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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