Baseball-No players voted to Hall of Fame, Bonds and Clemens snubbed

Jan 9 (Reuters) - No one was elected to the Baseball Hall of Fame on Wednesday, with all-time home run leader Barry Bonds and seven-time Cy Young winner Roger Clemens snubbed over suspicion they used performance enhancing drugs.
Bonds was named on 36.2 percent of the ballots, and Clemens 37.6, well short of the 75 percent of ballots required in voting by members of the Baseball Writers' Association of America.
Closest to winning election was former Houston Astros player Craig Biggio, who received 68.2 percent of the vote, falling 39 votes short of election. (Reporting by Larry Fine in New York; Editing by Frank Pingue)

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No players voted to Hall of Fame, Bonds and Clemens snubbed

(Reuters) - No one was elected to the Baseball Hall of Fame on Wednesday, with all-time home run leader Barry Bonds and seven-time Cy Young winner Roger Clemens snubbed over suspicion they used performance enhancing drugs.
Bonds was named on 36.2 percent of the ballots, and Clemens 37.6, well short of the 75 percent of ballots required in voting by members of the Baseball Writers' Association of America.
Closest to winning election was former Houston Astros player Craig Biggio, who received 68.2 percent of the vote, falling 39 votes short of election. (Reporting by Larry Fine in New York; Editing by Frank Pingue)

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Bonds, Clemens rejected; no one elected to BB Hall

NEW YORK (AP) — Steroid-tainted stars Barry Bonds, Roger Clemens and Sammy Sosa were denied entry to baseball's Hall of Fame, with voters failing to elect any candidates for only the second time in four decades.
In a vote that keeps the game's career home run leader and one of its greatest pitchers out of Cooperstown — at least for now — Bonds received just 36.2 percent of the vote and Clemens 37.6 in totals announced Wednesday by the Hall and the Baseball Writers' Association of America, both well short of the 75 percent necessary. Sosa, eighth on the career home run list, got 12.5 percent.
"Curt Schilling made a good point, everyone was guilty. Either you used PEDs, or you did nothing to stop their use," Hall of Famer Mike Schmidt said in an email to The Associated Press. "This generation got rich. Seems there was a price to pay."
Bonds, Clemens and Sosa were eligible for the first time and have up to 14 more years on the writers' ballot to gain baseball's highest honor.
"After what has been written and said over the last few years I'm not overly surprised," Clemens said in a statement he posted on Twitter.
Craig Biggio, 20th on the career list with 3,060 hits, topped the 37 candidates with 68.2 percent of the 569 ballots, 39 shy of election. Among other first-year eligibles, Mike Piazza received 57.8 percent and Schilling 38.8.
Jack Morris led holdovers with 67.7 percent. He will make his final ballot appearance next year, when fellow pitchers Greg Maddux and Tom Glavine along with slugger Frank Thomas are eligible for the first time.
Two-time NL MVP Dale Murphy received 18.6 percent in his 15th and final appearance.
"With 53 percent you can get to the White House, but you can't get to Cooperstown," BBWAA secretary-treasurer Jack O'Connell said. "It's the 75 percent that makes it difficult."
It was the eighth time the BBWAA failed to elect any players. There were four fewer votes than last year and five members submitted blank ballots.
"It's a tough period for evaluation, that's what this chalks up to," Hall President Jeff Idelson said. "Honestly, I think that any group you put this to would have the same issues. ... There's always going to be discussion and concern about players who didn't get in, but at the end of the day it's a process and again, a snapshot in time isn't one year, it's 15 with this exercise."
Bonds, baseball's only seven-time Most Valuable Player, hit 762 home runs, including a record 73 in 2001.
"It is unimaginable that the best player to ever play the game would not be a unanimous first-ballot selection," said Jeff Borris of the Beverly Hills Sports Council, Bonds' longtime agent.
Clemens, the only seven-time Cy Young Award winner, is third in career strikeouts and ninth in wins.
"To those who did take the time to look at the facts," Clemens said, "we very much appreciate it."
Since 1961, the only years the writers didn't elect a candidate were when Yogi Berra topped the 1971 vote by appearing on 67 percent of the ballots cast and when Phil Niekro headed the 1996 ballot at 68 percent. Both were chosen the following years when they achieved the 75 percent necessary for election.
The other BBWAA elections without a winner were in 1945, 1946, 1950, 1958 and 1960.
"Next year, I think you'll have a rather large class and this year, for whatever reasons, you had a couple of guys come really close," Commissioner Bud Selig said at the owners' meetings in Paradise Valley, Ariz. "This is not to be voted to make sure that somebody gets in every year. It's to be voted on to make sure that they're deserving. I respect the writers as well as the Hall itself. This idea that this somehow diminishes the Hall of baseball is just ridiculous in my opinion."
Players' union head Michael Weiner called the vote "unfortunate, if not sad."
"To ignore the historic accomplishments of Barry Bonds and Roger Clemens, for example, is hard to justify. Moreover, to penalize players exonerated in legal proceedings — and others never even implicated — is simply unfair. The Hall of Fame is supposed to be for the best players to have ever played the game. Several such players were denied access to the Hall today. Hopefully this will be rectified by future voting."
Three inductees were chosen last month by the 16-member panel considering individuals from the era before integration in 1947: Yankees owner Jacob Ruppert, umpire Hank O'Day and barehanded catcher Deacon White. They will be enshrined during a ceremony in Cooperstown on July 28, when the Hall also will honor Lou Gehrig and Rogers Hornsby among a dozen players who never received formal inductions because of restrictions during World War II.
Bonds has denied knowingly using performance-enhancing drugs and was convicted of one count of obstruction of justice for giving an evasive answer in 2003 to a grand jury investigating PEDs. Clemens was acquitted of perjury charges stemming from congressional testimony during which he denied using PEDs.
Sosa, who finished with 609 home runs, was among those who tested positive in MLB's 2003 anonymous survey, The New York Times reported in 2009. He told a congressional committee in 2005 that he never took illegal performance-enhancing drugs.
The BBWAA election rules say "voting shall be based upon the player's record, playing ability, integrity, sportsmanship, character, and contributions to the team(s) on which the player played."
An Associated Press survey of 112 eligible voters conducted in late November after the ballot was announced indicated Bonds, Clemens and Sosa would fall well short of 50 percent. The big three drew even less support than that as the debate raged over who was Hall worthy.
Voters are writers who have been members of the BBWAA for 10 consecutive years at any point.
BBWAA president Susan Slusser of the San Francisco Chronicle said she didn't vote for Bonds, Clemens or Sosa.
"The evidence for steroid use is too strong," she said.
As for Biggio, "I'm surprised he didn't get in."
MLB.com's Hal Bodley, the former baseball columnist for USA Today, said Biggio and others paid the price for other players using PEDs.
"They got caught in the undertow of the steroids thing," he said.
Bodley said this BBWAA vote was a "loud and clear" message on the steroids issue. He said he couldn't envision himself voting for stars linked to drugs.
"We've a forgiving society, I know that," he said. "But I have too great a passion for the sport."
Mark McGwire, 10th on the career home run list, received 16.9 percent on his seventh try, down from 19.5 last year. He received 23.7 percent in 2010 — a vote before he admitted using steroids and human growth hormone.
Rafael Palmeiro, among just four players with 500 homers and 3,000 hits along with Hank Aaron, Willie Mays and Eddie Murray, received 8.8 percent in his third try, down from 12.6 percent last year. Palmeiro received a 10-day suspension in 2005 for a positive test for performance-enhancing drugs, claiming it was due to a vitamin vial given to him by teammate Miguel Tejada.
While there are exhibits about the Steroids Era at the Hall, the plaque room will remain without Bonds and Clemens, who join career hits leader Pete Rose on the outside looking in. There were four write-in votes for Rose, who never appeared on the ballot because of his lifetime ban that followed an investigation of his gambling while manager of the Cincinnati Reds.
Morris increased slightly from his 66.7 percent last year, when Barry Larkin was elected. Morris could become the player with the highest-percentage of the vote who is not in the Hall, a mark currently held by Gil Hodges at 63 percent in 1983.
Several players who fell just short in the BBWAA balloting later were elected by either the Veterans Committee or Old-Timers' Committee: Nellie Fox (74.7 percent on the 1985 BBWAA ballot), Jim Bunning (74.2 percent in 1988), Orlando Cepeda (73.6 percent in 1994) and Frank Chance (72.5 percent in 1945).
The ace of three World Series winners, Morris had 254 victories and was the winningest pitcher of the 1980s. His 3.90 ERA, however, is higher than that of any Hall of Famer.

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Brazil: Indigenous squatters resist eviction

RIO DE JANEIRO (AP) — Police in riot gear surrounded a settlement of indigenous people next to Rio de Janeiro's storied Maracana stadium on Saturday, preparing to evict them as soon as an expected court order arrived.
The site commander, police Lt. Alex Melo, explained officers were "waiting for the order, and understand it can come at any time."
But the order still had not arrived after a tense, daylong standoff. Frightened residents wondered why law enforcement came without an order to enter, and federal public defenders who have worked on the protracted legal battle over the space tried to mediate.
"This is absolutely arbitrary. They can't enter without an order," said public defender Daniel Macedo. "If they did, they could be charged with a crime, with abuse of authority. It could be a blood bath, which could look really bad for the government of Brazil and the state."
The indigenous group includes men and women of about 10 ethnicities — mostly Guarani, Pataxo, Kaingangue and Guajajara — who have been squatting for years in 10 homes they built on the site of an old Indian Museum, abandoned since 1977.
The police arrived early in the morning and surrounded the compound. By noon, the residents locked the main gate. As supporters arrived, the Indians lowered a wooden ladder over the brick wall surrounding the complex to let them in, later pulling the ladder back up.
During the nerve-racking wait on Saturday, the squatters painted their faces and bodies and donned elaborate headdresses, at times playing rattles and flutes or whistling bird calls. Some displayed ornamental bows and arrows over the wall and through the gate separating them from the black-clad police in body armor.
The settlement and the remains of the building that lodged the museum are adjacent to the Maracana, which is being refurbished to host the opening and closing ceremonies of the 2016 Olympics and the final match of the 2014 World Cup.
Blighted streets around the stadium are also to undergo a vast transformation to become a shopping and sports entertainment hub, complete with parking lots. Most of a favela, or shantytown, about 500 meters away has already been demolished to make way for the new development.
The governor of Rio de Janeiro, Sergio Cabral, told a news conference in October that the building's razing is necessary for hosting the World Cup.
"The Indian Museum near the Maracana will be demolished," Cabral said then. "It's being demanded by FIFA and the World Cup Organizing Committee. Long live democracy, but the building has no historical value. We're going to tear it down."
However, a letter from FIFA's office in Brazil to the federal public defender's office published in the newspaper Jornal do Brazil said that the soccer authority "never requested the demolition of the old Indian Museum in Rio de Janeiro."
The indigenous have been resisting their possible eviction for months, operating with little or no information from authorities about what to expect, or what alternatives are available to them, said their leader Carlos Tukano.
"I know they are going to come in, and our proposal is to remain firm, but without moral or physical aggression," he said. "We cannot fight them with bows and arrows; they are armed."
Most of the approximately 30 Indians who live there and about 200 sympathizers packaged the compound Saturday to discuss how to peacefully deal with a possible police action. Several men, masking their faces with shirts, climbed high into the upper floors of the tumble-down building and surveyed the scene with professional bows and arrows.
The squatters believe they have history and the law on their side.
The crumbling mansion with soaring ceilings that housed the old museum was donated by a wealthy Brazilian to the government in 1847 to serve as a center for the study of indigenous traditions.
After the museum closed more than three decades ago, Indians of various ethnicities started using it as a safe place to stay when they came to Rio to pursue an education, sell trinkets in the streets or get medical treatment.
"They would come here without money, without knowing anyone, and sleep in the streets," Tukano explained. He himself is from a village deep in the Amazon. "We made this our space."
The head of Rio state legislature's Human Rights Commission, representative Marcelo Freixo, called for the need to stay calm and avoid violence.
"Conflict here is not in anyone's interest," he said before addressing the squatters and supporters inside the compound. "If there is a judicial order, the police will have to enforce it, but we have avoid any injuries with dialogue."
As he spoke, state public defender Eduardo Newton proposed an alternative legal tactic.
Under state law, Newton said, there can't be a mass eviction without proper legal proceedings. With group approval, he began gathering documents that would prove that more than 10 families lived on the grounds so he could try for a rushed stay on the eviction notice.
Police, meanwhile, police continued to stand guard the compound.

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Haiti quietly marks quake's 3rd anniversary

PORT-AU-PRINCE, Haiti (AP) — President Michel Martelly urged Haitians to recall the tens of thousands of people who lost their lives in a devastating earthquake three years ago, marking the disaster's anniversary Saturday with a simple ceremony.
Former U.S. president Bill Clinton joined Martelly later in the day for a similarly quiet wreath-laying commemoration.
"Haitian people, hand in hand, we remember what has gone," Martelly said in the morning as a gigantic Haitian flag flew at half-staff before him on the front lawn of the former National Palace, a pile of tangled steel reinforcement bars nearby. "Hand in hand, we're remembering, we're remembering Jan. 12."
Martelly thanked other countries and international organizations for their help since the Jan. 12, 2010, disaster.
Clad in black, several dozen senior government officials gathered where the opulent white palace stood before it collapsed in the temblor and was later demolished. Foreign diplomats and Czech supermodel Petra Nemcova, earlier named by Martelly as one of Haiti's goodwill ambassadors, were also there.
In the speech, Martelly announced a government contest seeking designs for a monument to honor those who died in the quake. He also said the government had just released a new construction code aimed at ensuring new buildings are seismically resistant in hopes of preventing the same kind of catastrophic damage in any future earthquake.
In the late morning, Clinton, the U.N. special envoy to Haiti, joined Martelly and Prime Minister Laurent Lamothe in placing a wreath at a mass burial site north of the capital of Port-au-Prince. None of the three spoke at the event.
Clinton expressed hope about Haiti's future in brief comments to reporters after the ceremony.
"I think that you will see, particularly in the economic sphere, a lot more in the coming year, where Haiti is projected to have the highest growth rate in the Caribbean," he said. "Well, we hope to speed up some of the infrastructure.  We have to repair the agriculture and ... build a lot more houses. We've got to get those people out of those tents."
Clinton, Martelly and Lamothe met privately in the afternoon.
Haiti's previous presidential administration said 316,000 people were killed but no one really knows how many died. The disaster displaced more than a million others.
Most of the rubble created by the quake has since been carted away but more than 350,000 people still live in grim displacement camps.
Many people had hoped the reconstruction effort would have made more headway by now, but progress has been stymied by political paralysis, the scale of devastation and a trickle of aid.
Jan. 12 was observed as a national holiday the last two years to remember the quake. This year, the government said the day would no longer be a holiday but called for the Haitian flag to be flown at half-staff and for nightclubs and "similar establishments" to close.
The anniversary this year has been used by Haiti observers to criticize the reconstruction process and by foreign aid groups to promote their work and raise money. The European Union announced Saturday it was giving Haiti 30.5 million euros for displaced people still living in camps, as well as victims of a subsequent cholera epidemic and those affected by Hurricane Sandy late last year.
The Clinton Foundation also announced that it was contributing about 40 solar-powered streetlights to a housing community north of Port-au-Prince for deaf families who were relocated there.
But for some Haitians, it was just another day.
"We can't remain focused on January 12th," said Asaie St. Louis, a 56-year-old teacher and devout church-goer, Bible in hand. "It's passed already.

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Mexico dog mutilated by drug traffickers recovers

MEXICO CITY (AP) — A dog reportedly mutilated by Mexican drug traffickers is recovering at a sanctuary for abused and abandoned dogs.
Sanctuary owner Patricia Ruiz says Pay de Limon, or Lemon Pie, was fitted with prosthetic front legs last year. The Belgian shepherd mix now walks, jumps and runs.
Ruiz says the dog was left in a trash can to die after his two fronts legs were cut off. She says people who asked her to help Pay de Limon told her that drug traffickers used the dog to practice for mutilating humans.
Pay de Limon is one of 128 abused dogs living at the Milagros Caninos sanctuary. Dogs on wheelchairs, blind, deaf or ill frolic and run around the huge sanctuary in the southern part of Mexico City.

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NFL-Steelers cut Rainey after domestic violence arrest

Jan 10 (Reuters) - The Pittsburgh Steelers have cut rookie running back Chris Rainey following his arrest for a domestic battery, the National Football League team said on Thursday.
"Chris Rainey's actions this morning were extremely disappointing," said Steelers general manager Kevin Colbert in a statement on the team's website. "Under the circumstances and due to this conduct, Chris will no longer be a member of the Pittsburgh Steelers."
Rainey was charged by Gainesville, Florida police with a single count of misdemeanor simple battery following an incident with his girlfriend, according to media reports.
A fifth round selection of the Steelers in last season's draft, Rainey was used primarily on specialty teams during his rookie campaign, returning 39 kickoffs for 1,035 yards while filling in at running back.

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AP Source: Browns meet 2nd time with Whisenhunt

CLEVELAND (AP) — A person familiar with the meeting says the Cleveland Browns are having a second interview with former Arizona coach Ken Whisenhunt about their vacancy.
Whisenhunt, who was recently fired after six seasons with the Cardinals, is meeting with the Browns on Thursday, said the person who spoke to The Associated Press on condition of anonymity because of the sensitivity of the search. The team met with Whisenhunt last week in Arizona. He went 45-51 in six seasons with the Cardinals and led them to one Super Bowl appearance.
The Plain Dealer was first to report Whisenhunt's second interview.
The 50-year-old worked as a special teams coach with the Browns in 1999, when they returned to the NFL as an expansion team.

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Apple CEO visits China for second time in less than a year

SHANGHAI (Reuters) - Apple Inc's Chief Executive Tim Cook is meeting with partners and government officials in China on his second visit to the firm's second-largest market in less than a year.
China is Apple's fastest-growing market, with the maker of the popular iPhone and iPad opening a raft of retail stores last year. Last month, Apple sold more than 2 million iPhone 5s in the country in just three days, the company's best ever smartphone launch in the country.
Despite the roaring success of iPhone sales in China, analysts say the company's longer-term outlook in the market may hinge on expanding its partners to include China Mobile Ltd, the country's top telecoms carrier.
"Tim is in Beijing meeting with government officials and partners. China is an important market for us and we look forward to continued customer excitement and growth here," Apple's spokeswoman in China Carolyn Wu said on Wednesday.
She declined to say whether or not Cook would be meeting with China Mobile executives.
In China, the iPhone is currently sold through Apple's seven stores, resellers and through China Unicom and China Telecom - which together have fewer than half the mobile subscribers of bigger rival China Mobile.
A deal with China's biggest carrier is seen as crucial to improving Apple's distribution in a market of 290 million users. Apple has been in talks on a tie-up with China Mobile for four years.
China Mobile and Apple initially said they were separated only by a technical issue - as the Chinese carrier runs a different 3G network from most of the world - but that has evolved into a broader and more complex issue of revenue-sharing.
On Tuesday, Cook met with the Minister of Industry and Information Technology, Miao Wei, where they discussed the development of the smartphone industry and innovation trends, according to a statement posted on the ministry's website.
China, Apple's biggest market after the United States, currently accounts for about 15 percent of its annual revenue.

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AP Exclusive: Richardson pressing NKorean test ban

PYONGYANG, North Korea (AP) — Former New Mexico Gov. Bill Richardson said Wednesday that his delegation is pressing North Korea to put a moratorium on missile launches and nuclear tests and to allow more cell phones and an open Internet for its citizens.
Richardson told The Associated Press in an exclusive interview in Pyongyang that the group is also asking for fair and humane treatment for an American citizen detained in North Korea. Also on the trip is Google Executive Chairman Eric Schmidt.
"The citizens of the DPRK (North Korea) will be better off with more cell phones and an active Internet. Those are the ... messages we've given to a variety of foreign policy officials, scientists" and government officials, Richardson said.
Most North Koreans have never logged onto the Internet, and the country's authoritarian government strictly limits access to the World Wide Web.
Richardson has said the delegation is on a private, humanitarian trip. Schmidt, who is the highest-profile U.S. business executive to visit North Korea since leader Kim Jong Un took power a year ago, has not spoken publicly about the reasons behind the journey to North Korea.
The visit comes just weeks after North Korea launched a long-range rocket to send a satellite into space. Washington has condemned the launch as a banned test of missile technology. State Department spokeswoman Victoria Nuland said Monday "the trip is ill-advised," and another State spokesman reacted to Richardson's latest remarks by referring to Nuland's statement again.
Spokesman Peter Velasco also said from Washington that he also did not believe Richardson's delegation had been in contact with U.S. officials since they arrived in Pyongyang.
Schmidt, who oversaw Google's expansion into a global Internet giant, speaks frequently about the importance of providing people around the world with Internet access and technology. Google now has offices in more than 40 countries, including all three of North Korea's neighbors: Russia, South Korea and China, another country criticized for systematic Internet censorship.
He and Google Ideas think tank director Jared Cohen, who is also on the trip, have collaborated on a book about the Internet's role in shaping society.
Using science and technology to build North Korea's beleaguered economy was the highlight of a New Year's Day speech by leader Kim Jong Un. Still, the reality is that experts see North Korea as one of the least connected countries in the world.
On Tuesday, students at North Korea's elite Kim Il Sung University showed Schmidt how they use Google to look for information online. Surfing the Internet that way is the privilege of only a very few in North Korea.
Officials say students at the university have had Internet access since April 2010.
While university students at Kim Chaek University of Science and Technology and the Pyongyang University of Science and Technology also have carefully monitored Internet access — and are under strict instructions to access only educational materials — most North Koreans have never surfed the Web.
Computers at Pyongyang's main library at the Grand People's Study house are linked to a domestic Intranet service that allows people to read state-run media online and access a trove of reading materials culled by North Korean officials. North Koreans with computers at home can also sign up for the Intranet service. But access to the World Wide Web is extremely rare and often is limited to those with clearance to get on the Internet.
The U.S. delegation's visit takes place as the U.S. pushes to punish North Korea for launching a long-range rocket in December.
Pyongyang celebrates the launch as a peaceful bid to send a satellite into space. The U.S. and other critics, however, condemn it as a covert test of long-range missile technology, and are urging the U.N. Security Council to take action against North Korea.
Some conservatives in the United States have had harsh criticism of the Schmidt-Richardson trip.
Schmidt and Richardson "have joined the long list of Americans and others used by the Kim family dictatorship for political advantage," John Bolton, who served as U.S. ambassador to the United Nations during the George W. Bush administration, wrote in the New York Daily News.
"North Korea has repeatedly welcomed prominent Americans to help elevate its stature. It is seeking direct negotiations with Washington, for in the distorted vision of the nation's leadership, this might lead to full diplomatic recognition and 'equal' status in the world community.

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RIM conducting under-the-radar campaign to promote BlackBerry 10 at CES [video]

RIM (RIMM) isn’t conducting any big press conferences at the Consumer Electronics Show this year and it doesn’t even have a booth, but that doesn’t mean the company isn’t working hard to promote BlackBerry 10 in Las Vegas this week. Jeff Gadway, RIM’s senior manager for BlackBerry product marketing, took some time this week to talk with Forbes about his company’s upcoming new smartphone OS and how it will hopefully put RIM back on the map as a major player in the mobile industry.
[More from BGR: Is Samsung the new Apple?]
Among other things, Gadway showed off BlackBerry 10′s nifty multitasking capabilities that allow users to easily access all their important messages within the BlackBerry Hub messaging center without closing down any of the apps they currently have open. What makes this capability particularly cool is that Gadway performed it with just two finger swipes: A swipe up from the bottom of the screen to shrink the app window and a second swipe right to bring up a “peak” at his messages.
[More from BGR: iPhone 5 now available with unlimited service, no contract on Walmart’s $45 Straight Talk plan]
Gadway also showed off the BlackBerry Hub itself, which acts as a one-stop message center that lets users handle messages from multiple email accounts, BlackBerry Messenger, social networking sites and text messages all in one location. RIM has already signed up big-name social networks sites such as Facebook (FB), Twitter and LinkedIn (LNKD) for the Hub, and Gadway notes that the Hub will have an open API that will let developers easily hop on and add their own social networks to the service.
And finally, Gadway demonstrated RIM’s new keyboard technology that takes auto-complete suggestions to a whole new level by allowing users to simply swipe up on a suggested word hovering over the keyboard to insert it into a message.
All of these new functions seem very cool, and we’re very eager to see the complete BlackBerry 10 package once RIM unveils it later this month. A full video of the Forbes interview follows below.

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BSE Sensex ends lower; earnings eyed

MUMBAI (Reuters) - The BSE Sensex fell on Wednesday as two-wheeler makers such as Bajaj Auto retreated after an industry body cut its estimates for motorcycle sales, while software services exporters fell ahead of earnings announcement.
After a strong start to the year, investors are turning more cautious ahead of third-quarter earnings reports. Infosys Ltd will kick off the blue-chip reporting season on Friday.
Even more important will be the corporate profit outlook for the year, at a time of optimism that an expected interest rate cut by the Reserve Bank of India on January 29 will help support economic growth.
"Third-quarter earnings growth should be better than second-quarter, or else the market is likely to show signs of nervousness," said R.K. Gupta, managing director at Taurus Mutual Fund.
Any positive surprise cannot be ruled out, Gupta added.
The BSE Sensex fell 0.38 percent, or 75.93 points, to end at 19,666.59. However, the index is still up 1.63 percent for the month.
The broader Nifty ended 0.5 percent, or 30.20 points, lower at 5,971.50.
Shares in two-wheeler makers were hit after the country's automobile industry association cut FY13 motorcycle sales growth forecast to 3-5 percent from 5-7 percent earlier.
Bajaj Auto shares fell 1.84 percent while Hero MotoCorp lost 1.8 percent.
Software services exporters also fell. The December quarter is a seasonally weak one for technology companies, and analysts are waiting for management comments on outlook.
Infosys fell 0.55 percent while Tata Consultancy Services ended down 1.8 percent.
Larsen & Toubro Ltd extended its recent fall and ended 1.1 percent lower. Citigroup and Barclays downgraded the engineering conglomerate on Tuesday on concerns over order cancellations and weak investment cycle.
Among gainers, Tata Motors Ltd closed 4.2 percent higher after hitting a record high of 330.35 rupees, as Credit Suisse and CLSA upgraded their ratings on the stock, citing expectations of improving sales.
Oil marketing companies, among the top performers this month, gained on hopes the government will announce diesel reforms soon. Hindustan Petroleum Corp rose 4 percent while Bharat Petroleum Corp gained 1.3 percent.
Shares in Havells India Ltd gained 4.82 percent as analysts lauded the transfer of the brand name 'Havells' from one of its promoters to the company at no cost, which is expected to save on royalty payments and improve corporate governance.

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UK shares rise as U.S. earnings get off on the right foot

* FTSE 100 index rises 0.4 percent
* Miners get boost from Alcoa's positive outlook
* Banks led up by Lloyds after upgrade
* Slow sales growth hits Sainsbury's despite meeting targets
LONDON, Jan 9 (Reuters) - Britain's blue-chip stocks rose on
Wednesday, led by banking stocks and miners, as a reassuring
start to the U.S. earnings season boosted investors' appetite
for riskier assets.
Miners were set for their first gains in a week
as investors welcomed news that Alcoa, the largest
aluminium producer in the United States, posted in-line
fourth-quarter earnings after the Wall Street close on Tuesday
and offered a positive outlook for 2013.
"This uptick on the FTSE is a reaction to Alcoa, and
people's expectations for earnings in the U.S.," said James
Butterfill, global equity strategist at Coutts.
"As has been for quite a few quarters now, analysts are
overly bearish for fourth quarter results. So it seems that
we'll see earnings beat expectations for another quarter in the
U.S., and that will help to support stocks."
Butterfill said that if earnings came in ahead of
expectations for the fourth quarter, it would be the 15th
consecutive quarterly earnings beats in succession on the
S&P500, bar a minor earnings miss at the end of 2011.
Banks added 12.5 points to the index, with
Lloyds Banking Group the best performer, up 5 percent
as traders cited the impact of a UBS upgrade to "buy" from
"neutral" with an increased target price of 60 pence.
"We think Lloyds will deliver rising margins, falling costs
and falling provisions, which will provide a very strong upswing
to profitability and EPS momentum over the next few years," UBS
said in a note.
The FTSE 100 was up 23.60 points, or 0.4 percent, at
6,077.23 by 1158 GMT, resuming a rally that took it to its
highest closing level since early February 2011 on Friday,
having slipped on Monday and Tuesday of this week.
The index is now up 3 percent for 2013 only a week into the
year, just over half the total 2012 gain of 5.8 percent.
"We continue to have a constructive outlook for equities.
It's a combination of a pick-up in economic activity... ongoing
policy support and lower systematic risk, relative to the last
year or so," Christopher Ferrarone, global equity strategist at
UBS in Hong Kong, said.
UBS' Risk Appetite Indicator hit 20-month highs after U.S.
politicians reached a fiscal compromise on New Year's day, and
Ferrarone expected growth to support equity prices so long as
outstanding issues in the U.S. budget negotiations were resolved
without drama.
"After a fairly broad-based deterioration in economic
activity last year, we have seen economic activity pick up,
initially in the U.S. but also notably in China. The improvement
in economic activity that we've seen develop over the last
several months is fairly broad-based, and we do look for that to
continue in the months ahead."
However, sluggish growth from last year had a hangover on UK
retailers, with J Sainsbury losing 2.9 percent and
relinquishing the previous session's advance as it issued a
trading update which prompted Seymour Pierce to cut its rating
on the stock to "reduce".
Britain's No. 3 supermarket met forecasts for underlying
sales in the Christmas quarter but growth slowed from its first
half in a highly competitive festive market.
"We suspect Sainsbury will struggle to outperform in 2013 as
Tesco continues its fight back and there is some margin
vulnerability as momentum slows," Seymour Pierce said in a note.
For a graphic showing UK retailers' share price performances

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Futures rise as earnings season begins in the US

NEW YORK (AP) — Stock futures are rising after a pair of U.S. companies opened the earnings season with a surprisingly strong start.
Dow Jones industrial futures are up 13 points to 13,280. The broader S&P futures have added 0.80 points to 1,435.10. Nasdaq futures are up 0.25 points to 2,714.25.
After markets closed Tuesday, Alcoa predicted rising demand for its aluminum this year and topped revenue expectations for the fourth quarter. Earlier in the day, agricultural giant Monsanto said its profit tripled and raised its guidance for 2013.
Alcoa's outlook, which could hint at a broader economic recovery, helped to buoy markets overseas Wednesday.
Britain's FTSE 100 rose 0.4 percent, Germany's DAX added 0.3 percent and France's CAC-40 rose 0.4 percent. In Asia, Hong Kong's Hang Seng advanced 0.5 percent.

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American Football-Alabama's Saban shoots down talk of move to NFL

MIAMI, Jan 8 (Reuters) - University of Alabama head coach Nick Saban, showered with acclaim after a fourth national title, said on Tuesday he has no desire to return to the National Football League and that the college game is where he belongs.
Saban's Crimson Tide won their second successive national title on Monday and third in four years with a 42-14 hammering of Notre Dame.
The win confirms the 61-year-old as the most successful active coach in college football -- he captured his maiden title with Louisiana State University in the 2003 season.
Then came an unhappy two seasons with the NFL's Miami Dolphins that ended in 2006, but despite his well documented disappointment there has remained speculation that Saban could be tempted back into the pro game.
With five NFL teams currently having vacancies for a head coach that speculation, not surprisingly, re-emerged following Alabama's second consecutive championship.
"How many times do you think I've been asked to put it to rest? And I've put it to rest, and you continue to ask it. So I'm going to say it today, that you know, I think somewhere along the line you've got to choose," he said.
"You learn a lot from the experiences of what you've done in the past," added Saban, before reflecting on the two seasons he spent in Miami after being tempted out of the college game by then Dolphins owner Wayne Huizenga.
"I came to the Miami Dolphins, what eight years ago for the best owner, the best person that I've ever had the opportunity to work for? And in the two years that I was here, had a very, very difficult time thinking that I could impact the organization in the way that I wanted to or the way that I was able to in college," he said before highlighting some of the reasons he prefers working with student athletes.
"It was very difficult for me, because there's a lot of parity in the NFL, there's a lot of rules in the NFL. People say you can draft the players that you want to draft; you can draft a player that's there when you pick. It might not be the player you need, it might not be the player you want.
"You've got salary cap issues. We had them here (in Miami) You've got to have a quarterback. We had a chance to get one here; sort of messed it up," he said, referring to the missed opportunity to sign Drew Brees, later a Super Bowl winner with New Orleans.
Saban enjoys a huge amount of personal control over the entire football program at Alabama and clearly did not enjoy the more devolved power structure in the NFL.
"I didn't feel like I could impact the team the same way that I can as a college coach in terms of affecting people's lives personally, helping them develop careers by graduating from school, off the field, by helping develop them as football players, and there's a lot of self gratification in all that, all right," said Saban.

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Alabama's Saban shoots down talk of move to NFL

MIAMI (Reuters) - University of Alabama head coach Nick Saban, showered with acclaim after a fourth national title, said on Tuesday he has no desire to return to the National Football League and that the college game is where he belongs.
Saban's Crimson Tide won their second successive national title on Monday and third in four years with a 42-14 hammering of Notre Dame.
The win confirms the 61-year-old as the most successful active coach in college football -- he captured his maiden title with Louisiana State University in the 2003 season.
Then came an unhappy two seasons with the NFL's Miami Dolphins that ended in 2006, but despite his well documented disappointment there has remained speculation that Saban could be tempted back into the pro game.
With five NFL teams currently having vacancies for a head coach that speculation, not surprisingly, re-emerged following Alabama's second consecutive championship.
"How many times do you think I've been asked to put it to rest? And I've put it to rest, and you continue to ask it. So I'm going to say it today, that you know, I think somewhere along the line you've got to choose," he said.
"You learn a lot from the experiences of what you've done in the past," added Saban, before reflecting on the two seasons he spent in Miami after being tempted out of the college game by then Dolphins owner Wayne Huizenga.
"I came to the Miami Dolphins, what eight years ago for the best owner, the best person that I've ever had the opportunity to work for? And in the two years that I was here, had a very, very difficult time thinking that I could impact the organization in the way that I wanted to or the way that I was able to in college," he said before highlighting some of the reasons he prefers working with student athletes.
"It was very difficult for me, because there's a lot of parity in the NFL, there's a lot of rules in the NFL. People say you can draft the players that you want to draft; you can draft a player that's there when you pick. It might not be the player you need, it might not be the player you want.
"You've got salary cap issues. We had them here (in Miami) You've got to have a quarterback. We had a chance to get one here; sort of messed it up," he said, referring to the missed opportunity to sign Drew Brees, later a Super Bowl winner with New Orleans.
Saban enjoys a huge amount of personal control over the entire football program at Alabama and clearly did not enjoy the more devolved power structure in the NFL.
"I didn't feel like I could impact the team the same way that I can as a college coach in terms of affecting people's lives personally, helping them develop careers by graduating from school, off the field, by helping develop them as football players, and there's a lot of self gratification in all that, all right," said Saban.
"I kind of learned through that (Dolphins) experience that maybe this (college) is where I belong, and I'm really happy and at peace with all that. So no matter how many times I say that, y'all don't believe it, so I don't even know why I keep talking about it.

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Norwegian kicker dreams of NFL after viral video

Aside from his ability to boot the ball through the uprights from almost kind of angle or distance, Havard Rugland is a complete stranger to the American version of football.
And yet the 28-year-old Norwegian, without having played a single game at any level of the sport, is suddenly pursuing a shot at making it to the NFL. And it's all because of a YouTube video.
Sound incredible? Well, so are some of the kicks and tricks Rugland can pull off with his powerful left leg.
That's why the video he put together for some friends has turned him into an Internet sensation, with 2 million views and counting. And that's why the same video turned into an inadvertent auditioning tape — earning him a tryout last month with the New York Jets.
At a time when people are increasingly taking to social media to showcase their talent, Rugland might be on the verge of going from viral-video-of-the-week to pro athlete.
"I never would have thought it would come to this," he said during a recent phone interview from his home in southern Norway. "I put the film up mostly for friends and family. But as it turns out, there were a lot more people who liked it. It's overwhelming."
Must be, for someone whose only previous experience with football was the European soccer version, and who has only a sketchy familiarity with the rules of the American game. Living in Aalgaard, a town with less than 10,000 people, he started kicking for fun about a year ago after his local soccer club shut down and he needed another outlet.
Having seen other online videos of people doing tricks with Frisbees and basketballs, he figured he'd make one with footballs to showcase his booming leg. He posted it online in mid-September, and three months later he was auditioning for the Jets.
So what is it about his four-minute video — "Kickalicious" — that has people so impressed? Well, the footage of him kicking field goals from 60 yards and soccer-style volleys through the uprights is the least of it.
His more spectacular repertoire includes kicking the ball into a basketball hoop — nothing but net — and into the arms of people in moving cars, floating down a lake in a boat, or atop a hill. For his grand finale, he casually punts one football into the air, then kicks a second ball off a tee so it hits the first one in midair.
"I'm probably the most satisfied with the last kick, which is the one I've received the most compliments about," Rugland said. "I needed eight tries before I pulled it off."
He insists there was no trickery with the actual filming — done with two brothers and a friend — but said he needed several attempts to pull off some of the other kicks as well. When local media picked up his story, a Norwegian broadcaster reviewed the video to make sure it was real, silencing some skeptics who believed it must have been doctored.
And unlike so many other posted videos, interest in Rugland's kicks only grew.
While it was racking up hits in the hundreds of thousands, Rugland received an email from Scott Cohen, assistant general manager of the Jets, who was interested in giving him a workout.
Rugland wondered if he was being scammed.
"When I received that, obviously I was excited, but I had to check out the name and email address to make sure it was genuine, and not some friend who was pulling a prank," he said.
It was real. The Jets were genuinely interested — on the condition that Rugland spend some time with a kicking coach first to hone his skills. So the week after Thanksgiving, the Norwegian traveled to California to spend a few weeks with Michael Husted — a former NFL kicker who now runs a training camp in San Diego and had reached out to Rugland after seeing his video on a Facebook page.
Husted said he's often approached by soccer players interested in trying their hand — or foot, rather — at kicking field goals, hoping to become the next Sebastian Janikowski. But he had seen enough of Rugland in the video to know he was special.
"He's definitely the most impressive nonfootball kicker that I've worked with," Husted said by phone. "When he hits it, it's going to go. He hits it just as high, just as far as a lot of the NFL kickers, if not further."
In fact, Husted sees a lot of similarities between Rugland and Janikowski, the Oakland Raiders kicker from Poland. They're both left-footed, more than 6 feet tall and have the same kind of leg strength.
Rugland's video shows him hitting field goals from 60 yards with ease. The NFL record — shared by Janikowski and three others — is 63 yards.
Rugland thinks he could hit one from "well beyond" 60, and Husted said that's very possible.
"Heck, if he's in Denver he can probably hit it from 65," Husted said.
The Jets liked what they saw enough to invite Rugland back for a second audition in March.
Meantime, he wants to spend more time with Husted to refine his technique and consistency, and he's looking for a sponsor to help pay for another stay in San Diego since he would need to take an unpaid leave of absence from his job as a youth counselor for the local child protective services.
Training on his own isn't so easy these days, given the winter climate in Norway.
"It's hard to get better when you're practicing in the snow," he said.
Husted has put him in touch with an agent, Jill McBride Baxter, who is trying to get him back in the U.S.
"It's not easy," said the Los Angeles-based McBride Baxter, whose other NFL clients include Jets punter Robert Malone and Miami Dolphins wide receiver Marlon Moore. "He's got a life in Norway. He works with youth. He's got a job. He's got a dog."
He also still has a lot to work on. Power is one thing, but getting timing and technique right is equally important. Before working with Husted, Rugland had never kicked with a snap and hold.
And, of course, it remains to be seen whether Rugland can perform as well in a game situation. Some current NFL players, who had watched his video online, weren't so sure.
"It's a cool video," Arizona Cardinals kicker Jay Feely said, "but I don't know if it necessarily translates to kicking field goals consistently in a timed, pressurized environment."
New York Giants punter Steve Weatherford agreed.
"I think he's talented, but there's a different dynamic when you have a video camera and 1,000 chances versus when there's 80,000 people screaming at you (at a game) and you only have one shot," Weatherford said. "You can't teach that skill."
Rugland, though, said he thinks his Scandinavian nerves can handle the pressure.
"It's hard to say before you've experienced it," he said. "But I imagine it will be a bit like a penalty kick in soccer. I was under a lot pressure during the (Jets) tryout, and a lot of people would freeze up at something like that because there's a lot of people watching you. But that went well, so I think I have good chances of handling it."
The Jets may not be Rugland's only hope of making the NFL. Husted said the Raiders, Green Bay Packers and Philadelphia Eagles have also contacted him for scouting reports. He said the "ideal situation" for the Norwegian may be to get picked up on the practice squad by one team and spend a year honing his skills — the same route taken by Australian punter Darren Bennett in the 1990s.
Bennett was an Australian Rules football player who was given a workout by the San Diego Chargers during his honeymoon in California, and ended up becoming one of the top punters in the NFL.
Rugland thinks he can make a similar journey.
"If you have the quality that's required, you'll get the chance," he said. "I probably have to prove a bit more than others, and impress people a bit more. Those I'm competing against have played in the NFL for several years, or at least played in high school and college. But I believe in it myself, that if everything goes perfectly then it is a realistic chance. Although it's still a long way to go."
And if things don't work out with the NFL. Rugland's YouTube video may at least turn into a different kind of film.
Husted said he was contacted by a producer.
"He thinks there may be a movie in this," he said.

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Stocks head lower, pushing S&P 500 down from high

 Stocks sank on Wall Street, pushing the Standard & Poor's 500 index down from the five-year high it reached Friday.
The move lower on Monday is likely the result of investors taking some winnings off the table after the stock market's surge last week, said Sam Stovall, chief equity strategist at S&P Capital IQ.
Investors are also preparing for corporate America's seasonal parade of earnings reports, which starts Tuesday.
"You can summarize it as profit-taking and preparation," Stovall said. "Investors are digesting some of those gains from last week and positioning themselves so they're not too far extended if fourth-quarter earnings slip a bit."
The S&P 500 dropped eight points to 1,458 as of 12:20 p.m. EST on Monday.
The Dow Jones industrial average fell 75 points to 13,359, while the Nasdaq composite fell nine points to 3,092.
Bank of America sank after the bank said it had reached an agreement to settle claims from the government agency Fannie Mae over mortgage investments that lost value after the housing crash. Bank of America will pay the agency $3.6 billion and buy back $6.75 billion in loans that the North Carolina-based bank and its Countrywide unit sold to agency from Jan. 1, 2000 through Dec. 31, 2008. The bank's stock fell 8 cents to $12.02.
The S&P 500 closed at a five-year high Friday after a report showed that hiring held up in December during the tense fiscal negotiations in Washington, with employers adding 155,000 jobs in the month. Stocks surged at the start of last week after lawmakers passed a bill to avoid a combination of government spending cuts and tax increases that came to be known as the "fiscal cliff." The law passed late Tuesday night averted that outcome, which could have pushed the economy back into recession.
Investors are now shifting their focus to corporate profits. Aluminum producer Alcoa launches the reporting season for the fourth quarter of 2012 after the market closes on Tuesday.
Analysts forecast that companies in the S&P 500 will report that quarterly earnings grew 3.3 percent from the same period the year before, according to S&P Capital IQ. But all the events that took place in the last three months of 2012 -- Superstorm Sandy, the presidential election, and worries about the narrowly avoided "fiscal cliff" -- could make for some surprises.
In other trading, the yield on the 10-year Treasury note fell 1 basis point to 1.89 percent. The yield on the note hit an eight-month high of 1.97 percent in intraday trading Friday, according to prices from Tradeweb, an operator of fixed-income markets.
Among other stocks making big moves:
— Archer Daniels Midland dropped 3 percent. Analysts at JP Morgan Chase said the ongoing drought in the Midwest will likely squeeze the crop-processing company's profit margins. The analysts also started coverage on ADM's stock with a price target of $28, below where it opened for trading Monday. ADM fell 85 cents to $28.37.
— Lowe's Cos. fell $1.05 to $34.53 after analysts at the money-management firm Canaccord cut their rating on the company to "sell" from "hold," saying that the home improvement company's efforts to improve stores and sales won't be successful.
— Walgreen Co. gained 73 cents to $37.91 after Jefferies analyst Scott A. Mushkin raised his rating on the drugstore chain to "buy" from "hold," saying the company's profits may get a boost from the flu season, Medicare drug plans and President Obama's health-care overhaul.

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Stocks sink, pushing S&P 500 down from 5-year high

Stocks sank on Wall Street, pushing the Standard & Poor's 500 index down from the five-year high it reached Friday.
The move lower on Monday is likely the result of investors taking some winnings off the table after the stock market's surge last week, said Sam Stovall, chief equity strategist at S&P Capital IQ.
Investors are also preparing for corporate America's seasonal parade of earnings reports, which starts Tuesday.
"You can summarize it as profit-taking and preparation," Stovall said. "Investors are digesting some of those gains from last week and positioning themselves so they're not too far extended if fourth-quarter earnings slip a bit."
The S&P 500 dropped eight points to 1,457 as of 2:05 p.m. EST on Monday.
The Dow Jones industrial average lost 74 points to 13,360, while the Nasdaq composite dropped 11 points to 3,090.
Major bank stocks fell on news that JPMorgan Chase, Bank of America and others banks agreed to pay $8.5 billion to settle federal complaints that they foreclosed on people who should have been allowed to stay in their homes.
In a separate agreement, Bank of America settled with the mortgage-servicing company Fannie Mae over mortgage investments that lost value during the real-estate crash. Bank of America will pay Fannie Mae $3.6 billion and buy back $6.75 billion in loans that the North Carolina-based bank and its Countrywide unit sold from Jan. 1, 2000 through Dec. 31, 2008. BofA's stock fell 9 cents to $12.02.
The S&P 500 closed at a five-year high Friday after a report showed that hiring held up in December during the tense fiscal negotiations in Washington, with employers adding 155,000 jobs in the month. Market indexes soared at the start of last week as lawmakers passed a bill to avoid a combination of government spending cuts and tax increases that came to be known as the "fiscal cliff." The law passed late Tuesday night avoided the full force of the budget cuts, which could have dragged the economy into a recession.
Investors are now shifting their focus to corporate profits. Aluminum producer Alcoa launches the reporting season for the fourth quarter of 2012 after the market closes on Tuesday.
Analysts forecast that companies in the S&P 500 will report that quarterly earnings increased 3.3 percent compared with the same period the year before, according to S&P Capital IQ. But all the events that took place in the last three months of 2012 -- Superstorm Sandy, the presidential election, and worries about the narrowly avoided "fiscal cliff" -- could make for some surprises.
In other trading, the yield on the 10-year Treasury note was 1.90 percent. The yield on the note hit an eight-month high of 1.97 percent in intraday trading Friday, according to prices from Tradeweb, an operator of fixed-income markets.
Among other stocks making big moves:
— Archer Daniels Midland dropped 4 percent. Analysts at JP Morgan Chase said the ongoing drought in the Midwest will likely squeeze the crop-processing company's profit margins. The analysts also started coverage on ADM's stock with a price target of $28, below where it opened for trading Monday. ADM fell $1.06 to $28.16.
— Lowe's Cos. fell 90 cents to $34.68 after analysts at the money-management firm Canaccord cut their rating on the company to "sell" from "hold," saying that the home improvement company's efforts to improve stores and sales won't be successful.
— Walgreen Co. gained 82 cents to $38 after Jefferies analyst Scott A. Mushkin raised his rating on the drugstore chain to "buy" from "hold," saying the company's profits may get a boost from the flu season, Medicare drug plans and President Obama's health-care overhaul.

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U.S. stocks fall from 5-year high; euro rises

Wall Street stock prices retreated from five-year highs on Monday, while the euro rose against the dollar on bets the European Central Bank might refrain from signaling more interest rate cuts on Thursday.
The weakness in the equities market, partly due to caution ahead of companies beginning to report on their fourth-quarter earnings, spurred selling of oil, gold and other risky investments. This stoked some safety bids for U.S. and German government debt.
Investors turned their focus to corporate profits in the last three months of 2012, when growth in American holiday spending and corporate investments was tepid as shoppers and companies dialed back on worries about the United States going over the 'fiscal cliff' - a series of automatic tax hikes and government spending cuts which could have kicked in if a budget deal in Washington were not reached last week.
"There is little doubt that concerns about the fiscal cliff created spending hesitancy in both consumers and businesses in the fourth quarter, and it is likely that will adversely impact earnings season," said Randy Frederick, managing director of active trading and derivatives at Charles Schwab in Austin, Texas.
Earnings are expected to be only slightly better than the third-quarter's lackluster results and analysts' current estimates are down sharply from what they were in October.
"I think it's going to be a disappointing one this time around," Peter Cardillo, chief market economist at Rockwell Global Capital in New York, said of the upcoming earnings season that unofficially launches with aluminum maker Alcoa reporting its results after Tuesday's market close.
Uneasiness about corporate profits emerged even after data on Friday showed U.S. employers kept up a modest pace of hiring in December and the vast services sector expanded.
Hopes for global economic recovery got a boost after the Basel Committee of banking supervisors agreed to give banks four more years and greater flexibility than previously envisaged to build protective cash buffers. That means they can use more of their reserves to lend and help economies grow.
In the United States, news of a longer timetable for banks to manage their capital was overshadowed by 10 banks agreeing to pay $8.5 billion to settle a federal review of their questionable foreclosure practices.
In midafternoon trading, the Dow Jones industrial average was down 74.46 points, or 0.55 percent, at 13,360.75. The Standard & Poor's 500 Index was down 8.30 points, or 0.57 percent, at 1,458.17. The Nasdaq Composite Index was down 11.91 points, or 0.38 percent, at 3,089.75.
Among the day's biggest movers were Nationstar Mortgage Holdings , whose shares rose 12 percent to $37.31 each after Bank of America entered a deal to sell the servicing rights on over $300 billion of home loans to Nationstar and Walter Investment Management .
Walter stock rose 7.2 percent at $47.20.
After touching a 22-month peak last week, the FTSE Eurofirst index of top European shares ended 0.49 percent lower at 1,161.57, although the region's bank sector as measured by the STOXX euro zone bank index bucked the market trend, gaining 1.5 percent on the Basel news on bank capital.
MSCI's broad world equity index was down 0.35 percent at 346.48, but was still not far from an 18-month peak scaled when investors returned to the market after the immediate U.S. fiscal crisis was averted last week.
EURO GAINS BEFORE ECB MEETING
In the currency market, the euro was up 0.31 percent at $1.3109, erasing early losses. It held above a three-week low of $1.2998 hit on Friday.
Analysts predicted the single currency would stay around those levels until after the ECB meeting. Some expect the ECB to point to the prospect of easier rates early this year, contrasting with signals from Federal Reserve policymakers that the U.S. central bank may pursue less-accommodative policies in the future.
The Bank of Japan is also expected to take major steps to stimulate that country's economy later this month as the new government aims to end deflation and recession.
The greenback weakened against the yen, last down 0.57 percent at 87.64 yen. Last week, the dollar climbed to a 2-1/2- year high, which some traders reckoned was overdone.
Expectations of less-easy monetary policy from the Fed later this year mitigated the renewed safe-haven bids for U.S. government debt. The yield on benchmark Treasury 10-year notes was 1.90 percent, little changed from Friday when it ticked up to an eight-month high.
German Bund futures were up 27 basis points at 143.13, rebounding after hitting one-month lows last week.
The weakness in stocks dragged oil prices lower, but signs of improvement in the global economy rekindled bets on higher energy demand in 2013, paring their early losses.
Gold and copper prices were stuck near their session lows.
Brent crude futures were off 11 cents or 0.10 percent at $111.20 per barrel after rising 0.6 percent last week, while U.S. oil futures were up 7 cents or 0.08 percent higher at $93.16.
Spot gold was down 0.58 percent at $1,646.76 an ounce, though above Friday's $1,625.79, its lowest price since August.
Three-month copper futures in London closed 0.2 percent lower at $8,071 a tonne after losing nearly 1 percent the prior session.

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Venezuela's Chavez fighting severe lung infection

CARACAS, Venezuela (AP) — Venezuelan lawmakers will meet Saturday in a session that could shed light on what steps may be taken if President Hugo Chavez is too sick to be sworn in for a new term next week.
Legislators will choose a president, two vice presidents and other leaders of the National Assembly, which is controlled by a pro-Chavez majority. Whoever is elected National Assembly president could end up being the interim president of Venezuela if Chavez is unable to be inaugurated on Thursday as scheduled.
Brewing disagreements over how to handle a possible transition of power also could be aired at the session, coming just five days before the scheduled inauguration day specified in the constitution. Chavez's health crisis has raised contentious questions ahead of the swearing-in, including whether the inauguration could legally be postponed.
The government revealed this week that Chavez is fighting a severe lung infection and receiving treatment for "respiratory deficiency" more than three weeks after undergoing cancer surgery in Cuba. The announcement suggests a deepening crisis for the 58-year-old president and has fed speculation that he likely is not well enough to travel to Caracas for the inauguration.
National Assembly President Diosdado Cabello called on Chavez backers to show up for the legislative session and demonstrate their support.
"This National Assembly is revolutionary and socialist. It will remain beside the people and our commander," Cabello said in one of several messages on his Twitter account. "If the opposition thinks it will find a space in the National Assembly to conspire against the people, it's mistaken once again. It will be defeated."
Opposition leaders have demanded that the government provide more specific information about Chavez's condition, and say a new election should be held within 30 days if the president doesn't return to Venezuela by inauguration day.
Some Chavez allies say the inauguration date is not a hard deadline, and argue that the president should be given more time to recover from his surgery if necessary.
Chavez hasn't spoken publicly or been seen since his Dec. 11 operation in Cuba. In a Thursday night update, the government for the first time described the president's respiratory infection as "severe," the strongest confirmation yet that Chavez is having serious trouble breathing after days of rumors about his condition worsening.
"Chavez has faced complications as a result of a severe respiratory infection. This infection has led to respiratory deficiency that requires Commander Chavez to remain in strict compliance with his medical treatment," Information Minister Ernesto Villegas said Thursday night, reading a statement on television.
The government's characterization raised the possibility that Chavez might be breathing with the assistance of a machine. But the government did not address that question and didn't give details of the president's treatment.
Independent medical experts consulted by The Associated Press said the government's account indicated a potentially dangerous turn in Chavez's condition, but said it's unclear whether he is attached to a ventilator.
"It appears he has a very severe pneumonia that he suffered after a respiratory failure. It is not very specific," said Dr. Alejandro Rios-Ramirez, a pulmonary specialist in Puerto Vallarta, Mexico.
Dr. Gustavo Medrano, a lung specialist at the Centro Medico hospital in Caracas, said he has seen similar cases in cancer patients who have undergone surgery, and "in general it's very bad, above all after a surgery like the one they performed on him."
"I don't know the magnitude of the infection he has, how much of his lungs have been compromised, how much other organs are being affected. That's not clear," Medrano said.
"What's most likely is that he's on mechanical ventilation," Medrano added. However, he said, while respiratory deficiency means there is an abnormally low concentration of oxygen in the blood, depending on the severity it can be treated in various ways.
Dr. Michael Pishvaian, an oncologist at Georgetown University's Lombardi Cancer Center in Washington, agreed that such respiratory infections can run the gamut from "a mild infection requiring antibiotics and supplemental oxygen to life-threatening respiratory complications."
"It could be a very ominous sign," Pishvaian said. He said it's possible Chavez could be on "life support," but added it's impossible to be sure without more details.
The government expressed confidence in Chavez's medical team and condemned what it called a "campaign of psychological warfare" in the international media regarding the president's condition. Officials have urged Venezuelans not to heed rumors about Chavez's condition.
Opposition leaders have blamed vague information coming from the government for the rumors, and demanded a full medical report.
The Venezuelan newspaper El Nacional criticized what it called an "information vacuum" in an editorial on Friday, saying Venezuelans are in the dark because "no one speaks clearly from the government." The newspaper called the situation reminiscent of secrecy that surrounded the deaths of Josef Stalin in the former Soviet Union and Mao Zedong in China.
State television repeatedly played video of a song in which rappers encourage Venezuelans to pray, saying of Chavez: "You will live and triumph." A recording of a speech by Chavez appears during the song, saying: "I will be with you always!"
Chavez has undergone four cancer-related surgeries since June 2011 for an undisclosed type of pelvic cancer. He also has undergone chemotherapy and radiation treatment.
He was re-elected in October to another six-year term, and two months later announced that the cancer had returned. Chavez said before the operation that if his illness prevented him from remaining president, Vice President Nicolas Maduro should be his party's candidate to replace him in a new election.
This week, Cabello and the president's elder brother Adan joined a parade of visitors who saw Chavez in Havana, and then returned to Caracas on Thursday along with Maduro.
Brazil's state-run Agencia Brasil news agency reported Friday that President Dilma Rousseff's top international adviser, Marco Aurelio Garcia, made a one-day visit to Cuba and spoke with Venezuelan and Cuban officials about Chavez's health. It was unclear if Garcia actually saw Chavez, or what day he visited Cuba.
Telephone calls placed after hours to Brazil's Foreign Ministry and presidential offices were not immediately answered.
The Venezuelan Constitution says the presidential oath should be taken Jan. 10 before the National Assembly. Government officials have raised the possibility that Chavez might not be well enough to do that, without saying what will happen if he can't. The constitution also says that if the president is unable to be sworn in before the National Assembly, he may take the oath office before the Supreme Court.
The constitution says that if a president or president-elect dies or is declared unable to continue in office, presidential powers should be held temporarily by the president of the National Assembly and a new election should be held within 30 days.
On the streets of Caracas, some of Chavez's supporters say they're still holding out hope he can recover.
"He's the only leader of the revolution," said Miriam Bolivar, who belongs to a grassroots pro-Chavez group. "We can't imagine life without him. He's our life. This is one more battle and we have faith that he'll come out it unscathed once again."
Other Chavez supporters say they're unsure what to believe about his condition and express misgivings about the president's lieutenants.
"We hope that what they're telling us is true," said Ricardo Maya, a supporter who was reading a newspaper in a city square. "Chavez has all my confidence. He always speaks the truth. I can't say the same about the people around him.

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Venezuela VP: Chavez could be sworn in by court

CARACAS, Venezuela (AP) — Venezuelan President Hugo Chavez could be sworn in by the Supreme Court later on if he's not able to take the oath of office before lawmakers next week because of his struggle with cancer, his vice president said Friday.
The stance announced by Vice President Nicolas Maduro conflicts with the argument by some opposition leaders that the president of the National Assembly would have to take over as interim president if Chavez were unable to attend his inauguration as scheduled next Thursday.
Maduro's remarks sent the strongest signal yet that the government may seek to postpone Chavez's inauguration due to his delicate condition after surgery in Cuba. His position appeared likely to generate friction between the government and opposition over the legality of putting off the swearing-in, which the constitution says should occur on Thursday before the National Assembly.
Maduro says Chavez, as a re-elected president, remains in office beyond the inauguration date stipulated in the constitution, and could be sworn in if necessary before the Supreme Court at a later date to be determined.
"The formality of his swearing-in can be resolved before the Supreme Court of Justice, at the time (the court) deems in coordination with the head of state, Commander Hugo Chavez," Maduro said in a televised interview.
As for the opposition, Maduro said, "they should respect our constitution." The vice president held up a small blue copy of the constitution and read aloud passages relating to such procedures.
Opposition leaders have demanded that the government provide more specific information about Chavez's condition, and say that if the president doesn't return to Venezuela by inauguration day, the president of the National Assembly should take over the presidency on an interim basis. But Maduro echoed other Chavez allies in suggesting the inauguration date is not a firm deadline, and that the president should be given more time to recover from his cancer surgery if needed.
"Maduro's comments are not surprising. The government holds all the cards in the current situation, particularly given the compassion for Chavez's serious illness. It has interpreted the constitution loosely, to its own political advantage," said Michael Shifter, president of the Inter-American Dialogue think tank in Washington. "In this way Maduro is able to buy some time, assert his authority, and rally support within Chavismo. He puts the opposition on notice and throws it off balance."
As for Chavez, Maduro reiterated that the president is fighting a "complex" health battle but expressed hope that eventually "we'll see him and we'll hear him."
"He has a right to rest and tranquility, and to recuperate," Maduro said on state television, speaking with Information Minister Ernesto Villegas.
"The president right now is the exercising president. He has his government formed," Maduro said. He read a portion of the constitution detailing procedures for declaring an "absolute absence" of the president, which would trigger a new election within 30 days, and declared that "none of these grounds can be raised by the Venezuelan opposition."
The Venezuelan Constitution says the presidential oath should be taken Jan. 10 before the National Assembly. It also says that if the president is unable to be sworn in before the National Assembly, he may take the oath office before the Supreme Court, and some legal experts have noted that the sentence mentioning the court does not mention a date.
Others disagree. Ruben Ortiz, a lawyer and opposition supporter, argued that Maduro is wrong and that under the constitution the inauguration date can't be postponed.
If Chavez is not in Caracas to be sworn in on Thursday, Ortiz said in a phone interview, "the president of the National Assembly should take charge." He added that "there is a formal separation between one term and the other."
But Shifter said the opposition is on the defensive, with its only tactic being to insist that Jan. 10 is the established date.
"Chavez controls all the key institutions, and it's doubtful that most Venezuelans will get too upset about defying what seems a fairly minor constitutional provision," Shifter said. "Attacking the government because it has no objection to the Supreme Court swearing in Chavez after Jan. 10 is not exactly a winning political strategy for the opposition."
A delay also serves the government's purposes, Shifter said. "The government wants more time, whether to see if Chavez gets better, or to consolidate their ranks and further splinter and demoralize the opposition."
Venezuelan lawmakers will meet Saturday in a session that could shed more light on what steps Chavez's allies plan to take.
Legislators will choose a president, two vice presidents and other leaders of the National Assembly, which is controlled by a pro-Chavez majority. Whoever is elected National Assembly president could eventually end up being the interim president of Venezuela under some circumstances.
Brewing disagreements over how to handle a possible transition of power could also be aired at the session.
"If the opposition thinks it will find a space in the National Assembly to conspire against the people, it's mistaken once again. It will be defeated," National Assembly President Diosdado Cabello said in a message on Twitter, saying the legislature will stand with Chavez.
The government revealed this week that Chavez is fighting a severe lung infection and receiving treatment for "respiratory deficiency" more than three weeks after undergoing cancer surgery in Cuba.
Chavez hasn't spoken publicly or been seen since his Dec. 11 operation in Cuba, and the latest announcement suggests a deepening crisis for the 58-year-old president.
But Maduro criticized rumors surrounding Chavez's condition, saying: "He has a right to his privacy, and to recover."
The government's account of Chavez's complications raised the possibility that he might be breathing with the assistance of a machine. But the government did not address that question and didn't give details of the president's treatment.
Independent medical experts consulted by The Associated Press said the government's account indicated a potentially dangerous turn in Chavez's condition, but said it's unclear whether he is attached to a ventilator.
Dr. Gustavo Medrano, a lung specialist at the Centro Medico hospital in Caracas, said he has seen similar cases in cancer patients who have undergone surgery, and "in general it's very bad, above all after a surgery like the one they performed on him."
"I don't know the magnitude of the infection he has, how much of his lungs have been compromised, how much other organs are being affected. That's not clear," Medrano said.
"What's most likely is that he's on mechanical ventilation," Medrano added. However, he said, while respiratory deficiency means there is an abnormally low concentration of oxygen in the blood, depending on the severity it can be treated in various ways.
Dr. Michael Pishvaian, an oncologist at Georgetown University's Lombardi Cancer Center in Washington, agreed that such respiratory infections can run the gamut from "a mild infection requiring antibiotics and supplemental oxygen to life-threatening respiratory complications."
"It could be a very ominous sign," Pishvaian said. He said it's possible Chavez could be on "life support," but added it's impossible to be sure without more details.
Opposition leaders have blamed vague information coming from the government for persistent rumors about Chavez's condition, and demanded a full medical report.
Chavez has undergone four cancer-related surgeries since June 2011 for an undisclosed type of pelvic cancer. He also has undergone chemotherapy and radiation treatment.
He was re-elected in October to another six-year term, and two months later announced that the cancer had returned. Chavez said before the operation that if his illness prevented him from remaining president, Maduro should be his party's candidate to replace him in a new election.
The Venezuelan newspaper El Nacional criticized what it called an "information vacuum" in an editorial on Friday, saying Venezuelans are in the dark because "no one speaks clearly from the government." The newspaper called the situation reminiscent of secrecy that surrounded the deaths of Josef Stalin in the former Soviet Union and Mao Zedong in China.
State television repeatedly played video of a song in which rappers encourage Venezuelans to pray, saying of Chavez: "You will live and triumph." A recording of a speech by Chavez appears during the song, saying: "I will be with you always!

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Venezuela VP: Chavez can be sworn in by Court

CARACAS, Venezuela (AP) — Venezuelan President Hugo Chavez can take the oath of office for his next term before the Supreme Court at a later date if the ailing leader isn't fit to be sworn in next week, his vice president said.
Vice President Nicolas Maduro sent the strongest signal yet that the government may seek to postpone Chavez's inauguration as the 58-year-old president fights a severe respiratory infection more than three weeks after undergoing cancer surgery in Cuba.
Maduro's position in a televised interview on Friday night generated new friction between the government and opposition over the swearing-in, which the constitution says should occur Thursday before the National Assembly. Some opposition leaders have argued that if Chavez doesn't make it back to Caracas by that date, the president of the National Assembly should take over as interim president.
Such brewing disagreements were expected to be aired on Saturday as the National Assembly, which is controlled by a pro-Chavez majority, prepared to convene to choose its president and other legislative leaders.
Maduro's comments shed more light on potential scenarios. If the government succeeds in delaying the swearing-in and Chavez's condition improves, the president and his allies could have more time to plan an orderly transition and prepare for a new presidential election. If Chavez dies or is declared incapacitated, the constitution says that a new election should be called and held within 30 days.
The National Assembly president chosen on Saturday could end up being the country's interim president under some circumstances. Anyone elected by the Chavez-dominated legislature is expected to remain loyal to the president.
But Information Minister Ernesto Villegas reiterated on Saturday that Chavez is still in office, saying in comments reported by the state news agency that "Chavez has won a thousand battles and has reappeared when no one expected."
Speaking on television, Maduro held up a small blue copy of the constitution and read aloud passages as he argued that opponents were using erroneous interpretations to try to drive Chavez from power.
"They should respect our constitution," the vice president said. "The formality of his swearing-in can be resolved before the Supreme Court of Justice, at the time (the court) deems, in coordination with the head of state, Commander Hugo Chavez."
Maduro echoed other Chavez allies in suggesting the inauguration date is not a firm deadline, and that the president should be given more time to recover from his cancer surgery if needed.
"Maduro's comments are not surprising. The government holds all the cards in the current situation, particularly given the compassion for Chavez's serious illness. It has interpreted the constitution loosely, to its own political advantage," said Michael Shifter, president of the Inter-American Dialogue think tank in Washington. "In this way Maduro is able to buy some time, assert his authority and rally support within Chavismo. He puts the opposition on notice and throws it off balance."
Chavez was re-elected in October to another six-year term, and two months later announced that his pelvic cancer had returned. Chavez said before the operation that if his illness prevented him from remaining president, Maduro should be his party's candidate to replace him in a new election.
Maduro reiterated on Friday that the president is fighting a "complex" battle for his health but expressed hope that eventually, "we'll see him and we'll hear him."
"He has a right to rest and tranquility, and to recuperate," Maduro said. "The president right now is the exercising president. He has his government formed."
Maduro read a portion of the constitution detailing procedures for declaring an "absolute absence" of the president, which would trigger a new election within 30 days, and declared that "none of these grounds can be raised by the Venezuelan opposition."
The Venezuelan Constitution says the presidential oath should be taken Jan. 10 before the National Assembly. It also says that if the president is unable to be sworn in before the Assembly, he may take the oath before the Supreme Court, and some legal experts have noted that the sentence mentioning the court does not mention a date.
Others disagree. Ruben Ortiz, a lawyer and opposition supporter, argued that the inauguration date can't be postponed.
If Chavez is not in Caracas to be sworn in on Thursday, Ortiz said in a phone interview, "the president of the National Assembly should take charge." He added that "there is a formal separation between one term and the other."
Shifter said the opposition is on the defensive, with its only tactic being to insist that Jan. 10 is the established date.
"Chavez controls all the key institutions, and it's doubtful that most Venezuelans will get too upset about defying what seems a fairly minor constitutional provision," Shifter said. "Attacking the government because it has no objection to the Supreme Court swearing in Chavez after Jan. 10 is not exactly a winning political strategy for the opposition."
A delay also serves the government's purposes, Shifter said. "The government wants more time, whether to see if Chavez gets better, or to consolidate their ranks and further splinter and demoralize the opposition."
Chavez hasn't spoken publicly or been seen since his Dec. 11 operation. The government revealed this week that Chavez is fighting a severe lung infection and receiving treatment for "respiratory deficiency."
That account raised the possibility that he might be breathing with the assistance of a machine. But the government did not address that question or details of the president's treatment, and independent medical experts consulted by The Associated Press said the statements indicated a potentially dangerous turn in Chavez's condition, but said it's unclear whether he is attached to a ventilator.
Chavez has undergone four cancer-related surgeries since June 2011 for an undisclosed type of pelvic cancer. He also has undergone chemotherapy and radiation treatment.

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News Summary: S&P 500 ends week at a 5-year high

DECEMBER JOBS: Stocks headed higher, capping a good week, after a report showed that hiring held up in December during the tense fiscal negotiations in Washington, with U.S. employers adding 155,000 jobs.
FIVE-YEAR HIGH: Stocks moved up at the end of the day pushing the Standard & Poor's to its highest close in five years.
GOOD START: Stocks got the year off to a strong start, surging after lawmakers came up with a long-awaited budget agreement. The plan wasn't perfect, but it was enough to keep stop the U.S. going over the "fiscal cliff" and, in all likelihood, another recession.

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Fed officials eye timeline for ending asset purchases

SAN DIEGO (Reuters) - The Federal Reserve could halt its asset purchases this year if the economy improves and unemployment drops, two top Fed officials said on Friday, a view seconded by most economists at Wall Street's top financial institutions.
Meanwhile, another top Fed official warned the U.S. central bank's aggressive easing plan threatens the Fed's credibility.
St. Louis Fed President James Bullard, a voting member of the Fed's monetary policy panel this year, said a drop in the unemployment rate to 7.1 percent would probably constitute the "substantial improvement" in the labor market that the central bank seeks.
That's the bar for the Fed's policy-setting committee to halt the current round of asset purchases that it began in September.
"If the economy performs well in 2013, the Committee will be in a position to think about going on pause" with the asset buys, Bullard told CNBC TV on a sunny balcony outside of the hotel where thousands of economists were gathered for an annual conference here. "If it doesn't do very well then the balance sheet policy will probably continue into 2014."
The Fed has also promised to keep interest rates at their current near-zero level until unemployment drops to 6.5 percent, as long as inflation does not threaten to rise above 2.5 percent.
U.S. unemployment stood at 7.8 percent last month. While that is down from a year ago, monthly job gains are probably not enough to ratchet down unemployment much more.
Philadelphia Fed Bank President Charles Plosser, who expects unemployment to drop to between 6.8 percent and 7.0 percent by end-2013, said on Friday at the same conference that he hoped the Fed would stop buying bonds before the 6.5 percent threshold, implying he anticipated the asset purchases would halt this year.
Economists at nine of 16 primary dealers -- the large financial institutions that do business directly with the Fed -- said they expect the current Fed program of buying $45 billion per month of Treasuries to end in 2013. The Fed is also buying $40 billion in mortgage-backed securities each month.
Meanwhile, Fed policymakers are increasingly concerned about the impact their monthly purchases of $85-billion in longer-term bonds and mortgage securities are having on financial markets.
Minutes from their December policy meeting showed that "several" top officials expected to slow or stop the so-called quantitative easing program, dubbed QE3, "well before" the end of the year - news that surprised some on Wall Street and prompted a drop in stocks and bonds, and a rise in the dollar.
Jeffrey Lacker, president of the Richmond Fed bank, on Friday held his ground opposing QE3, arguing that continued monetary policy is not the appropriate way to tackle the problem.
"It is unlikely that the Federal Reserve can push real growth rates materially higher than they otherwise would be, on a sustained basis," Lacker, who dissented on all Fed easing moves last year, told a meeting of the Maryland Bankers Association.
"I see an increased risk, given the course the committee has set, that inflation pressures emerge and are not thwarted in a timely way," he said.
EYEING 7.1 PERCENT UNEMPLOYMENT
While Lacker is an outspoken policy hawk, Bullard is more of a centrist who is nonetheless toward the hawkish end of the spectrum of Fed policymakers. The pair were the first top central bank officials to speak publicly since the minutes were unveiled on Thursday.
Bullard said he expects unemployment to "continue to tick down through 2013," adding the Fed could ramp down the asset purchases if the jobless rate drops to 7.1 percent.
"That would be probably substantial improvement and the committee could think about removing accommodation on the balance sheet side of the policy at that point," he said.
After the December meeting, the Fed said it would continue buying bonds until the labor market outlook improves "substantially," which Fed Chairman Ben Bernanke has characterized as a "sustained" decline in the unemployment rate.
With the Fed's key interest rate having remained near zero since late 2008 to encourage economic recovery from the Great Recession, the bond purchases are meant to lower longer-term rates and to encourage investment and hiring in the broader economy.
The U.S. economy expanded a respectable 3.1 percent in the third quarter on an annualized basis, but growth is believed to have slowed sharply to barely above 1.0 percent in the last three months of the year.
Government data released Friday showed the U.S. jobless rate held steady from November to December. Bullard called the December jobs number - a boost of 155,000 in new non-farm jobs - "reasonably good.
Plosser, one of the Fed's most hawkish members, said he believes the United States economy likely suffered a lasting decline in its trend potential growth rate as a result of the severe 2007-2009 U.S. recession.
"Any of you who have looked at the data of the most recent ... recession, it certainly looks like we've had a permanent shock," Charles Plosser, president of the Philadelphia Federal Reserve Bank, told a panel at the annual meeting of the American Economic Association. "The problem is we won't know the answer to that for many years to come."
Fed Vice Chair Janet Yellen, a proponent of aggressive Fed easing, also spoke on Friday, but confined her comments to how regulators are tackling risks to financial stability.

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Wall Street cheers "cliff" deal, but only for now

NEW YORK (AP) — When lawmakers delivered a long-delayed, last-minute agreement on the budget, Wall Street celebrated. And it would be easy to think that the surge in the Dow the following day meant that investors had put their concerns about Washington's political gridlock behind them.
The Dow Jones industrial average surged on the news, but that doesn't mean the volatility is over. In fact, there could be more turmoil in the market soon because decisions on cutting the federal budget deficit have been put off until March, when the government will reach its borrowing limit. Republicans have already said they will demand cuts to spending as a condition for extending the limit.
"The uncertainty is still there, the key issues are spending cuts and entitlement reforms and, for the most part, those were not addressed," says Terry Sandven, chief equities strategist at U.S. Bank Wealth Management. "This sets the stage for sharper rhetoric and increased market volatility as these discussions evolve."
The last time lawmakers tussled over the debt limit, the stock market plunged and the U.S. government lost its AAA debt rating. The Dow fell almost 7 percent in the two weeks before an agreement was reached Aug. 3, 2011.
Many business leaders objected to the agreement lawmakers reached late Tuesday. The Business Roundtable, an association of chief executive officers of leading U.S. companies, said that although it addressed some of the immediate negative consequences that the economy would have faced going over the "fiscal cliff," it failed to address the "serious and fundamental" reforms the economy needs. The National Retail Federation said that the deal was welcome, though it was only the first step in necessary tax reform.
Companies are likely to remain wary of investing until they get more clarity from Washington, says Joe Heider, a principal at Rehmann Financial in Cleveland, Ohio. He likens the current U.S. business climate to a sporting event where the referees tell the players to take the field before telling them that the rules of the game will only be decided on once the final whistle has been blown.
"Washington needs to get out of the way of the financial markets and American business," said Heider. "They need to create some certainty over how businesses should best deploy all the cash that they're sitting on."
And corporations are sitting on a lot of cash. Companies have been steadily building up their reserves over the last five years and are now sitting on record cash piles. By the end of the third quarter of last year, S&P 500 companies had accumulated more than $1 trillion in cash, according to data from S&P Dow Jones Indices.
At least for now, companies are unlikely to invest much of that money back into their businesses simply because demand just isn't strong enough, says U.S. Bank's Sandven. Instead they will spend it on acquisitions, stock buy-backs and pay higher dividends. Those are all actions that should boost stock prices in the near term, despite the ongoing uncertainty and increased volatility that will be caused by political wrangling.
Investors should take advantage of any volatility in the market created by the political wrangling to seek out stocks that have a history of growing their dividends, says Sandven. He estimates that half of the stocks in the S&P 500 have a dividend yield that is higher than the current 10-year U.S. Treasury note. The 10-year Treasury note was at 1.90 percent Friday.
He also recommends that investors buy the stocks of companies that have exposure to emerging markets that have a growing middle class and don't have the same debt issues as the U.S.
Joseph Tanious, a global markets strategist at J.P. Morgan Funds, says investors would be wise to remain calm when the negotiations in Washington around the debt ceiling start to heat up this spring.
The stock market dropped sharply in the weeks after the election Nov. 6 as investors worried that a divided government wouldn't get a deal done in time to meet a budget deadline by the end of the year, but it has rebounded since then. The S&P 500 is now 2 percent higher than it was on election day, even after falling by as much as 5 percent in the two weeks following the vote. On Friday it closed at 1,466, the highest since December 2007.
"When push came to shove, Congress did come together to reach an agreement," says Tanious. "Many people were saying you should be out of the market ... (that) markets are going to capitulate, and that didn't happen."
Stocks have rallied over the last three years as investors remain optimistic that the economy will maintain a slow, but steady, recovery from recession, as the housing market improves and as the outlook for jobs gets better.
And while investors also see the wisdom in addressing the nation's long-term debt problems, they also point out that businesses and consumers have been aggressively paying down their own debts in the aftermath of the 2008 financial crisis. That leaves more flexibility for people and companies to shop, invest, and spend money, helping to lift the economy — and the stock market — even if Washington's political dysfunction worsens.

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