caterinicchia in Washington, D.C. contributed to this report.

[Livyjr]

"Home price drop signals tough spring"

By VINNEE TONG, Associated Press

Last updated: 5:53 p.m., Tuesday, March 25, 2008

NEW YORK -- Home prices plunged by record levels in January from a year ago, with almost no major cities immune from the spiraling market.

Rising foreclosures have become the biggest factor driving prices lower, Moody's Economy.com chief economist Mark Zandi said.

There were already too many homes on the market, and foreclosures bring even more property -- priced at a deep discount -- into the mix.

Zandi said while prices are still falling steeply, demand seems to have stabilized.

"The psychology of the market has completely shifted," Zandi said.

"Sellers do realize that homes are worth fundamentally less than they thought."

"Consumer confidence plunges in March"

By EILEEN ALT POWELL, Associated Press

Last updated: 2:02 p.m., Tuesday, March 25, 2008

NEW YORK -- American consumers are gloomier about the economy that at any point since just before the U.S. invasion of Iraq, as slumping housing prices and soaring fuel costs depress consumer confidence to its lowest level in five years.

The Conference Board, a business-backed research group, said Tuesday that its Consumer Confidence Index plunged to 64.5 in March from a revised 76.4 in February.

The March reading was far below the 73.0 expected by analysts surveyed by Thomson/IFR and was the worst reading since the gauge registered 61.4 in March 2003, just ahead of the U.S. invasion of Iraq.

Weakening consumer confidence foreshadows weakening consumer spending, which could hurt the already faltering economy.

Meanwhile, the Standard & Poor's/Case-Shiller home price index released Tuesday indicated that U.S. home prices fell 11.4 percent in January, the steepest drop since data for the indicator was first collected in 1987.

The latest decline means prices have been growing more slowly or dropping for 19 consecutive months.

The weak readings initially depressed Wall Street, but trading later flattened out.

In early afternoon trading, the Dow fell 10.26, or 0.08 percent, to 12,538.38.

The Standard & Poor's 500 index and the Nasdaq composite index rose slightly.

The Consumer Confidence Index has been weakening since July and Lynn Franco, director of the Conference Board's research center, said further decline was likely.

"Consumers' outlook for business conditions, the job market and their income prospects is quite pessimistic and suggests further weakening may be on the horizon," she added.

Brian Bethune, chief U.S. financial economist with Global Insight in Lexington, Mass., expects the April confidence reading to be dreary, too.

"We expect overall payroll employment to decline for the third consecutive month ... and there is no immediate relief in sight for gasoline prices or other energy costs," he said in a research note.

That, he said, will mean "real consumer spending will barely creep forward in the first half of 2008," depressing the economy.

Economist Bernard Baumohl, executive director of The Economic Outlook Group in Princeton Junction, N.J., said consumers' pessimism "reflects the great anxiety that households have because there are just so many uncertainties that everyone faces."

He believes the economy fell into recession in the current quarter and that growth probably won't resume until the second half of the year, after government stimulus programs have had a chance to work.

These include measures by the Federal Reserve to boost credit markets and the plan by the Bush administration to distribute tax rebates starting this summer to encourage consumer spending.

The Fed on Tuesday said it had received bids of almost $89 billion for $50 billion in short-term loans offered in its latest auction to banks.

So far, the Fed has made $260 billion in such loans since December to help ease credit conditions.

Baumohl said government actions should help the economy resume growth later this year, but that the recovery could be weak.

"Even if we emerge from recession sometime this summer, the second half of the year is going to feel bad," he said.

"For most people, they won't be able to tell if the economy is growing 1 percent or shrinking 1 percent."

The Conference Board said were steep declines in two companion indexes.

The present situation index, which looks at current conditions, slumped to 89.2 in March from 104.0 the month before.

The expectations index, which looks ahead, dropped to a 35-year low of 47.9 in March from 58.0 in February.

The last time the reading was that depressed was in December 1973, when it registered 45.2 amid the Arab oil embargo and Watergate scandal, the Conference Board said.

In the expectations appraisal, a growing number of consumers said they expected business conditions to worsen over the next six months.

On the labor market, consumers expecting fewer jobs increased to 29 percent in March from 28 percent in February, while those expecting more jobs declined to 7.7 percent from 8.9 percent.

The survey by the New York-based Conference Board is based on a sample of 5,000 U.S. households.

------

On the Net:

http://www.conference-board.org

[Livyjr]

"Oil ekes out a slight gain on dollar"

By JOHN WILEN, Associated Press

Last updated: 4:33 p.m., Tuesday, March 25, 2008

NEW YORK -- Oil futures rose modestly Tuesday as investors focused on the dollar's latest decline rather than new worries about the economy.

Gas and diesel prices, meanwhile, retreated further from their recent record levels.

The dollar's decline against the euro, which ended a greenback rally that began last week, attracted investors back to oil.

The U.S. currency's protracted slide was a big contributor to oil's march to nearly $112 in recent weeks; many investors regard oil and other commodities as inflation hedges, and turn to such hard assets when the dollar is falling.

But oil's slight gain was far from definitive, and followed a session in which prices alternated frequently between gains and losses.

Investors were rattled by the Conference Board's report that consumer confidence fell much more than expected this month.

The drop in confidence intensified the oil market's concerns that consumers hesitant to spend would further weaken the economy and depress demand for fuel.

Meanwhile, home prices as measured by the Standard & Poor's/Case-Shiller index fell by 11.4 percent in January.

The reports raised new questions about the severity of the economic downturn.

Light, sweet crude for May delivery rose 36 cents to settle at $101.22 a barrel on the New York Mercantile Exchange.

"The crude oil market continues to chop," said Tim Evans, an analyst at Citigroup Inc.

Analysts and investors appear split on crude's future direction.

Many analysts believe oil prices rose much higher in recent weeks than could be justified by supply and demand factors.

Prices topped out at a trading record of $111.80 early last week, but have fallen about 10 percent since then.

Other analysts believe the falling dollar will continue to lure investors to the market, particularly given expectations that the Federal Reserve will cut interest rates several more times this year.

Falling interest rates tend to weaken the dollar.

Oil's recent decline has pulled gas and diesel prices down from a series of records set earlier this month.

The average national price of a gallon of gas fell 0.5 cent overnight to $3.255 a gallon, according to AAA and the Oil Price Information Service.

Diesel prices slipped 0.3 cent to a national average of $4.026 a gallon.

Diesel, which is used to transport virtually all consumer goods and food, has likely peaked in price for the year, said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service in Wall, N.J.

In part that's because demand for diesel in Europe, which is much more reliant on the distillate fuel, has fallen.

Gasoline, on the other hand, may still rise another 10 to 25 cents a gallon this spring as suppliers stock up in advance of peak summer driving season.

And that's likely to happen regardless of what happens with oil prices, Kloza said.

"I still believe there (will be) a run in gasoline independent of crude," Kloza said.

That's bad news for consumers already suffering from the effects of high food prices, falling home values and tight credit.

Other energy futures were mixed Tuesday.

April gasoline futures rose 3.9 cents to settle at $2.6802 a gallon on the Nymex, while April heating oil futures fell 3.83 cents to settle at $2.9248 a gallon.

April natural gas futures rose 9 cents to settle at $9.419 per 1,000 cubic feet.

In London, May Brent crude rose 74 cents to settle at $100.60 a barrel on the ICE Futures exchange.

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"Gold rebounds on weak dollar"

By STEVENSON JACOBS, Associated Press

Last updated: 5:34 p.m., Tuesday, March 25, 2008

NEW YORK -- Gold prices rebounded Tuesday, jumping more than $15 an ounce as a falling dollar and a big drop in consumer confidence enhanced the allure of precious metals as an alternative investment.

Other commodities traded broadly higher, with silver, copper crude oil and agriculture futures rising.

Gold last week fell the most in nearly two years amid a huge commodities sell-off that sent prices for everything from corn to crude oil sharply lower.

Investors jumped back into the gold market Tuesday, spurred by new data showing consumer confidence fell to its lowest level in five years.

The Conference Board report said fallout from the credit crisis, rising inflation and dim job prospects led to the decline, which was worse than expected.

Weak consumer confidence often slows consumer buying, hurting the economy.

"The low consumer confidence number definitely helps gold because it's seen as a safe haven and an alternative asset," said Carlos Sanchez, analyst with CPM Group in New York.

"The prospects of the economic situation and tightening of the credit fallout hasn't disappeared, so we'll likely see gold hold at these levels and probably go higher."

Gold for April delivery added $16.30 to settle at $935 an ounce on the New York Mercantile Exchange.

Gold last week fell more than 10 percent from its record high of $1,033.90, reached on March 17.

The metal closed lower Monday for the third straight session.

Prior to last week's sell-off, gold had been on a meteoric run, driven up by the tumbling dollar, record-high crude prices and fears of a U.S. recession.

Investors often buy gold during times of economic uncertainty and rising inflation because the metal is known for holding its value.

Other precious metals also rose Tuesday, boosted after the greenback slipped further against the euro, which bought $1.5606, up from $1.5431.

Silver for May delivery added 69 cents to settle at $17.80 an ounce on the Nymex, while May copper climbed 5.6 cents to settle at $3.6785 a pound.

In energy markets, oil futures rose slightly but gyrated between gains and losses most of the day as some traders sold on economic worries and others bought as a hedge against a falling dollar.

Light, sweet crude for May delivery added 36 cents to settle at $101.22 a barrel on the Nymex.

Other energy futures traded mixed Tuesday.

April gasoline futures gained 3.9 cents to settle at $2.6802 a gallon on the Nymex, while April heating oil futures sliipped 3.83 cents to settle at $2.9248 a gallon.

In agriculture markets, wheat, corn and soybeans all rose sharply amid dry weather in southern U.S. states, bargain-buying and a farming strike in Argentina.

Wheat for May delivery jumped 47.5 cents to settle at $10.675 a bushel on the Chicago Board of Trade, after earlier surging to $11.15 a bushel.

Corn for May delivery rose the 20-cent daily limit to settle at $5.4475 a bushel on the CBOT, while May soybeans gained 50 cents to settle at $13.07 a bushel.

[Livyjr]

"March auto sales likely to drop again"

By TOM KRISHER, Associated Press

Last updated: 6:02 p.m., Tuesday, March 25, 2008

SOUTHFIELD, Mich. -- Just like everyone else in Southeast Michigan, Desta Woudenh is worried about declining home values, high gas prices and the economic slowdown.

But the computer software maintenance specialist still spent much of his Good Friday holiday inside the showroom at Tamaroff Honda, sitting in a deluxe new Accord and talking with a salesman.

No matter what happens to the economy, Woudenh, 41, needs to replace his 1995 Honda Civic with 180,000 miles on it.

"I pushed it as much as I can," he said in the showroom of the dealership in the Detroit suburb of Southfield.

"I need a good, dependable car."

Automakers are hoping that there are more people like Woudenh out there as they face what could be one of the toughest months in one of the toughest sales years in more than a decade.

Industry analysts are predicting that U.S. auto sales in March will be worse than the same month last year.

Just how bad depends on the analyst.

"We're seeing the same negative forces that had an impact on consumer demand in the first couple of months of '08," said Jesse Toprak, chief industry analyst for the auto information site Edmunds.com.

He predicts that when automakers report their U.S. sales results for March on April 1, the U.S. market will be down 12 percent when compared with March of 2007.

J.D. Power and Associates reported that for the first half of March, information from dealers showed nearly a 22 percent decline from the same period last year, although the company counted two more selling days in the first half of March 2007.

In uncertain times, Toprak said, people postpone large purchases until they know what will happen to their home values.

A run-up in gasoline prices to $3.50 per gallon or more didn't help, either, and some analysts are predicting that tighter auto loan standards will crimp sales as well.

"We are in a very challenging environment," said George Pipas, Ford Motor Co.'s top sales analyst, although he cautions that sales generally are slower during the first half of the month than in the second.

Pipas wouldn't give specifics, but says Ford and most other automakers will see lower sales than in March of last year.

The Detroit Three, once again, are likely to be hit harder than their Asian competitors as the market continues its shift away from trucks and sport utility vehicles to more fuel efficient small cars and crossover vehicles, industry analysts say.

"The bottom line impact on domestics is negative," Toprak said.

"They make most of their money on SUVs and trucks, and those segments have been suffering quite a bit."

At Crippen Buick-Pontiac-GMC-Mazda-Volvo in suburban Lansing, the foreign brands fared better than the GM brands in the first three weeks of the month when compared with the same time last year, said owner Jeff Crippen.

But Buick, Pontiac and GMC still are the biggest chunk of the business.

He was hoping for a rebound in the final week of the month.

Lehman Brothers analyst Brian Johnson, in a note to investors, predicted continued weakness in auto sales this year due in large part to tighter lending standards.

"We believe that even modestly rising delinquencies in auto lending (as well as broader consumer credit) are leading to tightened credit standards and pressure on sales," he wrote.

But Crippen said that's not happening in the Lansing area.

"We haven't seen the banks tightening on their end, nor have we seen a decrease in our customers' overall credit scores," he said.

Pipas says demand could increase later in the year because of lower interest rates and because the U.S. auto fleet is getting old.

The average car in the U.S. is 9 years old, while the average truck is seven, Pipas said.

"Clearly there are people that need to replace a product," he said.

Edmunds' Toprak said automakers likely will raise incentives as the year progresses in an effort to boost slackening demand, so deals could get sweeter.

Already, incentive spending per vehicle is $2,469 so far this year, inching closer to the record of $2,603 set in 2004.

"Now that demand is so low, they need some tools to bring people back in the showrooms."

"They have no choice but to be more generous," he said.

"It's very likely that by the time we reach summer it will reach that record number."

Woudenh said he'll be among the shoppers looking for incentives and other deals.

He plans to look at Asian automakers as well as the Detroit Three, especially GM, which he says is building better cars now.

Gas prices will weigh heavily on his purchase.

Even though he's planning to get a larger car than his Civic to handle his growing children, he still will get a four-cylinder engine to get better gas mileage, he said.

"I'm just going to go to one dealership after another and just see which one will give me the best deal," he said.

[Livyjr]

"FDIC plans staff boost for bank failures"

By ALAN ZIBEL, Associated Press

Last updated: 12:52 p.m., Tuesday, March 25, 2008

WASHINGTON -- Federal bank regulators plan to increase staffing 60 percent in coming months to handle an anticipated surge in troubled financial institutions.

The Federal Deposit Insurance Corp. wants to add 140 workers to bring staff levels to 360 workers in the division that handles bank failures, John Bovenzi, the agency's chief operating officer, said Tuesday.

"We want to make sure that we're prepared," Bovenzi said, adding that most of the hires will be temporary and based in Dallas.

There have been five bank failures since February 2007 following an uneventful more than two-year stretch.

The last time the agency was hit hard with failures was during the 1990-1991 recession, when 502 banks failed in three years.

The FDIC provides insurance for deposits up to $100,000.

While depositors typically have quick access to their bank accounts on the next business day after a bank closure, winding down a failed bank's operations can take years to finish.

That process can include selling off real estate, investments and dealing with lawsuits.

There are 76 banks on the FDIC's "problem institutions" list -- which would equate to about 10 expected bank failures this year, though FDIC officials declined to make projections.

Historically, about six banks fail per year on average, FDIC officials said.

Since 1981, total failures per year averaged about 13 percent of the number of institutions that started the year on the agency's list of banks with weak financial conditions.

There have been two failures in 2008 -- both of which were small Missouri-based banks.

By far the largest recent failure was the September 2007 shutdown of Georgia-based NetBank Inc., an online bank with $2.5 billion in assets.

NetBank's insured deposits -- representing more than 100,000 customers -- were assumed by ING Bank, part of Dutch financial giant ING Groep NV.

The FDIC's chairman, Sheila Bair, has said that banks that were cautious about their lending should be able to weather the economic downturn, but cautioned that those that weren't so careful won't be so lucky.

Regulators have warned of problems lurking, especially in smaller banks with a high concentration of real estate construction loans.

FDIC officials said last month they planned to bring back about 25 retirees to the agency and noted those workers will train new hires.

Over the next five years, about 50 percent of employees with experience in bank failures, especially those who were at the agency during the savings and loan crisis of the late 1980s and early 1990s, will be eligible for retirement, officials added.

[Livyjr]

"Fed auctions another $50 billion"

By JEANNINE AVERSA, Associated Press

Last updated: 10:42 a.m., Tuesday, March 25, 2008

WASHINGTON -- Fighting to ease a dangerous credit crisis, the Federal Reserve has provided a total of $260 billion in short-term loans to squeezed banks since December to help them overcome credit problems.

The central bank on Tuesday announced the results of its most recent auction -- the eighth since the program started in December -- where commercial banks bid to get a slice of $50 billion in short-term loans.

It's part of an ongoing effort by the central bank to provide relief to a spreading credit crunch that has unnerved financial markets.

The situation threatens to push the country into a deep recession.

Counting the latest auction results announced Tuesday, the Fed has provided a total of $260 billion in short-term loans to banks since December.

In the most recent auction -- which marked the eighth -- commercial banks paid an interest rate of 2.615 percent, the lowest rate for any of the auctions of this kind conducted so far.

There were 88 bidders for the latest slice of the $50 billion in 28-day loans.

Demand was high.

The Fed received bids for $88.9 billion worth of loans.

The Fed, around the middle of December, announced it was creating an auction program that would give banks a new way to get short-term loans from the central bank and to help them over the credit hump.

A global credit crisis has made banks reluctant to lend to each other, which has crimped lending to individuals and businesses.

The smooth flow of credit is the economy's life blood.

It permits people to finance big-ticket purchases, such as homes and cars, and help businesses to expand operations and hire workers.

The ill effects of housing and credit problems, however, have made both people and businesses more cautious in their spending.

And that has significantly weakened the overall economy.

A growing number of economists believe the economy contracted in the January-to-March period and is on pace for its first recession since 2001.

Across the Atlantic, European banks hungry for more cash received an additional $77.1 billion in short-term credit from the European Central Bank on Tuesday as part of weekly operations.

The bank has jurisdiction over the 15-nations that use the euro as its currency.

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"OECD opposes sovereign wealth curbs"

By JOE McDONALD, Associated Press

Last updated: 9:52 a.m., Tuesday, March 25, 2008

BEIJING -- The head of the Organization for Economic Cooperation and Development said Tuesday there is no need to restrict investments by government funds so long as they are motivated by profit, not politics.

The OECD, a 30-nation group of the richest economies, has found no evidence that sovereign wealth funds have acted to further political agendas, Secretary-General Angel Gurria told reporters.

The rapid growth of such funds run by China and other governments in Asia and the Middle East has stirred concern they might be used to promote official policy and prompted calls for possible investment restrictions.

"There should not be any regulation or code applied that unduly restricts the freedom of investment, because we would be doing ourselves a disservice," Gurria said at a news conference after weekend meetings with Chinese leaders.

"Our hosts agree."

China's $200 billion investment fund, created last year, attracted attention in December when it put $5 billion into Morgan Stanley.

Wall Street welcomed the infusion of fresh capital after the U.S. subprime mortgage crisis shook many firms.

American lawmakers, though, have sought assurances such funds would not be used to further political goals.

European officials say investments by sovereign funds might be restricted if they fail to disclose more information about their strategy and intentions.

The OECD includes the United States, most European countries, Japan, South Korea and Australia.

China is not a member.

Beijing's fund has tried to allay foreign concern by saying it will buy only minority stakes in companies and avoid sensitive industries such as oil or telecommunications.

The fund says it will invest most of its money in China.

Other governments with sovereign wealth funds include Abu Dhabi -- which has the world's largest fund, with $875 billion in assets -- Singapore, South Korea, Russia and Australia.

The value of cross-border deals by sovereign wealth funds jumped 65 percent last year to $48.5 billion compared to 2006, according to the financial information firm Dealogic Inc.

Gurria, a former Mexican finance minister, was in Beijing for talks on closer ties between the OECD and China.

"We would like it to participate more," Gurria said.

"We want to become a more relevant, more global, more pertinent institution, and without these countries, we feel that we do not cover enough ground to be relevant, to be important."

An OECD report in September forecast that China, now the world's fourth-largest economy, will become No. 1 as early as 2015, surpassing Germany, Japan and the United States, the current leader.

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On the Net:

OECD: http://www.oecd.org

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"China's banks duck credit crisis, mostly"

By ELAINE KURTENBACH, Associated Press

Last updated: 8:13 a.m., Tuesday, March 25, 2008

SHANGHAI, China -- Major Chinese lenders Industrial & Commercial Bank of China and Bank of China posted record profits in 2007, as gains in interest income and fee-based businesses offset losses from the global mortgage-lending crisis.

Chinese financial institutions sectorwide are reporting strong profit growth in contrast to the malaise afflicting western lenders ensnared in credit woes tied to the U.S. housing market.

Bank of China, the country's most international bank, reported that its net profit rose 31 percent to 56.3 billion yuan ($8 billion) in 2007, despite its nearly $5 billion in investments in mortgage-backed securities.

That result, up from 43.8 billion yuan in 2006, beat analysts' forecasts.

Bank of China has reported the highest exposure among Asian banks to the U.S. mortgage crisis.

It posted an impairment allowance of $1.3 billion for its $4.99 billion in investments in so-called subprime securities.

Fellow state-owned lender ICBC said its net profit rose 65 percent in 2007.

Net profit for 2007 was 81.5 billion yuan ($11.6 billion), up from 49.3 billion yuan in 2006, the Beijing-based bank said in a statement.

At $1.23 billion, ICBC reported a much lower exposure to current credit problems compared with many U.S. and European lenders.

It said its business was "not significantly affected" by that fallout.

"The operational risk management of the bank continued to stand at a prudent level compared to domestic and overseas peers," the bank said.

Chinese banks have seen their profits soar in recent years, helped by rising interest rates and a diversification into wealth-management, consumer credit and other fee-based businesses.

Meanwhile, BOC Hong Kong (Holdings) Ltd., the Hong Kong arm of Bank of China, reported a 10 percent rise in net profit for 2007, as higher net interest income offset losses from its U.S. subprime mortgage-related exposure.

Net profit for the 12 months that ended Dec. 31, 2007 was Hong Kong $15.5 billion ($2 billion), up from HK$14 billion in 2006.

The lender, which is 66 percent-owned by Bank of China, said its full-year net interest income from core lending activities rose 22 percent to HK$19.40 billion ($2.5 billion) from HK$15.84 billion.

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"World markets rally on easing US worries"

By TOBY ANDERSON, Associated Press

Last updated: 8:02 a.m., Tuesday, March 25, 2008

LONDON -- European and Asian markets surged Tuesday as investors returned from the Easter holiday in a mood to buy, encouraged by upbeat U.S. housing numbers and overnight gains on Wall Street.

U.S. stocks headed for a moderately higher as investors awaited readings on consumer sentiment and housing.

Investors also were heartened by news that JP Morgan Chase & Co. raised its offer for Bear Stearns fivefold to $10 a share from $2 a share.

The new offer signals that investors' losses might not be as sizable as feared.

"Yesterday saw strong gains on Wall Street with the Dow Jones closing up 187 points, putting on over 400 points since Thursday afternoon," said Claire Collingwood, a dealer at CMC Markets in London.

"A re-evaluation of the Bear Stearns deal price by JP Morgan gave investors added belief that the credit crunch was coming to an end."

In Europe, stocks advanced strongly in early trading as markets reopened after the Easter Monday holiday.

In the U.K., the FTSE 100 rose 3.1 percent to 5,666.1, while Germany's DAX gained 2.7 percent.

France's CAC 40 climbed 3.1 percent.

In Asia, markets in Hong Kong and Australia, both of which had been closed since Thursday for the Easter holiday, jumped on easing concerns about the global credit crisis that has battered stocks since the start of the year.

"I think this is the beginning of a rally," said Francis Lun, a general manager at Fulbright Securities in Hong Kong.

"We have gone down low enough and the market is ready for a rebound."

"Banks will lead the rally."

Hong Kong's benchmark Hang Seng index jumped 6.4 percent to 22,464.52, while Australia's S&P/ASX 200 index rose 3.7 percent to finish at 5,318.4.

Japan's Nikkei 225 index climbed 2.2 percent to 12,745.2 after closing flat Monday, and India's Sensex was up more than 6 percent in late afternoon trading.

Investors got an unexpected dose of positive news about the U.S. housing sector, which has been at the heart of the credit problems.

The National Association of Realtors said Monday sales of existing homes rose 2.9 percent in February, the first gain since July.

The Dow Jones industrial average rose 187.32, or 1.52 percent, to 12,548.64 on Monday, after rising more than 260 points on Thursday, the last day of trading before the Easter weekend.

On Tuesday, investors will be examining the U.S. Conference Board's survey on consumer confidence for March as well as the Standard & Poor's/Case-Shiller index on housing prices.

In Tokyo, electronics and trading companies were buoyed by the recent recovery in the U.S. dollar, which was trading at 100.20 yen.

Last week, it dropped below 96 yen for the first time since August 1995.

Gainers in Tokyo included Canon Inc., which rose 3.9 percent, and Itochu Corp., up 4.8 percent.

In Australia, banks led the market higher.

National Australia Bank, the nation's largest lender, rose 5.1 percent, while Australia and New Zealand Banking Group added 5.9 percent.

Still, some analysts warned that the declines in regional markets may not be over.

"It's too early to conclude an end of the prevailing bear market," said Ernie Hon, a strategist at ICEA Securities in Hong Kong.

The mainland Chinese market recovered from an early drop to close nearly flat, as a rally in airlines offset a continued decline in PetroChina on views the stock is overvalued.

The Shanghai Composite Index rose 0.1 percent to 3,629.62.

Speculation that China's central bank may hike interest rates again continues to dampen buying sentiment, analysts said.

Taiwan bucked the regional trend.

Its main index slid 0.8 percent after surging 4 percent Monday amid expectations that president-elect Ma Ying-jeou will bring greater economic engagement with China.

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AP Business Writer Malcolm Foster in Bangkok contributed to this report.