Finance topics

A French official says France may propose joint bonds among the eurozone’s strongest economies as part of a package of measures to save the shared currency, despite German resistance.

The official said Tuesday that discussions over joint bonds by top-rated triple A eurozone economies is under discussion as the French government prepares for an EU summit next week.

Proponents say the proceeds of the so-called elite bonds could be used to help the eurozone’s weaker countries deal with their debts, in return for strict conditions being imposed on their budgets.

The official spoke on condition of anonymity because the sensitive, closed-door talks are still under way.

German Finance Minister Wolfgang Schaeuble dismissed reports of joint bonds Monday, saying they were “completely made up.”

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Asian stocks climbed Monday, buoyed by a robust start to the U.S. holiday shopping season and reports that European leaders are considering legal means to force debt-ridden euro countries into fiscal discipline.

Japan’s Nikkei 225 index jumped 1.9 percent to 8,314.45. South Korea’s Kospi gained 2 percent to 1,811.99 and Hong Kong’s Hang Seng index rose 1.8 percent to 18,012.29. Australia’s S&P/ASX 200 added 2 percent to 4,067.

Benchmarks in mainland China, Singapore, Indonesia and Taiwan were also higher.

German media reported over the weekend that German Chancellor Angela Merkel and French President Nicolas Sarkozy were studying legal changes _ possibly amendments to the European Union growth and stability pact _ to force nations using the euro common currency to comply with strict rules for budget discipline and tough sanctions for violators.

Traders were awaiting more details on such a possible plan, as well as the results of a key meeting Tuesday of finance ministers from the 17 euro nations.

Worries about Europe’s debt crisis flared anew Friday after Italy had to pay 7.8 percent to borrow for two years at a debt auction. It’s another sign that investors are increasingly hesitant to lend to European countries.

Higher interest rates on government debt of Italy, Spain and other European countries have rattled stock markets in recent weeks. Greece, Ireland and Portugal had to seek financial lifelines when their interest rates crossed the 7 percent mark.

Meanwhile, a record 226 million shoppers visited stores and websites during the four-day U.S. holiday weekend starting on Thanksgiving Day, up from 212 million last year, according to early estimates by The National Retail Federation.

The results for the first holiday shopping weekend show that retailers’ efforts to lure shoppers during the weak economy are working. The question remains whether retailers’ will be able to hold shopper attention throughout the remainder of the season, which can account for 25 to 40 percent of a merchant’s annual revenue.

During a shortened post-holiday trading session on Friday, the Dow Jones industrial average fell 0.2 percent to close at 11,231.78. The S&P 500 lost 0.3 percent to 1,158.67. The Nasdaq composite dropped 0.8 percent to close at 2,441.51.

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President Ali Abdullah Saleh’s agreement to step down failed to halt anti-government demonstrations or prevent violence Thursday as regime supporters killed five protesters demanding that the ousted leader be put on trial for crimes ranging from corruption to bloodshed during the current uprising.

Saleh signed the U.S.-backed power-transfer deal, brokered by neighboring countries, Wednesday in the Saudi capital Riyadh in exchange for immunity from prosecution. It sets in motion a number of changes designed to stop the uprising that has battered Yemen’s economy and caused a nationwide security lapse that al-Qaida linked militants have exploited to step up operations.

Saleh passed his presidential duties to his vice president Abed Rabbo Mansour Hadi, effectively ending his 33-year rule. If the deal holds, he’ll be the fourth leader to lose power in the wave of Arab Spring uprisings this year, following longtime dictators in Tunisia, Egypt and Libya.

In the coming days, the opposition is supposed to name a prime minister, who will be sworn in by Hadi. The prime minister will then form a national unity government, evenly divided between the opposition and the ruling party. Hadi also is to announce a date for presidential elections, to be held within 90 days.

Observers note that the deal does not include a number of Yemen’s biggest power brokers, including Saleh’s relatives who head elite security forces, powerful tribal chiefs and military commanders who have joined the protesters.

Many of the protesters, who have camped out in public square for months to call for sweeping democratic reforms, rejected the deal immediately, saying the opposition parties that agreed to it were compromised by their long association with Saleh.

Thousands took to the streets again Thursday in the capital Sanaa, the central city of Taiz and elsewhere, protesting the deal and calling for Saleh to be tried for charges of corruption and for the killing of protesters during the uprising.

They chanted “No immunity for the killer” and vowed to continue their protests.

Security forces and government supporters opened fire on Sanaa’s main protest camp Thursday, killing five protesters with live ammunition, said Gameela Abdullah, a medic at the local field hospital.

A video posted online by activists showed men in long robes and Arab head scarves firing assault rifles at protesters, who scramble for cover. Some throw rocks and carrying large pictures of Saleh payday advance low fees.

“We’ll keep fighting until Saleh is tried for all the crimes he has committed against the people in his capacity as the head of the armed forces,” said activist Bushra al-Maqtari in Taiz, which has seen some of the most violent crackdowns on anti-regime protesters. Hundreds of demonstrators have been killed nationwide since January.

Abdullah Obal, a leader in the coalition that signed the deal, said the opposition intended to meet with protest leaders to address their demands.

“The agreement does not cancel the youth’s demands or go against them,” he said. “It is their right to protest.”

Some doubt that the deal marks the end of political life for Saleh, who has proved to be a wily politician and suggested in remarks after the signing ceremony that he could play a future political role in the country, along with his ruling party. He had agreed to sign the deal three times before, only to back away at the last minute.

Saleh had stubbornly clung to power despite nearly 10 months of huge street protests in which hundreds of people were killed by his security forces. At one point, Saleh’s palace mosque was bombed and he was treated in Saudi Arabia for severe burns.

“The signature is not what is important,” Saleh said after signing the agreement. “What is important is good intentions and dedication to serious, loyal work at true participation to rebuild what has been destroyed by the crisis during the last 10 months.”

International leaders who had long pushed for the deal applauded Saleh’s signature, many hoping it would help end a security breakdown that has allowed Yemen’s active al-Qaida branch to step up operations in the country’s weakly governed provinces.

President Barack Obama welcomed the decision, saying the U.S. would stand by the Yemeni people “as they embark on this historic transition.”

King Abdullah also praised Saleh, telling Yemenis the plan would “open a new page in your history” and lead to greater freedom and prosperity.

Italy’s foreign minister, Giulio Terzi, lauded the agreement and called for an end to violence.

“Now it is necessary that the accord is fully implemented and that all violence cease,” he said.

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Gilead Sciences says it will spend $11 billion to buy drug developer Pharmasset at a price more than 88 percent over the stock’s latest closing price in a bet on its experimental hepatitis C treatments.

Gilead says it will pay $137 per share in cash for each Pharmasset share. That stock closed at $72.67 on Friday.

Pharmasset said earlier this month it had started late-stage clinical trials of an experimental hepatitis C drug. It also plans two other late-stage trials in 2012.

Hepatitis C is a viral infection that often has no symptoms but which can lead to life-threatening liver damage.

Gilead will pay for the deal with cash on hand, bank debt and senior unsecured notes. It expects the acquisition to close in next year’s first quarter.

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Just as the U.S. economy is making progress despite Europe’s turmoil, here come two new threats.

Deep spending cuts are set to kick in if a congressional panel can’t agree by Thanksgiving on how to shrink the budget deficit. And Congress may let emergency unemployment aid and a Social Security tax cut expire at year’s end. Either outcome could slow growth and spook markets.

Analysts are concerned. Yet most aren’t panicking.

Many say the economy and markets can withstand the blows. That’s because Congress or the Federal Reserve could take other steps next year to blunt the automatic cuts and lift the economy. And investors expect so little from the congressional panel that they’re unlikely to overreact if no deal is reached.

“There’s no doomsday scenario in reducing government spending,” said David Kelly of JP Morgan Funds.

The 12-member bipartisan panel, or supercommittee, was created in August to defuse a political standoff over raising the federal borrowing limit. It’s supposed to find at least $1.2 trillion in deficit cuts by Nov. 23. If it fails, federal spending would automatically be cut by that amount over nine years, starting in 2013.

The law triggers cuts in programs prized by both parties: social services such as Medicare for Democrats, defense spending for Republicans.

The panel appears to be deadlocked.

Economists say a stalemate makes it harder for Congress to extend the Social Security tax cut and unemployment benefits. On the other hand, if the supercommittee does forge a deal, it might include an extension of those benefits. Or it could at least clear the way for an extension later.

The Social Security tax cut gave most Americans an extra $1,000 to $2,000 this year. Unemployment benefits provide about $300 a week. Most of that money quickly and directly boosts consumer spending, which drives the economy.

By contrast, an expiration of those benefits could cut growth by about three-quarters of a percentage point, economists say. Throw in other cuts, like those passed in the August debt deal, and all told, federal budget policies could subtract 1.7 percentage points from growth in 2012, according to JPMorgan Chase and Moody’s Analytics.

Given the tepid economy, such a hit could be damaging.

“It would be very difficult for an economy that’s doing well to digest, let alone one that’s barely growing at potential,” said Ryan Sweet, an economist at Moody’s. “That could unwind a lot of the improvement we’ve seen so far.”

The economy grew at an annual rate of 2.5 percent in the July-September quarter. Some analysts fear it could fall below 2 percent next year, especially if the emergency unemployment benefits and Social Security tax cuts aren’t renewed.

The U.S. economy faces other threats, too _ from persistently high unemployment to Europe’s spreading debt crisis, which could hasten a recession.

If the automatic spending cuts take effect, the defense budget could be cut by nearly $500 billion over nine years. Some contractors are nervous.

Wes Bush, CEO of Northrop Grumman, has told analysts that the company is bracing for spending cuts.

“It’s certainly going to be a more challenging environment” next year, he said.

Another wild card: Some investors fear that the supercommittee’s failure would spark fresh downgrades of U.S. debt. Standard & Poor’s downgraded the government’s long-term debt in August. That contributed to a stock market plunge. It’s possible that a deadlocked supercommittee would lead the two other major rating agencies _ Fitch and Moody’s _ to follow suit.

Yet S&P’s downgrade did little to tarnish U.S. debt. Treasury prices rose, and yields fell. Bond investors still saw Treasurys as a super-safe investment. Federal borrowing costs actually declined.

“S&P showed that when a rating agency downgrades the best-known security in the world, it has little impact,” Kelly said. The market for U.S. Treasurys is so broad, accessible and transparent that ratings downgrades don’t pose much threat, he noted.

Kelly said Wall Street is unlikely to panic given that expectations for the supercommittee “are so low as to be subterranean.”

Even so, some traders appear to be positioning for a shock. So-called “defensive” sectors of the stock market, like healthcare companies and utilities, which tend to retain their value in a weak economy, have been outpacing the S&P 500 index as a whole.

In the past month, the economy has shown surprising strength. Reports this week showed that manufacturers are producing more goods and consumers are spending more. The number of people seeking unemployment benefits for the first time is at a seven-month low.

Still, more than once since the recession officially ended more than two years ago, the economy has displayed vigor only to stumble again. High gas and food prices and Japan’s earthquake sharply slowed growth in the first half of the year. Congress’ debt-ceiling fight sent consumer confidence to recession levels.

Sweet thinks there’s a good chance Congress will end up extending the Social Security tax cut. Partly on that assumption, Moody’s foresees 2.6 percent growth next year. For this year, analysts generally estimate less than 2 percent growth.

Lawmakers could make other policy changes next year to energize the economy. The tax cuts enacted during the Bush administration, and extended in 2010, are set to expire after 2012. Republicans will push to renew them.

Some of the automatic cuts set to kick in in 2013 could be delayed or altered. That’s particularly true if the White House or either chamber of Congress changes sides in 2012.

And some economists say the automatic spending cuts could actually boost confidence a bit: They would reassure the world that the U.S. government can make progress in shrinking its deficit.

Even so, the supercommittee seems likely to fall short of its goal to help reduce the federal debt load.

And there’s more pressure to come.

Priya Misra, an analyst at Bank of America Merrill Lynch, estimates that Congress will need to find $2 trillion more in cuts by August 2013 to prevent another credit downgrade.

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With its stock down about 65 per cent this year, Research in Motion, the maker of the BlackBerry, has no shortage of unhappy shareholders.

But few of its investors have sought and received as much attention over the past few months as Victor P. Alboini, the chairman and chief executive of Jaguar Financial.

In several interviews since June, Alboini has called for the replacement of RIM

Male CEOs with faces that are wider relative to facial height achieve better financial performance for their firms, according to research from the University of Wisconsin-Milwaukee.

Elaine M. Wong, assistant professor in the school’s department of communication, analyzed the features of 55 U.S. CEOs and found that in general, the wider the face, the higher the company’s return on assets.

She did not find the same correlation with women. She hypothesizes that wider faces – which her research also links to greater aggression – may have been an evolutionary necessity for men, but not women.

The successful group of current and former CEOs included Herb Kelleher of Southwest Airlines, who turned a pioneering business model into a high-flying success; Kenneth Wolfe, who expanded Hershey chocolate into new markets, dramatically increasing revenues and William Stavropoulous, who made Dow Chemical Company an industry leader.

All have faces that are wider rather than narrower, according to Wong’s research.

The Star asked her to put some Canadian CEOs to the test.

Jim Balsillie, co-chair of Research-in-Motion, the BlackBerry maker whose fortunes have tumbled this year, has a relatively narrow face, according to Wong’s calculations, forecasting less stellar results.

She put Tim Horton’s CEO Paul House and Loblaw’s chief Galen Weston Jr. squarely in the middle of the pack of 55 U.S. CEOs.

U.S. CEOs with lower facial ratios included Paul Allaire of Xerox, George Fisher of Kodak, and Richard Fuld of Lehman Brothers.

Wong cautions against eyeballing it because looks are deceiving. Barack Obama appears to have a thin face, but it only looks that way because he’s tall and thin. Precise measurements reveal he has a relatively wide face.

Even Wong and her fellow researchers don’t eyeball it. They use computer software to standardize the photos and measure the distance between cheekbones and the distance between the brow and upper lip.

But if Obama has a wide face, how to explain the current state of the U.S. economy? How to explain that a year ago, RIM, run by Balsillie and his partner Michael Lazaridis, was flying high?

The research reveals a trend, not an absolute that will hold true in every case, says Wong. And facial width is only one factor among numerous other variables.

The research was based on previous work by the University of Toronto’s Nicholas Rule, Ph.D., an assistant professor of psychology and Canada Research Chair in Social Perception and Cognition.

Rule’s research showed that people are able to judge successful CEOs from less successful ones based on photographs. They can even judge success later in life based on photographs taken in university.

Studies at Brock University have found that hockey players with wider faces tended to be more aggressive, with more penalty minutes, says Rule.

“It suggests there is something about the face,” says Rule. “What these studies are doing is saying indeed it’s the facial metrics.”

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Greece’s political leaders struggled Sunday to find common ground on forming an interim government amid a political crisis that threatened the country’s ability to avoid a catastrophic bankruptcy and to retain its cherished eurozone membership.

The country’s president, Karolos Papoulias, was to convene a meeting between Prime Minister George Papandreou and the head of the main opposition conservatives, Antonis Samaras, Sunday night to try to hammer out a solution.

Faced with mounting pressure from both the opposition and his Papandreou, who survived a confidence vote in his government Saturday, has said he will step aside if agreement can be reached on the formation of an interim government that will secure a new European debt deal for Greece and the disbursement of a vital bailout loan installment without which the country will default within weeks.

“I’ve said many times, and I insist on this for the umpteenth time, that I am not interested in staying on in this new government as prime minister,” Papandreou told his ministers during an emergency Cabinet meeting Sunday. “I couldn’t have been clearer. I don’t play games and neither do I gamble the country’s fortunes.”

Samaras, who has been pressing for snap elections, has set Papandreou’s resignation as a condition for participating in any talks, saying earlier Sunday he considered the prime minister to be “dangerous” for the country.

The crisis was sparked after Papandreou’s shock announcement Monday night that he wanted to put a new European debt deal aimed at rescuing his country’s economy to a referendum. That plan caused an uproar in Europe, with the leaders of France and Germany saying any popular vote in Greece would decide whether the country would remain in the euro. European officials also said the country would not receive the vital euro8 billion euro installment of its existing euro110 billion bailout until the uncertainty in Athens was over.

Papandreou’s announcement also spooked international markets, leading stock markets to tumble and led to calls in Greece for Papandreou’s resignation _ even from among his own Socialist lawmakers and ministers _ with many saying he had endangered Greece’s bailout.

The prime minister withdrew the referendum plan on Thursday, after Samaras indicated his party would back the new debt deal, which was agreed upon after marathon negotiations in Europe on Oct. 27.

Greek officials were hoping to have a deal on a new interim government by Monday, when the country has to attend a meeting of eurozone finance ministers in Brussels instant credit reports.

“Forming a new government is not just to a question of having someone representing the country. There are very specific things to be done and we must show responsibility and send a strong message to our partners abroad that we, as a country, are ready not only to vote the agreement, but also to implement it,” Papandreou said during the Cabinet meeting, according to a transcript of his statements released by his office.

Greece has been surviving since May 2010 on its initial bailout. But its financial crisis was so severe that a second rescue was needed as the country remained locked out of international bond markets by sky-high interest rates and facing an unsustainable national debt increase.

The new European deal, agreed on by the 27-nation bloc on Oct. 27 after marathon negotiations, would give Greece an additional euro130 billion ($179 billion) in rescue loans and bank support. It would also see banks write off 50 percent of Greek debt, worth some euro100 billion ($138 billion). The goal is to reduce Greece’s debts to the point where the country is able to handle its finances without relying on constant bailouts.

Greece’s lawmakers must now approve the new rescue deal, putting intense pressure on the country’s leaders to swiftly end the political crisis so parliament can convene and put the debt agreement to a vote.

“We know that there can be no elections now,” Papandreou said during the Cabinet meeting, noting that snap polls would delay the approval of the new debt deal. “This cooperation, however, is necessary and will be beneficial for the climate in our country and internationally.”

He said the new government would focus on passing the new debt deal and ensuring the disbursement of the bailout tranche.

“In these critical moments, the two (main) parties are merely wasting time,” said lawmaker Giorgos Kontoyannis, a former New Democracy legislator who has joined splinter group Democratic Alliance. “I want to say to my former New Democracy colleagues that our responsibility to our country is individual and not bound by party allegiance.”

In return for bailout money, Greece was forced to embark on a punishing program of tax hikes and cuts in pensions and salaries that sent Papandreou’s popularity plummeting and his majority in parliament whittled down from a comfortable 10 seats to just three.

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Italian Premier Silvio Berlusconi averted a government collapse and reached a deal with allies on emergency growth measures in time for an EU summit on saving the euro before political tensions erupted in a fist fight in parliament.

Berlusconi and Northern League leader Umberto Bossi reached a compromise on raising Italy’s retirement age in late-night parliament talks Tuesday _ a point of disagreement that had threatened Berlusconi’s leadership. His majority in parliament needs the support of the Northern League.

A fist fight in the Chamber of Deputies on Wednesday when League lawmakers briefly came to blows with colleagues loyal to a former Berlusconi ally Gianfranco Fini, the Chamber president who broke with the governing coalition early in its term. Scuffles are not rare in Italy’s parliament.

League deputies were incensed when Fini, on a TV talk show, mentioned that Bossi’s wife, took early retirement from a teaching job when she was 39.

Berlusconi will deliver a letter detailing the emergency measures to an EU summit. A spokesman said the contents are reserved for summit leaders, but Italian media reported the measures include new infrastructure spending, with a push for more private investment for strategic projects, the privatization of public entities and property and simplifying rules for companies.

Changes to Italy’s pension scheme had become a major sticking point, with Bossi’s party refusing to risk alienating its constituency of workers from the productive north.

Under the overnight deal, Italy will gradually raise the pension age for all workers to 67 by 2025, bringing it in line with European trends. Currently, Italian men retire at 65 along with women in the public sector but some women in the private sector retire earlier.

The 15-page letter also reportedly contains details of the euro54 billion ($75 billion) in austerity measures passed by lawmakers last month to balance Italy’s budget by 2013.

The European Union had asked for measures, with a clear calendar for implementation, to promote growth, raise the pension age and simplify civil legal proceedings to encourage foreign investment

Outgoing Bank of Italy governor Mario Draghi called the letter of intent “an important step … but now it’s time to implement the measures swiftly and concretely.” Draghi, who takes over helm of the European Central Bank on Nov. 1, also urged Berlusconi’s government to quickly activate the spending cuts and new taxes approved last month.

In Brussels, a spokesman for the European commission, Olivier Bailly, said the EU was “confident” it would have the letter by the end of the day.

Italy is seen as the next country at risk in the widening sovereign debt crisis, but with euro1.9 trillion ($2.6 trillion) in public debt, an Italian default would be disastrous for the global economy. The European Central Bank for months has been buying billions in Italian bonds to help keep borrowing costs down.

Nonetheless, Italy saw borrowing costs on short-term bonds spike Wednesday. The Italian Treasury sold euro8.5 billion ($11.83 billion) in six-month bonds at 3.53 percent, up sharply from last month’s 3.071 percent, its highest level in three years. Yields on two-year bonds rose to 4.628 percent from 4.511.

A Berlusconi spokesman, meanwhile, brushed off reports that Berlusconi was preparing to resign. The left-leaning La Repubblica newspaper, one of Berlusconi’s staunchest critics, reported that he had threatened to resign if no deal could be reached with the Northern League, which was persisting in its resistance to raising the retirement age.

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Stocks stumbled Wednesday as a rare earnings miss by Apple pulled down technology stocks. Indexes turned lower in late afternoon trading on reports of an impasse in talks aimed at resolving the European debt crisis.

The leaders of Germany, France, the International Monetary Fund and the European Central Bank met Wednesday to prepare for a European summit this weekend to find a solution to the region’s debt troubles. Rising and falling expectations for the meeting have rattled markets every day this week.

“The big theme this week is what’s going to happen in Europe over the weekend,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott. “If a Greece or another country defaults, it could do real damage to Europe. If that pushes Europe into a recession, it will further clip the pace of global growth.”

Apple Inc. slumped 5 percent after the company’s income and revenue fell short of forecasts. It was a rare miss for the company, which had jumped 31 percent this year through Tuesday. Apple blamed the shortfall on a later-than-usual release of its newest iPhone.

The Dow Jones industrial average was down 99 points, or 0.9 percent, 11,478 at 3:05 p.m. Eastern. The Dow had spent much of the day edging higher, led by Travelers Cos., a major insurer. Travelers jumped 5.8 percent after reporting revenue that beat analysts’ expectations.

The Dow’s second-best stock was Intel, which rose 3.2 percent. Intel Corp. said its net income rose 17 percent last quarter, beating Wall Street’s target.

Other technology stocks were lower. The Nasdaq composite slid 52, or 2 percent, to 2,604. The S&P 500 fell 16, or 1.3 percent, to 1,208.

Worries that Europe’s troubles could get worse have driven many of the market’s big swings lately. The Greek government is widely expected to go through some kind of default or restructuring of its debt. If that process becomes messy, European banks that hold Greek government bonds may find it difficult to raise money from other banks. That, in turn, could trigger a freeze in credit markets and deliver a blow to an already weak European economy.

Investors had plenty of corporate news to digest on Wednesday. Abbott Laboratories announced plans to spin off its drug business. Abbott’s stock rose 1 percent.

Large banks that were trading higher dropped in the late afternoon. Morgan Stanley fell less than 1 percent. The bank said a jump in investment banking revenue helped it earn $1.15 a share, well above analyst expectations of 30 cents per share.

Citigroup slipped 1.7 percent. The bank agreed to pay $285 million to settle civil fraud charges that it misled buyers of complex mortgage investments just as the housing market was starting to collapse.

BlackRock Inc. dropped 4.2 percent after the money management giant said its assets under management fell 3 percent.

Airlines fell. AMR Corp., the parent of American Airlines, slid 5 percent after reporting a loss that was worse than Wall Street analysts predicted. The company said its fuel spending jumped 40 percent, wiping out revenue gains from higher fares and fees. JetBlue Airways Corp. dropped 6.2 percent after the company said its chief financial officer has resigned.

American Express and eBay will report their results from the last quarter after the market closes.

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