Top News

TOKYO — The Bank of Japan upgraded its assessment of the nation’s economy Friday, setting itself up for a confrontation with government officials who are worried about a possible return to recession and are pressing for a policy response to deflation.

The Japanese government published a report Friday that pronounced the economy officially in deflation for the first time since 2006, and the finance minister said he wanted the central bank to “respond appropriately.”

The report did not say specifically how the government wanted the central bank to tackle deflation, but on Thursday, the Organization for Economic Cooperation and Development urged the Bank of Japan to keep interest rates low and to buy more government bonds to help beat declining prices.

Having rebuffed government appeals last month to extend support for credit markets, the central bank might soon find itself under pressure to buy more government bonds as rising yields and the risk of a credit rating downgrade threaten an economic recovery, analysts said.

“By declaring that Japan is in deflation, the government is trying to persuade the B.O.J. that it needs to do something,” said Takeshi Minami, chief economist at Norinchukin Research Institute, adding that the central bank governor “doesn’t seem to be taking price falls too seriously. At least, the B.O.J. doesn’t seem to want to take further action. I think the government is trying to change that.”

The central bank held its benchmark rate at 0.1 percent after a two-day policy review and appeared to suggest the next steps were up to the government.

“The cause of sustained price falls is a lack of demand,” Masaaki Shirakawa, the central bank’s governor, said at a news conference after the government published its report faxless payday loan. The bank, he said, was doing everything it could to provide liquidity to the economy, including keeping interest rates very low.

“When demand itself is weak, prices won’t rise just through liquidity provision,” Mr. Shirakawa said.

That was an attempt to deflect government pressure, said Koji Ochiai, senior market economist at Mizuho Investors Securities.

“If share prices fall more or if the yen strengthens much more, the B.O.J. might be forced to take more steps,” he said. “It can either say explicitly that low interest rates will stay for an extended period, just like the Fed does, or it could increase its purchases of government bonds.”

The Bank of Japan buys ¥21.6 trillion, or $243 billion, of Japanese government bonds each year and is reluctant to increase purchases, arguing that its government debt holdings are already approaching its self-imposed ceiling.

“The B.O.J. will be on hold for a long time to come,” said Adrian Foster, head of financial markets research at Rabobank International in Hong Kong.

“The government still has some room to boost demand, but with the public- sector deficit already so large, there are not many levers left across the board.”

The bank said Friday it would maintain very easy monetary conditions. But it dropped a more specific pledge to keep rates low for some time.

Reuters

Bank of Japan Sets Itself Up for Clash With Government

HONG KONG (MarketWatch) — Shares of China Strategic Holdings soared Wednesday after it announced plans to trade a part of its newly acquired stake in American International Group Inc.’s Taiwan unit for a wider presence in the Taiwanese financial-services sector.

In a statement issued Tuesday, Hong Kong-listed investment company China Strategic said it has agreed to sell a 30% stake in Nan Shan Life Insurance Co. to Taiwanese financial services major Chinatrust Financial Holding Co. in return for a 9.95% stake in Chinatrust.

The announcement comes just a month after a consortium led by China Strategic outbid others — including Chinatrust — to acquire a 97.57% interest in Nan Shan Life from AIG for $2.15 billion.

China Strategic shares were rose as much as 11.7% in the Hong Kong morning session, while Chinatrust shares gained 2.2% in Taipei.

China Strategic’s decision to sell the stake to Chinatrust came after its consortium failed to win the Taiwanese regulators’ approval to the stake purchase from AIG.

Hong Kong daily The Standard reported Wednesday that Taiwanese regulators and lawmakers had purportedly “cast strong doubts about China Strategic’s mainland [China] background.”

The stake sale in Nan Shan to Chinatrust would make it easier for the China Strategic consortium to complete the acquisition.

In its notice to the Hong Kong stock exchange, China Strategic said the agreement with Chinatrust is subject to the completion of its earlier pact to acquire Nan Shan, as well as regulatory approvals to the latest deal Internet Payday loans.

In a note to clients, Morgan Stanley analysts said the acquisition of a 30% stake in Nan Shan could mean “short-term pain but mid-term gain” for Chinatrust.

“Based on the price Chinatrust paid for a 30% stake in Nan Shan Life and the funding structure, we estimate that Nan Shan Life’s return on assets would need to reach 0.5% to make the deal return-on-equity accretive for Chinatrust,” Morgan Stanley analysts Lily Choi and Bruce Chou wrote in the report.

“We believe it will be difficult for Nan Shan to generate this kind of performance in the near term, given the current low interest rate environment,” they said, adding they expected Chinatrust shares to be volatile in the near term.

Under the proposed transaction with Chinatrust, China Strategic will acquire 1.17 billion common shares of Chinatrust, amounting to 9.95% of the Taiwanese company’s share capital. The purchase will be made at 17.74 new Taiwanese dollars (55 U.S. cents) apiece, a 12.8% discount to Chinatrust shares’ Tuesday close.

The $660 million deal gives Nan Shan roughly the same valuation at which the China Strategic consortium agreed to buy the controlling stake from AIG last month.

Under the agreement, China Strategic said it would also enter talks at a later date to increase its stake in Chinatrust, as well as to increase the Taiwanese company’s stake in Nan Shan within three years.

China Strategic shares jump on Chinatrust deal

MOSCOW — A 37-year-old Russian lawyer for an international investment fund, Hermitage Capital Management, died in a pretrial detention center on Monday, nearly a year after he was arrested in an escalating feud between the Russian authorities and the company, Russia’s Interior Ministry announced on Tuesday.

The lawyer, Sergei L. Magnitsky, who was in charge of the tax practice at the Moscow law firm of Firestone Duncan, died of toxic shock and heart failure in the prison hospital, said Irina V. Dudukina, a spokeswoman for the Interior Ministry’s Investigative Committee.

Mr. Magnitsky’s death adds another chapter to the turbulent history of Hermitage Capital and its owner, William F. Browder, once among the most prominent foreign investors in Russia. Mr. Browder was widely known for accumulating large stakes in companies like Gazprom, and then badgering them to fight corruption in their ranks and provide greater transparency. In 2005, without warning, he was barred from Russia.

Last year, Mr. Browder accused the Russian authorities of using his Russian companies to embezzle $230 million from the Russian treasury. He said that when he complained, the police began a campaign to intimidate his representatives, including Mr. Magnitsky. The authorities, meanwhile, have accused Hermitage of failing to pay about $17.4 million in taxes.

Mr. Magnitsky was working as outside counsel for Hermitage when he was arrested and held without bail in connection with the tax case payday loans.

Jamison Firestone, Mr. Magnitsky’s employer, said that the lawyer was in good health at the time of his arrest but that his condition deteriorated so sharply in custody that he lost about 40 pounds. In meticulous notes from the detention center, Mr. Magnitsky documented his repeated requests for medical attention and medicine, which were denied, and wrote that prison doctors said he was suffering from gall bladder disease and pancreatitis.

“He was repeatedly told by investigators that if he testified, he could get out, but he refused,” Mr. Firestone said. “They were just moving him into worse and worse conditions, and eventually his health started to break down.”

Ms. Dudukina, the Interior Ministry spokeswoman, said that Mr. Magnitsky had never alerted the prison authorities to any health problems, including at his most recent hearing, on Friday. She also said prison doctors found that he had no chronic illnesses. She said he complained to guards on Monday night that he was feeling unwell and was transferred to the prison hospital.

“For investigators, this comes as a total surprise, because there were no complaints about his health,” she said.

Lawyer Held In Tax Case In Russia Dies in Jail

LONDON – World stock markets pushed higher Monday after figures showed U.S. retail sales — which are crucial for the global economic recovery — rose more strongly than anticipated in October.

In Europe, the FTSE 100 index of leading British shares was up 90.71 points, or 1.7 percent, at 5,387.09. Germany’s DAX rose 116.96 points, or 2.1 percent, at 5,803.79 while the CAC-40 in France was 56.36 points, or 1.5 percent, higher at 3,862.37.

On Wall Street, the Dow Jones industrial average was up 130.82 points, or 1.3 percent, at 10,401.29, while the broader Standard & Poor’s 500 futures rose 16.64 points, or 1.5 percent, to 1,110.12.

The gains came after the Commerce Department reported that U.S. retail sales rose 1.4 percent in October from the previous month. Though higher than analysts’ expectations for a 0.8 percent advance, it was not enough to offset September’s revised 2.3 percent decline — originally the fall was estimated at 1.5 percent.

And excluding auto sales, retail sales rose 0.2 percent, half of the expected 0.4 percent increase.

Despite the dependence on car sales and the bigger than anticipated fall in September, markets extended their earlier gains, as investors focused in on the October rebound. Retail sales are particularly important when assessing the outlook for the global economy — without the help of U.S. consumer spending, which accounts for around 70 percent of the U.S. economy, any global economic recovery will be modest.

“The October retail sales numbers were a very mixed bag, but signal that despite the consumer’s gloomy mood, spending is improving,” said Nigel Gault, chief U.S. economist at IHS Global Insight.

The retail sales data came in the wake of a raft of encouraging quarterly reports Friday from large U.S. chains, including clothing retailer Abercrombie & Fitch Co payday loan lenders. and department-store chain J.C. Penney Co.

Retailers will continue to dominate the earnings calendar in the U.S. this week, too. Those expected to report include Home Depot Inc., Target Corp. and Gap Inc.

Home improvement retailer Lowe’s Cos. kicked off the week’s retailing earnings. Though its third-quarter profit dipped 30 percent, it matched expectations. And despite the declining earnings, Lowe’s said it is seeing stabilization in some of the hardest-hit housing markets.

Stock markets have rallied strongly since March’s lows, with many of the world’s major indexes trading at, or near, their highest levels this year as investors reined in their economic doomsday expectations to factor in a swifter than anticipated global economic rebound.

Earlier, Japan’s Nikkei 225 stock average closed up 0.2 percent at 9,791.18 after figures showed the Japanese economy expanded at an annual rate of 4.8 percent in the third quarter. That was the second straight quarter of expansion and the biggest rise since 2007.

In greater China, Hong Kong’s Hang Seng rose 1.7 percent to 22,943.98, and Shanghai’s benchmark surged 2.7 percent to 3,275.05. Markets in South Korea, Taiwan, Singapore and Australia rose between 1 percent and 2 percent.

Oil prices rose in tandem with stocks. Benchmark crude for December delivery was up 76 cents at $77.11 a barrel; the contract settled down 59 cents at $76.35 on Friday.

Meanwhile, the euro was up 0.4 percent at $1.4977 while the dollar was down 0.3 percent at 89.29 yen.

____

AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.

World stocks lifted by US retail sales data

Singapore PM Lee Hsien Loong, back to camera, gives welcome address to APEC leaders, in Singapore, 14 Nov 2009Leaders of Pacific Rim nations have agreed to work toward a new pattern of regional growth.

In a statement released Sunday, Asia Pacific Economic Cooperation leaders meeting in Singapore acknowledged the leading role Asia Pacific nations have taken in the global economic recovery.  But they said their regional economies can not return to growth as usual.The 21 Pacific Rim economies agree a new growth strategy is needed to meet the needs of the global economy. He said, Singapore’s Prime Minister Lee Hsien Loong read an outline of the statement to APEC leaders. He said, “We will pursue growth which is balanced, inclusive, and sustainable, to ensure a durable recovery that will create jobs and benefit people.”

During the last day of meetings Sunday, APEC leaders also held discussions about climate change.  They agreed a legally binding agreement to lower greenhouse gas emissions was not likely by a December meeting in Copenhagen, but a framework for further negotiations was possible free business cards.Pacific Rim leaders dropped a target to cut greenhouse gas emissions from a draft statement.  But, Mr. Lee’s outline mentioned their concerns. “To achieve sustainable growth, we will work towards an ambitious outcome in Copenhagen and ensure that efforts to mitigate climate change are consistent with our international trade obligations,” said Mr. Lee.

U.S. President Barack Obama gave a speech to APEC leaders Sunday saying they needed a growth model that would allow all nations to grow and raise living standards without damaging the environment. APEC leaders meeting this past week in Singapore said high unemployment was a sign that the global economic recovery is still fragile and protectionism a concern.  The APEC statement says free trade and open markets are key for continued prosperity in the Asia Pacific.

APEC Leaders Agree to Chart New Growth in Asia Pacific

BEIJING, Nov. 13 (Xinhua) — China should keep home prices from long time “abnormal increases” and divert profits made from home price hikes to the public through taxation, a senior property official said here Friday.

Dong Zuoji, director of land planning department of the Ministry of Land and Resources, said home prices would continue to rise as the land in the world’s fastest-growing economy is becoming increasingly scarce, but the government should use taxes to give the added value of the land back to society.

“China hasn’t seen overcapacity in real estate sector on the whole, otherwise home prices wouldn’t have gained so much,” he said while attending a meeting held in Beijing.

Dong said the government would increase land supply for subsidized homes and adopt measures to prevent developers from hoarding land guaranteed online payday loans.

The government would also guarantee land use for high-tech, high added-value enterprises while limiting that of backward production projects.

Due to a series of supportive measures adopted by the government, China’s property sector rebounded strongly this year. Home prices in 70 large and medium-sized cities rose for the eight straight month in October.

Average house price in Beijing surged 43.7 percent in July from that of January, to 14,500 yuan per square meter, Golden Keys, a property agent said on July 17.

Property official: China to restrain “abnormal” home price hike

Two computer programmers who worked for Bernard L. Madoff’s investment firm were accused Friday of helping to cover-up the giant Ponzi scheme for more than for more than 15 years.

In a statement, the United States attorney’s office in Manhattan said the two programmers — Jerome O’Hara, 46, of Malverne, N.Y., and George Perez, 43, of East Brunswick, N.J. — were arrested Friday at their homes.

The complaint accuses the two men of providing the technical support needed to produce false documents and trading records that defrauding investors in Bernard L. Madoff Investment Securities of billions of dollars.

“Jerome O’Hara and George Perez allegedly helped construct Bernie Madoff’s house of cards. The computer codes and random algorithms they allegedly designed served to deceive investors and regulators and concealed Madoff’s crimes,” Preet Bharara, the United States attorney for the Southern District of New York, said in a statement.

In addition, Joseph M. Demarest Jr., the assistant director in charge of the F.B.I.’s New York office, said that when the two men told Mr. Madoff “they would no longer lie for him,” they were paid to keep the scheme quiet.

Separately, a civil complaint was filed Friday by the Securities and Exchange Commission.

“Without the help of O’Hara and Perez, the Madoff fraud would not have been possible,” said George S. Canellos, the director of the S.E.C.’s New York Regional Office. “They used their special computer skills to create sophisticated, credible and entirely phony trading records that were critical to the success of Madoff’s scheme for so many years.”

According to prosecutors, F.B.I. agents found handwritten notes in Mr. O’Hara’s desk stating, “I won’t lie any longer. Next time, I say ‘ask Frank,’ ” referring to Frank DiPascali Jr., Mr. Madoff’s primary assistant in the Ponzi scheme.

Thereafter, according to the complaints, Mr payday loans for bad credit. Madoff ordered Mr. DiPascali to pay the two programmers “whatever they wanted in order to keep them happy.” Thereafter, the two men received “hush money” in the form of 25-percent pay increases and bonuses of about $60,000, the civil complaint said.

Documents filed by prosecutors and regulators on Friday suggest that the two men reached some sort of turning point in their role in the Madoff operation in April 2006, when they attempted to delete almost all the special programs they had created for the computer Mr. Madoff used to generate his phony customer statements, the complaints said.

They also closed their own Madoff accounts at that time and withdrew hundreds of thousands of dollars each, prosecutors said. The two men, who started to work for Mr. Madoff in the early 1990s, left in December 2008, according to the S.E.C. complaint.

Mr. Madoff was sentenced in June to 150 years in prison for orchestrating the massive Ponzi scheme. Two others have pleaded guilty to fraud in the case. He is in prison in North Carolina.

His long-time accountant, David G. Friehling, admitted in federal court earlier this month that he had produced the rubber-stamp audits that allowed Mr. Madoff to conceal his Ponzi scheme for nearly 20 years.

And in August, Mr. DiPascali pleaded guilty to creating the fictitious paper trail of office records and customer accounts that helped deceive investors for decades. He is in jail in Manhattan awaiting sentencing and faces up to 125 years in prison.

In addition, Irving H. Picard, the court-appointed trustee seeking to recover assets for the victims, has sued four members of the Madoff family for almost $200 million they received over the years, asserting that the money represented excessive paychecks, improper use of company cash and fabricated investment profits that should have alerted them to the underlying fraud.

Two Are Charged With Helping Madoff Falsify Records

WASHINGTON (Reuters) – The Obama administration's pay czar said on Thursday his compensation rulings will allow General Motors Co and Chrysler Group to retain talent but is willing to consider "lateral" offers to hire new executives.

Kenneth Feinberg, the U.S. Treasury's special master for executive pay at seven companies with massive taxpayer bailouts, told a forum sponsored by Bloomberg that the auto industry largely accepted his pay rulings without appeals Internet Payday loans.

"If General Motors or any other company wants to bring someone in laterally — laterally — and competitive pay packages require that lateral hires get certain competitive pay, what have you, we're perfectly willing to examine that," Feinberg said.

(Reporting by David Lawder; Editing by James Dalgleish)

Pay czar open to “lateral” pay offers

Jeffry M. Picower, a longtime investor in Bernard L. Madoff’s fraud scheme who died in his Palm Beach swimming pool last month, left an estate with assets far in excess of $1 billion — and that could be a spot of good news for Mr. Madoff’s victims.

Although Mr. Picower’s will, which is expected to be filed on Tuesday, leaves the bulk of the estate to charity, that amount depends on how much his family pays to settle legal claims brought by the trustee gathering assets for Mr. Madoff’s victims.

But the estate is clearly large enough to add at least several billion dollars to the $1.4 billion that the trustee has gathered so far. The trustee, Irving H. Picard, estimates that the cash losses in the enormous Ponzi scheme total at least $21 billion.

Mr. Picard has demanded the return of $7 billion he says Mr. Picower and his wife withdrew from their Madoff accounts over several decades. Lawyers for the Picowers say they withdrew $2.4 billion during the six-year recovery period allowed for the trustee’s claims under New York State law and contend that should be the limit of Mr. Picard’s claim.

William D. Zabel, a lawyer for the family, declined to comment Monday night on the settlement talks, except to note that the figures under discussion obviously range from $2.4 billion to $7 billion. Any settlement in that range would at least double the amount available to Mr. Picard to cover victim losses.

Mr. Zabel said “a fair and generous settlement with the Madoff trustee” should still leave “hundreds of millions of dollars” to establish a new charitable foundation envisioned in the will and to pay more than $240 million in cash bequests.

Those cash bequests reveal a new personal footnote to the cloudy history of the Madoff fraud — a link between Mr. Picower and the earliest known fund-raisers for Mr. Madoff.

One of the beneficiaries under the will is Mr. Picower’s niece — who is also the daughter of Michael Bienes, a former employee of the accounting firm owned by Ruth Madoff’s father, Saul Alpern.

With his partner Frank Avellino, Mr. Bienes helped steer hundreds of millions of dollars from individual investors to Mr. Madoff before their partnership was shut down by securities regulators in 1992. Mr. Bienes and Mr. Avellino settled the regulatory lawsuit without admitting or denying any wrongdoing.

According to a family source, Mr. Picower’s sister was once married to Mr. Bienes, but the two men “have long been estranged.” The daughter of Mr. Bienes remained with her mother and Mr. Picower regularly contributed toward her care. The will provides $200,000 to be left in trust to sustain that support ay day loans.

The other cash bequests detailed in the will include a total of $225 million for Mr. Picower’s widow, Barbara, and his adult daughter, Gabrielle; $10 million for April C. Freilich, his longtime assistant; and $1 million each for the New York Public Library, the Harlem Children’s Zone and the Nurse-Family Partnership.

The will, which will be publicly available at the probate court in New York on Tuesday, provides that the remainder of Mr. Picower’s estate will be contributed to a new charitable foundation that would direct at least half of its grants to medical research.

The will specifies that the foundation, in its first year, must distribute $1 million each to four scientists conducting research on Parkinson’s disease, from which Mr. Picower suffered. It is also required to make a first-year grant of $25 million to the Picower Institute for Learning and Memory at the Massachusetts Institute of Technology, which had been underwritten in 2002 by an earlier charity established by the couple in 1989.

That charity, the Picower Foundation, had all its assets invested with Mr. Madoff and closed when his fraud was uncovered in December.

The will was signed on Oct. 15. Ten days later, Mr. Picower suffered a heart attack and drowned at his oceanfront mansion in Palm Beach, Fla. He died amid a tangle of litigation arising from his disputed role in the Ponzi scheme operated by Mr. Madoff.

Initially, the Picowers were notable as victims of fraud, but in May, Mr. Picard sued the Picowers in federal court to recover all the money they had withdrawn from their Madoff accounts over the years. The lawsuit contended that the Picower accounts with the Madoff firm were “riddled with blatant and obvious fraud” that a finance professional like Mr. Picower should have detected immediately.

The Picowers emphatically denied any knowledge of the Ponzi scheme, and a family lawyer has said they, along with other investors and regulators, were deceived by Mr. Madoff.

In a statement released last night, Mrs. Picower said her husband “was determined that we would put Madoff behind us, reclaim our good name and reverse the damage Madoff’s fraud had, not only upon our lives, but upon the many deserving institutions and people we were blessed to support.”

The new foundation will allow his “charitable legacy” to continue after a settlement is reached with the trustee, she said.

Trustee May Win Billions for Investors in Madoff

(Reuters) – Unhappy over constraints imposed by U.S. government overseers, American International Group Inc (AIG.N) Chief Executive Robert Benmosche told the company's board last week that he is considering stepping down, the Wall Street Journal said, citing people familiar with the matter.

The giant insurer's chief executive is particularly unhappy over a recent compensation review by Kenneth Feinberg, the Treasury bailout program's special master for compensation, the paper said, citing the people.

Benmosche told AIG directors that he was "done" but agreed to think it over when they reacted with shock, the people told the paper personal loans.

AIG could not be immediately reached for comment by Reuters outside regular U.S. business hours.

AIG, which has received up to $180 billion of federal aid, including more than $80 billion in loans, and is now 80 percent-owned by U.S. taxpayers, posted its second straight quarterly profit last week, helped by a recovery in the value of its investments.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Valerie Lee)

AIG’s Benmosche threatened to leave over pay constraints: report

Hot News: Proposed delay of Ohio tax cuts spurs e-mails

HONG KONG — Semiconductor Manufacturing International Corp., the largest contract chip maker in China, said Tuesday that its long-serving chief executive had been replaced by another industry veteran, which could pave the way for consolidation in the Chinese chip sector.

David Wang has replaced S.M.I.C.’s founder, Richard Chang, as C.E.O., the company said in a statement to the Hong Kong Stock Exchange.

Mr. Wang’s strong industry background — as a former executive at Applied Materials, the world’s top supplier of chip-making equipment, and then as head of another major Chinese chip maker, Huahong NEC — could set the stage for consolidation, analysts said.

“This will likely be a precursor for a merger of the two companies, and David Wang will take charge after the merger,” said Rick Hsu, a Nomura analyst, referring to S.M.I.C. and Huahong NEC. “A new person will hopefully bring in a new culture, a new mission and new results.”

S.M.I.C.’s shares have been suspended since Nov. 4 pending the release of price-sensitive information. S.M.I.C. officials were not immediately available for comment.

Mr. Chang founded the company in 2000 with major support from the government as China tried to build up its higher value-added technology industries to move away from the lower-margin manufacturing that has become a staple of its economy cash loans with bad credit.

After getting off to a relatively strong start, S.M.I.C. has languished over the past few years, with quarterly losses in 16 of the past 17 quarters, as it tried to compete with larger, more established players like United Microelectronics and the industry leader, Taiwan Semiconductor Manufacturing.

Many saw Mr. Chang as an obstacle to S.M.I.C.’s efforts to merge with other rivals to attain greater economies of scale and bring in strategic investors.

The Chinese government, which remains a major shareholder, may have been getting impatient with Mr. Chang’s leadership as early as a year ago, Mr. Hsu of Nomura said.

“The government has given Richard a certain period of time to really grow the business,” he said. “But it’s already almost nine years since the company was established and it hasn’t really generated real profitability. So it’s pushing the government’s patience a little.”

S.M.I.C., whose share price has dropped steadily since its 2004 I.P.O., was looking for a strategic investor for much of last year and was reportedly talking with several potential major foreign partners, including Intel. But none of investments materialized.

Reuters

S.M.I.C. Gets a New Chief Executive

LONDON — Kraft took its $16.3 billion bid for Cadbury, the British chocolate and chewing gum maker, directly to shareholders on Monday after the Cadbury board rejected the offer as too low.

But Kraft did not raise its offer, sticking with its original proposal from September. Kraft, which makes of Ritz crackers and Oreo cookies, offered £3, or $4.90, in cash and 0.2589 new Kraft shares for every Cadbury share. The offer values each Cadbury share at £7.17, a 26 percent premium to the price before Kraft made its original proposal.

Cadbury’s shares initially dropped 1.72 percent in London after Kraft’s announcement, indicating that investors became less optimistic that a deal would materialize, before increasing slightly. The shares remained above the offer price, at £7.63 a share.

Analysts had expected Kraft to sweeten its original proposal. But in its filing with the London Stock Exchange, Kraft again asserted that its latest pitch was full and fairly priced. Monday’s offer, it said, had an enterprise value of 13.9 times Cadbury’s earnings before interest, taxes, depreciation and amortization, or Ebitda. Cadbury’s own acquisition of Adams in 2002 was valued at 12.8 times Ebitda, Kraft said.

That was not enough to persuade the Cadbury board to change its mind.

“The repetition of a proposal which is now of less value and lower than the current Cadbury share price does not make it any more attractive,” Roger Carr, the company’s chairman, said in a statement. “As a result, the board has emphatically rejected this derisory offer and has strengthened its resolve to ensure the true value of Cadbury is fully understood by all.”

The reason the offer was lower than the September proposal, Cadbury’s board said, was because Kraft’s share price declined 4 percent since then.

“Kraft’s offer does not come remotely close to reflecting the true value of our company,” Mr. Carr said, “and involves the unattractive prospect of the absorption of Cadbury into a low-growth conglomerate business model.”

Analysts had long supported Kraft’s rationale for the merger, which would add Trident gum and Dairy Milk chocolates to Kraft’s brands and help the American food company expand into faster growing countries like India, South Africa and Mexico no fax payday loans. But they said Kraft would have to increase its offer to at least £8 a Cadbury share to succeed.

“We remain convinced of the strategic merits for both companies of combining Kraft Foods and Cadbury,” the Kraft chief executive, Irene Rosenfeld, said in a statement. “We believe that our proposal offers the best immediate and long-term value for Cadbury’s shareholders and for the company itself.”

Rival bidders for Cadbury have not emerged. Kraft’s move on Monday was the result of a deadline set by Britain’s Takeover Panel to either make a bid Monday or be barred from making another for Cadbury for six months.

Earlier this month, Kraft cut its forecast for net organic revenue growth, disappointing analysts even as its third-quarter results beat expectations. Cadbury’s management and board have said that Kraft’s offer substantially undervalues its future prospects. Last month, Cadbury reported stronger-than-expected results, which it said reinforced its argument that the company’s prospects are better as an independent entity than as part of a “low-growth” conglomerate.

Kraft reiterated that it expects a merger to achieve $625 million in pretax annual cost savings and that there “is potential for meaningful revenue synergies.” A combination would create a global food and confectionery giant with more than 40 confectionery brands and annual revenue of $50 billion, Kraft said.

Since Kraft first made its expression of interest in September, analysts and dealmakers have watched the repartee between it and Cadbury in what could be one of the biggest mergers this year — if Kraft succeeds. Both sides have already hired teams of investment banks and law firms to gird for a fight that could last months.

Julia Werdigier reported from London and Michael J. de la Merced from New York.

Kraft Makes a Hostile Takeover Bid for Cadbury

NEW YORK (Reuters) – U.S. stocks rose on Friday as investors took heart after the government said monthly payroll losses slowed, even as unemployment rose above 10 percent.

General Electric Co (GE.N) shares jumped more than 5 percent after a brokerage upgrade, and helped lead the industrial sector higher. The S&P industrials (.GSPI) gained 1.1 percent.

The market had opened lower after data showed the unemployment rate topped the psychologically key 10 percent level and reached the highest point since April 1983.

U.S. employers cut 190,000 jobs in October and unemployment hit its highest level since 1983. Despite the disturbing headline unemployment number, payroll losses continued to decline, which some investors saw as a mild positive as the hourly work week remained static.

"We have gotten the idea that the number of jobs being lost has been slowing, and that continues," said Kim Caughey, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh online payday loans.

The Dow Jones industrial average (.DJI) was up 17.84 points, or 0.18 percent, at 10,023.80. The Standard & Poor's 500 Index (.SPX) rose 2.30 points, or 0.22 percent, at 1,068.93. The Nasdaq Composite Index (.IXIC) increased 7.87 points, or 0.37 percent, at 2,113.19.

Bailed-out insurer American International Group Inc (AIG.N) dropped 7 percent to $36.42 after it said its main insurance business remained weak.

(Editing by Jeffrey Benkoe)

GE lifts Wall St despite rising unemployment

BEIJING — It could almost be a snippet from a World of Warcraft game session — two competing titans, plotting against each other, swapping punches, embarked on a quest for a single prize that only the stronger of them will claim.

But this is not virtual reality. The titans are two agencies of the Chinese government. And their quest, during which they have traded a few blows in the past week, is for a comparatively mundane prize: the power to regulate the real World of Warcraft, among the most popular online games in China.

Last Monday, the Chinese General Administration of Press and Publication ordered the Shanghai-based operator of World of Warcraft, Netease, to shut down its servers for the game, saying it had rejected the company’s application to be the host of the game’s four million Chinese players.

But by Wednesday, the Ministry of Culture had struck back.

“In regards to the World of Warcraft incident, the General Administration of Press and Publication has clearly overstepped its authority,” a ministry official, Li Xiong, was quoted as saying in the Economic Information Daily, a newspaper in Beijing. “They do not have the authority to penalize online gaming.”

The ministry said it had that authority. And it said Netease was perfectly free to offer the game on computers in China. The matter now appears destined for settlement by the State Council, the Chinese government’s cabinet.

Such bureaucratic hair-pulling might seem petty, were so much not at stake.

The online gaming industry in China is already huge, and growing fast. About 50 million people crowd the Internet cafes of China on a regular basis to play. Revenues in 2008 rose about 50 percent to at least 20 billion yuan, or $2.9 billion, according to Alicia Yap, a Hong Kong analyst for Citi Investment Research & Analysis. That is 10 times the revenue of just five years ago. IDC, a research company, has predicted that annual revenue will reach $6 billion by 2013.

In that context, the question of who decides what games go online — and how they decide — looms large. It is perhaps especially important for game makers outside China, who have had trouble cracking the vast Chinese market.

Of the 10 most popular Chinese games ranked by MMLC Group, a Beijing intellectual-property consulting firm, only World of Warcraft, by Blizzard Entertainment, is American-made; two are South Korean, and the rest were developed in China.

The press and publication administration has taken a hard line against outside involvement in the industry, stating flatly last month that foreign investment in Chinese online gaming operations, whether by joint ventures, cooperatives or other means, was forbidden No teletrak payday loan.

The agency did not directly address the origin of the actual games, although it did bar foreigners from providing technical support to Chinese companies and declared its authority over foreign “service packs” and other improvements to existing online games.

In practice, some experts say, at least some of those bans could be easily sidestepped. The proclamation may be part of a larger feud within the government, and perhaps in the business world as well, over parceling out regulation of the booming industry.

Historically, the publication administration has had the power to censor and ban virtually anything published, whether a book, a DVD or an online game. The Ministry of Culture has policed film and other performing arts, including literary and audiovisual works.

The State Council sought to redefine this overlap in 2008, essentially giving the publication agency the power to approve online games before they are made public, and assigning the Culture Ministry to police them once they appear on the Internet.

World of Warcraft fell between the cracks. Long popular among Chinese gamers, the role-playing game hit a snag in June, when Blizzard dropped the previous operator of the game’s Chinese franchise in favor of Netease. Netease shut the game down while it reapplied for permission from the Ministry of Culture and the publication agency.

The Culture Ministry swiftly approved the game, while the publications agency lagged. In September, after the State Council issued a statement reaffirming the Culture Ministry’s authority over games already online, Netease restarted World of Warcraft — and drew the publication agency’s wrath.

Which agency will win the regulatory battle remains unclear, although the Culture Ministry, with allies among other ministerial-level offices, is said to enjoy an edge. Regardless, there appears to be much for both offices to do. The government this summer proclaimed its desire to clean up the Internet, ridding it of pornography, gambling, violence and seditious material.

The Culture Ministry dived further into that Herculean task in the past week, announcing sanctions against 188 companies that it said were running unlicensed, vulgar or overly violent online games. Netease and World of Warcraft were conspicuously absent from the list.

Li Bibo and Xiyun Yang in Beijing contributed research.

Chinese Agencies Struggle Over World of Warcraft

Hot News: Bank of England Adds $40 Billion to Stimulus

WASHINGTON — Legislation that its supporters say would provide greater protection to investors sailed through a House committee on Wednesday, but not before the lawmakers added a provision to ease new auditing standards for small and medium-size companies.

The full House, meanwhile, overwhelmingly approved a bill to accelerate restrictions on credit card companies that had been signed into law by President Obama last May. That law was scheduled to take effect in February, but in response to consumer outrage over moves by some banks and credit card companies to raise rates and fees before then, the House moved to make it effective next month.

That move faces significant obstacles in the Senate, however.

By a vote of 37 to 32, the House Financial Services Committee moved to permanently exempt companies worth less than $75 million from the auditing provisions of the Sarbanes-Oxley Act, a change that was promoted by the White House chief of staff, Rahm Emanuel.

The amendment was criticized by senior Democrats, including Representative Barney Frank of Massachusetts, the chairman of the committee. But at a news conference on Tuesday, Mr. Frank defended Mr. Emanuel’s involvement, saying he had helped to negotiate a substantial narrowing of the provision.

The companies that would be permanently relieved of auditing requirements under Sarbanes-Oxley have repeatedly won temporary exemptions from the Securities and Exchange Commission. The amendment approved by the committee was sponsored by two New Jersey congressmen, John Adler, a Democrat, and Scott Garrett, a Republican. Supporters said the more stringent auditing provisions were overly burdensome to small companies and that easing them would encourage job growth.

Consumer groups said the provision had no place in a bill that its sponsors say is supposed to help protect investors.

“The supporters of this amendment, including apparently the White House, have suggested that weakening protections against accounting fraud is justified in order to promote job growth,” said Barbara Roper, director of investor protection at the Consumer Federation of America. “That is precisely the sort of thinking that landed us in the current mess and precisely the sort of thinking Democrats criticized when they were blaming Republicans for the current financial crisis.”

The bill, part of a broader effort to overhaul the regulatory system in response to the crisis in the financial markets, would provide new powers and increased resources to the Securities and Exchange Commission . The legislation, approved 41 to 28, would give the commission the authority to end mandatory arbitration agreements that investors must sign with their brokers and financial advisers. And it would establish a whistle-blower bounty program for Wall Street employees.

The vote cleared the way for the committee to begin considering a plan by Mr. Frank and the administration to give the government broad new powers to shift the cost of rescues of big financial institutions from taxpayers to other large companies.

The legislation tries to respond to the outcry over taxpayer bailouts of some of the nation’s biggest financial companies, including Bear Stearns, Fannie Mae, Freddie Mac, the American International Group, Citigroup and Bank of America.

The measure, directed at institutions whose troubles might pose risks to the financial system, would create a powerful oversight council, led by the Treasury secretary and composed of top regulators, to set policy and tougher regulations for the largest companies and mediate disputes between federal agencies. It would also give the Federal Reserve a lead role in directly supervising many of the largest financial conglomerates.

The legislation accelerating the effective date of the credit card law was approved 331 to 92 after lawmakers criticized companies that had moved to raise rates and fees before the new law takes effect. The law, passed last May, would require banks and card companies to give 45 days’ notice before changing interest rates. The law also makes it harder to issue credit cards to students and prevents companies from charging fees to those who exceed their credit limit.

Representative Carolyn Maloney, Democrat of New York and the sponsor of the measure, said it would prevent issuers of credit cards from “getting in under the wire with a last gasp of unfair practices.”

Industry executives, however, said the move could backfire by prompting companies to restrict the availability of credit at a time when the economy is in a recession.

“This will create significant confusion for consumers and will further restrict access to credit for both consumers and small businesses, all to the detriment of the broader economy,” said Kenneth J. Clayton, a senior vice president at the American Bankers Association.

Committee Allows a Break on Certain Auditing Rules

Hot News: Carmakers keen on auto finance arms

NEW YORK (Reuters) – Comcast Corp's quarterly profit rose 22 percent, beating expectations, as it sold more phone and Internet subscriptions, helping the top U.S. cable operator fight competition from phone and satellite companies for video subscribers.

Shares of Comcast jumped 5.1 percent in premarket trading as it reported 361,000 new high-speed Internet customers and 375,000 new digital phone subscribers in the third quarter, offsetting the loss of 132,000 basic video subscribers.

Barclays Capital had expected 310,000 voice and 320,000 Internet additions.

The company, which sources say is in talks with General Electric Co about taking a majority stake in NBC Universal, made no mention of the talks in its quarterly earnings release.

The company posted net profit of $944 million, or 33 cents a share, up from $771 million, or 26 cents a share a year earlier business cards.

Excluding special items, including income tax benefits and financing expenses, the profit was 28 cents a share, outpacing analysts expectations of 25 cents a share, according to Thomson Reuters I/B/E/S.

Revenue rose 3 percent to $8.80 billion, just shy of analysts view of $8.85 billion.

The Philadelphia-based company lost about 132,000 basic video subscribers during the quarter.

Free cash flow — a measure of cash left after all expenses are paid for the quarter — rose nearly 20 percent to $1.11 billion.

Shares of Comcast climbed 5.1 percent to $15.25 in premarket trade.

(Reporting by Franklin Paul; Editing by Derek Caney, Dave Zimmerman)

Comcast profit beats Street as users add services

Stocks showed modest gains on the first day of trading since the market took one of its steepest plunges in months. Signs that manufacturing in the United States was on a path to recovery helped buoy shares.

At the close of the markets on Monday, the skittishness of investors over the health of the economy, the source of much anxiety on Friday, appeared to have receded slightly. Stocks jumped in early trading, then pulled back at midday.

The Dow Jones industrial average closed up 76.71 points, or 0.79 percent, at 9,789.44. The Standard and Poor’s 500-stock index was up 6.69 points, or 0.65 percent, at 1,042.88, and the technology-heavy Nasdaq composite index was up 4.09 points, or 0.20 percent, at 2,049.20. Shares of companies that produce consumer staples like food and tobacco led the gains.

A report by the Institute for Supply Management said the health of the manufacturing sector was at its highest level in three years, substantially beating Wall Street expectations. In addition, a separate report showed increases in the number of home sales, offering hope that a critical sector might be headed for revival.

On Friday, the major averages posted some of the biggest losses in months, with the Dow tumbling 250 points, or 2.5 percent, and the S.& P. 500 falling 2.8 percent.

Many Wall Street analysts wonder whether the drops on Friday were simply an adjustment in the market after weeks of steady gains, or a harbinger of dreary days to come. Over the last seven months, stocks have rallied at a remarkable pace, leaving some analysts skeptical the momentum will last much longer.

John F. Merrill, chief investment officer at Tanglewood Investments in Houston, said the ups and downs in recent days were the result of investors looking to latch on to any piece of news that beat expectations online pay day loans.

“There’s a seesaw or a tug-of-war going on between those who want to be more invested and those who don’t,” he said. “Those who want to be more invested are looking for reasons to get there.”

Investors were also buoyed by news that the Ford Motor Company posted a higher-than-expected profit of $997 million in the third quarter, its first profitable quarter in North America in more than four years. Ford said cost-cutting and the government’s cash-for-clunkers program helped drive up its earnings. At the close, Ford’s stock was up 8.29 percent at $7.58.

European markets turned upward, with the FTSE 100 in Britain up 1.19 percent, the CAC-40 in France up 0.88 percent, and the DAX in Germany 0.29 percent higher.

Overnight, Asian markets fell in response to the sharp sell-offs in the United States on Friday, with the Nikkei average in Japan closing down 2.3 percent and the Hang Seng in Hong Kong dropping 0.6 percent.

The dollar fell against the euro, hitting $1.48. The yield on the Treasury’s benchmark 10-year note rose to 3.43, from 3.39 on Friday.

A key economic indicator will come on Friday, when the government releases its monthly report on unemployment. The jobless rate is expected to rise slightly, to 9.9 percent, but a sharp deviation could sway markets significantly.

Stocks Close Higher on Economic News

In the latest of the great newspaper wars of London, two lions of Fleet Street, Rupert Murdoch and Jonathan Harmsworth (the fourth Viscount Rothermere), have been outflanked by a former Soviet K.G.B. officer, Aleksandr Lebedev.

London Lite, a free newspaper published by Mr. Harmsworth’s Daily Mail & General Trust, signaled its intention last week to shut down. That would leave the London afternoon newspaper market to Mr. Lebedev’s Evening Standard.

In January, Mr. Lebedev, a Russian tycoon, acquired a controlling stake in The Standard, a 182-year-old fixture of London commutes, from the Daily Mail & General Trust. The Standard put intense pressure on London Lite by becoming free three weeks ago, rather than charging 50 pence (80 cents) a copy. This vastly increased its distribution.

The Standard’s move followed the recent demise of another afternoon free paper, The London Paper, published by Mr. Murdoch’s News Corporation. For three years, London Lite and The London Paper fought a battle that ended up bleeding both, as well as The Standard.

Circulation of The Standard had fallen to 225,000 in July, from 443,000 nine years earlier, and many of those copies were discounted or given away.

Since the paper became free, Mr. Lebedev said, its popularity has soared.

Whether Mr. Lebedev’s coup translates into profits is another matter.

“At the personal level, I’m quite happy about what we have done,” he said in an interview. “Whether I will be unhappy someday with the financial results — let’s wait and see.”

The decision to shift to free distribution goes against the grain, at a time when other papers are raising prices to compensate for a plunge in advertising. Across Europe, dozens of free papers, with all their eggs in the advertising basket, have shut down.

Andrew Mullins, managing director of The Standard, said the move would result in lower distribution costs, balancing the effects of lost newsstand revenue. And while printing costs will rise as circulation increases, the paper hopes to recoup that and more by raising ad rates.

“We had to be brave and do something bold,” Mr. Mullins said. “It had become abundantly clear that the paid-for model could not generate the audiences we needed.”

The Standard has increased distribution to 600,000 papers a day, filling the gap left by The London Paper. The Daily Mail & General Trust, which has kept a 25 percent stake in The Standard, is still publishing London Lite for now. But it said it had begun consultations with its staff about the future of that paper, a formality before a shutdown payday advance loans.

While The Evening Standard will pick up many of the other two papers’ readers, advertisers are not guaranteed to follow, said Vanessa Clifford, head of press at the media-buying agency Mindshare in London. Many advertisers, she said, are more interested in reaching specific groups of readers than in reaching the largest possible circulation.

“I hope they aren’t skipping around saying, ‘Yippee, all that money is now going to come in to us,’ ” she said of The Standard. “That would be naïve.”

Mr. Lebedev said advertisers had been reassured by the paper’s insistence on maintaining journalistic quality — something that is not a hallmark of free publications.

“It’s good to see people getting newspaper literature, rather than litter, for free,” Mr. Lebedev said.

The Evening Standard is not Mr. Lebedev’s only media holding. With the former Soviet president Mikhail Gorbachev, he owns a majority stake in Novaya Gazeta of Moscow.

Mr. Lebedev installed a new editor, Geordie Greig, who was hired away from Tatler, a Condé Nast magazine. The decision to drop the cover charge, Mr. Mullins said, had been personally approved by Mr. Lebedev after a study in which a number of business scenarios were presented to him.

Now, Mr. Lebedev and his London-based son, Evgeny, are keeping a close eye on developments.

“There’s a phone call once a day from one of the Lebedevs,” Mr. Mullins said. “They bought an influential paper and want to make sure it stays an influential paper.”

There have been reports that Mr. Lebedev might move to acquire another paper, like The Independent.

“Most of the speculation has been inaccurate,” he said. “It’s not that I don’t want to, but there’s no substance in it now.”

Mr. Lebedev said that he felt an obligation to support the newspaper business at a time when many were struggling with the challenge of the Internet. Much of what he learned about business and finance on the way to assembling a multibillion-dollar fortune came from reading the papers, he said.

“It’s good that we have online, but there’s so much rubbish in it,” he said. “What could Dostoevsky communicate with Twitter?”

One London Paper to Rule Evening Commute

NEW YORK – The following stocks were among those that moved substantially or traded heavily Friday on the New York Stock Exchange:

NYSE:

Alcatel-Lucent, down 48 cents at $3.69

The telecommunications equipment maker saw its net loss widen in the third quarter as European phone companies cut back on spending.

Harman International Industries Inc., up $4.61 at $37.61

The company said its fiscal first-quarter sales rose from earlier this year and aggressive cost cuts continued.

Manitowoc Co., down $1.31 at $9.14

The industrial equipment maker posted a smaller loss as it cut costs, increased efficiency and reduced working capital costs.

Aon Corp., down $2.68 at $38.51

The insurance broker posted a higher third-quarter profit but missed expectations as its income from investments tumbled 69 percent.

Las Vegas Sands Corp faxless payday advance., up 33 cents at $15.09

The casino operator received approval for its Hong Kong initial public offering as investors latched on to comments made by its CEO.

MetLife Inc., down $2.81 at $34.03

MetLife reported a loss of $650 million for the third quarter, driven by losses in its investment portfolio.

Estee Lauder Cos., up $1.36 at $42.50

A strong relaunch of a skin-care line and better-than-expected sales at airport stores helped more than double the company’s profit.

NASDAQ:

Novatel Wireless Inc., down $3.27 at $8.92

The high-speed Internet service provider posted a disappointing outlook for the fourth quarter, despite strong third-quarter results.

Las Vegas Sands, MetLife, Manitowoc are big movers

Filed at 9:36 a.m. ET

NEW YORK (AP) — The Washington Post Co. reported a 69 percent jump in third-quarter profit Friday as its newspapers trimmed their losses and its cable TV and education divisions held steady.

The company, which owns Newsweek magazine, Kaplan education services and television properties along with The Washington Post newspaper, earned $17.1 million, or $1.81 per share. That compares with a year-earlier net income of $10.1 million, or $1.08 per share.

Revenue climbed 2 percent to $1.15 billion.

The newspaper division, which includes dozens of dailies and weeklies, whittled its operating losses through buyouts and other cost-cutting moves to $23.6 million, down from $82.7 million a year ago low rate payday loans.

That happened even though advertising revenue at the flagship newspaper took a steeper dive than the quarter before, falling 28 percent. The newspaper had seen a 20 percent drop in the second quarter and a 33 percent drop in the first.

The Post’s decline was comparable to what other big publishes have seen. The New York Times Co.’s advertising revenue plunged 27 percent in the most recent quarter. Ad revenue in Gannett Co.’s publishing division, which includes USA Today and more than 80 other newspapers, dropped 28 percent.

Washington Post Co. Quarterly Profit Up 69%