Oil price steadies despite Saudi Arabia protest fears

Oil prices had risen 2% in early trading, due to the shutdown of Libyan production as well as fears that unrest might spread to Saudi Arabia itself.

But prices fell back again after Saudi state oil company Aramco announced that all demands for extra oil had been met.

Sentiment was also boosted by news that the eastern Libyan port of Tobruk had reopened and a Chinese tanker was being loaded.

By 1800 GMT, Brent crude was slightly higher for the day at $112.28, while US light, sweet crude was down 0.5% at $97.83.

Brent had earlier reached $114.50 - still well below its Thursday peak of $119.80 - while US light, sweet crude hit $99.50.
Control of oil fields

Also on Monday, the European Union's Energy Commissioner Guenther Oettinger said that most of Libya's oil fields were no longer under the control of Libyan leader Colonel Muammar Gaddafi.

"There is reason to believe most of the oil and gas fields are no longer under Gaddafi's control," Mr Oettinger told a news conference.

"Instead we have provisional [regional] leaders who have taken control," he said, adding there was therefore no point in blockading Libyan energy shipments.]

"We would be punishing the wrong people," he said.

Mr Oettinger was speaking after EU ministers approved a package of sanctions against Colonel Gaddafi in response to his attempts to suppress anti-government unrest. The sanctions included an arms embargo, asset freezes and travel bans.
Stock market fall

Meanwhile, the world's biggest shipbroker Clarkson said that oil cargoes were still leaving Libya, with a majority of its loadings going normally.

Nevertheless, Shukri Ghanem, head of the state-run National Oil Company and Libya's de facto oil minister, said that the country's oil production had been cut by about 50%, although some estimates say oil output has fallen by up to 75% due to the revolt.

Whatever the shortfall, the Saudis have promised to make up for it.

However, on Sunday, the Saudi stock market fell 5% after 119 academics, activists and businessmen wrote an open letter to the king demanding reform.

The Tadawul all-share index has fallen a cumulative 10% in the last two weeks to its lowest level in six months, prompting some Saudi investors to call on the government to intervene to steady the market, or even to close it.

The index had recovered early losses and remained largely unchanged for the day on Monday.

The news comes as the Egyptian stock exchange is set to reopen on Tuesday after a month-long closure due to the popular uprising there, although protesters continued to gather outside the stock exchange building intent on forcing another delay.
'Spike and crash scenario'

Libyan supply could be knocked out for months, according to a report by US investment bank Merrill Lynch.

The Wall Street firm said that as much as 1.2 million barrels-per-day of production may have been shut down already, and that production facilities in the west of the country were prone to attack by government or opposition forces, which would lead to a prolonged output loss.

There remained a substantial risk that oil prices could move sharply higher, undermining the global economic recovery, the research piece warned, and the market only had limited ability to withstand further unrest in the Middle East.

"The combination of a substantial run-up in demand coupled with a very severe supply shock makes a spike and crash scenario increasingly likely for global oil prices and the world economy," it said.

The investment bank said that a 10% rise in oil prices - if sustained - would lead to a 0.5% reduction in global oil demand.
Saudi 'day of rage'

The letter to the Saudi king complained about the prevalence of corruption and nepotism and a widening gap between state and society.

Meanwhile a Facebook site calling for a "day of rage" in Saudi Arabia on 11 March has seen its number of subscribers increase from 400 to 12,000 in recent days.

Analysts fear the kingdom may face the same volatile generational schism that has affected Egypt and elsewhere.

Two-thirds of the Saudi population is aged under 30.

Youth unemployment is about three times the national average and there is an 18-year waiting list for government-provided housing.

The threat of protests has already wrung concessions from the 87-year-old King Abdullah, who only recently returned from three months of medical treatment in the US.

He has offered permanent work contracts to an estimated 50,000 state workers, and spent $36bn (£22.3bn; 26.1bn euros) of the country's $440bn in currency reserves on social initiatives, including a 15% pay rise for public sector employees.

Not only is it the world's biggest producer, with the world's largest reserves by far, but the country is also a key "swing producer" within the Organisation of Petroleum Exporting Countries (Opec), retaining most of the world's spare production capacity.

The kingdom accounts for the bulk of Opec's additional 4.7 million barrels-per-day available, compared with Libya's exports estimated at 1.5 million.

Meanwhile violence flared on Sunday for the first time in non-Opec Oman - which produces about 865,000 barrels-per-day - as police cracked down on pro-democracy demonstrations there.

Shutdown: Washington gets ready

Washington has started getting ready for a possible government shutdown.

Behind the scenes, federal agencies are working on their plans for shutting down operations and deciding how many workers they need to perform essential operations.

Washington has started getting ready for a possible government shutdown.

Behind the scenes, federal agencies are working on their plans for shutting down operations and deciding how many workers they need to perform essential operations.

Dudley: Don't blame Fed for recent price hikes

The Federal Reserve is not to blame for the rise in global commodity prices and it should continue its controversial purchases of Treasuries, according to New York Fed President William Dudley.

Speaking at New York University on Monday morning, Dudley challenged the assumptions that the recent rise in oil, food and other commodity prices is the fault of the Fed -- which has been pouring money into the economy with its recent purchases -- or that there is a risk of a U.S. inflation outbreak.

He argued the U.S. economy is still too weak to have higher prices take hold, although he did acknowledge that the "economic outlook has improved considerably" since the Fed started a program in November to buy $600 billion long-term Treasuries.

That policy, known as quantitative easing, or QE2 for short, has been under frequent attack since it was announced. Critics -- including some within the Fed -- worry that pumping so much cash into the economy will spark inflation.

"The natural debate now is whether to complete the program, or to taper off to a somewhat lower level of asset purchases," St. Louis Fed President James Bullard said in a speech Thursday.

But on Monday Dudley argued against any early end to QE2. "Faster progress...would be very welcome and need not require an early change in the stance of monetary policy," he said.

In answer to a questioner who suggested that inflation is now the major U.S. export, Dudley said he strongly disagreed. Instead he pointed to political disruptions in the Middle East, bad food harvests and the rapid growth of major developing economies, such as China and India, as reasons for the rising commodity prices.

In fact, Dudley argued it is very unlikely that rising commodity prices will bleed into core inflation readings, which exclude such volatile segments as food and energy.

He said even if the U.S. economy started adding 300,000 jobs a month, far above recent gains, there would still be significant slack in the labor markets at the end of 2012. "The economy can be allowed to grow rapidly for quite some time before there is a real risk that shrinking slack will result in a rise in underlying inflation," he said.

He sees the only significant risk of inflation coming from an increase in inflation expectations by businesses and investors. But he said he's confident that the Fed has the tools it needs to reign in inflation quickly if necessary.

"If inflation expectations were to become unanchored because Federal Reserve policymakers failed to communicate clearly, this would be a self-inflicted wound," he said.

Still, NYU economics professor Thomas Cooley said Dudley's speech won't do much to convince the so-called "inflation hawks" among Fed policymakers.

Military health costs up 300%

The cost of military health care, up 300% in the past decade, is eating a giant hole in the Pentagon's budget, according to a report released Monday by a group of defense experts.

The Defense Department expects to spend $52.5 billion on health care in 2012, a 300% increase since 2001, the report says. By 2015, health care will account for 10% of the Pentagon budget.
The eye-popping numbers have set alarm bells ringing inside the Pentagon.

The report, from the left-leaning Center for American Progress, lays out a way to cut $15 billion a year from the Pentagon's bloated health care budget.

The target: An insurance program called Tricare that accounts for much of the cost increase.

Currently, fees for some of the 9.6 million service members who participate in the program haven't risen since 1995. And enrollees pay rates far below what they would find in the private sector.
Defense spending: Slaying the sacred cow

Fees for one popular Tricare program -- called Tricare Prime -- stand at $38 a month, or $460 a year for an entire family. Individual retirees pay $230 a year.

The report advocates for a gradual increase in enrollment fees and deductibles for working-age retirees who can afford to pay.

It would also raise costs on retirees who use a program called Tricare for Life, which is a supplemental policy for veterans enrolled in Medicare.

Those enrollees would pay a $120 annual enrollment fee, and the program would no longer cover the first $500 in expenses, and would increase cost-sharing with Medicare.

The plan would also limit coverage for high-income working-age retirees, many of whom are able to secure insurance through their currently employer, but instead choose Tricare for its rock-bottom price, and it would peg premium levels to those of Medicare Part B.

The changes advocated in the report would not change health care services provided to active duty troops.
0:00 /01:13Buying Boeing

"While the Defense Department must continue to provide top quality care to our men and women in uniform -- and their dependents, and our military retirees -- the Pentagon's health care system simply cannot afford to continue on its current trajectory without undermining military readiness and increasing our already debilitating deficit," the report says.

The report's authors include Lawrence Korb, who served as assistant secretary of defense between 1981 and 1985, are not the only ones looking for ways to control costs. The Pentagon's 2012 budget request lays out its own proposal for cost control that includes a modest increase in enrollment fees.

The Pentagon has sought to modify Tricare in recent years, but has run up against strong opposition from members of Congress.

"In recent years the department has attempted modest increases in premiums and co-pays to help bring costs under control, but has been met with a furious response from the Congress and veterans groups," Defense Secretary Robert Gates has said. "The proposals routinely die an ignominious death on Capitol Hill."

NFL ticket prices on the rise

The average ticket price for professional football games increased 4.5 percent this year to $76.47, even as some teams struggled to fill every seat.

The increase comes largely at the expense of the fans of the New York Jets and New York Giants, who face ticket price increases of 38.1% and 26.0% respectively. Both teams play in a $1.6 billion new stadium in New Jersey.

But prices pushed higher despite 15 NFL teams either keeping rates steady or lowering prices, according to a survey conducted by Team Marketing Report, a group that tracks ticket prices.

In fact, only nine of the NFL's 32 teams have prices above the league average, with New England Patriots fans forced to fork over the most cash for a ticket: $117.84.

David Carter, executive director of USC's Sports Business Institute, said the tough economy is certainly playing a role in pricing decisions made by management, and that some teams soften the blow of a price increase by including price breaks on concessions or parking.

But fans that buy tickets as part of season ticket packages should consider themselves lucky. The increase in the average face value of tickets is dwarfed by resold tickets in the secondary market.

The average price of a resold ticket to an NFL game is up nearly $100 from last year, according to data from FanSnap, a website that acts as a search engine for tickets that are resold online.

Success on the field seems to be pushing those prices higher. Tickets for reigning Super Bowl champion New Orleans Saints games increased 264%, to an average of price of $404.

But the rising prices may become a problem for teams. That's because it could lead to unsold seats and more television blackouts, which tend to further alienate fans. If tickets don't sell out within 72 hours of game time, the games are not shown on television in the team's home market.

One team already hit by a blackout, the Tampa Bay Buccaneers, is offering discounts in order to increase attendance.

According to team spokesman Jonathan Grella, the sales problem is grounded in economic conditions.

"This area is struggling and it's unfortunate," Grella said. "We're hoping that when economic conditions improve, our fans will return to the stadium."

Bank of America, Wells Fargo, JPMorgan Lead Rebound in Hiring

Wells Fargo & Co. and JPMorgan Chase & Co. are among financial firms that added employees last year as the industry adjusted to an expanding economy and demands imposed by new U.S. regulations.

Bank of America, the biggest U.S. lender, counted 288,000 employees in its annual report for 2010 to securities regulators, an increase of 4,000, or 1.4 percent. Wells Fargo, the biggest U.S. mortgage lender, increased headcount by 4,900, or 1.8 percent, to 272,200, according to its annual report. Bank of America’s workforce increased 17 percent in 2009, the year when Merrill Lynch & Co. was added, while San Francisco-based Wells Fargo dropped almost 5 percent that year.

Banks reported a 77 percent increase in earnings in 2010, according to data compiled by Bloomberg. Improved asset quality and a decrease in loan-loss provisions contributed to the earnings growth, according to a report last week from the Federal Deposit Insurance Corp. Bank of America, based in Charlotte, North Carolina, put aside $28.4 billion for bad loans in 2010, down 41 percent.

“There was good talent out there at the right price,” said Eric Moskowitz, head of market intelligence in the global financial-markets practice of Los Angeles-based executive search firm Korn/Ferry International. “A lot of banks cut pretty deep in 2008 and 2009, and they needed to staff-up.”

AmEx Headcount

JPMorgan, the second-largest bank, may file its annual form 10-K later today. Data accompanying the New York-based company’s fourth-quarter earnings report in January showed 239,831 employees, an increase of almost 8 percent from a year earlier.

American Express, the biggest credit-card issuer by purchases, increased its workforce by 2,700, or 4.6 percent, to 61,000 in 2010, according to a filing today by the New York- based firm. In 2009, the staff shrank 12 percent. Citigroup Inc., the third-largest bank by assets, cut jobs by 5,300, or 2 percent, to 260,000 in 2010. New York-based Citigroup has been shrinking as it recovers from the financial crisis.

Banks are adding employees to help ensure they’re in compliance with new laws such as the Dodd-Frank overhaul of the financial industry that passed last July, Moskowitz said. The act creates a consumer bureau at the Federal Reserve, a council of regulators to monitor firms for systemic risk to the economy and a mechanism for liquidating large financial firms whose collapse could threaten economic stability.

“It’s a very nuanced regulatory environment, not just for the U.S., but globally, so you need people on the ground in different regions because the regulations are so in flux and varied,” Moskowitz said.

Bank of America, ranked second in home loans and first in mortgage servicing, hired and trained about 12,000 people to modify loans over the past two years to help homeowners struggling to keep up with payments. About 58,200 were employed in the home loans and insurance unit, according to the filing.

Obama Tells Governors Public Workers Must Not be ‘Vilified’

President Barack Obama said public employees shouldn’t be “vilified” or lose collective bargaining rights as states seek to balance their budgets.

The president, speaking to a bipartisan group of the nation’s governors at the White House, said that while everyone will need “to give up something” to bring state and federal spending into line, government workers shouldn’t have to bear the entire burden.

The president didn’t specifically mention the battle in Wisconsin between the state’s Republican governor, Scott Walker, and unionized state workers that has sparked protests in Madison.

Walker wants to let public workers bargain only over wages. He also proposes to double their health-care premiums and would require them to start paying part of their pension costs. The minority Democrats in the state Senate have fled Wisconsin to block passage of the legislation.

The fight is likely to spread to other states, including Ohio, which will be a key battleground in the 2012 presidential election. Unions are a prime Democratic Party constituency and the workers in Wisconsin have gotten help from Obama’s political organization and aligned political advocacy groups such as MoveOn.org.

Obama earlier this month called Walker’s proposal an “assault on unions.” Walker stayed in Wisconsin and didn’t attend the three-day conference of governors in Washington.

‘Shared Sacrifice’

In a meeting with governors at the White House today, Obama said “everybody should be prepared to give up something” to solve state budget problems. He said “most public servants agree with that,” Democrats and Republicans.

He called on states to invoke a practice of “shared sacrifice” where “everyone should be at the table.”

“If all the pain is borne by only one group, whether it’s workers or seniors or the poor, while the wealthiest among us get to keep or get more tax breaks, we’re not doing the right thing,” he said. “I don’t think it does anybody any good when public employees are denigrated or vilified or their rights are infringed upon.”

He said doing so will make it more difficult to attract the best teachers for public schools or recruit firefighters and police officers.

Obama also used his address to the governors to defend his budget priorities. He said the federal government, like the states, must get spending under control. Still, he said, that shouldn’t be done by cutting spending for education, building infrastructure and encouraging innovation.

The U.S. can’t “sacrifice our future” by trimming in those areas because it will make the country less competitive in the global economy, Obama said.

Lundin Mining Considers Equinox’s C$4.8 Billion Offer

Lundin Mining Corp., a Canadian copper and zinc producer, said it’s considering a C$4.8 billion ($4.9 billion) unsolicited cash-and-stock takeover bid from Equinox Minerals Ltd., which trumps an earlier offer from Inmet Mining Corp.

Lundin’s board is evaluating today’s C$8.10-a-share offer with its advisers and will make a recommendation to its shareholders “as soon as possible,” the Toronto-based company said in a statement. Inmet agreed Jan. 12 to acquire Lundin in a friendly all-stock deal currently worth C$3.6 billion. Lundin rose the most in more than two years in Toronto trading.

Buying Lundin would give Perth, Australia-based Equinox zinc, copper and lead mines in Sweden and Ireland, as well as a stake in a copper and cobalt venture in the Democratic Republic of Congo. A lack of new projects is forcing miners to expand through acquisitions. Equinox, operator of Zambia’s Lumwana mine, bought the biggest Saudi copper deposit this year.

Equinox’s bid is 14 percent more than Lundin’s average share price over 20 days. That compares with an average 27 percent premium among base-metals deals globally announced in the past 12 months, according to data compiled by Bloomberg.

“There is no substitute for cash,” Peter Arden, a mining analyst at Ord Minnett Ltd., said by telephone from Melbourne. “Equinox is a good company but it’s high-risk and not everyone would want to have Zambian copper as their underlying asset. A bit of cash is very smart.”

Shares Gain

Lundin rose C$1.25 to C$7.70 at 12:16 p.m. on the Toronto Stock Exchange. The shares earlier climbed 22 percent to $7.87, the biggest intraday gain since November 2008. Equinox fell 48 cents, or 7.7 percent, to C$5.79. Toronto-based Inmet dropped 79 cents, or 1.2 percent, to C$66.51.

Lorito Holdings Srl and Zebra Holdings & Investments, Lundin’s largest shareholders according to Bloomberg data, couldn’t be reached for comment. Both companies are owned by a Lundin family trust, according to the website of Lundin Petroleum AB, in which Lorito holds a 24 percent stake.

Inmet agreed to pay 0.0954 of a share for every Lundin share, which would give it about 53 percent of a new company to be called Symterra Corp. Equinox is offering to pay 9.5 times earnings before interest, tax, depreciation and amortization, according to Bloomberg data. That compares with Inmet’s bid, which prices Lundin at 8.3 times.

Equinox said it will offer C$8.10 in cash or 1.2903 shares and 1 cent for every Lundin share, prorated based on a maximum cash consideration of C$2.4 billion.

Superior Proposal

“This offer is clearly superior to the nil-premium merger proposed between Lundin and Inmet,” Craig Williams, Equinox’s chief executive officer, said in a statement.

Equinox will finance the cash component of its offer through a $3.2 billion bridging loan arranged through Goldman Sachs Group Inc. and Credit Suisse Group AG, Equinox said in a statement. Goldman Sachs is also lead financial adviser to Equinox.

There have been $24 billion of mining mergers and acquisitions so far this quarter, set for the best start to the year since 2008. Metal prices in London have almost doubled in the past two years as the global economy emerged from a recession.

“Anything that’s got a market capitalization of A$5 billion ($5.1 billion) or less, with good-quality mine life, in the right strategic place, then there’s every chance you’re going to see further consolidation,” Chris Weston, an institutional dealer at IG Markets in Melbourne, said by phone.

Copper Prices

The average copper price will climb 22 percent this year, Standard Bank Plc said last month. A combination of Equinox and Lundin would create a global top 10 copper producer, based on 2011 production forecasts, Equinox said in a presentation.

Equinox, with a market value of C$4.9 billion, completed the purchase of Citadel Resource Group Ltd. last month for A$970.5 million, its first acquisition in six years. Citadel owns the $305 million Jabal Sayid copper and gold project in Saudi Arabia. Equinox’s $841 million Lumwana project is Zambia’s biggest foreign investment.

Lumwana produced 109,413 metric tons of copper in 2009 and was forecast to yield 135,000 tons in 2010, Equinox said on its website. Lundin last year produced 93,450 tons of copper. Copper output at the Tenke Fungurume project in Congo, in which Lundin owns a 25 percent stake, is forecast to rise to 130,000 tons this year.

“The two key assets are the 24 percent interest in Tenke Fungurume, which is a world-class operation, and the Neves-Corvo mine in Portugal,” Equinox’s Williams said in a phone interview. Tenke “is a very significant mine,” he said.

Boost Earnings

Equinox is targeting production from the combined company of about 500,000 tons a year by 2016, it said in the statement. The deal would boost earnings and cash flow immediately and the company sees no need to sell shares to refinance the bridging loan, it said in the presentation. Equinox’s production will almost double on the acquisition, based on 2013 output forecasts, it said.

Stocks Rise as Buffett Eyes M&A; Oil, Treasuries Fluctuate

extending a third monthly gain for U.S. benchmark indexes, as billionaire investor Warren Buffett said he’s looking to make acquisitions and reports signaled a strengthening American economy. The Dollar Index declined while Treasuries and oil fluctuated.

The S&P 500 added 0.2 percent at 1:05 p.m. in New York, paring an advance of as much as 0.7 percent. The Stoxx Europe 600 Index climbed 0.8 percent. The Dollar Index slipped 0.4 percent, while the yield on the 10-year Treasury rose less than one basis point to 3.42 percent. Oman shares sank the most in 25 months as political unrest spread to the Sultanate. Dubai’s index slid to the lowest level since 2004.

The S&P 500 rebounded after last week’s 1.7 percent drop after Buffett told shareholders his “trigger finger is itchy” for deals, spurring speculation that an upswing in takeovers will accelerate. Blackstone Group LP agreed to buy Centro Properties Group’s U.S. shopping centers for $9.4 billion, two people familiar with the matter said, while Ventas Inc. plans to buy Nationwide Health Properties Inc. for about $5.7 billion in the biggest ever takeover of a health-care real-estate investment trusts.

“It’s a constructive environment,” said Mike Ryan, the New York-based head of wealth management research for the Americas at UBS Financial Services Inc., which oversees about $741 billion. “Whenever Warren Buffett’s talking about putting money to work, that’s going to have a positive impact on people’s views and on the market.”

Consumer Spending

Buffett isn’t the only investor with an itchy trigger finger. Announced takeovers of U.S. companies have totaled $161.9 billion so far in 2011, 66 percent more than the $97.4 billion through this date last year, according to data compiled by Bloomberg.

Class B shares of Buffett’s Berkshire Hathaway Inc. climbed 2.4 percent as the company also reported a 43 percent gain in quarterly profit to the highest since 2007 on derivative gains and earnings from the acquisition of Burlington Northern Santa Fe, the railroad purchased last year.

“Our elephant gun has been reloaded, and my trigger finger is itchy,” Buffett said of the outlook for deals in his annual letter to shareholders on Feb. 26. The company’s cash holdings rose to $38.2 billion at year-end, the highest in three years, compared with $34.5 billion as of Sept. 30.

Nationwide Health Properties rallied 9.4 percent, the most since May 2009, while Ventas slipped 3.7 percent.

Economic Data

Stocks also gained as the Institute for Supply Management- Chicago Inc. said today its business barometer rose to 71.2 this month, the highest level since July 1988, from 68.8 in January. Figures greater than 50 signal expansion. The gauge, which was projected to fall, exceeded every estimate of economists surveyed by Bloomberg News. Separate government data showed personal incomes climbed 1 percent and inflation remained below the Fed’s long-term forecast.

Federal Reserve Bank of New York President William Dudley said in a speech in New York that the “considerably brighter” economic outlook isn’t yet reason for the central bank to withdraw its record monetary stimulus. Fed Bank of St. Louis President James Bullard said in a CNBC interview that oil prices would have to go “substantially higher” to be a concern to U.S. economic and a weaker dollar can help growth temporarily.

The cost of protecting U.S. corporate bonds from default dropped for a third day. The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, declined 0.9 basis points to a mid-price of 82.2 basis points, according to index administrator Markit Group Ltd.

European Stocks

About five shares gained for every two that fell in Europe’s Stoxx 600. Syngenta AG jumped 2.6 percent after the Indian government announced tax breaks for investments in fertilizer projects and a rival announced an increase in sales of agricultural chemicals. Siemens AG climbed 3.6 percent after the company was said to be weighing an initial public offering of its Osram lighting business. HSBC Holdings Plc, Europe’s biggest bank, slid 4.7 percent after earnings missed analysts’ estimates.

The dollar depreciated against all but three of its most- traded counterparts, slipping 0.3 percent per euro. Europe’s single currency appreciated 0.5 percent versus the yen and 0.4 percent against the Swiss franc before the European Central Bank meets to discuss interest rates this week.

Krona Jumps

Sweden’s krona jumped 1.4 percent against the dollar to the strongest since August 2008, after central bank Governor Stefan Ingves said in minutes of the Feb. 14 meeting published today that the chances of monetary tightening at every meeting this year have risen and signaled individual interest-rate increases may be bigger than those executed thus far.

The Bloomberg GCC 200 index fell to the lowest level on a closing basis since Sept. 4. Oman’s MSM 30 Index sank 4.9 percent and the Dubai Financial Market General Index slid 3.8 percent

The MSCI Emerging Markets Index advanced 0.7 percent. The Bombay Stock Exchange Sensitive Index climbed 0.7 percent as India’s government pledged to trim its budget shortfall while boosting spending on projects needed to sustain economic growth.

Oil fell as much as 1.2 percent to $96.71 a barrel after earlier climbing as much as 2.1 percent to $99.96 in New York. Chief Executive Officer Khalid Al-Falih said the Saudi Arabian Oil Co. is ready to compensate for any shortfall in crude supply. Most ships picking up Libyan oil cargoes have done so successfully in the past week, said Bob Knight, head of tankers at Clarkson Plc, the world’s largest shipbroker.

Brent crude also fluctuated between gains and losses, recently trading up less than 0.1 percent at $112.18. The average price for U.S. regular gasoline at the pump gained 2.1 cents to $3.354 a gallon on Feb. 26, AAA, the country’s largest motor club, said on its website. The record pump price, reached in July 2008, was $4.114.

Cotton jumped the daily limit of 7 cents, or 3.8 percent, after China, the world’s largest producer and consumer, reported lower production last year. Copper climbed 0.9 percent to $4.4940 a pound in New York.

BofA’s Kaplan Leaves for Appaloosa; Baronoff Named M&A Chief

Bank of America Corp., the biggest U.S. lender by assets, said Steven Baronoff will assume Jeff Kaplan’s duties leading mergers and acquisitions.

Kaplan is leaving to join hedge fund Appaloosa Management LP, the Charlotte, North Carolina-based bank said today in a memo obtained by Bloomberg. Baronoff, chairman of global M&A, has advised on more than $1 trillion of transactions, including Procter & Gamble Co.’s purchase of Gillette, according to the memo from Thomas Montag, president of global banking and markets, and Michael Rubinoff and Purna Saggurti, co-heads of global investment banking.

Baronoff “will continue to serve as our most senior adviser to deal teams and clients globally,” according to the memo. “We thank Jeff for his dedication and leadership and look forward to working with him in the future.”

Kaplan joins Appaloosa, a Bank of America client, as chief operating officer, according to the memo. As M&A chief, he worked on deals including advising Marvel Entertainment Inc., led by Isaac Perlmutter, on its $4 billion sale to Walt Disney Co. in 2009.

John Yiannacopoulos, a Bank of America spokesman, confirmed the contents of the memo. The change was reported earlier by the Wall Street Journal.

U.S. Sends Refugee Aid as Pressure Grows on Qaddafi to Quit

The international community intensified pressure on Libyan leader Muammar Qaddafi to quit, as clashes were reported near the capital and the U.S. and its allies threatened to impose a no-fly zone to prevent his forces from launching air strikes against opposition-held areas.

U.S. Secretary of State Hillary Clinton, after meeting with foreign ministers in Geneva, said the U.S. is responding to the refugee crisis by allocating $10 million for humanitarian assistance and immediately sending aid teams to the Tunisian and Egyptian borders with Libya. The foreign ministers discussed sanctions on Qaddafi’s regime and other measures to “support the Libyan people,” she said.

In the latest clashes, three soldiers from a force loyal to Qaddafi were killed in clashes with protesters in Zawiyah, Al Arabiya reported, citing rebels in the town. It said that Qaddafi’s troops were trying take control of the town, 45 kilometers (28 miles) west of Tripoli and the nearest population center to fall to the rebels. An Associated Press reporter saw a large pro-Qaddafi force massed on the western edge of town with about a dozen armored vehicles and tanks and jeeps mounted with anti-aircraft guns.

The United Nations estimates that more than 1,000 people have died in the uprising and almost 100,000 have fled amid the heaviest fighting in six weeks of unrest that swept parts of North Africa and the Persian Gulf, home of the world’s biggest oil reserves. Armed anti-government forces control much of Libya’s east and have deployed tanks and anti-aircraft weapons to defend Zawiyah, according to the Associated Press.

Shares Tumble

Middle East shares tumbled today, sending Dubai’s stock index to the lowest level in almost seven years, as political unrest in the region spread to the Sultanate of Oman and reignited in Tunisia, prompting investors to trim riskier assets.

“Mercenaries and thugs have been turned loose to attack,” Clinton said in Geneva today at a meeting of the UN Human Rights Council. ‘We will continue to explore all possible options for action -- as we have said, nothing is off the table so long as the Libyan government continues to threaten and kill Libyan citizens.’’

Libyan rebels are organizing in the eastern port of Benghazi, the biggest city they control. On the roads between Benghazi and the Egyptian border, anti-Qaddafi protesters carrying assault rifles and former soldiers in uniform set up tents and searched passing cars for weapons, some of them welcoming passersby with juice and sweets.

‘Qaddafi Out’

There were no major clashes yesterday, though gunfire was heard in Tripoli after nightfall, the AP said. In Zawiyah, hundreds of people chanted “Qaddafi out!,” it said.

“We’ve been reaching out to many different Libyans who are attempting to organize in the east and, as the revolution moves westward, there as well,” Clinton said en route to Geneva, where she met today with officials from the European Union and Russia to discuss the crisis. German Foreign Minister Guido Westerwelle urged a 60-day freeze on oil payments to Libya and said the imposition of a no-fly zone over the country is under discussion today.

Crude oil for April delivery declined 48 cents, or 0.5 percent, to $97.40 a barrel at 9:21 a.m. on the New York Mercantile Exchange as Saudi Arabia offered to make up for supplies lost because of unrest in Libya and on reports the North African country is exporting crude.

Regional Unrest

Futures reached $103.41 a barrel on Feb. 24, the highest intraday level since Sept. 29, 2008. Prices rose 14 percent last week, the most in two years.

The regional unrest that ousted Tunisian President Zine El Abidine Ben Ali and Egyptian President Hosni Mubarak reached Oman, where two demonstrators were killed yesterday and several were wounded in clashes with security forces in the city of Sohar, according to hospital and government officials.

Demonstrations in Sohar resumed today, and a hypermarket in the coastal city was set on fire as hundreds gathered to protest and roads were closed. Sultan Qaboos Bin Said, the ruler since 1970, has told the government to create 50,000 jobs and boost allowances for those without full-time work.

Oman, where companies including Royal Dutch Shell Plc and Total SA have a stake in the oil industry, produces about 800,000 barrels a day and lies at the entrance to the Strait of Hormuz, through which a fifth of the world’s oil passes.

Oman Impact

Oman’s benchmark MSM30 stock index slumped 4.9 percent, the biggest drop for more than two years. In Dubai the main index fell 3.8 percent to a seven-year low. The Bloomberg GCC 200 index of regional shares fell 1 percent.

In Tunisia, where the regional turmoil began two months ago, protests have flared up again, forcing interim Prime Minister Mohamed Ghannouchi to resign after at least three people were killed. The demonstrators had called for the removal of Ghannouchi because of his links with former ruler Ben Ali, who fled the country on Jan. 14. Interim President Fouad Mebazaa named former foreign minister Beji Caid Essebsi as the new prime minister and appealed for calm.

In Saudi Arabia, the world’s largest oil supplier, activists and academics yesterday called on King Abdullah to increase political rights and move toward a constitutional monarchy. Libya and Saudi Arabia are among the 12 members of the Organization of Petroleum Exporting Countries, which pumps about 40 percent of the world’s oil.

Yemen Protests

Yemeni opposition movements, which have been holding daily protests demanding the ouster of President Ali Abdullah Saleh after more than three decades, today refused an offer by Saleh to form a national unity government, al-Jazeera television said. Thirteen lawmakers quit Yemen’s parliament today to protest violence against demonstrators, as the government said three security officers have been killed in recent days.

International efforts to end Qaddafi’s attacks on the Libyan rebels and force him from power have shifted to Geneva, “It is time for Qaddafi to go -- now, without further violence or delay,” Clinton said today.

The possibility of imposing a no-fly zone over Libya, which would prevent Qaddafi loyalists from carrying out aerial attacks on the opposition, is being debated at today’s meeting in Geneva, Westerwelle said.

The UN Security Council voted 15-0 on Feb. 26 to freeze the foreign assets of Qaddafi and four aides and to bar them from traveling. The resolution also imposes an arms embargo on Libya and calls for an immediate end to violence that it says “may amount to crimes against humanity.”

Qaddafi’s Assets

Qaddafi’s family has no bank accounts abroad, Libya’s state television reported today, citing the leader’s son Saif al-Islam Qaddafi.

Governments throughout the world have rushed to get their nationals out of Libya. China has evacuated about 29,000 people, state news agency Xinhua said today, and Turkey said 18,000 of its citizens have been removed. The U.K. and Germany sent military missions to help with the evacuation.

Qaddafi remained defiant yesterday as he said he would remain in Libya and quash the rebellion. “The people of Libya support me,” he said in a telephone interview with Serbia’s Pink television station, according to a report by Israel’s Haaretz newspaper. “Small groups of rebels are surrounded and will be dealt with.”

Egypt stock trading is set to resume tomorrow after a suspension of more than a month amid a popular revolution that toppled the 30-year-old regime of former President Hosni Mubarak. The measure lost 16 percent the week ended Jan. 27, when it last traded. The Tunisian bourse suspended trading from today until further notice, the bourse said on its website.

U.S. Stocks Rise Amid Improving Data as Buffett Eyes Takeovers

extending a third straight monthly gain for benchmark indexes, amid improving economic data and as billionaire investor Warren Buffett said he’s looking to make more acquisitions.

Berkshire Hathaway Inc.’s Class B shares rose 2.1 percent as Buffett’s company said profit jumped 43 percent to the highest since 2007. Walgreen Co. climbed 4.1 percent after Morgan Stanley raised its share-price estimate for the largest U.S. drugstore chain. Humana Inc., the biggest provider of U.S.- backed health benefits, jumped 5 percent after raising its profit forecast. Amazon.com Inc. slumped 2.5 percent after UBS AG cut its recommendation for the largest online retailer.

The S&P 500 advanced 0.4 percent to 1,325.34 at 12:52 p.m. in New York, rallying for a second straight day. The gauge is up 3 percent this month. The Dow Jones Industrial Average rallied 77.04 points, or 0.6 percent, to 12,207.49 today.

“Warren Buffett is always out there to buy companies at the right price,” said E. William Stone, who oversees about $105 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “He has enough cash to do what he wants to do. On top of that, the economy continues to recover and earnings will not be affected by the situation in oil prices. We see pressure coming off the oil market. There’s a sense the market can handle Libya covering the supply.”

Middle East Crisis

The S&P 500 had the biggest drop in three months last week as Libya’s anti-government uprising pushed oil prices higher and prompted concern economic growth may falter. Oil was little changed today as Saudi Arabia offered to make up for supplies lost because of unrest in Libya and on reports the North African country is exporting crude. Still, crude is trading near a two- year high.

The benchmark gauge for U.S. stocks has risen 5 percent this year through Feb. 25 amid government measures to stimulate the economy and higher-than-estimated corporate earnings. Per- share profit topped estimates at 71 percent of the 460 companies in the S&P 500 that have reported results since Jan. 10, according to data compiled by Bloomberg.

Earlier, futures maintained gains as government data showed personal incomes climbed 1 percent, more than the 0.4 percent median estimate in a Bloomberg News survey of economists, reflecting the tax-cut compromise reached by President Barack Obama and Congressional Republicans in December. Inflation remained below the Federal Reserve’s long-term forecast.

Business Barometer

Stocks also rose after the Institute for Supply Management- Chicago Inc. said today its business barometer rose to 71.2 this month, the highest level since July 1988, from 68.8 in January. Figures greater than 50 signal expansion. The gauge was projected to fall to 67.5, according to the median estimate of 52 economists surveyed by Bloomberg News.

The dollar fell to its lowest since November against the currencies of six U.S. trade partners on bets Federal Reserve Chairman Ben S. Bernanke will signal to Congress the central bank plans to maintain economic stimulus. Bernanke is scheduled to deliver the Fed’s semiannual report on monetary policy tomorrow to the Senate Banking Committee and is due to testify to the House Financial Services Committee the following day.

Federal Reserve Bank of New York President William Dudley said the “considerably brighter” economic outlook isn’t yet reason for the central bank to withdraw its record monetary stimulus. Dudley spoke today in a speech in New York.

Berkshire Hathaway Class B shares added 2.1 percent to $86.66. Fourth-quarter net income advanced to $4.38 billion, or $2,656 a share, from $3.06 billion, or $1,969, a year earlier, Omaha, Nebraska-based Berkshire said on its website.

‘Trigger Finger’

Buffett said his “trigger finger is itchy” for takeovers after cash holdings at his Berkshire Hathaway climbed to $38.2 billion. “Our elephant gun has been reloaded,” Buffett said on Feb. 26 in his annual letter to shareholders.

“It’s another positive influence for confidence,” said Liam Dalton, New York-based president of Axiom Capital Management Inc., which oversees $1.4 billion. “It supports a lot of what we’re dealing with right now -- improving data in the real economy hasn’t reversed. There hasn’t really been any real weakening. A Buffett remark perpetuates that trend.”

Announced takeovers of U.S. companies have totaled $161.9 billion so far in 2011, 66 percent more than the $97.4 billion announced through this date last year, according to data compiled by Bloomberg.

Greater Voting Rights

A share of Berkshire Hathaway changed hands on the Nasdaq Stock Market for $189,999 before the official open of U.S. exchanges at 7:21 a.m., 49 percent above the Feb. 25 close. The company’s Class A stock, which carries greater voting rights, closed at $127,550 on Feb. 25. There were no additional trades before the shares opened at 9:30 a.m. for $129,000, according to Bloomberg data.

Alexandra Honeysett, a Nasdaq spokeswoman, declined to comment. NYSE Euronext’s Jill Archibald also declined to comment.

Walgreen added 4.1 percent to $43.68. Morgan Stanley boosted its share-price estimate for the drugstore chain to $50 from $44, while raising its second-quarter profit forecast citing stronger-than-estimated sales stemming from flu trends. Morgan Stanley also expects Walgreen stock to rise over the next 30 days.

Humana rose 5 percent to $65.72. The biggest provider of U.S.-backed health benefits boosted its full-year per-share profit forecast to $5.95 to $6.15. The shares were raised to “buy” from “hold” at Stifel Nicolaus.

Nationwide Health Soars

Nationwide Health Properties Inc. jumped 9.9 percent, the most in the Russell 1000 Index, to $42.81. Ventas Inc., the second-biggest U.S. health-care real estate investment trust by market value, agreed to buy Nationwide Health for about $5.7 billion. Ventas slid 3.1 percent to $55.42.

Amazon fell 2.5 percent to $172.90. UBS downgraded the stock to “neutral” from “buy”, citing potential margin pressures because of a more prolonged investment period and free subscription streaming. UBS also reduced its 12-month share- price estimate to $180 a share from $195.

Barclays Plc forecast the S&P 500 will advance to 1,450 in 2011, up from a previous prediction of 1,420. Barry Knapp, the New York-based chief equity strategist for the firm, lifted his 2011 profit estimate for the benchmark gauge to $93 from $91, citing better-than-estimated fourth-quarter earnings and increased confidence in the financial sector.

“We are more optimistic than we have been at this time in each of the last two years,” Knapp wrote in a report dated Feb. 25. “Our base case is for a favorable first half, resulting in a more upbeat full-year outlook for 2011.”

The firm also raised its recommendation for industrial companies to “overweight” and health-care and financial stocks to “marketweight,” while lowering its rating of consumer discretionary companies to “marketweight.”

Oman Protests for Jobs, Pay, Representation Enter Third Night

Hundreds of Omani protesters gathered in the city of Sohar for a third night, demanding that the government open talks on their demands for more jobs, higher pay and more representative political institutions.

Khaled Maqbuli, a leader of the protest, called on the demonstrators at a roundabout in the center of Sohar, north of the capital, Muscat, to stay peaceful and avoid confrontation with the army and the police. Two people were killed, several wounded and a supermarket set on fire over the past two days.

“We are peaceful, we have demands, we are not saboteurs,” Maqbuli, 26, said through a loudspeaker. “We want the government to send civilian people to discuss our demands; we have nothing to say to the military.”

Sultan Qaboos Bin Said, the country’s ruler since 1970, “has received the demands of the citizens in all the provinces and is giving them his attention,” state television reported.

Demonstrations against poverty and autocratic rule are spreading through the Arab world. Tunisia was the first to see an Arab leader ousted by popular protests in January, followed this month by Egypt. Libyan leader Muammar Qaddafi has lost control of several cities to the opposition and demonstrations also have taken place in Yemen, Bahrain, Algeria and Jordan.

Stocks Fall

Oman’s MSM30 Index of stocks closed down 4.9 percent, the most since January 2009, at 6,142.42. Oil gained for a second day in New York. Crude for April delivery rose as much as $2.08, or 2.1 percent, to $99.96 a barrel in electronic trading on the New York Mercantile Exchange.

Demonstrators circulated a list of demands today, including that the sultan names a prime minister and gives more power to the consultative council. Qaboos is head of the government.

Omani television said the sultan formed a committee to examine how to expand the power of the 83-member council whose role is to make recommendations to the government. Yesterday, he ordered the government to hire 50,000 Omanis and to pay 150 rials ($390) a month to job seekers.

Among the other demands of the demonstrators were a tripling of salaries, cancellation of private bank debts and the establishment of a government fund to help people marry and build a house.

“How can anybody live on 150 rials a month,” said Nasser Sheibi, a 26 year-old unemployed man. “I want a government official to come here and to tell me how that can be possible.”

Protests in Sohar escalated yesterday after security forces rounded up demonstrators, arresting a total of 48, according to Ammar Hanai, who said he was one of those detained.

Released Detainees

Qaboos later ordered the release of the detainees and the withdrawal of the police from the roundabout where hundreds of demonstrators have gathered since about noon on Feb. 26.

The city’s harbor is operating normally after protesters blocked roads, Jan Meijer, the chief executive officer of the Port of Sohar, said today.

As in Bahrain, the feeling of deprivation of the Omani demonstrators is exacerbated by their proximity to richer oil- producing nations Qatar and United Arab Emirates. The U.S. Central Intelligence Agency estimates that 60 percent of the workforce in Oman was made up of non-citizens in 2007 and that unemployment in 2004 was 15 percent. The Omani government doesn’t publish employment indicators.

Oman, with a population of about 2.7 million Omanis and 600,000 expatriates, produces just over 800,000 barrels of oil a day. The sultanate lies at the strategically important entrance to the Strait of Hormuz, through which a fifth of the world’s oil passes.

--With assistance from Vivian Salama in Abu Dhabi and Camilla Hall in Dubai. Editors: Eddie Buckle, Andrew Atkinson.

Peru Raises Reserve Requirement to Ease Inflation Pressure

Peru’s central bank increased reserve requirements for a second straight month to ease inflation pressures amid surging demand for credit, goods and services.

Banco Central de Reserva del Peru raised the average reserve rate by 0.25 percentage point of banks’ sol- and dollar- denominated deposits. The increase takes effect March 1, the central bank said in an e-mailed statement yesterday.

Policy makers have raised both the reserve ratio and their benchmark rate twice this year as bank lending feeds a boom in private investment and consumer demand in the $153 billion economy. The central bank is seeking to prevent rising international prices for food and crude oil from contaminating other parts of South America’s sixth-largest economy, bank president Julio Velarde said last week.

“They’re trying to deflate any potential bubble in the credit market and moderate demand-side pressures on inflation,” said Benito Berber, a currency strategist at Nomura Securities Inc, in a phone interview from New York. “The risk is that by the end of the year inflation could have tripled. They’re putting the brakes on right now.”

Higher commodity prices sparked the fastest monthly inflation in more than two years in January and will likely push the annual rate “very close” to 3 percent, Velarde told reporters Feb. 24.

Peru’s sol gained 0.1 percent to 2.7735 per U.S. dollar at 11:39 a.m. in New York, from 2.7765 on Feb. 25.

Consumer Prices

February’s rise in consumer prices is forecast to match January’s 0.39 percent month-on-month increase, according the median estimate of eight analysts surveyed by Bloomberg. The annual inflation rate for February is projected to rise to 2.2 percent, compared with 2.17 percent in January.

Peru’s national statistics agency will issue its monthly inflation report tomorrow.

The increase in the reserve ratio seeks “to keep inflation expectations anchored within the 1 percent to 3 percent target range,” the bank said in yesterday’s statement.

Outstanding bank loans rose 19 percent to 110 billion soles ($39.6 billion) in January from a year earlier, the Andean country’s banking association Asbanc said last week.

Sol Volatility

The central bank extended reserve requirements to include the overseas units of domestic lenders for the first time on Jan. 1 as it seeks to prevent short-term capital inflows from increasing volatility in the sol.

Peruvian banks’ average reserve requirement was 12.1 percent during Feb. 1 to Feb. 22, according to central bank data.

Economic growth accelerated in the fourth quarter as infrastructure projects boosted construction output. Gross domestic product rose 2.2 percent from the third quarter, the government’s statistics agency said today in an e-mailed report.

GDP climbed 9.2 percent in the fourth quarter from the same period a year earlier, taking growth for 2010 to 8.8 percent, the agency said. Analysts forecast a 9.1 percent year-on-year expansion, according to the median estimate of 10 economists in a Bloomberg survey.

“Growth will probably be close to 9 percent in the first quarter, and that’s very high,” said Pedro Tuesta, a Washington-based economist for Latin America at 4Cast Inc, in a phone interview. “The central bank will keep tightening to stay ahead of the curve.”

Consumer spending edges up, manufacturing strong

Consumer spending rose modestly in January, getting the year off to a soft start, as households took advantage of tax cuts to rebuild their savings.

Other data on Monday painted a bullish picture of the manufacturing sector, with a gauge of factory activity in the country's Midwest hitting a 22-1/2 year high this month, which should help the economy weather rising oil prices and maintain its steady growth momentum.

The Commerce Department said on Monday spending edged up 0.2 percent, the smallest increase in seven straight months of gains, after an upwardly revised 0.5 percent rise in December.

While bad weather was partly blamed for the below-forecast rise in spending, it also suggested that spending would slow down after growing briskly in the final three months of 2010 as consumers deal with rising food and gasoline costs.

"It appears consumers are pulling back both because a lot of spending was concentrated in the fourth quarter and also because rising food and energy prices are crimping purchasing power," said Julia Coronado, an economist at BNP Paribas in New York.

Economists had expected spending, which accounts for 70 percent of U.S. economic activity, to rise 0.4 percent. Real spending fell 0.1 percent, the first decline in a year, after rising 0.3 percent in December.

Spending in the fourth quarter grew at a 4.1 percent annual rate, the fastest in more than four years. That helped to lift economic growth to an annualized 2.8 percent rate from 2.6 percent in the third quarter.

A separate report showed the Institute for Supply Management-Chicago's index of business activity in the Midwest rose to 71.2 in February -- the highest since July 1988 -- from 68.8 in January.

A reading above 50 indicates expansion in the regional economy. Economists had expected the index to dip to 67.7 and the rise this month reflected increases in new orders, backlogs and deliveries.

TAX DEAL BOOSTS INCOMES

U.S. stocks traded higher, while government bond prices were little changed. The U.S. dollar fell to a 3-1/2 month low against a basket of currencies.

Incomes rose 1.0 percent last month, the largest increase since May 2009, lifted by the implementation of a payroll tax holiday, which was part of a $858 billion tax package enacted last year. The boost to incomes is likely temporary.

The increase in January outpaced economists' expectations for a 0.4 percent gain and followed a similar rise in December. Savings jumped to $677.1 billion, the highest level since August, from $620.9 billion in December.

The report also showed the Federal Reserve's preferred measure of consumer inflation -- the personal consumption expenditures price index, excluding food and energy - edged up 0.1 percent last month, after being unchanged in December.

Fed officials prefer the core personal consumption expenditures price index as a gauge of consumer inflation because it takes into account changes in spending habits by households.

New York Fed President William Dudley on Monday cautioned against overreacting to developments in the Middle East and North Africa, which have pushed oil prices and stoked inflation fears.

"It is premature to make strong judgments today," Dudley said. If oil prices rose on a sustained basis, he said, and fed through into broader prices, "that would be something that the Fed takes seriously," he said.

Fed officials have maintained their view that core inflation rates remain too low, even as high food and energy prices have put global central banks on alert for inflation.

Fed Chairman Ben Bernanke testifies to Congress on Tuesday and Wednesday, and analysts do not expect him to depart much from the central bank's view of low inflation.

In the 12 months through January, the core PCE index rose 0.8 percent after rising by the same margin in December.

A third report showed the recovery continues to elude the housing sector. The National Association of Realtors Pending Home Sales Index, based on contracts signed in January, declined 2.8 percent to 88.9.

Pending home sales lead existing home sales by a month or two.

Blackstone to buy Centro malls for $9.4 billion: sources

Private equity firm Blackstone Group LP (BX.N) has struck a deal to buy nearly 600 U.S. strip malls and other properties from Australia's Centro Property Group (CNP.AX) for about $9.4 billion, people with direct knowledge of the transaction said on Monday.

Blackstone beat rival bidders that include Morgan Stanley Real Estate (MS.N), which had teamed up with Starwood Capital Group and New York-based NRDC, according to a person who was not authorized to talk to the media and did not want to be identified.

The portfolio includes 560 U.S. shopping centers, whose tenants include grocery store operators such as Kroger Co (KR.N), Safeway Inc (SWY.N), and Koninklijke Ahold NV (AHLN.AS), which owns Stop & Shop and Giant.

Centro bought the shopping centers when it acquired New Plan Excel Realty Trust for about $6.2 billion at the top of the market in 2007.

The U.S. commercial real estate market began to rebound last year, but the recovery has been uneven. The highest quality properties in the most densely populated areas have recouped much of their lost value, while the rest have languished.

Values of good quality, large U.S. malls did not suffer greatly during the downturn, in part because new ones are difficult to build. Land in desirable areas is scarce and permits for new construction face local opposition from residents who object to the auto traffic the malls generate. Good properties rarely come up for sale.

But neighborhood shopping centers, which are easier to build and face less local resistance, are still struggling with weak occupancy rates and limp rent. Centro's properties are not considered among the best.

That may prove to be a big opportunity for Blackstone, said Benjamin Yang, an analyst with Keefe, Bruyette & Woods.

"To the extent that they are looking for some meaningful return, probably in the double-digit territory, they're not going to get those type of returns getting the "A" quality properties," Yang said.

"There's an opportunity to increase occupancy to something that's a little higher," he said. "And to the extent that these properties were under-managed, there might be an opportunity there to get rents back to market and maybe put in a better tenant base."

Centro is the latest example of Blackstone's rapidly expanding property empire, which includes the Hilton hotels chain, a 7.6 percent stake in U.S. regional mall owner General Growth Properties Inc (GGP.N) and expanding holdings in U.S. warehouse and distribution centers.

A sale would allow Centro to reduce its large debt load.

Centro shares, which have recently traded slightly above their 52-week low of 13 Australian cents, were halted ahead of an expected announcement on Tuesday. Blackstone shares were unchanged in trading before the U.S. markets opened.

A Centro spokeswoman declined to comment, while Blackstone officials were not immediately available.

The $9.4 billion purchase price equals book value for the assets, the source said, confirming a report in the Wall Street Journal.

Centro was one of corporate Australia's first casualties of the 2008 global credit crisis, having saddled itself with too much debt.

The company said last week that its total portfolio was valued at A$16.5 billion (US$16.8 billion), while it has A$16 billion (US$16.3 billion) in debt. U.S. companies are not required to publicly release the value of their assets.

Any asset sales would need approval from Centro's lenders, now mainly hedge and distressed-debt funds.

Blackstone is unusual among private equity firms in having a large number of real estate investments. It oversaw $33.2 billion of real estate assets at year's-end, up 63 percent from a year earlier, according to a Friday regulatory filing.

Earlier this month, Blackstone said it was seeing a recovery in office and hospitality sectors, and that concerns about inflation are making real estate a more attractive investment.

The company said its current real estate fund, Blackstone Real Estate Partners VI, was about 70 percent invested, and that it plans to start fundraising for a seventh fund this year.

Last year, Blackstone bought 180 properties from ProLogis (PLD.N) for $1.01 billion and paid Eaton Vance Corp (EV.N) $900 million for industrial real estate.

Libyan oil output cut by at least half, Saudi steps in

PARIS/RIYADH (Reuters) – The uprising in Libya has cut its oil output by half, the International Energy Agency said on Monday, but Saudi Arabia's pledge to pump more helped to prevent a further surge in the price of oil.

The head of Italian oil company ENI, the biggest foreign operator in Libya, said he thought two-thirds of Libyan oil and gas output had been halted and warned oil extraction could halt if shipments did not resume.

Foreign firms have been pulling staff out of Libya due to the uprising against Muammar Gaddafi's rule. China's three major state-owned oil and gas companies have evacuated all their Chinese employees.

U.S. oil firm Marathon Oil Corp also said it had evacuated all expatriate employees and their dependents from Libya, while ConocoPhillips said it had closed its operations there and evacuated some employees due to the unrest.

About half of Libya's 1.6 million barrels per day (bpd) of production had been cut, IEA Chief Economist Fatih Birol told Reuters Insider TV, citing industry reports. That is higher than the IEA estimated initially.

Oil prices jumped toward $120 a barrel last week for the first time since 2008 because of the disruption in Libya, the world's 12th largest oil exporter.

Prices have since eased to $112, partly because Saudi Arabia has promised to meet any shortages.

"This is not good news for suppliers in the market but at the same time it is very comforting that Saudi Arabia showed their readiness to make up," Birol told Reuters in the interview.

All demands for extra oil have been met, the head of Saudi state oil company Saudi Aramco said on Monday. The kingdom has boosted its output to around 9 million bpd, a senior Saudi source told Reuters, to meet demand.

"All incremental needs requested by our customers have been met," Saudi Aramco CEO Khalid al-Falih said.

OUT FOR MONTHS?

As well as the scale of the loss of Libya's oil, the duration of the shutdown is also a concern to oil markets. Some analysts expect it may be out for a while.

"With Libya apparently at risk of a civil war, there are reasons to believe that oil supplies in that country could be off for months," Bank of America Merrill Lynch said in a note.

Libya's oil exports and oil tanker loadings remained at a virtual standstill. The country exports about 1.3 million bpd of high-quality crude, mostly to Europe.

The size of the cut in Libya's oil output remains unclear partly because of disrupted communications with the country.

Eni's chief executive, Paolo Scaroni, said on Monday he thought two-thirds of Libyan oil and gas output had been halted. He had put the disruption at 1.2 million bpd, or 75 percent, last week.

Most of Libya's oilfields are no longer under Gaddafi's control, the European Union's energy commissioner said on Monday.

A unit of Libya's state-owned National Oil Corp has decided to operate separately from its parent until Gaddafi is overthrown and Tripoli is free of his rule, an official said.

(Reporting by Ludovic Vickers, Jim Bai, Selam Gebrekidan, Tom Miles, Martina Fuchs, Reem Shamseddine, Barbara Lewis and Giancarlo Navach; editing by James Jukwey)

Economists list U.S. budget deficit as No. 1 worry

WASHINGTON (Reuters) – The massive U.S. budget deficit is the gravest threat facing the economy, topping high unemployment and the risk of inflation or deflation, according to a survey of forecasters released on Monday.

The National Association for Business Economics said its 47-member panel of forecasters increased its estimate for the 2011 federal deficit to $1.4 trillion from $1.1 trillion in its previous survey in November.

"Panelists continue to characterize excessive federal indebtedness as their single greatest concern," with state and local government debt the second-biggest worry, the survey said. It was conducted between January 25 and February 9.

The panel's deficit forecast is lower than the Obama administration projection of a record $1.65 trillion this fiscal year, or 10.9 percent of U.S. gross domestic product.

Although the White House budget proposes $1.1 trillion in deficit reductions over 10 years, Republicans in the House of Representatives say that is not enough.

Republicans are pressuring the administration to reduce spending by $61 billion by September, and the dispute threatens to shut down the government if Democrats and the White House refuse to go along.

NABE panelists tweaked their previous stance on the Federal Reserve's decision to pump more money into the economy by buying government bonds.

Most panelists now view the Fed's decision to buy an additional $600 billion in longer-term Treasury securities as having either somewhat diminished the risk of deflation or having had no impact on inflation whatsoever.

November's survey showed economists worried that the bond purchases could stoke inflation.

Panelists forecast core inflation, which excludes volatile food and energy prices, to rise gradually from 0.8 percent in the final quarter of last year to 1.2 percent in 2011.

GDP growth for 2011 is expected to advance 3.3 percent year over year, up from the panel's previous estimate of 2.6 percent, the survey said.

"Factors supporting growth going forward include pent-up consumer and business demand, strong growth in foreign economies, especially those in Asia, and accommodative monetary policy," NABE President Richard Wobbekind said in a statement.

"Factors restraining growth include financial headwinds, uncertainty about future federal government economic policies, a tepid housing market and sustained high unemployment," he said.

Possible pullback on high oil

NEW YORK (Reuters) – On Wall Street they wonder: Was that it? Is the pullback over?

Following the S&P 500's worst week in 15 last week, investors are trying to determine whether the predictions of a correction have been fulfilled or if there's still downside ahead as oil prices remain at elevated levels.

Shares could find some support Monday after positive commentary from Berkshire Hathaway Inc (BRKa.N) Chairman Warren Buffett, who said in his annual letter that Berkshire will engage in record capital spending in the coming year.

"They're certainly encouraging, especially for U.S. investing. I was struck by the level of capital investing he cited," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "Whether or not his remarks result in a Monday (rally) remains to be seen. Buffett is a long-term investor, not a timer. He tends to be early."

Along with the direction of oil, potential market movers this week for traders will be the February payrolls report, which will be released on Friday, and Federal Reserve Chairman Ben Bernanke's speech on Tuesday.

The benchmark S&P index fell 1.7 percent last week, a relatively mild pullback for an index that has gained more than 25 percent since the start of September.

"We were looking for a pullback of at least 5 percent and we didn't get it, so I don't think we can expect a lot of new entrants at these levels," said Leo Grohowski, who oversees about $166 billion in assets as chief investment officer at BNY Mellon Wealth Management in New York.

"With the gains we've had, and since tensions remain high in the Middle East, I don't expect to see aggressive buying on the dip this time around," Grohowski said.

A lack of new entrants could mean lighter volume, which could leave the market more susceptible to increased volatility. Lately, volume has been stronger on down days in the market.

"RISKIER" ENVIRONMENT

An unexpected surge in crude prices, sparked by Libya's popular uprising, pressured equities for much of the holiday-shortened previous week on concern that higher energy costs could stifle economic activity.

U.S. crude futures spiked as much as 20 percent during the week to a high of $103.41 per barrel, although they later fell below $100. The CBOE Volatility Index VIX (.VIX) rose 17 percent last week and at one point was up 30 percent.

Though many say the market remains overstretched, its resilience in the face of geopolitical uncertainty and some disappointing data has some encouraged.

Judy Moses, portfolio manager at Evercore Wealth Management in San Francisco, said that the week's drop had quieted some of the calls for consolidation.

"Had we not seen this pullback, our enthusiasm would be a little tapered because valuations would be fuller," she said. "But it does seem that in general the investment environment is a bit riskier now."

S&P MEETS KEY LEVEL

The S&P faces few technical hurdles before it reaches 1,360, and last week it seemed to find support at 1,300. Grohowski said it was "very important, psychologically, that we closed above that level on Wednesday and Thursday."

Others were more bearish on a market that, even with the week's drop, has seen gains of 4.8 percent since the start of the year.

"We're at the end of the push in equities, and I see a lot of downside from here," said Steven Hochberg, chief market analyst at Elliott Wave International in Gainesville, Georgia. "Those who are adept at handling risk should look to short the market in one form or another."

Hochberg added that financial stocks "look particularly weak here, and that could be an interesting area on the downside."

With earnings season largely over -- Costco Wholesale (COST.O), H.J. Heinz Co (HNZ.N) and Novell Inc (NOVL.O) are among the few S&P components reporting this week -- equities will track other factors.

Recent monthly payroll reports have been a mixed bag, with fewer jobs being added than anticipated, but the unemployment rate declined. The upcoming unemployment report will be watched for confirmation that a job market recovery remains on track.

Meanwhile, comments from Bernanke will be parsed for clues about when the Federal Reserve's quantitative easing program will end and whether a third round is likely.

On Monday, new restrictions on short selling with go into effect. Under the new rules, the circuit breaker will kick in with a 10 percent price decline from the previous day's close and will last for the duration of the trading day, as well as the following day.

Wall Street gains on deal, Buffett bullishness

NEW YORK (Reuters) – Stocks rose on Monday after Ventas Inc (VTR.N) said it will buy Nationwide Health Properties (NHP.N) for $5.8 billion and investor Warren Buffett said he was eyeing "major acquisitions."

Comments from Buffett, chairman of Berkshire Hathaway Inc (BRKa.N) and known as a value investor, signaled he sees cheapness in the market. Berkshire's Class B (BRKb.N) shares rose 2.1 percent to $86.74.

"Some of the deals start forming backstops so even if it goes down there is capital available to backstop," said Doug Roberts, chief investment strategist at Channel Capital Research.com in Shrewsbury, New Jersey.

Ventas Inc is to buy Nationwide Health Properties in a stock deal that strengthens its position as the biggest U.S. owner of senior housing. NHP shares rose 9.2 percent to $42.54.

The Nasdaq came under pressure after Amazon.com Inc (AMZN.O) fell 2.5 percent to $172.78 after UBS downgraded the online retailer, citing increased costs.

The Dow Jones industrial average (.DJI) gained 73.22 points, or 0.60 percent, to 12,203.67. The Standard & Poor's 500 Index (.SPX) rose 5.77 points, or 0.44 percent, to 1,325.65. The Nasdaq Composite Index (.IXIC) added 2.87 points, or 0.10 percent, to 2,783.92.

Comments from Federal Reserve officials hinting they were ready to support the economy if needed also helped as concern mounts about how the market will react when the Fed's current bond-buying program ends later this year.

New York Fed Bank President William Dudley said policymakers should be wary about withdrawing liquidity too quickly, while St. Louis Fed Bank President James Bullard would not rule out further use of the Fed's unorthodox long-term bond buying tool.

Equities had their worst performance since November last week as an uprising in Libya sent oil surging in what was seen as a potential threat to the economic recovery.

The decline allowed the market to work off some of its overbought condition after months of gains. The S&P 500's relative strength index (RSI), a measure of high to lower closes, was in moderate territory for a fifth day.

Saudi Arabia, the largest oil exporter, eased concern about higher oil prices when it reassured oil markets supply could be met as protests spread to oil producer Oman. U.S. April crude futures fell 0.6 percent to $97.35 per barrel.

Easing concerns about events abroad allowed investors to focus on the domestic economy which continues to show signs of strength.

The Institute for Supply Management-Chicago said its index of Midwest business activity rose more than forecast in February to 71.2 from 68.8 in January.

U.S. incomes rose 1.0 percent last month, the largest increase since May 2009, after increasing 0.4 percent in December. The jump in income partly reflected the tax package enacted last year.

However, underlying the continued struggles of the housing market, pending home sales fell 2.8 percent in January, a steeper decline than expected. Stocks were little impacted by the data.

Reduce Your Tax Liability with IRA Contributions

Most taxpayers crack a smile during tax season because they know that they're getting a refund. The average tax refund last year was a whopping three thousand dollars, which is enough to make anyone smile. If you're one of the few people who will owe this year and want to soften the blow a little bit, here's one of the few things you can do to reduce your tax liability--make a contribution to a Traditional IRA.

[In Pictures: 10 Smart Ways to Improve Your Budget.]

How much you save will depend on your tax bracket. One caveat, before you make any decisions, consult with a tax professional. Your situation may have wrinkles we don't cover and the last thing I want you to do is make a mistake that costs you money. A tax professional will be able to sit down with you, map out your situation, and give you the proper direction you need. We're just hoping to open your eyes to an idea that might help you out.

Deductible Traditional IRA Rules

In order to make a deductible contribution to a Traditional IRA, which is the whole point of this strategy, you have to satisfy certain conditions. Anyone with earned income can make a contribution to a Traditional IRA, but depending on the retirement package your employer offers and your income, your deduction may not be tax deductible. If it's not tax deductible, then it's really not worth investigating for the purposes of reducing your taxes.

Contribution limits: The 2010 limit for IRA contributions is $5,000 if you are age 49 and under, $6,000 for age 50 and older. The limits are shared across Traditional and Roth IRAs, so if you made a $1,000 contribution to a Roth IRA then you can only make a $4,000 contribution to a Traditional IRA (assuming you are 49 and under).

[In Pictures: 12 Money Mistakes Almost Everyone Makes]

Deductibility rules: If you are covered by a retirement plan at work, your subject to these modified adjusted gross income phaseouts:

--For single filers: $55,000 to $66,000

--For head of household filers: $55,000 to $66,000

--For married couples filing jointly: $89,000 to $109,000

--For married couples filing separately: $0 to $10,000

If you are a single filer that earned less than $55,000, then your entire Traditional IRA contribution is tax deductible. If you earned over $66,000, you can't deduction your contribution (you can still make it, but it has no immediate tax benefits).

Contribution Tips

When you make a contribution, be sure to let your administrator know that you're making a contribution for the 2010 tax year. By default, they will characterize the contribution as a 2011 contribution because you made it in 2011. Once you've made the contribution, remember to include it on Line 32 of your Form 1040 (Line 17 on a Form 1040A) so you get the tax benefit.

You do not need to itemize deductions to get this deduction. What if you forgot to indicate your contribution was for 2010? It shouldn't be a problem, simply send them a note that you'd like them to "recharacterize" your contribution as a 2010 contribution. As long your original contribution date was before the tax deadline, they can easily recharacterize it as a 2011 contribution.

Jim Wang writes about personal finance at Bargaineering.com. When he's not tackling money issues, he's usually looking forward to his next vacation and writing about it at Wanderlust Journey.

HSBC 2010 profit up, but disappoints investors

LONDON – HSBC Holdings PLC increased its dividend Monday as it reported that profits more than doubled last year, but the bank disappointed investors by falling short of analysts' forecasts and cutting its future profitability predictions.

Shares in the bank dropped 5 percent by early afternoon as investors focused on the negatives rather than a rise in profits to $13.2 billion, from $5.8 billion the year before.

Pretax profit was up 169 percent to $19 billion. HSBC's investment banking arm was responsible for approximately half the profits as loan impairment charges dropped to the lowest level since 2006.

Revenue was up 2 percent to $80 billion, constrained by reduced loan balances in the United States, lower trading income in Global Banking and Markets and adverse fair value movements on hedges.

The bank announced a final dividend for 2010 of 12 cents, up from 10 cents, and said there would be a higher payout of 9 cents a quarter for the first three quarters of 2011. It also promised a benchmark payout ratio of 40-60 per cent of attributable profits in future.

But new Chief Executive Stuart Gulliver also warned that future profitability would be constrained by new capital rules, leading the bank to lower its return on target equity range to 12-15 percent from 15-19 percent.

"Apart from the profit numbers being slightly shy of analyst estimates, a further triple whammy has dented sentiment in the form of a lower proposed return on equity, a deterioration of the cost/income ratio and further pressure on margins, particularly in its important Asian region," said Richard Hunter, head of U.K. equities at Hargreaves Lansdown Stockbrokers.

HSBC stock was down 5 percent at 675 pence in early afternoon trade on the London Stock Exchange.

Ian Gordon, an analyst at Exane BNP Paribas, said that the earnings miss was broad-based, with results below expectations in every customer group — personal financial services, commercial banking, global banking and markets and global private banking.

Hunter said one positive, in line with reports from Barclays PLC and state bailout recipients Royal Bank of Scotland PLC and Lloyds Banking Group PLC last week, was the fall in loan impairment charges.

Loan impairment charges at HSBC dropped $12.4 billion to $14 billion, with the greatest improvement in HSBC's credit card and consumer finance businesses in the United States.

The results of the "Big Four" British banks have been mixed.

Barclays PLC, which shunned state assistance at the height of the financial crisis, reported a strong rise in 2010 net profit to 3.56 billion pounds from 2.63 billion in 2009.

RBS, Britain's largest government-owned bank, missed analysts' expectations with a 1.1 billion pound full-year loss despite returning to profit in the final quarter of the year.

Lloyds also disappointed with a net loss of 258 million pounds ($415 million) for the full year on the bank of exposure to Ireland's financial crisis, compared with a 2.9 billion pound profit in 2009.

HSBC awarded Gulliver, who took over as CEO on Jan. 1, a 5.2 million pound bonus in deferred shares for his 2010 performance, down from the 9 million pounds he was granted in 2009.

Chairman Douglas Flint said the lower rate reflected the shift in his role last year, when he went from being solely head of Global Banking and Markets, HSBC's investment-banking arm, to also running its private bank and serving as European chairman.

Libya oil chief: Production down 50 percent

CAIRO – Libya's oil chief said Monday that production had been cut by around 50 percent, and argued it was "safe" for foreign oil workers to return after a mass exodus sparked by Moammar Gadhafi's increasingly violent campaign to retain control of the country.

The assurances by Shukri Ghanem, the head of the state-run National Oil Co. and Libya's de facto oil minister, came as uncertainty swirled about the state of the OPEC member's production and who was actually in control of the brunt of the nation's oil. Libya sits atop Africa's largest proven reserves.

The country is the only member of the Organization of the Petroleum Exporting Countries so far seriously affected by the protests roiling the Arab world, and unrest there has sent shudders through global oil markets.

Ghanem claimed that the government in Tripoli remained firmly in control of the country's oil installations — from fields to refineries and pipelines. He rejected an assessment put forward by EU Energy Commissioner Guenther Oettinger on Monday that Gadhafi had lost control of the country's main oil and gas fields.

"He does not control the oil," Ghanem said, referring to Oettinger. "You can believe who you want, but I am the chairman of the National Oil Company and I know what we produce," he told The Associated Press in a telephone interview.

Ghanem conceded, however, that production at some fields, including in the Hamada area, had been halted, but attributed the disruption to the departure of foreign workers.

"Of course there is a drastic cut" in production, he said. "The main reason for the oil production to come down is the panic of foreign laborers, who felt they had to leave. I think all laborers will be safe if they return."

The comments came hours after officials in Libya's east, which has thrown off Gadhafi's rule, said that the Tobruk port had reopened and one China-bound tanker was being loaded with 1 million barrels of crude. Another tanker, destined for Italy, was waiting to pick up its cargo of 600,000 barrels of Libya's light sweet crude — a refiner's favorite.

"The terminal (at Tobruk) is working at 100 percent," Rajab Sahnoun, an official with the Arabian Gulf Oil Co., which is based in the eastern city of Benghazi, told the AP.

Sahnoun also said that at least two of the major eastern fields, Sarir and Misla, were still producing, though at slightly reduced capacity. He was not able to say how much production was down at those fields, but noted that the 34-inch pipeline to the terminal was operating normally. The terminal can store 4 million barrels of crude, he said.

Another Agoco official, Ali Faraj, who works in the emergency operations room at the facility, said the company's production of roughly 220,000 barrels per day was largely unaffected.

"A drop of 5,000 or 6,000 barrels per day, in our experience, is not a drop, really," Faraj said.

Libya produces about 1.6 million barrels per day of crude oil, and about 85 percent of its exports are Europe-bound.

Aside from uncertainty about a drop in Libya's exports, oil markets are also panicked that the unrest in the Arab world could spread to other, bigger, OPEC members such as Saudi Arabia or Kuwait, prompting a price rally that could undermine global recovery efforts.

The head of Saudi Arabia's state-run oil giant, Saudi Aramco, said his company had already stepped in to offset the drop in Libyan exports. Khalid Al Falih, however, declined to specify how much additional oil the company had supplied.

Ensuring market stability has long been a source of pride for Saudi Arabia, the de facto leader of the 12-nation bloc that supplies about 35 percent of the world's crude. The country's information minister said Monday that the Cabinet had reaffirmed Saudi Arabia's role in the market and that it was continuing consultations with OPEC members to ensure stability of supply.

Iran, however, which holds OPEC's revolving presidency, cautioned Riyadh against "hasty" steps by injecting new volumes into the market, the official IRNA news agency reported.

Oil markets have rallied over the past couple of weeks because of the broader unrest in the Arab world, and spiked late last week because of Libya. Saudi Arabia's comments Monday helped cool the futures market slightly, with the U.S. crude futures benchmark holding at around $98 per barrel while its London counterpart, Brent, clung to a precariously high level of $113 per barrel.

The spread between the two contracts reflected the fears about Libya. Crude from that country is of roughly the same quality as Brent, and questions about how much control Gadhafi had over his key export unnerved global markets.

EU Energy Commissioner Oettinger said during a meeting of EU energy ministers Monday that control over much of the oil and gas fields is in the hands of regional families or provisional regional leaders that have emerged from the revolt and chaos. But he also spoke out against a proposal put forward by Germany's foreign minister that the EU should consider a total ban on payments to Libya including for oil deliveries.

Oettinger argued that since Gadhafi already lost much of the control over the oil and gas fields, imposing a ban on oil imports would be bad.

"We'd be punishing the wrong people potentially and we would be discarding the regional aspects if we just stopped imports altogether," he said. "We might actually be punishing people who have changed their ways, who are acting better."

The sanctions issue also raises questions about who would be paid for the Libyan crude given the uncertainty in the country and the efforts to isolate Gadhafi's regime.

A Libyan oil official in the east said that February loading cargoes had already been paid for, but that those for March had not. The official, speaking on condition of anonymity because of the sensitivity of the matter, said that if and when Gadhafi falls, the money would go to the new government. Barring that possibility at present, the payment could be channeled to the regional government in Benghazi, he said.

But experts questioned whether that option would be agreeable to international oil companies who would have no real assurances that they were paying the proper authorities. In addition, if a new government was to be set up, it may request the money that was already paid, for example, to the regional government.

A third option would be for the sale proceeds to be put into some sort of escrow account until some clarity emerges in the country.

Ghanem, Libya's de facto oil minister, said that tankers were loading at the various Libyan ports — indicating that all were operational though that could not be immediately independently confirmed.

"I cannot say its business as usual, or production as usual," Ghanem said. But he stressed that the NOC was firmly in control and coordinating the production, refining and transportation of crude oil in the country.

Ghanem said that for production to return to normal, the foreign workers needed to return.

But international companies, if they haven't done so already, are still trying to pull their expatriate workers from the embattled nation.

Pro-Gadhafi militias and mercenaries have made travel in the country unsafe, and few foreigners appear inclined to stay in the country to see how the political situation will play out given that Gadhafi has vowed a fight to the death.

Italy's Eni SpA, which before the crisis produced 244,000 barrels of gas and oil equivalent a day in Libya, about a quarter of the country's exports, said it was continuing to evacuate its employees.

The company last week announced that supplies of natural gas from Libya, through the Greenstream pipeline, had been suspended. But Eni said it was able to meet its customers' demand for gas. Up until the crisis, Libya supplied around 10 percent of Italy's gas.

Oil workers for Britain's OPS International oil field services company made it across the Egyptian border in a convoy of buses across the desert late Sunday night, and another bus full of oil workers reached the Libyan port of Ras Lanuf Monday and boarded a ship bound for Malta, said company chairman Gavin de Salis.

Meanwhile, France's Total SA said it evacuated all expatriate oil workers in the country, and their families, said spokeswoman Phenelope Semavoine. She said the company "continues to reduce some of our production" of Libya oil but declined to provide more detail.

Repsol spokesman Kristian Rix said Monday that the company is now "declining to give production figures because the situation is unclear and communications are difficult." He said the company was able to get the rest of its employees and contractors out of remote Libyan desert production areas over the weekend. In all, about 200 employees have been evacuated since the crisis began.

Fewer people sign contracts to buy homes in Jan.

Fewer Americans signed contracts to buy homes in January, the latest evidence that the housing market is struggling to rise above depressed levels.

The National Association of Realtors says its index of sales agreements for previously occupied homes fell 2.8 percent last month to a reading of 88.9, the second straight monthly decline.

The reading was higher than the 75.9 reading from June, the low point since the housing bust. But it's below 100, which is considered a healthy level. The last time it reached that point was in April, the final month people could qualify for a home-buying tax credit.

Sales of previously owned homes fell last year to the lowest level in 13 years. Economists say it will be years before the housing market fully recovers. High unemployment, strict lending standards, and a record number of foreclosures are deterring potential buyers, who fear home prices haven't reached the bottom.

Contract signings of previously owned homes are usually a good indicator of where the housing market is heading. That's because there's usually a one- to two-month lag between a sales contract and a completed deal.

Steven Wood, chief economist for Insight Economics, said the tax credits have pulled home sales on a "rollercoaster ride over the past two years" and that sales have not yet found a steady level.

The Realtors group had reported a modest 2 percent increase in December, which would have marked the fifth such uptick in the previous six months. But the trade association, which began tracking contract signings of homes in 2001, revised its figures to show that signings fell in December from November by nearly 3.2 percent.

Jennifer Lee, senior economist for BMO Capital Markets, said the dismal contract numbers in January is "clearly bad news" for the nation's housing industry.

"And we can't blame weather as three of the four regions saw a decline," she said.

Prices and sales of previously occupied homes have painted a grim picture of that portion of the housing market, which historically accounts for roughly 85 percent of home sales.

Housing prices in all but one of the 20 cities tracked by the Standard & Poor's/Case Shiller index fell in December from November. Eleven of the markets — stretching from Seattle to Miami — hit their lowest point since the housing bubble burst in 2006 and 2007.

Sales of previously occupied homes rose slightly last month. But the seasonally adjusted annual pace of 5.36 million is still far below the 6 million homes a year needed to maintain a healthy market.

Best Buy, Home Depot find tough times in China

SHANGHAI – Home Depot is no longer open for home improvements in Beijing. Best Buy Inc. decided its brand name electronics stores were not best for China.

This may well be the world's biggest and fastest growing consumer market, but foreign retailers are finding China is no easy sell as tough competition and a boom in online shopping prompt some big names to pack up or drastically alter their market strategy.

Minneapolis-based Best Buy opened its flagship store and other outlets in Shanghai just a few years ago, to great fanfare. This week it closed all nine of its brand name stores in China, stunning employees and customers: On Friday, hundreds of people were lined up outside the city's biggest store to seek help with returns and other customer services.

Best Buy says it plans to increase the number of its Five Star outlets — acquired through the company's purchase of provincial retailer Jiangsu Five Star Appliance Co. in 2006 — to about 210 by early 2012. It also is studying more profitable options for its Best Buy-branded outlets and plans to reopen two of them.

"We at Best Buy will not withdraw from the Chinese market. We will try to find new ways to develop," said a notice posted outside its flagship store in Shanghai's busy downtown Xujiahui shopping district.

Despite its expanded Five Star presence, shuttering the big blue outlets in some of Shanghai's choicest locations signals the company misjudged the local market, analysts say.

"My sense is that their first error was to use a model similar to the one they use in the U.S.," said Torsten Stocker, vice president of the consultancy Monitor Group. "Maybe their people were good at doing what Best Buy does back in America but not at operating a retailer in China."

Last month, Home Depot closed its last store in Beijing, one of several outlets shut down since 2009. The world's biggest home improvement retailer has retained outlets in some key provincial cities, where costs are presumably lower and competition perhaps less intense.

Meanwhile, regulators recently ordered up to 500,000 yuan ($75,900) in fines for hypermarket retailers Carrefour and Wal-Mart for over charging on items ranging from underwear to dumpling flour — a sore point when authorities are jittery over inflation. Shanghai newspaper reports also criticized Carrefour, a French chain, of not paying its employees fair wages.

Some foreign retailers are thriving in China. KFC and Pizza Hut owner Yum Brands Inc. saw its annual operating profit surge 26 percent last year, pushing toward the $1 billion mark, thanks to the voracious Chinese appetite for western fast foods. The Shanghai outlets of foreign fashion retailers like H&M and Zara are often packed.

As Best Buy stages its strategic retreat from China's richest city, Apple Inc. reportedly plans a yet bigger shop right on Shanghai's famous Nanjing Rd. to help accommodate weekend crowds jammed into two recently opened spacious stores.

With incomes of many workers rising by more than 10 percent a year, China's growing affluence makes it a market few companies can afford to ignore. But hitting the right notes with Chinese consumers is crucial, and not always easy, analysts say.

Chinese customers balked at paying a premium for Best Buy's offer of a pleasant store experience and helpful service, including its Geek Squad computer troubleshooters, said Liu Hongjiao, a senior consultant with Analysys International Solution in Beijing.

While its competitors like Suning Appliance and its archrival Gome Electrical Appliances Holdings have suppliers that take payments after their products are sold, in Shanghai Best Buy had no such advantage. Add to that costs for labor and for retail space and the overhead was just not competitive, Liu said.

"Foreign companies are sometimes bolder than local ones, but the local companies know more about the local customers. They are better at controlling costs and keeping prices low," said Ding Wenjin, an analyst with Dongguan Securities in the southern city of Dongguan.

"Especially in these days of serious inflation, people are more sensitive about prices," Ding said.

In China, Best Buy has also been bested by local competitors in online sales in a market where, increasingly, purchases are done with the click of mouse.

From towels and T-shirts to microwaves and cell phones — Chinese go online to comparison shop and then wait for their purchases to be sent, cash-on-delivery, straight to their homes or offices.

Online retail sales doubled in China last year from 2009, to 513.1 billion yuan ($77.7 billion), according to figures from the China E-commerce Research Center.

Of course, in a shopping-obsessed city like Shanghai, there is still plenty of retailing to be done: companies like Apple and Zara, which manufacture their own products, draw customers with their unique products, analysts say.

"Their market positioning is high, because their products are different from local brands," said Ding. "However, if you want to buy something like a Nokia cell phone, that's different. It will be the same whether it's from Best Buy, Suning or online," he said.