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NEW YORK (MarketWatch) — U.S. stocks ended with a slight gain Tuesday after being whipsawed by bets in the financial sector and a rally in telecommunications, which benefited from Cisco Systems Inc.’s unveiling of a new router.

The Dow Jones Industrial Average moved between gains and losses late in the day before ending 11.86 points higher, or 0.1%, at 10,564.38. The Nasdaq Composite Index was the strongest of the major indexes, with a gain of 0.4%.

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The S&P 500 rose 0.2%, led by a 1.2% gain in its telecommunications sector, which benefited from hopes that Cisco’s new device will help alleviate congestion on mobile data networks.

Sprint Nextel Corp. shares jumped 6.5%, while Verizon Communications shares rose rose 0.9%. Read Telecom Stocks

The S&P 500’s financial sector finished with a small gain overall, up just 0.3%. See Financial Stocks.

But there was extremely heavy volume in just four of its names: American International Group leapt 12.6%, Fannie Mae jumped 5.9%, Freddie Mac leapt 7.6%, and Citigroup was up 7.3%. Read more on Citi, AIG stocks.

Citi was helped by a a report on Fox Business that the government is discussing plans to sell its 27% stake in the bank, perhaps within the next three months. That in turn spurred buying in some of the other names that are still subject to the heaviest government involvement in the wake of the recent financial crisis, though no moves had been announced by the Treasury or other agencies as of Tuesday’s market close.

AIG surged as a debt sale by an important unit went well, the Wall Street Journal reported Tuesday. A $1.3 billion loan offering by International Lease Finance Corp. has met with strong investor demand, which will enable the aircraft-leasing unit of AIG to raise fresh funds to repay some of its maturing debt, the newspaper said.

In general, traders and analysts said Tuesday’s session saw an increase in speculative betting, which added volatility and underscored the lack of confidence that has developed on trading floors since the market hit its bear-market lows exactly one year ago.

Digits: The Push for 3-D TV

Sony, Panasonic and Samsung have recently announced new TV models that feature 3-D. But the rush to manufacture products hides the fact that there is little content to showcase, the Digits panel reports.

“The main thing the market has going for it at this point is cheap money,” thanks to low borrowing costs from central banks around the world, said Darren Chervitz, research director at Jacob Asset Management auto loan interest rates. “We’re positioning ourselves for the day when fundamentals will matter again, but we haven’t reached that point yet.”

The Dow is now up 61% from its 12-year low hit on March 9, 2009, marking the depths of the financial crisis. The S&P 500 is up 69% over that timeframe, while the Nasdaq Composite is up 85%. Read about best and worst stocks since bear-market bottom.

The technology and telcom names that dominate the Nasdaq have often benefited over the past year from optimism that an early wave of capital investment will fuel a broader U.S. economic recovery, even as consumer spending and employment lag.

This week, Cisco’s announcement regarding its new router, dubbed the CRS-3, has meshed nicely with that broader investment theme. The device would function as part of the backbone of networks that carriers assemble to deliver information to large swaths of customers, not an at-home device for individuals to set up for personal use.

Cisco, which hit a 52-week high on Monday in anticipation of the router announcement, ended flat on Tuesday. Read more about Cisco’s new router plans.

Rex on Techs: Cisco’s Router Hype

Networking giant borrows a page from Apple’s marketing manual to promote a fast new router, and the market yawns. Rex Crum reports.

But some of its potential customers showed big gains, including a 1.1% gain in AT&T, which said it has tested the new Cisco device and found it to move data at 10,000 times the speed of a typial residential broadband connection.

“Even during the recession, people were demanding more and more data, which was incredible to see,” said portfolio manager Kim Caughey, of Fort Pitt Capital Group. “It’s become one of these trends that’s not going away.”

Elsewhere, the industrial sector benefited from a 0.8% rise in Boeing Co. after Northrop Grumman Corp. said it would drop out of a protracted quest to win a $40 billion contract to build the U.S. Air Force’s next generation of aerial-refueling planes, leaving Boeing as the only competitor left standing. Northrop shares slipped 0.3%. Read more on Boeing, Northrop.

General Growth Properties shares climbed 3.8% after the shopping-center operator got a proposal to help it emerge from bankruptcy from two of its biggest creditors.

UAL Corp. shares climbed 3.7% after its United Airlines said February unit revenue — the amount taken in for each passenger flown a mile on its planes and those of its affiliates — jumped 17% to 19% over the same month a year earlier. Read Airline Stocks.

In other markets, the dollar weakened against the yen but gained ground versus the euro. Crude-oil futures slipped 38 cents to $81.49 a barrel, while gold futures also moved lower. Treasurys edged higher.

Market Snapshot: U.S. stock end up, with financials in spotlight

NEW YORK – Tim Burton and Johnny Depp’s trip down the rabbit hole drew huge crowds, as “Alice in Wonderland” earned a whopping $116.3 million in its opening weekend — a record for a 3-D film.

The surprisingly huge total easily surpassed all other films in release and gave Walt Disney Studios an even bigger opening than that of the hugely popular 3-D film “Avatar.” It also marked the biggest opening weekend for a non-sequel.

“This is just one of those cultural phenomenons that has caught everybody’s interest,” said Chuck Viane, Disney’s president of distribution. “They don’t come like this very often.”

The film beat forecasts that ranged between $65 million-$75 million, and the surprising results added some intrigue to Oscar Sunday. Before the weekend, Disney and 20th Century Fox competed over the available 3-D ready screens; screens outfitted for 3-D are rapidly rising, but still amount to fewer than 4,000 in the U.S. and Canada.

Before “Alice,” many of those screens were still dedicated to Fox’s box-office behemoth, “Avatar,” which is up for nine Academy Awards on Sunday, including best picture.

In its 12th week of release, “Avatar” earned $7.7 million over the weekend, bringing its cumulative domestic total to $720.2 million.

Asked whether fewer 3-D and IMAX screens hurt “Avatar,” Chris Aronson, head of distribution for Fox, said, “No question.”

“Are we disappointed? Sure,” said Aronson. “But there are certain market forces that are beyond anything we can do. To have an 11-week window is pretty much unheard of. It certainly allowed this movie to be discovered and witnessed by so many people.”

“Avatar” isn’t disappearing, though, and it can be expected to regain 3-D and IMAX screens, especially if it wins best picture.

“We’ll have that negotiation tomorrow morning with exhibition, without a doubt,” said Aronson.

It also seemed likely that “Alice” benefited from the “Avatar”-effect in galvanizing audiences for 3-D movies. “Alice in Wonderland” is the first film released in 3-D since James Cameron’s epic. “Alice” was shot in 2-D, but transferred to 3-D in post-production.

“In the wake of the impact of `Avatar,’ there’s a whole new audience that’s been indoctrinated to 3-D,” said Paul Dergarabedian, box-office analyst for Hollywood.com. “That paid off big for `Alice in Wonderland.’”

The weekend’s second best performer at the box-office was Overture’s “Brooklyn’s Finest,” Antoine Fuqua’s gritty police thriller, which earned $13.5 million in its first weekend, according to studio estimates.

Martin Scorsese’s “Shutter Island” for Paramount followed closely with $13.3 million in its third week of release, bringing its cumulative total to $95.8 million. Warner Bros.’s comedy “Cop Out” came in fourth, adding $9.1 million for a two-week total of $32.4 million.

But “Alice” thoroughly dominated the weekend, surprising even Disney. Worldwide, it took in $210.3 million.

It was a record release for the first quarter of the year, typically a time of lower box-office expectations and critically acclaimed Oscar contenders. The previous first quarter record was Mel Gibson’s “Passion of the Christ,” which opened with $83.8 million in Feb. 2004.

“We went into Friday thinking that we really had a big hit with us, and then all of a sudden the numbers started to roll in,” said Viane inferred heaters. “Alice” went on to make $41 million on Friday alone.

“We said, `Oh my gosh. This is bigger than any of us could have anticipated,” said Viane.

Though reviews were mostly respectfully negative, much of the film’s draw was surely in teaming director Burton and his frequent collaborator, Depp, who plays the Mad Hatter. It also presented moviegoers with a 3-D updating of Lewis Carroll’s beloved classic. Though at times dark, it gained a PG rating from the MPAA (for, among other things, “a smoking caterpillar”), which meant a large number of kids could attend.

But it proved once again how significant the draw of 3-D is to moviegoers. The technology repeatedly has inflated box-office grosses for everything from “Avatar” to “Cloudy with a Chance of Meatballs.”

“Alice” also played across 188 IMAX screens in North America and gave IMAX its best opening ever, with $11.9 million domestically. That beat the previous record of $9.5 million set by “Avatar.”

IMAX chairman and president Greg Foster said the huge success of “Alice” was unexpected, but that “Avatar” would regain some of those IMAX screens, whether or not it wins best picture.

“The momentum on 3-D is so massive right now,” said Foster. “They were ready for a new movie. They were ready for a new, cool 3-D experience.”

Though most of the Oscar contenders weren’t a big factor at the box-office Sunday, the boffo performance of “Alice” proved the good health of Hollywood, said Dergarabedian.

Estimated ticket sales for Friday through Sunday at U.S. and Canadian theaters, according to Hollywood.com. Final figures will be released Monday.

1. “Alice in Wonderland,” $116.3 million.

2. “Brookyn’s Finest,” $13.5 million.

3. “Shutter Island,” $13.3 million.

4. “Cop Out,” $9.1 million.

5. “Avatar,” $7.7 million.

6. “The Crazies,” $7 million.

7. “Percy Jackson & the Olympians: The Lightning Thief,” $5.1 million.

8. “Valentine’s Day,” $4.3 million.

9. “Crazy Heart,” $3.4 million.

10. “Dear John,” $2.9 million.

___

On the Net:

http://www.hollywood.com/boxoffice

___

Universal Pictures and Focus Features are owned by NBC Universal, a unit of General Electric Co.; Sony Pictures, Sony Screen Gems and Sony Pictures Classics are units of Sony Corp.; Paramount and Paramount Vantage are divisions of Viacom Inc.; Disney’s parent is The Walt Disney Co.; Miramax is a division of The Walt Disney Co.; 20th Century Fox, Fox Searchlight Pictures and Fox Atomic are owned by News Corp.; Warner Bros. and New Line are units of Time Warner Inc.; MGM is owned by a consortium of Providence Equity Partners, Texas Pacific Group, Sony Corp., Comcast Corp., DLJ Merchant Banking Partners and Quadrangle Group; Lionsgate is owned by Lions Gate Entertainment Corp.; IFC Films is owned by Rainbow Media Holdings, a subsidiary of Cablevision Systems Corp.; Rogue Pictures is owned by Relativity Media LLC; Overture Films is a subsidiary of Liberty Media Corp.

‘Alice’ opens with $116.3 million, a 3-D record

Hot News: Congressional estimates show grim deficit picture

WASHINGTON – The Senate Tuesday rejected a plan backed by President Barack Obama to create a bipartisan task force to tackle the federal deficit this year despite glaring new figures showing the enormity of the red-ink threat.

The special deficit panel would have attempted to produce a plan combining tax cuts and spending curbs that would have been voted on after the midterm elections. The measure went down because anti-tax Republicans joined with Democrats who were wary of being railroaded into cutting Social Security and Medicare.

The Senate vote to kill the deficit task force came just hours after the nonpartisan Congressional Budget Office predicted a $1.35 trillion deficit for this year as the economy continues to slowly recover from the recession.

“Yet another indication that Congress is more concerned with the next election than the next generation,” said Sen. Judd Gregg, R-N.H., a sponsor of the plan.

The budget deficits facing Obama and Congress are large and intractable, and the CBO prediction for 2010 is roughly equal to last year’s record $1.4 trillion ocean of red ink. That means the government is borrowing to cover 40 percent of the cost of its programs.

The report predicts a sluggish economic recovery and continued high unemployment — which presages big political problems for President Barack Obama and his Democratic allies heading into the midterm elections.

The report sees unemployment averaging 10.1 percent this year as the economy grows by just over 2 percent. It would grow only slightly more next year with an unemployment rate of 9.5 percent.

“CBO expects that the pace of economic recovery will be slow,” said agency chief Douglas Elmendorf.

The latest estimates also project that the deficit will drop to $980 billion next year and $480 billion in five years — but only if a host of tax cuts enacted under President George W. Bush are allowed to expire. Most budget experts see deficits nearing or exceeding $1 trillion each year over the next decade once tax cuts and other policies are factored in.

It’s a sobering reminder of the fundamental imbalance of the federal government’s budget that comes just days before Obama’s Feb. 1 budget submission. The White House says Obama will propose a three-year freeze on domestic agency budgets, though the savings would barely make a dent. It hasn’t said whether Obama will proposes tax hikes or cuts to spiraling benefit programs such as Medicare, Medicaid and Social Security no fax pay day loans.

The 2010 deficit figure is in line with previous estimates and would be less, marginally, than last year’s $1.4 trillion shortfall. But plans afoot on Capitol Hill for a new jobs bill and a coming Obama request for war funds would add to the total.

The spending freeze, expected to be proposed by Obama during the State of the Union address on Wednesday, would apply to a relatively small portion of the federal budget, affecting a $477 billion pot of money available for domestic agencies whose budgets are approved by Congress each year. Some of those agencies could get increases, others would have to face cuts; such programs got an almost 10 percent increase this year. The federal budget total was $3.5 trillion.

The freeze on so-called discretionary programs would have only a modest impact on the deficit. The steps needed to really tackle such huge deficits include tax increases and curbs on benefit programs like Medicare, Medicaid and Social Security.

That was the idea behind the Obama-backed plan to pass a law to create a special task force to come up with a plan to curb the spiraling budget deficit. Now, Obama may create a weaker version by a presidential order. But unlike the plan rejected Tuesday, there’s no way to force a Senate vote.

Supporters actually garnered 53 votes for the plan co-sponsored by Gregg and Budget Committee Chairman Kent Conrad, D-N.D. But 60 votes were required under special floor rules. Thirty-six Democrats and independent Joe Lieberman of Connecticut voted for the plan as did 16 Republicans.

The task force was rejected after the powerful seniors lobby, led by AARP, objected to a potential fast-track debate of cuts to Social Security and Medicare. Anti-tax activists and GOP-friendly editorial pages pressed Republicans to oppose it. It would have tried to reveal a deficit reduction blueprint after the November elections for a vote before the new Congress convenes.

The plan was offered as an amendment to a deeply unpopular bill to permit the government to borrow an additional $1.9 trillion to finance its operations and prevent a first-ever default on U.S. obligations.

___

On the Net:

Congressional Budget Office: http://cbo.gov/

Senate rejects bipartisan task force to tackle deficit

Crude oil followed the stock market up on Tuesday, settling higher for the first time in five sessions.

Investors boosted health stocks, watching a Massachusetts election to fill the seat of the late Sen. Edward M. Kennedy. Some hoped for a Republican victory that would make it more difficult for Senate Democrats to pass a health care bill. The Dow Jones Industrial Average was up nearly 100 points in afternoon trading.

Wholesale gasoline prices also moved higher after the MasterCard SpendingPulse report for the week ended Friday showed gasoline consumption rose 3.2 percent with the week before and 2.3 percent from the same week a year ago. Traders have been looking for signs that gasoline demand is starting to pick up to justify oil prices that have more than doubled in the past year.

SpendingPulse is a division of MasterCard Advisors that tracks total sales paid for by credit card, checks and cash.

But last week’s falling oil prices started to bring down prices at the gas pump. Gasoline prices fell for the fourth straight day, though the declines have been modest so far.

Prices of $2.74 per gallon Tuesday were less than 2 pennies under the 15-month peak of $2.7543 hit on Thursday, according to AAA, Wright Express and Oil Price Information Service.

Prices still are up 15 cents in the past month and 89.8 cents from a year ago, as motorists dig deeper into their wallets to pay for fuel just as Christmas bills start to come in payday loans with low fees.

Tuesday’s gasoline prices matched the Energy Information Administration survey that showed prices averaged $2.739 per gallon nationwide Monday, down 1.2 cents from the week before.

A typical motorist using about 50 gallons a month is paying about $140 for gasoline, $45 more a month than a year ago.

Gasoline prices have spiked in the past month on a jump in oil prices.

Analyst Tom Kloza said to look for larger declines in gasoline prices over the next few weeks. January and February are typically a period of poor demand for transportation fuels.

Benchmark crude for February delivery rose $1.02 to settle at $79.02 Tuesday on the New York Mercantile Exchange.

In other Nymex trading in February contracts, heating oil fell 0.06 cent to settle at $2.0454 a gallon, while gasoline added 1.37 cents to settle at $2.0591 a gallon. Natural gas futures shed 13.4 cents to settle at $5.557 per 1,000 cubic feet.

In London, Brent crude for March delivery rose 53 cents to settle at $77.63 a barrel on the ICE Futures exchange.

___

Associates Press writers Pablo Gorondi in Budapest and Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.

Crude settles higher as stocks climb

European stock markets rose Monday as speculation of a pickup in corporate deal making kept investors interested on a day Wall Street was closed for the Martin Luther King public holiday and Greece’s budgetary woes continued to weigh on the euro.

The FTSE 100 in London closed up 39.02 points, or 0.7 percent, at 5,494.39, while DAX in Frankfurt rose 42.58 points, or 0.7 percent, at 5,918.55. The CAC-40 in Paris ended 23.08 points, or 0.6 percent, higher at 3,977.46.

Earlier in Asia, Japan’s Nikkei 225 stock average ended 127.02 points, or 1.2 percent, lower at 10,855.08 while Hong Kong’s Hang Seng fell 194.15 points, or 0.9 percent, to 21,460.01. Markets in Singapore and Taiwan also lost ground.

A lot of the interest in Europe centered on International Power of Britain and Gaz de France and whether weekend speculation that they were looking at some sort of tie-up would materialize.

However, International Power’s statement that merger talks had ended saw a massive reverse in the company’s fortunes and a share price that had been 8 percent higher in the day ended over 3 percent lower — making it the biggest faller on the FTSE 100.

The British candy maker Cadbury also remained in the spotlight amid speculation that its suitor Kraft Foods was preparing to sweeten its offer before a Tuesday deadline. Cadbury ended around 1.5 percent higher but investors remain skeptical that the current stand-off between the two companies can be ended.

“Some traders seem to feel that this has dragged on long enough, making any sort of deal unlikely,” said David Jones, chief market strategist at IG Index.

Even though talks between International Power and Gaz de France failed to yield anything, analysts said there are expectations that the amount of mergers and acquisitions taking place will increase over the coming months as the global economy recovers from recession. One corollary of increased confidence is an increase in mergers and acquisitions.

When Wall Street returns on Tuesday, the focus will turn towards the next batch of fourth quarter corporate earnings — so far, earnings have been fairly mixed, with upside surprises from the likes of the chipmaker Intel offset by disappointments elsewhere, most notably the aluminum Alcoa Inc free instant credit report.

Banks will be in the spotlight especially after U.S. stocks fell 1 percent on Friday — the Dow Jones industrial average suffered its worst day of the year so far — as JP Morgan Chase & Company offered a cautious earnings guidance even though it reported a fairly strong set of results.

“We get Citigroup tomorrow which has less of the good bits of banking and more of the bad bits,” said Kit Juckes, chief economist at the ECU Group.

A meeting of the 16 finance ministers of the countries that use the euro in Brussels later will be closely monitored in the currency markets as the main topic of debate will be the shaky state of Greece’s public finances.

Concern about Greece’s debts has been one of the reasons why the euro has floundered over the last month or so from 16-month highs above $1.50. Earlier it hit a ten-day low of $1.4336 before recovering slightly to $1.4380.

Greece’s problems have fueled concerns that the country may eventually have to be bailed out by its partners in the eurozone. Some observers are even speculating about a possible Greek exit from the single currency zone.

“With rising concerns about the workability of the Greek government’s stability and growth plan, the firm rejection from within the eurozone of the idea of a bailout, the rapidly rising cost of default insurance on Greek sovereign debt and concerns over deficits elsewhere in the region, the problems for the single currency are mounting rapidly,” said Neil Mellor, a currency strategist at Bank of New York Mellon.

Europe Markets Rise Amid Rumors on Deals

LONDON (MarketWatch) — European shares traded lower on Friday with investors cautious after a mixed start to the U.S. fourth-quarter earnings season.

The pan-European Dow Jones Stoxx 600 index traded down 0.6% at 257.39.

“Overall, the market has been strong since the beginning of the year and I think that we could see a bit of profit-taking,” said Stephen Taylor, strategist at Dolmen Stockbrokers.

European banks came under pressure after the release of fourth-quarter earnings from U.S. banking giant J.P. Morgan, with Societe Generale shares down 2.9%, Deutsche Bank shares down 3.7% and Barclays shares down 2.2%.

J.P. Morgan reported that it earned more than analysts expected in the fourth quarter, but its credit costs remained high and it set aside nearly $2 billion to cover consumer-loan losses. Read more on J.P, Morgan results.

“There’s still a lot of risk with financials; their balance sheets are complicated,” said Taylor.

The German DAX index declined 2% to 5,872.96, the French CAC-40 index moved down 1.3% at 3,964.34 and the U.K. FTSE 100 index fell 0.6% to 5,466.05.

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Asian stocks ended broadly higher. U.S. stocks retreated. Shares rose on Wall Street Thursday ahead of results out from Intel Corp., .

The world’s biggest chipmaker posted a jump in fourth-quarter profit and topped Wall Street estimates after higher sales for PC processors. See full story.

Carrefour , Europe’s largest retailer, rose 3.7%, after it reported late on Thursday a 1% rise in fourth-quarter sales to 25.99 billion euros. Latin American sales growth offset a stagnant performance in its home market of France.

Carrefour, which twice lowered its earnings outlook for the year, estimates operating profit of 2 free business cards.78 billion euros, down from 3.3 billion euros in 2008 but above its previous estimate of the “bottom end of the 2.7 billion euro to 2.8 billion euro range.” Read more on Carrefour.

Back with earnings-related decliners, shares of Man Group fell 6.1% in London after it said that its funds under management declined around 4% to $42.4 billion at the end of December after redemptions from institutional investors and a negative performance from its AHL fund. Read Man Group story.

Business-software giant SAP fell 3.2% after it was downgraded to equal weight at Morgan Stanley. The brokerage said the German software giant will want to re-energize its top line through more investment.

Vodafone Group shares were down 1.4%.

The wireless telecom giant’s Verizon Wireless venture with Verizon Communications lowered its basic wireless service fee by about $29 a month on Friday. Read more on Verizon Wireless move.

Autos were also lower, with Renault down 3% and BMW shares down 1.2%..

Taylor at Dolmen said he’s cautious on companies that sell relatively high-priced consumer products. “They had a good rally last year, but I think that they may underperform,” he said.

And QinetiQ shares dropped nearly 12%. The U.K. defense and intelligence group said orders from the U.K. and U.S. governments have been delayed, so the normally seasonally strong second half won’t occur. Its second-half performance is seen broadly similar to the first. Read more on order delay.

However, media stocks were higher, with newspaper publisher Daily Mail and General Trust up 5.5% on the London Stock Exchange after upgrades at UBS and Credit Suisse.

In addition, Pearson shares were up 1.4% after the publisher of the Financial Times said that its majority-owned unit, Interactive Data Corp., is mulling strategic options.

Europe Markets: Europe shares lower after mixed earnings

WASHINGTON (Reuters) – A pension fund may ask the Supreme Court to let it sue BAE Systems Plc (BAES.L) in the United States over allegations that the company paid more than $2 billion in bribes to win a record Saudi arms deal, the fund's lead attorney said on Friday.

A U.S. appeals court ruled this week against the fund for employees of the city of Harper Woods, Michigan. The court said English law, not U.S. law, governed the shareholder lawsuit over alleged bribes to Saudi Prince Bandar bin Sultan and others.

The appeals court, which upheld a lower court's finding, left the fund to pursue its case in Britain.

Patrick Coughlin, the plaintiffs' lead attorney, said the fund had no plans to take its case to England.

Instead, he said it may appeal to the high court against the dismissal of the case on Tuesday by the U.S. Court of Appeals for the District of Columbia.

"Will consider" going to the Supreme Court, Coughlin, of Coughlin, Stoia, Geller, Rudman, Robbins LLP, said in a terse email reply to Reuters. "No current plans to litigate in England."

He did not respond to questions about why he did not plan to take the case to England. The original suit was brought in September 2007.

The pension fund has charged that current and former directors and executives of BAE, Britain's No. 1 arms maker, breached their fiduciary duties and wasted corporate assets by allegedly allowing illegal bribes and kickbacks in the 1980s arm deal known as al-Yamamah, or "the Dove."

BAE has denied that wrongful payments were made to secure the deal in which Tornado fighter jets, Hawker trainer aircraft and other military hardware were sold to Saudi Arabia in exchange for oil starting in 1985 payday advance. The value of the government-to-government barter has been estimated at up to $80 billion, Britain's costliest arms deal.

BAE welcomed the U.S. appeals court ruling, said Lindsay Walls, a company spokeswoman in London.

Lawyers for Bandar, a former ambassador to the United States, have denied any wrongdoing on his part.

The plaintiffs had argued the United States should have jurisdiction because more than $2 billion in alleged bribes went to Bandar through an account at Riggs Bank, a defunct Washington D.C. financial institution.

BAE defendants countered that nearly all of them reside outside the United States, and none in Washington D.C.

Britain's Serious Fraud Office in December 2006 dropped an inquiry into the al-Yamamah deal. Then-Prime Minister Tony Blair said pursuing the matter threatened national security and ties with Saudi Arabia, which he called crucial for counter-terrorism efforts and Middle East peace.

In June 2007, BAE said the U.S. Justice Department had opened its own investigation of BAE's compliance with anti-bribery laws, including dealings with Saudi Arabia. The department did not respond to a request for comment on its investigation.

(Reporting by Jim Wolf; Editing by David Gregorio)

BAE bribery suit may be taken to Supreme Court

MIAMI (Reuters) – A key informant in the U.S. tax evasion case against Swiss bank UBS AG (UBSN.VX) (UBS.N) has asked a federal court in Florida to postpone the scheduled January 8 start of his prison term so that he can cooperate further with the U.S. government to uncover tax cheats.

Former UBS banker Bradley Birkenfeld, who was sentenced in August to three years and four months in prison for helping a billionaire hide assets from U.S. tax authorities, made the postponement request in a filing this weekend by his lawyer to a U.S. district court in Florida.

The filing also requested a hearing to reconsider the 4O-month sentence imposed on Birkenfeld, a U.S. citizen, by federal Judge William Zloch on August 21.

Birkenfeld's sentencing in August came two days after U.S. and Swiss authorities signed a pact in which Switzerland agreed to reveal the names of about 4,450 wealthy American clients of UBS to U.S. tax investigators.

Supporters of Birkenfeld and whistleblower advocates had criticized the sentence against as too harsh, saying his testimony was pivotal in helping prosecutors to uncover massive tax cheating by U.S. holders of undisclosed UBS accounts.

The critics said the informant's tougher-than-expected treatment would undermine future U.S. efforts to expose secretive offshore tax havens used by tax evaders.

"Since the August 21, 2009, sentencing hearing, Mr. Birkenfeld has been ready, willing and able to cooperate further with the Government" in helping bring cases against other UBS clients suspected of concealing assets from U.S. tax authorities, the filing by attorney David Meier said.

"Accordingly … the defendant respectfully submits that the court should extend the date on which Mr easy fast payday loans. Birkenfeld is to self-report to the Bureau of Prisons (presently scheduled to be January 8, 2010), the document said.

The filing noted that despite the U.S. government's stated intention, expressed at the original sentencing hearing, to continue to use him in its investigations, it had "neither met with Mr. Birkenfeld, not asked him a single question" in the last four months.

The request said an extension of Birkenfeld's voluntary surrender was warranted to give him sufficient time to provide additional assistance to the government.

There was no immediate comment from prosecutors.

Government lawyers had said that by coming forward in the summer of 2007 and volunteering insider information to the Justice Department, Birkenfeld had exposed UBS practices that encouraged tax fraud by U.S. citizens.

The Swiss bank earlier in the year settled criminal charges by paying $780 million, and then promising to name thousands of suspected American tax cheats and exit the U.S. tax-shelter business.

Birkenfeld had pleaded guilty to a single fraud conspiracy count in June 2008 for helping a billionaire client hide assets from the Internal Revenue Service.

Justice Department officials, in a claim disputed by Birkenfeld's supporters, said he received a prison sentence instead of probation because he had initially sought to conceal his personal involvement in tax fraud.

(Editing by Leslie Adler)

UBS whistleblower seeks prison postponement

NEW YORK (Reuters) – The Nasdaq rose on Wednesday after solid earnings from Micron Technology and Red Hat, but an unexpected drop in new home sales limited gains on the broader market.

Red Hat Inc (RHT.N) gained 4.8 percent to $31.30 following third-quarter results that beat expectations, and Micron Technology Inc (MU.N) climbed 5.6 percent to $9.94 after posting its first quarterly profit in nearly three years.

"Technology is really carrying the way," said Keith Springer, president of Capital Financial Advisory Services in Sacramento, California.

"The consensus is regardless of what the economy does, this group will be the beneficiary. They were the ones that leaned down the fastest when the market crumbled last year."

The Dow and S&P 500 were little changed as gains in resource shares were tempered by data that showed new home sales dropped 11.3 percent, sinking to a seven-month low in November.

A recovery in the housing market is considered crucial if the U.S. economy is to sustain its rebound from a severe recession. Home improvement chain Home Depot Inc (HD.N) shed 1.2 percent to $28.92 and was one of the Dow's worst drags.

The Dow Jones industrial average (.DJI) added 9.07 points, or 0.09 percent, to 10,474.00. The Standard & Poor's 500 Index (.SPX) put on 2.83 points, or 0 paydayloans.25 percent, to 1,120.85. The Nasdaq Composite Index (.IXIC) gained 15.62 points, or 0.69 percent, to 2,268.29.

Volume was light on the last full trading day before the Christmas holiday. The New York Stock Exchange will close at 1:00 p.m. EST on Thursday and will be closed on Friday.

Energy stocks moved higher, as U.S. oil futures jumped 2.8 percent to $76.50 per barrel after data showed U.S. crude oil inventories fell more than expected last week as imports declined.

The PHLX Oil Service index (.OSX) shot up 1.8 percent, lifted by Schlumberger Ltd (SLB.N), which rose 2.4 percent to $65.50. Barclays Capital raised its rating on shares of the oilfield services company to "overweight" from "equal-weight."

The dollar lost 0.5 percent against a basket of major currencies (.DXY), lifting exporters like Caterpillar Inc (CAT.N), which was up 1 percent at $58.41, and helped limit declines in the Dow and the S&P 500.

Rounding out the day's data, the final December reading on consumer sentiment from the Reuters/University of Michigan surveys and November personal spending both came in weaker than expected.

(Editing by Jeffrey Benkoe)

Dow, S&P dampened by home sales; techs lift Nasdaq

NEW YORK (Reuters) – AOL is in talks to sell its ICQ instant-messaging service to Russian investment firm Digital Sky Technologies, The Wall Street Journal reported on Sunday, citing people familiar with the matter.

According to the report, the discussions are still in the early phase and AOL has reached out to other parties. The value of the sale could be between $200 million and $300 million, the Journal said online payday loans.

A spokeswoman for AOL declined to comment on the story. A spokeswoman for Digital Sky could not be immediately reached for comment.

(Reporting by Michael Erman, editing by Martin Golan)

AOL in talks with Russian investment firm on ICQ

KUWAIT (Reuters) – Kuwait's sale of its stake in Citigroup (C.N) earlier this month was not due to a dispute with the U.S. bank, the Gulf Arab state's finance minister said in published remarks on Sunday.

Mustapha al-Shamali told al-Rai newspaper that there is no dispute between the country's sovereign wealth fund the Kuwait Investment Authority (KIA) and Citigroup.

"The exit of KIA from its stake in Citigroup for $4.1 billion was not due to any dispute between the two parties but it was an opportunistic investment," Shamali was quoted as saying direct payday loans.

The minister's comment comes days after the Financial Times said that the KIA has held internal discussions about scaling back its banking operations with Citigroup.

Last week, KIA said it had sold its stake in Citigroup, making a $1.1 billion profit.

(Reporting by Rania El Gamal; Editing by Thomas Atkins)

Kuwait finance minister says no dispute with Citi: report

NEW YORK (Reuters) – The Dow and S&P 500 rose on Friday as a stronger-than-expected retail sales for November reinforced investors' confidence in a steady recovery of the economy.

But tech stocks were pressured by disappointing quarterly results from a semiconductor company, erasing gains for the Nasdaq.

Total retail sales rose for the second straight month in November for the largest advance since August, data from the Commerce Department said.

A separate report showed that consumer sentiment improved in early December, also raising hopes of a self-sustaining economic recovery.

"Today is a repeat of prior days, with economic data showing recession is bottoming out and recovery is here," said Rick Lake, portfolio manager of the Aston/Lake Partners LASSO Alternatives Fund in Greenwich, Connecticut.

The Dow Jones industrial average (.DJI) was up 63.78 points, or 0.61 percent, at 10,469.61. The Standard & Poor's 500 Index (.SPX) gained 4.22 points, or 0.38 percent, at 1,106.57. The Nasdaq Composite Index (.IXIC) was down 0.67 point, or 0.03 percent, at 2,190.19.

The S&P Retail index (.RLX) was up 1 percent while the S&P Consumer Discretionary sector (.GSPD) gained 0.8 percent.

Mining stocks also advanced after JPMorgan lifted its price target on five companies in the sector, including Alcoa Inc (AA.N) and Freeport McMoRan (FCX.N).

Alcoa shares surged 7 percent to $14 immediate payday loans online.43 and were the top percentage gainer among Dow components.

United Technologies Corp (UTX.N) gained 2.4 percent to $69.59 and provided the Dow's biggest lift after the company said it expects profits to rise about 10 percent in 2010 on cost cuts.

But National Semiconductor (NSM.N) fell 4.6 percent to $14.58 a day after the company posted results that prompted concerns about its ability to regain market share. The Philadelphia semiconductor index (.SOXX) fell 1.0 percent.

Apple Inc (AAPL.O) fell 1 percent to $194.46 after the tech bellwether said it had filed a countersuit against Nokia Corp (NOK1V.HE) (NOK.N), claiming the cell phone maker was infringing upon Apple patents.

A stronger U.S. dollar, which rose 0.7 percent against a basket of currencies, also caused a headwind for equities. Stocks and the greenback have had an inverse relationship for about nine months.

That inverse correlation partly reflects the so-called carry trade, whereby investors borrow a currency cheaply in order to invest in higher-yielding assets. The unwinding of dollar carry-trades puts pressure on equities as investors sold high-yielding assets to cover short positions in the dollar.

(Reporting by Angela Moon, Editing by Kenneth Barry)

Dow, S&P up on retail consumer data; Nasdaq lags

CHICAGO (Reuters) – In a worrisome sign for retailers, data released on Saturday showed that sales rose a scant 0.5 percent on the traditional kickoff to the holiday shopping season despite early signs of a strong showing.

A focus on bargains pulled shoppers into stores and onto websites over the Thanksgiving holiday weekend, but many said they would stick to their budgets and avoid purchases if they could not find a good deal.

Those trends appeared to play out in the results issued by ShopperTrak, which measures customer traffic in stores.

The firm said retail sales rose to $10.66 billion on Black Friday, which often is the single busiest shopping day of the holiday season and can set the tone for the weeks leading up to Christmas on December 25.

In 2008, Black Friday sales measured by ShopperTrak rose 3 percent compared to the prior year's Black Friday. Last year's entire holiday season marked the worst performance in nearly 40 years. The firm stuck by its forecast for total holiday sales to rise 1.6 percent this year compared to 2008.

"I figured Black Friday would be up 1 (percent or) maybe 2 percent, just because of the deal-consciousness of folks," said Patricia Edwards, founder and chief investment officer of Storehouse Partners, an investment advisory firm based in Bellevue, Washington. She noted that early November deals from stores and online promotions also may have diverted traffic.

"It's possible it took some of the glory out of the Friday number," she said.

Shoppers spent 35 percent more on Black Friday web purchases than a year earlier, with the average order value reaching $170.19, according to online retail analytics company Coremetrics. Those shoppers bought an average of 5.4 items per order, up from 4.6 items last year, Coremetrics said.

TOUGH HOLIDAY SEASON

Industry executives and analysts have predicted a tough holiday season that may show only a slight improvement over 2008 due to a weak economy and high unemployment.

But their optimism had crept up earlier this week. Analysts polled by Thomson Reuters Data on Friday had increased their forecast for November retail same-store sales to a 2.5 percent increase, from a previous view of 1.8 percent.

The National Retail Federation is due to release its early holiday data on Sunday.

"This will be the hardest holiday season ever to predict," said Eric Karson, associate professor of marketing at the Villanova University School of Business in Pennsylvania.

Retailers used to offer steep promotions on select items as the initial lure for shoppers, in the hopes they would buy more inside the store auto loans. Consumers now expect such discounts as a matter of course.

"We have this big game of chicken now evolving between the retailers and the customers," Karson said.

Claude Smith, a 45-year-old out-of-work plumber from Virginia, said he was trying to pay off his bills from his credit card, which now has a higher interest rate. He pays with cash when he visits stores such as TJX Cos's AJ Wright and Walmart.

"Things are bad. Everybody's thinking about saving everything they have. I go out when there's sales and that's it," said Smith, who visited the Galleria at White Plains mall in New York with his two teenagers on Saturday.

BUYING ONLY WHAT'S NEEDED

Many shoppers showed they were relying on lessons learned from the 2008 season, which began just after a global financial crisis erupted. A U.S. unemployment rate above 10 percent and other financial pressures also weighed on their minds.

"I have three children. I am a single mom. The economy is bad. I am getting only those things that we really need," said Natasha Walker, a 35-year-old telephone operator shopping in Times Square in New York. Her purchases included a GPS navigation system for her car, CD holders, movies for her children and clothing for herself.

Shawn Kravetz, president of hedge fund operator Esplanade Capital LLC, said retailers that slashed costs will do well.

"You can count companies with positive comps (an increase in existing store sales compared to the prior year) on two hands — J Crew, Wal-Mart, Chico's and few others. That is not a strong holiday," he said.

Even though online sales are growing, they still account for less than 4 percent of total retail sales, Karson said.

Wal-Mart Stores Inc's site Walmart.com was the most popular retail site on Thanksgiving for the fifth year in a row, followed by Amazon.com Inc and Best Buy Inc, according to tracking firm Hitwise.

Liberty Interactive's QVC, best known for its TV shopping channel, rang up more than $32 million in orders for its biggest Black Friday ever, a 60 percent increase from 2008, QVC said. It added that more than 40 percent of the sales came from its web site, QVC.com.

(Reporting by Jessica Wohl, additional reporting by Nicole Maestri in San Francisco, and Jennifer Ablan, Martinne Geller and Dhanya Skariachan in New York; Editing by Michele Gershberg and Will Dunham)

Black Friday sales barely up, online surges

Bernard L. Madoff’s enormous Ponzi scheme ended on Dec. 11, 2008, when he was arrested at his Manhattan penthouse. But for some early victims, the date his crime started could matter much more than when it stopped.

A motion pending in federal bankruptcy court in Manhattan contends that Mr. Madoff’s long-term investors cannot accurately calculate their losses until they know whether any of their original profits were legitimate. And to determine that, the motion continues, they must know when the Ponzi scheme began.

The Madoff bankruptcy trustee is calculating investor losses as the difference between the cash paid into an account and the cash taken out.

But if some of an investor’s early profits were in fact legitimate, those earnings should count as part of the cash paid into the Ponzi scheme, the motion argues.

Doing that would mean that some people who do not have a valid claim now — because they took out more than they paid in — could suddenly become “net losers” who got back less than they put in.

Of the 4,903 accounts on the Madoff books, 2,568 of them are classified as net winners with no valid claims.

Depending on the size of their loss, net losers can get up to $500,000 from the Securities Investor Protection Corporation, an industry-financed reimbursement fund, and a share of whatever assets the trustee can collect.

Even some investors already eligible for SIPC compensation could get more if they were credited with legitimate profits earned before the Ponzi scheme began, the motion asserts.

The novel argument is being made by Therese M. Doherty and John Oleske at the firm of Herrick, Feinstein in New York. They represent an obscure, insolvent company called Magnify Inc., which is not related to two other identically named companies in the United States.

“I can confirm that Herrick’s client was a direct investor” with Mr. Madoff since at least 1979, Ms. Doherty said. “Our client has requested that we not further identify it in any way, or discuss the facts relating to its investments.”

The Herrick team argues that “the information available to date” points to a starting date for the fraud sometime in the early 1990s — by which point Magnify already had “a substantial amount” of legitimate profits in its Madoff account, according to the motion.

But that is only one of the publicly available answers to the question of when the fraud started.

Mr. Madoff, in the sworn statement he made when he pleaded guilty in March, said his fraud began in the early 1990s. When his key lieutenant, Frank DiPascali Jr., pleaded guilty in August, he told the judge his crime may have started a few years earlier than that, perhaps in 1989 immediate payday loans online.

Indeed, since Mr. Madoff was accused of giving special treatment to some long-term investors, it is possible that some accounts became part of the Ponzi scheme later than others.

But in court statements and filings, federal prosecutors have consistently asserted that the entire Ponzi scheme was up and running “at least by the 1980s.”

They made that estimate long before the bankruptcy trustee had reconstructed the Madoff account records for the 1980s — even now, only records going back to 1983 are completed. And prosecutors declined recently to explain why they were so certain, even though the date could be quite significant for some Madoff victims.

But other lawyers are clearly intrigued by the Magnify argument.

“It is an interesting, novel and potentially very important thesis that makes perfect sense,” said Richard Levy Jr., whose firm represents a variety of Madoff victims.

“There had to be a starting point,” Mr. Levy continued. “If it wasn’t a Ponzi scheme from the start, I don’t see how you can dismiss the legitimate profits from the initial investments.”

The Magnify motion demands that Irving H. Picard, the trustee liquidating the Madoff estate for SIPC, produce a valid starting date for the fraud before he determines the claims of investors whose accounts may predate the Ponzi scheme.

The Herrick filing also echoes more familiar arguments being made by dozens of other lawyers disputing the way Mr. Picard is calculating investor losses.

Those motions argue that Mr. Picard is violating the SIPC statute and earlier court rulings by calculating investor losses on a “cash-in, cash-out” basis rather using the balances shown on customer account statements before Mr. Madoff’s arrest.

The sum of all of those individual account balances was more than $64 billion. By contrast, Mr. Picard has said that the eligible losses in the fraud, calculated by his formula, total just over $21 billion.

This so-called net equity dispute, which has generated fierce debate among Madoff victims since last spring, is scheduled to come before Judge Burton R. Lifland of United States Bankruptcy Court in Manhattan on Feb. 2.

Lawyers on both sides of the dispute say that any decision by Judge Lifland is certain to be appealed at least to the federal appellate court in New York, which could take up to a year to reach a decision.

Mr. Picard declined to comment on the Magnify argument, saying that he would respond to it and the other pending objections in a formal answer to the court in January.

Start Date Is Critical in Ponzi Plan

NEW YORK, Nov. 19 (Xinhua) — The Conference Board, an economic research group, said Thursday that its leading economic index (LEI)for the United States increased 0.3 percent for the seventh consecutive month in October.

The LEI for the United States increased 0.3 percent in October, following a 1.0 percent gain in September, and a 0.4 percent rise in August, said the Conference Board in a report.

“After half a year of consecutive increases, the month-to-month growth of the LEI is stabilizing and the gains continue to be broad-based,” said Ataman Ozyildirim, economist at the Conference Board.

“Meanwhile, the coincident economic index has been essentially flat since June, after declining since November 2007. The composite indexes suggest the recovery is unfolding and economic activity should continue improving in the near term,” he added payday loans.

“The data indicate that economic recovery is finally setting in. We can expect slow growth through the first half of 2010. The pace of growth, however, will depend critically on how much demand picks up, and how soon,” said Ken Goldstein, economist at the Conference Board.

The Conference Board coincident economic index for the United States was unchanged in October, following a 0.1 percent decline in September, and a 0.1 percent increase in August.

The Conference Board lagging economic index declined 0.2 percent in October, following a 0.5 percent decline in September, and a 0.4 percent decline in August.

U.S. economic leading indicator increases in October