Finance topics

India’s central bank held key interest rates steady Friday as it struggles to foster growth amid high inflation, disappointing businesses who were looking for more drastic action.

The Reserve Bank of India kept the short-term lending rate, or repo rate, at 8.5 percent and the reverse repo rate _ the rate it pays to banks for deposits, at 7.5 percent. The bank also kept the cash reserve ratio for commercial lenders unchanged.

“Downside risks to growth have clearly increased,” the bank said in a statement. “However, it must be emphasized that inflation risks remain high.”

The bank’s 13 rate hikes since March 2010 are starting to choke growth in Asia’s third largest economy. Growth slipped to a two year low of 6.9 percent in the September quarter and industrial production fell 5.1 percent in October, its first contraction since June 2009. But inflation remains above 9 percent.

“I would like to see RBI do a major rate cut now,” B. Muthuraman, president of the Confederation of Indian Industry and vice chairman of Tata Steel, told CNBC-TV18 before the policy decision.

He said he would have liked the bank to cut rates by half a percentage point and reduce the cash reserve ratio to boost lending. That would help small and medium sized businesses _ which are crucial to jobs and output in India’s manufacturing sector _ get more affordable financing to grow.

“Government inaction is a big cause of concern for industry,” Muthuraman said, citing coal shortages, land acquisition difficulties and slow decision making. “We can have a growth rate in excess of 8 percent, if only we’d had reforms. It’s a very sad story.”

The rupee, which has been trading at record lows, strengthened Friday, after the central bank took to steps to curb speculation.

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A Yemeni military official says al-Qaida-linked militants have attacked a military barracks in an embattled southern town, leaving two soldiers and 11 militants dead.

The official said Saturday that another 36 soldiers were injured in the base in Zinjibar, the capital of Abyan province.

He says that the fighting began Friday night and continued into the morning. He spoke on condition of anonymity because he was not authorized to speak to the media payday loans.

Militants and the army have fought for control of Zinjibar since May. A 10-month-old uprising against authoritarian President Ali Abdullah Saleh has caused a breakdown of authority throughout the country.

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Australia’s central bank cut its benchmark interest rate by a quarter percentage point on Tuesday, the second such move in as many months as concern mounts over the fragile global economy.

The Reserve Bank of Australia said its decision to lower the rate to 4.25 percent comes amid uncertainty over the European debt crisis, and concern that global economic conditions could worsen.

“Financial markets have experienced considerable turbulence, and financing conditions have become much more difficult, especially in Europe,” Reserve Bank Governor Glenn Stevens said in a statement. “This, together with precautionary behavior by firms and households, means that the likelihood of a further material slowing in global growth has increased.”

Economists were split on what the bank would do, after it cut the cash rate by a quarter percentage point in November. Tuesday’s decision marked the first time the bank has cut rates in consecutive months since Dec. 2008, the height of the global financial crisis.

The move will provide a savings of an extra 50 Australian dollars ($51) a month on a AU$300,000 mortgage, Treasurer Wayne Swan said.

“Christmas is a time when family budgets are stretched, so I’m certain it will be welcome,” Swan told reporters.

The treasurer said the country’s economy remained strong, but said there are “serious risks” arising from Europe’s debt woes. European Union leaders will hold a summit later this week to discuss a plan to resolve the crisis.

“There is a lot riding on what is happening in Europe as we go through the rest of this week,” Swan said. “All of us hope and pray that the Europeans get their act together.”

Australia’s economy remained strong throughout the global financial crisis thanks to a mining boom largely fueled by China’s demand for iron ore, coal and natural gas.

Craig James, chief economist with the Commonwealth Bank of Australia, said the Reserve Bank will probably cut the rate by another quarter percentage point when it meets again in February. Should the European crisis worsen dramatically, he said, the bank may issue an even steeper cut of half a percentage point.

“In the global financial crisis, they were quite aggressive with cutting interest rates,” James said. “This time around, they’re not taking any chances.”

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How metro areas with more than 1 million people ranked in net domestic migration - the number of people who moved to a place, minus those who moved away — for people age 25 to 34. Does not include foreign immigration.

Annual average for three-year period

1: Riverside, Calif.    +23,147       1: Denver    +10,429

2: Phoenix                +14,220       2: Houston    +9,366

3: Atlanta                 +12,167       3: Dallas    +8.731

4: Houston               +10,992       4: Seattle    +7,451

5: Charlotte              +9,273         5: Austin, Tex.    +7,099

38: St. Louis            -2,349      24: St. Louis    +870

47: Chicago              -13,859         47: Miami    -5,724

48: Miami                  -15,208       48: Detroit    -7,501

49: New Orleans       -18,626         49: Chicago    -9,645

50: New York             -47,027       50: New York    -22,325

51: Los Angeles         -53,795       51: Los Angeles    -24,470

Source: Census/Brookings Institution

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Global markets rose on Friday as investors welcomed German Chancellor Angela Merkel’s call to enforce tighter government spending rules and a surprise drop in the U.S. unemployment rate.

In a closely scrutinized speech to Germany’s parliament, Merkel said the 17 nations that use the euro currency must move quickly to restore market confidence, changing EU treaties to make financial controls stricter and more binding.

She reiterated her objection to so-called eurobonds _ debt jointly backed by eurozone countries _ and warned that the debt crisis will take years, not months, to fix. But her call for long-term changes suggested a commitment to strengthen financial union between countries in the euro, something analysts have said is necessary to make sure the eurozone doesn’t break up.

Merkel and French President Nicolas Sarkozy are meeting Monday to discuss potential treaty changes. The talks will culminate in a Dec. 9 summit of EU leaders, where the proposals are expected to be debated and detailed.

Investors are hoping if eurozone governments agree to longer-term changes in the way they control their finances, the European Central Bank will agree to step up its interventions in the bond markets. Those interventions keep borrowing rates down for debt-troubled nations like Italy.

Whether the ECB will agree to step up its bond purchases is not clear, although its President Mario Draghi hinted Thursday that it was a possibility.

“Expectations have been growing that a ‘Grand Plan’ will be delivered next week,” said Frederik Ducrozet, analyst at Credit Agricole CIB.

European stocks rose, as did bonds for Italy and Spain. Britain’s FTSE 100 gained 1.1 percent to 5,548.87 while Germany’s DAX added 1.0 percent to 6,094.66. France’s CAC-40 climbed 1.4 percent to 3,172.22.

Italy’s 10-year bond yield was down to 6.52 percent, almost a full percentage lower than Wednesday, an indication investors have high hopes of next week’s talks to save the euro. Spain’s 10-year yield was down to 5.56 percent.

Wall Street also rose on the open _ the Dow Jones industrial average was up 0.8 percent at 12,111 while the Standard & Poor’s 500 rose 0.8 percent to 1,255 after the release of cautiously upbeat U.S. jobs data.

The U.S. government said the unemployment rate fell to 8.6 percent in November, the lowest in 2 1/2 years and better than economists’ expectations for an unchanged rate of 9 percent.

The world’s largest economy also added 120,000 jobs in November, while the previous two months were revised up to show another 72,000 more jobs were created _ the fourth straight month the government revised prior months higher.

Although the drop in the unemployment rate was unexpected, the increase in jobs was roughly as forecast by most analyst.

Earlier in Asia, Japan’s Nikkei 225 index rose 0.5 percent to end at 8,643.75, its highest closing in three weeks. Hong Kong’s Hang Seng rose 0.2 percent and Australia’s S&P/ASX 200 added 1.4 percent.

South Korea’s Kospi was marginally down and mainland Chinese shares also lost ground as investors cashed in on earlier gains. The benchmark Shanghai Composite Index lost 1 percent.

Markets continued to enjoy some momentum from Wednesday, when the U.S. Federal Reserve, European Central Bank, Bank of England and the central banks of Canada, Japan and Switzerland jointly made it easier for banks to borrow dollars.

The coordinated effort was meant to prevent Europe’s debt crisis from exploding into a global panic. Should a European bank fail or if a country default on its debt, investors fear it could result in a freeze-up in global lending like the one that occurred in 2008 when Lehman Brothers collapsed.

China’s central bank also acted to release money for lending and to shore up growth by lowering bank reserve levels for the first time in three years. The bank actions caused global stocks to rally Thursday.

Benchmark oil for January delivery was down 5 cents to $100.15 per barrel in electronic trading on the New York Mercantile Exchange on Friday. The contract lost 16 cents to end at $100.20 per barrel on the Nymex on Thursday.

In currency trading, the euro rose to $1.3478 from $1.3460 late Thursday in New York. The dollar rose to 77.93 yen from 77.76 yen.

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Tens of thousands of Egyptians rallied Friday in Cairo’s Tahrir square with Islamists in the forefront to protest against what they say are attempts by the country’s military rulers to designate themselves as the guardians of a new Egypt. It was one of the largest rallies in Egypt in recent months.

Most rallies in Tahrir have been led by liberal- or left-leaning groups. But Friday’s rally was dominated by the country’s most organized political group, the Muslim Brotherhood, which has rarely come out in full force since the protests that forced President Hosni Mubarak to step down in February.

The Brotherhood had until recently avoided confrontation with the ruling Supreme Council of the Armed Forces, but now warns of escalating its protest campaign if plans to give permanent political powers to the military are not scrapped.

“The army has no role in ruling people. Its only job is to protect the country. We want civilian rule chosen through democracy,” said Hani Hegazi, a 28-year old Brotherhood member who traveled by bus to Tahrir from the Delta province of el-Beheira.

Banners read: “Down with military rule. Egypt our country is not a military camp.” Some demonstrators flew the Egyptian flag, while others including ultraconservative Salafis waved a banner declaring Islam’s holy book, the Quran, to be “our constitution.”

The rally was called to protest a document floated by the government which declares the military the guardian of “constitutional legitimacy,” suggesting the armed forces could have the final word on major policies even after a new president is elected. The document, which includes guiding principles for Egypt’s new constitution, also introduces clauses that would shield it from civilian oversight.

Most of Egypt’s pro-democracy groups object to the document, calling it an attempt to perpetuate military rule past the post-Mubarak transitional period which is supposed to end with the election of a new parliament and a new president.

In addition to the Brotherhood, Salafis, left- and liberal-leaning groups such as the April 6 movement and other youth revolutionary alliances joined the rally, demanding a timetable for the end of military rule, which began in February.

They have called for marches from mosques around Egypt to major squares, dubbing it the “Friday of the Single Demand” _ that demand being a clear date for the transfer of power to civilian rule. Many groups have planned to hold an open ended sit-in until a date has been set.

The Brotherhood says the document reinforces “dictatorship.”

“It contains articles that rob the people of their sovereignty and reinforces dictatorship. It constitutes a coup against the principles and goals of the January 25 revolution,” the group said in a statement issued Wednesday. Last-minute negotiations between the government and the Brotherhood failed to stave off their participation in the rally, or scrap the document payday loans lenders.

The show of force comes 10 days before the country’s first parliamentary elections since Mubarak stepped down, when a Brotherhood-affiliated political party is expected to fare well.

Anger against the Supreme Council has been building up over their management of the transition period. Many complain that the generals are recreating the Mubarak regime by cracking down on opponents, by refusing to order a thorough reform of the security services, and by monopolizing decision making. Islamists and liberals alike now express fear that the military council wants to hold on to power, a claim denied by the generals.

The military council had promised to transfer power to an elected civilian government within six months of Mubarak’s ouster. But according to a vague timetable in place, it may not be until early 2013 that a president is elected. Only the dates for the parliamentary elections, which are due to begin in ten days and which will drag into March, are yet known.

Walid Farouk, 32, who wore the heavy beard and traditional robe of the ultraconservative Salafi trend, said that Egypt had seen nothing good from military rule since the army first took power in 1952.

“All of us are scared that the army could try to hold on to power,” he said. “It is time for a civilian government.”

The writing of Egypt’s constitution has been a divisive issue, and details of who will write it and what it contains are at the heart of recent rallies.

Some liberals have supported the idea of writing guiding principles for the constitution, fearing that a parliament controlled by Islamists would insert religious principles into the document.

Even now, some liberals remain opposed to the Friday rally, saying a document is necessary to detail how members of the assembly are to be chosen, and controversial clauses can be negotiated.

But many others have come to distrust the military’s Supreme Council at least as much they distrust the Islamists.

At Friday’s rally, protesters are also expected to celebrate the birthday of one of the most prominent revolutionary to be jailed by the military prosecutor. Alaa Abdel-Fattah, a famous blogger and activist, was detained late last months for refusing to answer to the military prosecution on his alleged role in sectarian violence that left 27, mostly Christians, dead. He turned 30 on Friday.

Many hold the military responsible for the violence, and see Abdel-Fattah’s detention as an attempt to find a scapegoat and discredit activists.

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Warren Buffett said Monday that his company has spent $10.7 billion to buy more than 5 percent of IBM’s stock this year, a surprising move by the billionaire investor who has long shied away from investing in high technology companies.

Berkshire Hathaway also revealed several other new investments made during the turmoil of the third quarter. Besides the new IBM investment, Berkshire added much smaller stakes in Intel Corp., DirecTV, General Dynamics Corp. and CVS Caremark Corp.

Most of the details emerged from the quarterly update Berkshire filed with regulators on its $59 billion U.S. stock portfolio. Buffett disclosed some details in interviews earlier in the day.

Monday’s filing doesn’t offer a full picture of Berkshire’s holdings, however, because the Securities and Exchange Commission allowed the Omaha-based company to keep some of its investments confidential.

Buffett has long refused to invest in high-tech companies because he has said it’s too difficult to predict which technology businesses will prosper in the long run.

But he said he recently realized his view of IBM was wrong based on what he read in the company’s annual reports and what he learned by talking to information-technology departments at Berkshire subsidiaries. He said he should have realized years sooner that hardware is no longer the heart of IBM’s business.

“Now they’re very much a services company, and they’re very intertwined with their customers,” Buffett said. And he said IBM’s customers are reluctant to change once they start working with IBM.

So Berkshire has bought about 64 million shares since March, or about 5.5 percent of IBM. Buffett says he believes IBM has a sound plan for the future.

Andy Kilpatrick, the stockbroker-author of “Of Permanent Value, the Story of Warren Buffett,” said it’s surprising to see Buffett invest in a high-tech company, but the investment appears to be an example of Buffett spotting something in plain sight that he had previously overlooked.

“I don’t think it moves things very far from what he’s always done,” Kilpatrick said.

IBM joins several other American business icons in Berkshire’s stock portfolio. Buffett’s company already holds stakes in Coca-Cola Co., American Express Co., Wells Fargo & Co., among others.

IBM officials declined to comment Monday on Buffett’s investment.

International Business Machines Corp., which marked its 100-year anniversary in June, has proven resilient even in a downturn because of hard decisions it made in the 1990s, when it tapped an outsider as CEO to help with a turnaround.

At the time, IBM was slipping with the rise of cheap microprocessors and rapid changes in the industry. Although it helped make the personal computer a mainstream product, it quickly found itself outmatched in a market it helped create. PCs also began to perform many of the functions of mainframes computer, throwing IBM’s main moneymaking business into disarray.

The company decided then to focus on the high-margin areas of software and technology services and move away from computer hardware. That intensified with IBM’s $3.5 billion purchase of PricewaterhouseCoopers’ consulting business in 2002 and the sale of its PC business to Lenovo for $1.75 billion in 2005. Today, IBM is the world’s biggest technology services provider no fax pay day loan.

The shift is important because it has allowed IBM to ride two recessions. When times are tough, businesses pay IBM to help them find ways to cut costs and handle technology chores that would be more expensive to perform in-house.

IBM’s stock has more than doubled since the depth of the recession in 2008. IBM shares gained as much as $2.46 Monday to trade near its 52-week high of $190.53 before slipping to close at $187.35, down 3 cents.

Buffett said Berkshire paid an average of about $170 per share for the IBM stock.

IBM executives insist the company’s focus on long-term contracts insulates it from economic swings. The company has said it is ahead of its own aggressive forecasts. IBM has disclosed a goal of hitting $20 per share in adjusted earnings by 2015, a rare example of a long-term earnings target made public by a major company. IBM, which is based in Armonk, N.Y., says it plans to continue growing its software business and invest about $20 billion in acquisitions from 2011 to 2015.

The third-quarter report filed Monday doesn’t include all of Berkshire’s new IBM stake because Buffett said some of the shares were bought in the fourth quarter.

A couple of the other new investments revealed Monday are tech companies. At the end of September, Berkshire held 9.3 million Intel shares, 4.2 million DirecTV shares, 3.1 million General Dynamics shares and 5.7 million CVS Caremark shares.

But those other new investments, besides IBM, were worth less than $200 million at the end of September. That dollar figure suggests those investments were made by Berkshire’s new investment manager Todd Combs, who manages between $1 billion and $3 billion.

It’s not clear who picked the investments because the filing doesn’t differentiate between investments Berkshire makes, investments any of roughly 80 subsidiaries make, or investments made by Buffett himself.

Besides the new investments, Berkshire also reported changes in some of its other holdings, including:

_ Increasing its sizeable stake in Wells Fargo to 361.4 million shares from 352.3 million in June.

_ Reducing its holdings of Kraft Foods to 89.7 million shares from 99.5 million.

_ Boosting its Dollar General stake to 4.5 million shares from 1.5 million.

_ Increasing its stake in insurer Torchmark Corp. to 4.2 million shares from 2.8 million.

Berkshire’s investments are closely watched in the market because of Buffett’s successful record. Buffett has said that Berkshire has been buying aggressively during the recent market turmoil.

Berkshire occasionally receives permission from the SEC to delay disclosing some stock purchases to prevent others from driving up the price of those stocks before Berkshire completes its purchases. Berkshire then discloses the purchases or sales in a subsequent quarter and issues amended reports for previous quarters.

The SEC says it grants such confidentiality to investment managers only when they can show they would be harmed substantially by immediate disclosure.

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Appliance maker Whirlpool Corp. says it will cut 5,000 jobs in an effort as it faces soft demand and higher costs for materials.

The jobs to be cut are mostly in North America and Europe. They include 1,200 salaried positions and the closing of the company’s Fort Smith, Ark., plant.

The company expects the moves will save $400 million by the end of 2013.

Whirlpool also says its third-quarter net income more than doubled to $177 million, or $2 payday loans in one hour.27 per share, from $79 million, or $1.02 per share. Adjusted earnings of $2.35 per share fell short of analyst expectations for $2.75 per share.

The company, whose brands include Maytag and KitchenAid, has been squeezed by higher costs for materials such as steel and copper.

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China’s trade with its close ally North Korea nearly doubled in the first seven months of the year compared with the same period in 2010, state media reported Sunday.

The 87 percent increase to $3.1 billion was announced at the start of a visit to the North by Chinese Vice Premier Li Keqiang that reaffirms strong ties between the communist neighbors.

Li said China was hoping for better relations between North and South Korea and a resumption of long-stalled six-nation nuclear disarmament talks.

China wants to work with all parties in promoting the denuclearization of the Korean peninsula and safeguarding regional peace and development, the official Xinhua News Agency quoted Li’s statement as saying.

North Korea relies heavily on China for food and fuel aid and many consumer products. Chinese companies are the main investors in North Korean mining, and the sides recently signed agreements on road building and jointly developing an industrial park on an island near the Chinese city of Dandong.

“The economic and trade cooperation between the two countries has shown great potential, with bilateral trade and investment volume reaching new highs,” Xinhua said, citing the Chinese ambassador to Pyongyang, Liu Hongcai.

Bilateral trade between China and North Korea still is dwarfed by economic ties between China and South Korea. China is South Korea’s largest trade partner.

Trade between Beijing and Seoul rose more than 20 percent in the first eight months of the year to $159 billion and is expected to hit about $250 billion for all of 2011.

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Unemployment rates fell in half of U.S. states last month, a sign that September’s pickup in hiring was felt around the country.

The Labor Department says unemployment rates dropped in 25 states, rose in 14 and stayed the same in 11. That’s a modest improvement from August, when unemployment rose in 26 states.

Nationwide, employers added 103,000 net jobs in September, nearly double the number created in August. Still, that’s not enough to lower the unemployment rate, which stayed at 9.1 percent for the third straight month.

Nevada reported the highest unemployment rate for the 16th straight month. It stayed at 13.4 percent for the second consecutive month. California was next. The rate there fell from 12.1 in August to 11.9 percent. Michigan had the third-highest rate, at 11.1 percent.

Layoffs have slowed at a national level in recent months. The number of people applying for unemployment benefits has fallen to a six-month low, according to a four-week average calculated by the government. That has helped calm fears that the economy was sliding into another recession, as have other recent data.

Manufacturers in the Philadelphia region grew in October after contracting for two straight months, according to a survey by the Federal Reserve Bank of Philadelphia. In September, consumers boosted their spending on retail goods by the most in seven months.

Still, the national unemployment rate has been stuck near 9 percent for more than two years payday loan. Employers have added an average of only 72,000 jobs per month in the past five months. That’s far below the 100,000 per month needed to keep up with population growth. And it’s down from an average of 180,000 in the first four months of this year.

Americans are pessimistic about the economy. And more than half say President Barack Obama does not inspire confidence about a recovery.

A sizable majority _ more than 7 in 10 _ believe the country is headed in the wrong direction, according to a new Associated Press-GfK poll. And 43 percent describe the nation’s economy as “very poor,” a new high. Among those surveyed, less than 40 percent say Obama’s proposed remedies for high unemployment would increase jobs significantly.

Employers pulled back on hiring this spring after seeing less demand from consumers. Higher food and gas prices forced consumers to rein in spending. Consumer spending accounts for 70 percent of economic activity.

Job growth is critical to a recovery in the housing market, which many economists say is years away.

The number of Americans who bought previously occupied homes fell in September to a seasonally adjusted annual rate of 4.91 million homes, the National Association of Realtors said Thursday. The pace matches last year’s sales figures, which were the worst since 1997.

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