Nike to Cut About 1,750 Jobs, or 5% of Workforce

Shoe and apparel company Nike said Thursday that it will cut about 1,750 jobs worldwide, or 5 percent of its global work force.

About 500 of the jobs lost will be at Nike's world headquarters in Beaverton, Ore. The company did not specify what departments the cuts would be in.

Shares of Nike [NKE 50.95 1.43 (+2.89%) ] were up $1.43 to close at $50.95 Thursday. They were little changed in after-hours trading following the announcement.

Nike had announced in February that it would cut jobs as part of a realignment of its business. In March, it said it was reducing layers of management, among other organizational changes.

Like many companies, Nike has seen demand for its products slow as the global economic meltdown hurt consumer spending. The company plans to complete the reductions in the coming weeks. "Our new structure sharpens our consumer focus globally to drive continued growth while positioning Nike competitively in today's marketplace," Chief Executive Mark Parker said in a statement. "We remain a growth company and we know these changes have created a stronger organization that will enable us to invest in our most significant opportunities."

The company, whose other brands include Converse, Cole Haan and Umbro, remains the industry leader. But Nike saw its profit drop in the most recent quarter, largely on one-time items, and its revenue fell 2 percent as the economic downturn dragged on.

Euro Drops, Government Bonds Climb as Region’s Economy Shrinks

The euro fell and European government bonds rose after the region’s economy shrank the most in 13 years, increasing investor concern the pace of recovery from the first global recession since World War II is flagging.

The euro weakened 1.2 percent against the yen and 0.5 percent versus the dollar at 9:45 a.m. in London, while the yield on the 10-year German bund dropped three basis points. The MSCI World Index of stocks climbed 0.6 percent, trimming its first weekly drop in two months, as Barclays Plc led a rally in financial shares. Futures on the Standard & Poor’s 500 Index advanced 0.2 percent.

“Almost without exception, the markets seem to be suggesting a real danger that we are about to see a six- to eight-week period that is very risk-negative,” Citigroup Inc. currency strategists Tom Fitzpatrick in New York and London- based Shyam Devani wrote in a note to clients.

The euro is having its worst week against the yen in four months as concern grows that the slump in the 16-nation region is deepening and European Central Bank policy makers differ over the measures needed to spark a recovery. ECB Vice President Lucas Papademos said yesterday the rebound may come sooner than previously thought, while Dutch council member Nout Wellink said economists shouldn’t get too optimistic.

Gross domestic product in the 16-member euro region dropped 2.5 percent from the fourth quarter, the European Union’s statistics office in Luxembourg said today. That’s the biggest drop since the euro-area GDP data were first compiled in 1995 and exceeded the 2 percent decline economists forecast in a Bloomberg News survey.

Dollar Advances

The dollar had its biggest gain against the euro in almost two weeks, strengthening to $1.3575, before reports today that may show U.S. industrial production declined in April at the slowest pace in six months and consumer sentiment climbed to the highest level since September.

New Zealand’s dollar fell 1.6 percent versus the yen and 1.1 percent against the dollar after the nation’s statistics office said retail sales declined for a record sixth quarter.

“The New Zealand dollar is an accident waiting to happen,” Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney, wrote in a report today.

Russia’s ruble strengthened for a 12th week against a basket of currencies, the longest stretch since 2005. The currency, which is managed against the basket to limit swings that hurt exporters, appreciated 0.2 percent to 37.3043, bringing its five-day advance to 0.6 percent.

Emerging Markets

Emerging-market stocks climbed, trimming the first weekly drop in two months, after the U.S. government’s bailout of insurers bolstered confidence in financial companies. The MSCI Emerging Markets Index gained 1.1 percent as Industrial & Commercial Bank of China Ltd., the world’s largest bank by market value, and OAO Sberbank, Russia’s biggest lender, rose.

The Dow Jones Stoxx 600 Index of European shares climbed 0.6 percent, reducing its weekly decline to 3.1 percent. London- based Barclays rose 8.5 percent to 274.5 pence after people with knowledge of the matter said the U.K.’s third-biggest bank is in talks to sell Barclays Global Investors.

Hartford Financial Services Group Inc. rose 10 percent to $16.24 in German trading. The Hartford, Connecticut-based company was among six insurers granted access to U.S. aid as the government moves to shore up an industry battered by investment losses.

Copper fell 0.2 percent to $4,438 a metric ton on the London Metal Exchange, heading for its first weekly drop in three. Crude oil rose 0.2 percent to $58.71 a barrel on the New York Mercantile Exchange, having retreated from a six-month high of $60 a barrel this week.

“This bear market rally will end soon,” said Charles Morris, head of absolute return at HSBC Global Asset Management, which manages $2 billion of assets in London. “I’d stick to high-quality investment: gold and good stocks.”

Microsoft, China's Hangzhou set 'model city' pact

Microsoft Corp. announced a partnership aimed at helping make the eastern Chinese city of Hangzhou a model for innovation and protection of intellectual property, in the company's latest attempt to combat rampant software piracy.

A three-year agreement signed Friday calls for setting up two new centers in Hangzhou to focus on developing the local technology industry. Microsoft will provide curriculum support, technology and training for teachers at Hangzhou Normal University through an institute set up to nurture local innovation.

"Partnering with leading IT companies like Microsoft will greatly boost Hangzhou's innovative capabilities and help us build a model information technology city in China," Cai Qi, Hangzhou's mayor, said in a statement.

No dollar figure was announced for the plan. Spending will be above the roughly $1 billion the company pledged in November to spend on research and development in China over the following three years.

The deal came after Hangzhou pledged to improve its enforcement of anti-piracy laws and promote the use of legitimate, non-pirated software by individuals, government offices and companies based in the city, which is west of Shanghai.

Software, movie and music makers, among many industries, say they lose billions of dollars each year to counterfeited and pirated products.

The deal calls for the two sides to set up a working team from both sides that will hold regular meetings to assess progress in that area, Alec Cooper, general manager of Microsoft Greater China's "Genuine Software Initiative," told reporters in a conference call.

"There is some degree of piracy in virtually every country around the world. We said, here's what we think are the best practices and here's what we think will work in China, and make it a more positive approach," Cooper said.

He said the partnership will focus on educating local people and businesses on the importance of fighting piracy of software and other intellectual property to their own economic future.

"We think it's an approach that addresses the root of the problem," he said.

Raising consumer awareness was the motivation behind Microsoft's Windows Genuine Advantage program, which turns the wallpaper of computers using pirated Windows software black and notifies users, urging them to get a legitimate copy.

That effort continues, Cooper said, despite complaints from some Chinese computer users.

Software piracy is still rampant despite individual countries' attempts at cracking down. Research commissioned by the Business Software Alliance, an industry trade group, found that 82 percent of the software used in China in 2007 was not legitimately purchased, more than double the worldwide piracy rate of 38 percent.

But Hangzhou, one of China's wealthiest cities, is seeking to build up its technology industries as it shifts away from textile making and other traditional manufacturing.

"They understand that to get the best companies in the world to be located in Hangzhou ... companies need to feel comfortable about their intellectual property," Cooper said, adding that Microsoft may seek such arrangements with other cities in the future.

Wal-Mart reports flat 1st-quarter profit

With plenty going wrong in the global economy, Wal-Mart Stores Inc. is seeing indications that it will hang onto customers it has picked up during the recession.

The world's largest retailer reported flat earnings for the first quarter on Thursday, hurt on international transactions because of a strong dollar. The year-ago comparison was affected because there was one more day in the quarter last year. Also, with fuel prices coming back to earth, Wal-Mart has lowered prices on some food items.

Wal-Mart Vice Chairman Eduardo Castro-Wright, who runs Wal-Mart's U.S. stores, said that as food prices moderated and consumers found their dollars going farther, some sales have crossed into discretionary items. And new customers who have switched to Wal-Mart because of the economic climate are doing some of that buying.

Singapore’s Temasek Sells Stake in Bank of America

Temasek Holdings Pte, a Singapore state-owned investment company that bought stakes in Merrill Lynch & Co. and Barclays Plc amid the global financial crisis, sold its stake in Bank of America Corp.

Temasek received shares in Bank of America after the biggest U.S. bank by assets bought Merrill Lynch this year. The investment company had paid about $5.9 billion for a 14 percent stake in Merrill Lynch since December 2007, which was converted into Bank of America stock following the completion of the acquisition.

“We have divested our shares in Bank of America,” Temasek said in an e-mailed response to Bloomberg News queries. The company declined to say how much it sold the stake for or when the sale was conducted.

Temasek had 31 percent wiped from the value of its global portfolio in the eight months through November amid the slump in financial markets. The company had sold assets including power generators and Singapore Food Industries Ltd. over the past year while increasing its investments in companies such as CapitaLand Ltd. and DBS Group Holdings Ltd. through rights offers.

A Form 13F filing to the U.S. Securities and Exchange Commission indicates that Temasek no longer held shares in Bank of America or Merrill Lynch as of March 31.

Bank of America rose 2.7 percent to $11.31 in New York trading yesterday. The shares have tumbled 69 percent in the past year, outpacing the 36 percent decline in the Standard & Poor’s 500 Index.

Temasek will cut its holdings in the Organization for Economic Cooperation and Development countries to 20 percent as it expands in Asia and emerging markets from Latin America to Africa, Chief Executive Officer Ho Ching said according to a speech posted on Temasek’s Web site yesterday.

The investment company had earlier said the more developed OECD countries will make up about a third of its investment portfolio.

GM Bankruptcy Looms, Congress Faces Pressure

With General Motors planning to end production of Saturns and Pontiacs at its Delaware plant which employs more than 1,000 people, state leaders are scrambling to win new work at the facility or persuade the company to move other operations to the region."This would appear on the surface to leave us in bleak circumstances," said U.S. Sen. Thomas Carper, a Democrat and former governor who helped save the 62-year-old Wilmington plant from closure in the early 1990s.

"We're encouraging them not to close the plant. At some point, GM will need more capacity," Carper said in an interview with Reuters just weeks ahead of a June 1 deadline for GM to show a White House/Treasury task force overseeing industry restructuring that it can be viable without government aid.Failure to satisfy the task force would trigger bankruptcy where GM [GM 1.21 0.06 (+5.22%) ] could try to finalize concessions.

It is seeking givebacks from debtholders and the United Auto Workers and wants to more than halve its network of 6,000 dealers. GM plans to cut 21,000 factory jobs. Lawmakers deferred to the task force as smaller Chrysler spiraled into a bankruptcy court.

But there has been a broader political response to GM over the past week since a second carmaker bankruptcy would compound Detroit's uncertainty and likely radiate economic anxiety beyond the industry's Midwest core.

GM A Bellwether

Autos has one of the heaviest economic multipliers of any U.S. industry. For every job loss in auto assembly, another nine disappear elsewhere, Mark Zandi, chief economist and co-founder of Moody's Economy.com, has told Congress.

GM employs 88,000 factory and salaried workers in the United States. It has also been a bellwether for industries like steel, plastics, warehousing, software, healthcare, trucking and makers of glossy paper for car catalogs.

Michigan State University economist Charles Ballard believes GM's reach is vast enough to affect U.S. GDP "if the whole thing were to implode," which he believes is remote.

Still, the possibility of bankruptcy is rattling Washington, which has extended GM $15.4 billion since January.

The Treasury likely will be on the hook for more GM financing before month's end as well as in any court restructuring. GM's restructuring would wipe out half the current debt to taxpayers.

Lawmakers are under pressure from constituents and interest groups like labor, car dealers, and suppliers to intervene as the Obama administration reviews the GM business plan and prepares the company for a possible bankruptcy filing.

In meetings last week on Capitol Hill, GM Chief Executive Fritz Henderson fielded concerns of lawmakers from the primary auto states of Michigan, Ohio and Indiana.

He also met with officials from Missouri, California, New York, Minnesota, Texas, Georgia, Illinois and Colorado.

Options Discussed

Carper said he suggested to GM North American operations chief Troy Clarke that the company locate research work on batteries and other technologies to the mid-Atlantic.

Creating a business center close to Washington where key funding and other decisions on advanced technology programs will be made in coming years would make sense for Detroit, Carper said, noting that GM, Chrysler and Ford [F 4.96 -0.05 (-1%) ] have lost political clout as they have contracted. Ford is restructuring but has not sought government aid.

Sen. Robert Corker, a Tennessee Republican, discussed with Henderson the fate of the Spring Hill assembly, storage and powertrain operation that employs 3,200 people in his state. "We want those plants to stay open," Corker said in an interview.

"We realize the the company has got to be restructured and tough decisions have to be made." Related businesses are also feeling pressure and gaining attention from Congress.

Last week, Democratic Sen. Charles Schumer pressed GM and bankrupt Delphi Corp to reach a deal for GM to buy back four of the supplier's production plants.

Two of the plants are located in Schumer's home state of New York. "I will continue to do whatever is necessary to see this purchase through," Schumer said.

Suppliers want Congress to authorize new assistance programs and encourage banks to resume lending to the sector once restructuring is completed at GM and Chrysler.

Congress is also considering legislation that would accelerate federal aid to communities facing sharp job losses. Michigan tops the nation in unemployment, with joblessness above 12 percent.

Stocks take a thumping

Stocks tumbled Wednesday, with the Nasdaq and S&P 500 falling for a third straight session, after a weaker-than-expected retail sales report gave investors a reason to retreat.

The Dow Jones industrial average (INDU) lost 184 points, or 2.2%. The S&P 500 (SPX) index fell 24 points, or 2.7%. The Nasdaq composite (COMP) dropped 52 points, or 3%.

The worse-than-expected retail sales dragged on stocks, said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. He said investors were also a little jittery about the bevy of banks rushing to raise capital to pay back the government bailout money they received.

"We were due for a pause here and with questions about the consumer and the banks, investors are finding an excuse to take some profits," he said.

Stocks seesawed Tuesday as investors showed caution after a roughly 2-month rally that propelled all the major stock gauges by at least 30%. That hesitation remained in place Wednesday.

Stocks have risen since early March on bets that the economy is close to turning a corner.

"I think the momentum has gotten a little ahead of itself," said Robert Loest, portfolio manager at Integrity Funds. "We've run out of good news for the time being."

He said that later in the year, there will be more positives for investors to key off of, as fourth-quarter earnings are bound to show improvement versus abysmal results a year earlier. Additionally, the impact of the government putting trillions of dollars into the economy will have an impact.

Thursday brings the government's April Producer Price index and the weekly jobless claims index. Also Thursday, Wal-Mart Stores (WMT, Fortune 500) is due to report quarterly results before the start of trade. Wal-Mart is expected to have earned 77 cents per share versus 76 cents a year earlier.

Economy: Retail sales fell 0.4% in April, according to a report from the Commerce Department released before the market open. Sales were expected to hold steady, according to a consensus of economists surveyed by Briefing.com. Sales fell a revised 1.3% in March.

Sales excluding volatile autos fell 0.5% in April, after dropping 1.2% in the previous month. Economists forecasts had called for a rise of 0.2%.

The number of U.S. households facing foreclosure jumped 32% in April versus a year ago, according to RealtyTrac. More than 342,000 homes received notices of default in the month, up 1% from March.

In other economic news, March business inventories fell 1% after slipping 1.4% in the previous month. Economists expected inventories to have dropped 1.1%.

Company news: AIG (AIG, Fortune 500) shares declined as the company's CEO discussed restructuring plans at a House hearing about how the company plans to pay back billions in government loans. Shares rose 11.6%.

In other news, Intel (INTC, Fortune 500) was fined a record $1.45 billion by the European Union for allegedly anti competitive practices, a decision the chipmaker plans to appeal. Shares fell.

Freddie Mac (FRE, Fortune 500) posted a $9.9 billion quarterly loss after the market close Tuesday and also asked the government for another $6.1 billion in aid. Shares fell 7%.

GM (GM, Fortune 500) shares started the day with another drop on concerns that it will have to file for bankruptcy, with the stock touching $1 per share, the lowest level since 1933. But GM rallied in the afternoon to finish 6 cents higher at $1.21.

Market breadth was negative. On the New York Stock Exchange, losers topped winners eight to one on volume of 1.76 billion shares. On the New York Stock Exchange, decliners beat advancers by almost six to one on volume of 2.42 billion shares.

Japan Economy Probably Shrank by Record Last Quarter

Japan’s economy shrank by a record last quarter amid an unprecedented collapse in exports and a drawdown of inventories that could pave the way for a recovery later this year, a report next week may show.

Gross domestic product contracted an annualized 16.1 percent in the three months ended March 31, following a fourth- quarter drop of 12.1 percent, according to the median estimate of economists surveyed by Bloomberg News. The Cabinet Office will release the GDP report on May 20 at 8:50 a.m. in Tokyo.

Japan’s worst recession since World War II probably reached its bottom last quarter, as a pullback in business and consumer spending compounded the damage done by the export crash that began in October. World markets have shown signs of stabilizing in recent weeks and Prime Minister Taro Aso’s record 15.4 trillion yen ($160 billion) stimulus package has buoyed domestic confidence.

“The first-quarter numbers are awful, but what’s more important are the signs of recovery,” said Julian Jessop, chief economist at Capital Economics Ltd. in London. “Growth might turn positive again in the second quarter,” he said, citing recent rebounds in overseas shipments and production.

Exports plunged a record 26.8 percent last quarter from the previous three months, economists predict the report will show. Consumer spending probably fell 0.9 percent, as companies including Toyota Motor Corp., Toshiba Corp. and NEC Corp. slashed pay and fired thousands of workers to offset losses.

Spending Slump

The drop in private consumption would be the biggest since 1974, excluding the second quarter of 1997 when consumers cut spending 3.5 percent after an increase in the sales tax. Business investment is likely to have fallen 9 percent, the worst retrenchment on record.

“The good news is that the production cycle has hit bottom,” said Hiroshi Shiraishi, an economist at BNP Paribas in Tokyo. “The bad news is that the second-round effects from the initial export shock are starting to hit,” he said, referring to the recession’s spread to the job market. The unemployment rate surged to 4.8 percent in March from 4.4 percent the previous month, the biggest jump in four decades.

Japan’s first-quarter contraction was probably the most severe since records started in 1955, eclipsing a 13.1 percent plunge that came during the 1974 oil crisis. The drop would also be more than twice as bad as the U.S.’s 6.1 percent slide.

BOJ’s Shirakawa

Reports in the past month suggest the world’s second- largest economy may resume growth this quarter, albeit from a low level. Exports gained in March on a month-on-month basis, the first uptick since May. Factory production also rose, a fact that Bank of Japan Governor Masaaki Shirakawa cited yesterday as a reason for cautious optimism.

“We expect the pace of deterioration in economic conditions to moderate gradually and the economy to start to level out towards the end of this year,” Shirakawa said in a speech at the London Stock Exchange.

Gains in the stock market and earnings projections for the current year add to signs the worst may be over. The Nikkei 225 Stock Average has risen 29 percent from a 26-year low set on March 10. Japanese companies that reported fiscal 2008 results say profits will rise 26 percent in the current business year, according to Tokyo-based Shinko Research Institute Co.

Confidence in the Japanese economy climbed to an 18-month high in May, the Bloomberg Professional Global Confidence Index showed yesterday. Sentiment among Bloomberg users around the world surged the most since the survey began in November 2007.

Replenishing Inventories

Stabilizing demand from Japan’s biggest overseas markets, combined with aggressive inventory cuts, has given companies including Honda Motor Corp. room to raise production. Executive Vice President Koichi Kondo said last month the U.S. has probably bottomed. The automaker plans to boost output at domestic factories this quarter as dealerships clear inventories, the Wall Street Journal reported this week.

The stock adjustment at Honda is part of larger trend among manufacturers that may have exacerbated Japan’s first- quarter contraction, while also setting the stage for recovery. Falling inventories at Japanese companies probably accounted for 0.8 percentage point, almost a fifth, of the economy’s estimated 4.3 percent decline versus the previous three months.

“Firms cut production below the low of final demand. That’s what happened in the first quarter and that’s why the contraction was so severe,” said BNP’s Shiraishi. “Now that the adjustment is coming to an end firms can start to increase production. The rebound could potentially be fairly large.”

Still, the failure of export demand to do better than simply stabilize will probably limit the scope of Japan’s recovery, said Jessop at Capital Economics.

“The best you can hope for is a long period of sub-par growth,” he said. “It’s not going to be a strong recovery but at least it’ll be a recovery.”

Nissan Reports Its First Annual Loss Under Ghosn

Nissan Motor Co. on Tuesday booked its first annual net loss since President and Chief Executive Carlos Ghosn took the helm of the Japanese auto maker in 1999, and warned that the red ink would continue this year.

But Mr. Ghosn said relief is in sight, predicting the company will return to profitability by the finish of its fiscal year 2010, which ends in March 2011 -- or sooner if incentives for Americans to scrap old cars are approved, boosting sales; and if the Japanese yen weakens, raising the value of overseas earnings.

"We are preparing ourselves to go back to profitability, in the worst case, in [fiscal] 2010," said Mr. Ghosn.

Japan's third-biggest auto maker by sales volume, citing the world-wide slump in demand for cars and the strong yen, reported a net loss of 276.9 billion yen ($2.84 billion) in the three months ended March 31, compared with 137.6 billion yen net profit in the same period a year earlier.

Nissan, in which Renault SA of France owns a 44% stake, logged an operating loss of 230.4 billion yen in the quarter, compared with operating profit of 211.7 billion yen a year earlier. Sales tumbled 41% to 1.751 trillion yen.

For the full fiscal year ended March 31, the company's net loss was 233.71 billion yen compared with a 482.26 billion yen net profit the previous year.

For the current fiscal year, the maker of the Altima sedan and the Qashqai crossover sport-utility vehicle projected a net loss of 170 billion yen, an operating loss of 100 billion yen and sales of 6.950 trillion yen. It said it expects global sales of 3.08 million units, down 9.7% from 3.41 million units for the just-ended year.

The dismal results and bleak projection for the current fiscal year are a setback for Mr. Ghosn, one of the industry's top managers, who rescued Nissan from bankruptcy a decade ago and forged its alliance with Renault. Known for setting and meeting his management commitments, Mr. Ghosn in February suspended his key goal of 5% annual revenue growth through 2012 because of the global recession and steep drop in world-wide auto sales.

Nissan, meanwhile, beat its projected 265 billion yen loss for the year. Mr. Ghosn credited the smaller-than-expected loss to the company's aggressive cost cutting and recovery efforts, including slashing 20,000 jobs world-wide, scaling back the number of new car models it plans to release during the next four years to 48 from 60, and reducing production.

"The measures in the recovery plan have been swiftly deployed even if some of the measures were harsh," Mr. Ghosn said. "We have been challenged of our very existence by this crisis."

Mr. Ghosn said his next effort will be to reduce Nissan's exposure to the strong yen, which erodes overseas earnings. Nissan said it is assuming the dollar will average 95 yen and the euro 125 yen for the current fiscal year.

Mr. Ghosn said he is eager to source more parts and components outside Japan, such as from China, South Korea and the U.S. Some 55% of the company's expenses in yen go to suppliers based in Japan, he said, a fact that needs to change if the company wants to recover.

Sourcing more parts outside Japan will make Nissan more competitive and allow it to keep more car assembly in Japan, he said. Nissan has already announced plans to shift production of the new compact March/Micra from Japan to Thailand in the fiscal year ending in March 2011, part of an effort to move production of 130,000 vehicles and 120,000 powertrain units outside Japan over the next two years.

Nissan said it plans to achieve new savings this year by using more common parts, such as door handles, windshield wipers and seat belts, that that be shared among different models. The company is also aiming to develop more synergies with its partner Renault

U.S. Median House Price Declines 14%

The median price for a single-family house fell 14% to $169,000 in the first quarter from a year earlier, the National Association of Realtors reported.

The trade group said first-time home buyers accounted for half of all purchases in the quarter, and many of them zeroed in on foreclosed homes. That dragged down the median, the Realtors said.

The median price for the latest quarter is down 26% from a peak of $227,600 in the third quarter of 2005. The latest median price was down from a year earlier in 134 of the 152 metro areas included in the survey.

The biggest increase was in the Cumberland area of Maryland and West Virginia, where the median price climbed 21% to $114,900. Debbie Grimm, manager of the Long & Foster real-estate brokerage in Cumberland, Md., said the area is attracting retirees and second-home buyers, particularly from Washington and Baltimore.

The lowest median price among the metro areas was $30,300 in Saginaw, Mich., and the highest was $570,000 in Honolulu. Most of the areas with the lowest prices are in troubled parts of the industrial Midwest. But a glut of homes in Cape Coral-Fort Myers, Fla., pushed the median down 59% from a year earlier to $87,300 -- ranking it just below Gary, Ind., which, at $92,000, was down 26%.

Sales of single-family homes and condominiums declined 6.8% from a year earlier to a seasonally adjusted annual rate of 4.6 million units. But sales were up sharply in some areas hardest hit by the housing bust, largely because bargain hunters were out in force. States with big sales increases from the depressed levels of a year before included Nevada (up 117%), California (81%) and Arizona (50%) and Florida (25%).

Rising unemployment and fears of more job losses are deterring many potential buyers. But others are encouraged by the lowest mortgage rates since the 1950s. In addition, the U.S. government is offering tax credits for certain home buyers before Dec. 1.

Asian stocks advance but caution lingers in wake of huge rally

Asian stock markets rose moderately Wednesday, led by oil companies on stronger crude prices, but investors remained cautious as an enormous spring rally showed signs of fatigue.

Shanghai and Hong Kong shares gained on news that China's aggressive stimulus spending was starting to filter through the economy in the form of higher consumer spending. The dollar was higher against the yen.

Investors, encouraged by hints of an economic turnaround, have rushed into global stock markets over the last nine weeks, pushing major benchmarks 30 percent and higher.

While some analysts see more upside in the short-term as investors look to spend their cash and worry about missing the rally, confidence remains fragile with economic conditions and company earnings outlooks still lackluster.

"The market has already gone too far too fast, so we're expecting some profit taking," said Alex Tang, head of research at Core Pacific-Yamaichi International in Hong Kong, "Shares are starting to be overbought."

Japan's Nikkei 225 stock average rose 60.41 points, or 0.7 percent, to 9,359.02, while South Korea's Kospi added 0.4 percent to 1,408.68.

In China, Hong Kong's Hang Seng rose 0.7 percent to 17,264.90 and Shanghai's benchmark gained 1.2 percent to 2,649.35.

Investors there were comforted by news China's retail sales jumped 14.8 percent in April from a year earlier as stimulus spending helped support domestic demand. Dampening sentiment, though, were other data showing industrial output rising only 7.3 percent, lower than expected.

Elsewhere, Taiwan shares gained 0.8 percent. Australian and Indian indexes fell.

Lifting the broader market were shares in oil companies like Chinese offshore producer CNOOC and Japan's Inpex Corp.

Crude prices gained more ground as an unexpected fall in U.S. crude inventories suggested demand may be picking up. Benchmark crude for June delivery was up 72 cents to $59.57 in Asia.

Overnight in New York, Wall Street ended largely mixed. The Dow rose 50.34, or 0.6 percent, to 8,469.11. The S&P 500 index slipped 0.89, or 0.1 percent, to 908.35.

Wall Street futures augured a mixed opening in the U.S. Dow futures were down 10 points, or 0.1 percent, at 8,426 while S&P 500 futures gained 2.1, or 0.2 percent, to 908.90.

In currencies, the dollar climbed to 96.57 yen from 96.14 yen. The euro was little changed against the dollar.

IDX new system ready July

The Indonesia Stock Exchange (IDX) is set to launch its Investor Area system, with real-time access to investors' balance sheets by July: Most securities houses will be ready then.
IDX president director Erry Firmansyah said on Monday that 100 securities firms had confirmed they would be ready for the new system, leaving only 19 companies that were not yet in ready to match its technical requirements. It aims to promote more transparency in securities transactions in the market.

"This should not fail because of the small number *of securities companies which* are not yet ready. We expect to start operating the new system in the next one or two months," Erry said.
The number of securities firms covered by the IDX system has now grown to 119.
The IDX has delayed the launching of the new on-line system several times.
Initial technical problems and adequate time needed to integrate regulatory organizations like the KPEI (the Indonesian Stock Market Clearing House), and the KSEI (the Indonesia Central Securities Depository) helped explain the delays in starting up the new system since February.
Furthermore, lack of promotion and poor disssemination of information about the system helped lead to some unpreparedness on the part of participating securities houses, said to be one of the main reasons for the delay in starting the new system.

So far the investment cost needed to get the new IT system off the ground has not been disclosed.
The stock market authorities have introduced the Investor Area system into the dialogue with its clients since last January, after an embezzlement scandal involving one of the largest securities firms in Indonesia, PT Sarijaya Permana Sekuritas raised questions and led to increased media scrutiny.
Sarijaya president commissioner Herman Ramli had earlier allegedly missappropriated Rp 240 billion (US$23.28 million) of client's funds.
Sarijaya was suspended from trading since Jan. 6 and Herman was arrested and detained by the police in December, but Sarijaya customers are still in the dark about the future of their cash deposits and whether or not they can recover them.
The stock market society welcomes the new IT system as it will protect investors from fraud by insiders within securities companies and will help avoid another Sarijaya saga in the future.
Under the new system, investors get direct on-line access to check the balance of their assets.
Currently, investors who want to monitor their portfolio and assets should first ask permission from their brokers to do so.

IDX director for equity trading MS Sembiring said under the new system, investors would be given a single password so as to be able to access all type of transactions.
Currently, investors have different passwords for each type of investment, be it securities or bonds.

Citigroup: TARP loans near $45 billion mark

NEW YORK (AP) -- Citigroup Inc. is using its $45 billion in government capital to make nearly that much in new loans.

Citigroup said its committee overseeing the use of taxpayer money approved $44.75 billion in lending initiatives as of March 31. That is up from the $36.5 billion in lending initiatives announced in February, and now includes $5 billion in loans to municipalities.

The loans being offered by Citigroup to state and local governments, municipal agencies, universities and non-profit hospitals would not likely have been made had the bank not received money from the Troubled Assets Relief Program, or TARP.

David Brownstein, Citigroup's managing director and co-head of public finance, said in an interview with The Associated Press that these municipal borrowers are still very secure, but their borrowing costs have shot higher because of turbulence in the credit markets.

In Citigroup's report, reviewed by the AP and scheduled for release Tuesday morning, the bank also said it is spending $2 billion more to finance suppliers, $1 billion more in residential mortgages, and $250 million more in auto loans.

In total, Citigroup has extended more than $200 billion in new credit in the United States since last October -- when the bank got its first $25 billion injection of bailout money from the government. Last fall, Congress approved the $700 billion TARP fund, which got handed out to hundreds of financial institutions in an effort to stabilize the financial system and revive lending.

Banks like Citigroup do not lend the TARP money directly to borrowers. Instead, the banks keep the extra capital on their books, which allows them to borrow more money from funding sources. Then, they lend that borrowed money to others. A bank makes money by borrowing cheaply for the short-term and lending at higher rates for the long-term; if a bank has no capital, other institutions and investors won't lend to it.

In November, Citigroup got an additional $20 billion, bringing its TARP total to $45 billion. In February, it agreed to convert a portion of the TARP investment from preferred stock to common stock.

After the government's funding and other capital raising efforts, the Federal Reserve found last week in its "stress test" of the country's 19 largest banks that Citigroup has a capital shortfall of $5.5 billion. Citigroup said last week it plans to make up that shortfall by converting more preferred stock into common stock.