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SAN DIEGO – Investigators are confronted with a series of nagging questions as they try to unravel the case of a California real estate agent who said his Toyota Prius turned into a runaway death trap after the gas pedal became stuck.

Why didn’t the driver simply throw the transmission into neutral as officers urged him to do? Why didn’t a safety mechanism activate that was supposed to cut power to the engine in such situations? And could he have made the story up in pursuit of fame and money?

Each question is getting scrutiny from the Internet-consuming public as they question the motives of the driver, a 61-year-old real estate agent named James Sikes. Some skeptics have even invoked the infamous “balloon boy hoax” in expressing doubts about the story.

No evidence has emerged to suggest that Sikes was dishonest when he called 911 on Monday to report that the accelerator of his 2008 Prius was jammed during a trip home from his lawyer’s office.

Sikes and his car emerged unscathed, but the incident has been another major headache for the Japanese automaker amid questions over the safety and reliability of its vehicles.

The California Highway Patrol has repeatedly said it has no reason to suspect a hoax. It does not plan to investigate the incident or perform a mechanical inspection because there were no injuries or property damage. Investigators from Toyota and the federal government are also looking into the incident.

“There is no factual information that I’m aware of, or the highway patrol is aware of, that would discredit his story,” agency spokesman Brian Pennings said Friday.

Sikes spoke to throngs of reporters twice this week about his ordeal, but he has but he has not sought out attention or talk show interviews like others have done during their 15 minutes of fame. Pennings said he urged Sikes to speak with reporters the first time, on Monday, after the white-knuckled journey down Interstate 8 to avoid getting besieged later by the media.

And a law firm representing Sikes during the investigation said its client does not intend to take legal action against the automaker.

Doubters have asked why Sikes didn’t put the car in neutral as a California Highway Patrol dispatcher and an officer repeatedly urged him to do. Sikes said he considered going into neutral but worried he might go into reverse or flip.

“I had never played with this kind of transmission, especially when you’re driving, and I was actually afraid to do that,” he said Tuesday. “I was afraid to do anything out of the normal.”

Toyota has said all Priuses are equipped with a computer system that cuts power to the wheels if the brake and gas pedals are depressed at the same time, as Sikes was doing.

“It’s tough for us to say if we’re skeptical. I’m mystified in how it could happen with the brake override system,” Don Esmond, senior vice president of automotive operations for Toyota Motor Sales, said Thursday.

Raj Rajkumar, an electrical and computer-engineering professor at Carnegie Mellon University in Pittsburgh who studies auto electronics, said the Prius could still have acceleration malfunctions even with the fail-safe system.

Toyota says the fail-safe and the engine are controlled by a central computer that contains two independent microprocessors that communicate and must agree with each other free business cards. If there’s a disagreement, power would be cut to the wheels.

But Rajkumar said the two engine control unit microprocessors could still receive common erroneous signals from sensors or experience software errors that could cause the throttle and the fail-safe mechanism to malfunction.

Sikes came to a stop after a Highway Patrol officer blared instructions from a loudspeaker, telling him to push the brake pedal to the floor while applying the emergency brake. Sikes apparently did this, allowing him to slow the car to 50 mph and shut off the engine.

At one point during the 911 call, the dispatcher asks if he can press the ignition button for five seconds and she gets no response. Sikes said later that he struggled to hold the phone and keep his hands on the wheel.

Todd Neibert, the officer who gave instructions to Sikes over a loudspeaker, said he smelled burning brakes when he caught up with the Prius. He examined the car when it came to a stop.

“The brakes were definitely down to hardly any material,” he told reporters. “There was a bunch of brake material on the ground and inside the wheels.”

Sikes said afterward that he was “embarrassed” by the incident, suggesting that he wished he would have handled it differently. “I’m just embarrassed about that,” he said. “You have to be there. That’s all I can say.”

Kurt Bardella, a spokesman for Rep. Darrell Issa, R-Calif., said Friday that investigators are best positioned to determine if there was a hoax, but no evidence has emerged.

A representative of Issa’s office was at a California Toyota dealership when investigators from the National Highway Traffic Safety Administration and Toyota examined Sikes’ blue Prius on Wednesday and Thursday.

“Where are these suggestions coming from?” he said. “It would be irresponsible to assert it’s a hoax without having facts.”

Joan Claybrook, a former NHTSA administrator, said Sikes’ refusal to shift to neutral, is understandable.

“It’s such a horrifying experience to be completely out of control,” she said. “It’s the kind of thing you dream about when you’re really upset and you wake up in sweats.”

The same firm handling Sikes’ case also represents the family of California Highway Patrol Officer Mark Saylor, which sued Toyota last week in San Diego Superior Court.

Saylor was killed in August along with his wife, her brother and the couple’s daughter after their Lexus accelerator became trapped by a wrong-size floor mat on a freeway in La Mesa, near San Diego. Their loaner car hit a sport utility vehicle and burst into flames.

Representatives of the firm did not respond to phone messages seeking additional comment Friday.

Claybrook, the former federal administrator, noted that drivers often come under heavy scrutiny for reporting unintended acceleration.

“Attacking the driver has long been the answer that not just Toyota, but the entire industry, has had,” she said. “Blaming the driver is old hat.”

___

AP Auto Writer Tom Krisher in Troy, Mich., contributed to this report.

Runaway Prius case presents nagging questions

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 (AFP) – Embattled US automaker General Motors on Wednesday announced its vice chairman Robert Lutz would retire in May.

"Lutz will retire effective May 1, 2010, capping a 47-year career in the global auto industry that included senior leadership positions at four of the world?s leading automakers," GM said in a statement personal business card.

GM says vice chairman to step down in May

ZURICH — A Swiss court ordered tax officials to drop two more cases involving account holders of the banking giant UBS, adding urgency to the government’s effort to find a political solution that would preserve a data-sharing agreement with American regulators.

The Federal Administrative Court, in a decision published on Friday, told Switzerland’s tax authority to comply with an earlier ruling that blocked it from sending American regulators information on 26 UBS customers. The court, located in Bern, said Switzerland could lift bank secrecy rules only when there was evidence of tax fraud.

The decision increases pressure to find a way to salvage the agreement to hand over data on as many as 4,450 UBS account holders as part of an American crackdown on tax evasion. Parliament, however, may be asked to approve the settlement to get around the court rulings cheap payday advance.

With parliamentary approval, the court will not be able to “regard the UBS agreement as merely a mutual agreement” as it will have the same legal weight as a treaty, the government said.

The two UBS clients involved in the latest decision are among 26 covered by last month’s ruling. The court said that the account holders’ conduct — failing to complete tax forms or declare income — was tax evasion rather than tax fraud. Under Swiss law, tax fraud is a criminal offense, while evasion is a civil matter.

Officials with UBS, the Swiss Federal Tax Administration and the Internal Revenue Service all declined to comment.

U.S.-UBS Deal Is Undermined by Swiss Ruling

The 70-28 roll call Wednesday by which the Senate passed a jobs bill offering tax breaks to companies that hire unemployed workers.

A “yes” vote is a vote to pass the bill.

Voting yes were 55 Democrats, 13 Republicans and 2 independents.

Voting no were 1 Democrat and 27 Republicans.

ALABAMA

Sessions (R), No; Shelby (R), No.

ALASKA

Begich (D), Yes; Murkowski (R), Yes.

ARIZONA

Kyl (R), No; McCain (R), No.

ARKANSAS

Lincoln (D), Yes; Pryor (D), Yes.

CALIFORNIA

Boxer (D), Yes; Feinstein (D), Yes.

COLORADO

Bennet (D), Yes; Udall (D), Yes.

CONNECTICUT

Dodd (D), Yes; Lieberman (I), Yes.

DELAWARE

Carper (D), Yes; Kaufman (D), Yes.

FLORIDA

LeMieux (R), Yes; Nelson (D), Yes.

GEORGIA

Chambliss (R), No; Isakson (R), No.

HAWAII

Akaka (D), Yes; Inouye (D), Yes.

IDAHO

Crapo (R), No; Risch (R), No.

ILLINOIS

Burris (D), Yes; Durbin (D), Yes.

INDIANA

Bayh (D), Yes; Lugar (R), No.

IOWA

Grassley (R), No; Harkin (D), Yes.

KANSAS

Brownback (R), No; Roberts (R), No.

KENTUCKY

Bunning (R), No; McConnell (R), No.

LOUISIANA

Landrieu (D), Yes; Vitter (R), No.

MAINE

Collins (R), Yes; Snowe (R), Yes.

MARYLAND

Cardin (D), Yes; Mikulski (D), Yes.

MASSACHUSETTS

Brown (R), Yes; Kerry (D), Yes.

MICHIGAN

Levin (D), Yes; Stabenow (D), Yes.

MINNESOTA

Franken (D), Yes; Klobuchar (D), Yes.

MISSISSIPPI

Cochran (R), Yes; Wicker (R), Yes pay day loan lenders.

MISSOURI

Bond (R), Yes; McCaskill (D), Yes.

MONTANA

Baucus (D), Yes; Tester (D), Yes.

NEBRASKA

Johanns (R), No; Nelson (D), No.

NEVADA

Ensign (R), No; Reid (D), Yes.

NEW HAMPSHIRE

Gregg (R), No; Shaheen (D), Yes.

NEW JERSEY

Lautenberg (D), Not Voting; Menendez (D), Yes.

NEW MEXICO

Bingaman (D), Yes; Udall (D), Yes.

NEW YORK

Gillibrand (D), Yes; Schumer (D), Yes.

NORTH CAROLINA

Burr (R), Yes; Hagan (D), Yes.

NORTH DAKOTA

Conrad (D), Yes; Dorgan (D), Yes.

OHIO

Brown (D), Yes; Voinovich (R), Yes.

OKLAHOMA

Coburn (R), No; Inhofe (R), Yes.

OREGON

Merkley (D), Yes; Wyden (D), Yes.

PENNSYLVANIA

Casey (D), Yes; Specter (D), Yes.

RHODE ISLAND

Reed (D), Yes; Whitehouse (D), Yes.

SOUTH CAROLINA

DeMint (R), No; Graham (R), No.

SOUTH DAKOTA

Johnson (D), Yes; Thune (R), No.

TENNESSEE

Alexander (R), Yes; Corker (R), No.

TEXAS

Cornyn (R), No; Hutchison (R), Not Voting.

UTAH

Bennett (R), No; Hatch (R), Yes.

VERMONT

Leahy (D), Yes; Sanders (I), Yes.

VIRGINIA

Warner (D), Yes; Webb (D), Yes.

WASHINGTON

Cantwell (D), Yes; Murray (D), Yes.

WEST VIRGINIA

Byrd (D), Yes; Rockefeller (D), Yes.

WISCONSIN

Feingold (D), Yes; Kohl (D), Yes.

WYOMING

Barrasso (R), No; Enzi (R), No.

Senate roll call on tax breaks for new hires

Filed at 2:33 a.m. ET

YOKOHAMA, Japan, Feb 9 (Reuters) - Nissan Motor Co (NASDAQ:NSANY) , Japan’s No.3 carmaker, said it returned to profit in the third quarter from a year earlier and raised its annual forecast for the second time this financial year, boosted by brisk sales globally.

Nissan, in which France’s Renault SA holds a 44 percent stake, reported on Tuesday an operating profit of 134.07 billion yen ($1.5 billion) for the October-December quarter, swinging from a loss of 99.19 billion yen a year earlier.

The result beat the average estimate of 80 billion yen from three analysts.

For the year ending in March, Nissan now expects an operating profit of 290 billion yen, up from the 120 billion yen profit it forecast in November. That compared with the average 210 billion yen estimate in a poll of 19 analysts by Thomson Reuters (NYSE:TRI) (TSX:TRI) I/B/E/S short term personal loan.

Nissan had initially projected a second straight year of losses this financial year, but it revised its outlook to a profit three months ago as government incentives helped rev up sales in China.

Bigger Japanese rivals Toyota Motor Corp (NYSE:TM) and Honda Motor Co (NYSE:HMC) also upgraded their annual forecasts last week. [IDs:nSGE61209G]

Shares of Nissan have risen 8.7 percent in the last three months, outperforming the Nikkei stock average’s 1.7 percent gain.

Nissan shares closed up 2.4 percent at 731 yen before the results announcement, against a 0.2 percent fall in the Nikkei.

Nissan Returns to Profit and Lifts Forecast

WASHINGTON/BEIJING (Reuters) – China said on Friday it will slap heavy anti-dumping duties on U.S. chicken parts, a move likely to aggravate trade ties between two of the world's most important economies at a time of strained political relations.

The Chinese Commerce Ministry's initial investigation showed that U.S. companies had dumped chicken products into the Chinese market, according to the ministry's website (www.mofcom.gov.cn).

The preliminary tariffs were announced a day after Beijing requested a World Trade Organization ruling on European Union duties on shoes made in China in the latest case demonstrating China's use of the WTO to keep markets open to the exports on which it depends.

The United States Trade Representative was muted in its response, saying it would consult with U.S. producers as it analyzed China's move.

"USTR is following the investigation closely, and we will want to ensure that MOFCOM follows the applicable WTO rules," . spokeswoman Carol Guthrie said in a statement.

The United States and China are embroiled in a series of economic and political disputes, ranging from the value of the Chinese currency to Internet control, Taiwan and Tibet.

President Barack Obama this week vowed to get tough in dealing with complaints that U.S. exports are disadvantaged by China's artificially cheap yuan, drawing a sharp rebuke from China that its currency was set at "reasonable" levels.

CHINESE PRODUCERS CRY FOUL

The various disputes following placid ties during Obama's first year in office have alarmed the business community.

"The world needs strong U.S.-China economic engagement now, not a ratcheting up of trade tensions," said Michael Barbalas, president of the American Chamber of Commerce in China.

Chicken feet and wing tips, virtually worthless in the U.S. market, are a delicacy in southern China. Many U.S. poultry producers count on the Chinese market to round out their profits.

Chicken feet and wing tips fetch about 2 U.S. cents per pound in the United States, but land in China at about 42 U.S. cents - a figure that Chinese rivals say represents the cost of the freight only.

"Chicken feet and wings are not wanted in the U.S. so they sell them to China, they dump them below cost," said Wang Xiulin, president of the Chinese Poultry Association.

"For over a decade, the U.S. has sent big volumes of chicken to the Chinese market, hurting producers here. Last year, the Chinese poultry industry was really hurting so we asked for this investigation no teletrek payday advance."

Tyson Foods, an active investor and lobbyist in China, got the lowest duty of 43.1 percent. Pilgrim's Pride Corp was hit with an 80.5 percent duty. Most other firms, including Sanderson Farms, face a 64.5 percent duty.

Those that did not appeal the finding would pay duties of 105.4 percent, the ministry said.

China began its investigation of U.S. chicken parts after the U.S. imposed safeguard duties on Chinese-made tires, which China is fighting at the WTO [ID:nLDE60I1H8].

DALAI LAMA ROW LOOMS

The latest flare-up in Sino-U.S. ties comes against a backdrop of disagreements over human rights after Beijing jailed a top dissident and over Internet freedoms after search engine Google Inc threatened to pull out of China over censorship and hacking attacks.

U.S. senators have taken up the Google case, backing the search engine with unanimous resolution. a Congressional panel will hold a high-profile hearing on Google on February 10.

China has been warning Obama against meeting the Dalai Lama, reviled by Beijing as a separatist for seeking self-rule for Tibet. The meeting may happen as early as this month.

Beijing is also upset with Washington over a $6.4 billion U.S. weapons package for Taiwan, the self-ruled island that Beijing deems a breakaway province. China has said it will impose unspecified sanctions on U.S. firms selling weapons to the island.

U.S. officials have voiced frustration that the issues roiling ties now were all discussed directly by Obama and Chinese President Hu Jintao just last November in Beijing.

The Eurasia Group said in analysis published on Friday that China's government is reacting to nationalistic pressures at home and to resistance from foreign countries who want more Chinese action in correcting huge global imbalances.

"Beijing's amped up rhetoric was likely driven by domestic insecurities and an external environment that is less conducive to perpetuating its export-led economic model," it said.

Damien Ma, a China analyst at the Eurasia Group in Washington, said there are still many bilateral working relationships that can help defuse U.S.-China tensions.

"Just because there's a lot of issues and a lot of headline risk, doesn't mean these things won't be worked out through back channels," he said.

(Additional reporting by Niu Shuping in Beijing; Writing by Paul Eckert; Editing by Eric Walsh)

Chicken parts join menu of U.S.-China disputes

BERLIN — The soaring glass and iron Siemens factory here opened almost exactly a century ago. At first, it churned out turbines to generate electricity, then switched to munitions during World War II before being looted by the Soviets, which required it to be rebuilt at the dawn of the Cold War.

Today, it is manufacturing turbines again — except the models being made now are among the most advanced in the world, each one able to power all the homes in this city of three million people by itself.

“It’s not a museum; it’s a workshop,” said Michael Schwarzlose, a project manager at the Berlin plant.

The same might be said for much of Europe itself, despite American suspicions to the contrary. European companies may not be as nimble as their U.S. counterparts, but in moving to preserve jobs in the midst of the worst global downturn since the end of World War II, they have forged a different path toward recovery.

In doing so, they are making old plants more modern and effective rather than starting over elsewhere or shifting jobs to less expensive locales.

“American companies have been faster to adjust their work forces and quicker in protecting profit margins,” said Gilles Moëc, a senior economist at Deutsche Bank. Indeed, while overall profit margins have fallen for both European and American companies, European firms have been willing to accept lower profit and productivity in the short term.

But that does not mean companies on the Continent have fallen behind in innovation, experts say, especially when it comes to green technology, despite increasing pressure from China.

Instead, Europe relies on its large companies to maintain a cutting edge in key industries, a sharp contrast to the American pattern of turning to newer, smaller companies to drive innovation and create jobs.

“The large incumbents in Europe, which might have been considered technological laggards, have used green technology and sustainability as a core new element of growth,” said Luc Soete, a professor of international economics at Maastrict University, in the Netherlands.

They are also remarkably resilient. The Siemens factory added 500 workers here during the depths of the economic crisis last year, beginning production of new gas-burning turbines that are the most powerful Siemens makes but emit substantially less carbon dioxide than older models.

Barbara Kux, the chief sustainability officer at the company, points to the state-of-the art products made by the century-old factory as an example of green innovation.

“It’s part of sustainability and it shows you think long term and are there to stay,” she said. “It gives you the chance to keep experienced people, to keep their knowledge in-house and develop a high level of loyalty and trust so they feel like part of a family rather than just doing a job.”

The varying responses to the economic downturn come amid a fierce intellectual debate in the United States about whether the country is headed toward a more European economic model, given Washington’s nationalization of big banks and intervention in the auto industry, as well as President Barack Obama’s proposal to overhaul the health care system.

“The end result would be an America much closer to the European model of a social-welfare state, which prioritizes cohesion over innovation,” warned a recent article in National Affairs quarterly by Jim Manzi, a former software executive who is now a senior fellow at the Manhattan Institute, a conservative research group.

While unemployment has soared into the 20 percent range in hard-hit countries on the periphery of Europe like Spain and Latvia, the relative success of other European countries in avoiding deep job cuts adds a new wrinkle to a long-standing trans-Atlantic argument.

When it comes to jobs, the most powerful political issue in the United States today, “companies in Europe are probably much more aware of the social limits in which they operate,” Mr. Soete said.

The overall European unemployment rate of 10 percent matches that of the United States, but northern and central Europe have fared much better, with joblessness at 4 percent in the Netherlands and 5.4 percent in Austria, for example.

Germany’s economy contracted by 5 percent last year, yet its unemployment rate of 7 cashadvance.5 percent is actually down from where it was two years ago. By contrast, the U.S. economy shrank 2.4 percent last year as unemployment doubled to 10 percent over the period.

The ability of the German economy, the biggest in Europe, to stanch job losses despite a markedly deeper recession than in the United States is “something of an economic miracle,” contends Jorg Kramer, chief economist for Commerzbank in Frankfurt.

Much of the attention on saving jobs has focused on the government’s short-work program, in which taxpayers and companies share the cost of furloughing workers. But Mr. Kramer said the government-financed program of shorter work weeks, or Kurzarbeit, was responsible for saving only about 20 percent of jobs.

“Half of this miracle can be explained because firms allowed workers to do less; they tolerated a 2.5 percent drop in productivity,” he added. “You can either cut workers or cut hours.”

In the more flexible U.S. labor market, where industrial unions are weak and contracts far less rigid, companies responded more often by letting workers go, sharply cutting costs and preserving profit margins.

German companies not only reduced hours on the job, they also made a decision to accept lower profit margins in the short term, Mr. Kramer said, a practice he called “labor-hoarding.”

In Germany, profit margins have fallen from 6.26 percent in the first quarter of 2008 to just 0.58 percent in the latest quarter, according to Thomson Reuters Datastream. Similarly, French profit margins have dropped from 6.5 percent to 1.2 percent. By contrast, corporate profitability in the United States have shrunk from 7.8 percent to 3.6 percent.

The choices may have fateful consequences. As the recovery picks up steam, European competitors will be well situated to take advantage of new growth opportunities while American companies are required to rebuild their work forces.

But if the fears of a “double-dip recession” turn out to be true, the leaner profile of big U.S. companies could help them hold up better in a renewed downturn.

Whatever the outcome, European experts say that the varying strategies of companies during the financial crisis, and the different ways they treated their workers, ought to prompt a revision of the traditional American view that Europe’s social democracies are condemned to slow growth and high unemployment.

“It’s not true that there is a correlation between how much you spend on social policy and welfare and economic growth,” said Paolo Guerrieri, a professor of international economics at the University of Rome I.

“The best performing group — Denmark, Sweden, Holland, Germany — are exactly the kind of countries that shouldn’t be doing well according to the U.S. stereotype of high taxes and high welfare benefits.”

Siemens is an example of the kind of European company that is leading the way.

Although its global work force has shrunk over the past five years as it exited businesses like telecommunications and auto parts, that has not stopped it making advances in facilities like its Berlin factory, even if the setting resembles Fritz Lang’s 1927 film “Metropolis.”

The 163-year old company spent €500 million, or $700 million, to develop the new turbines being built at the Berlin factory as part of a push into green technology, which it broadly defines to include low carbon-dioxide-emitting turbines and locomotives, solar paneling and wind technology, as well as air and purification equipment.

With revenue increasing 11 percent from 2008 to 2009, Siemens’ broad green portfolio is now growing faster than the company’s other businesses, Ms. Kux added.

And it managed to save its customers an estimated 210 million tons in carbon dioxide emissions last year, the equivalent of the amount generated by New York, Tokyo, London and Berlin put together.

“The global economic crisis has actually allowed us to increase our green advantage,” she said. “It’s an opportunity to jump ahead, cut costs, and improve our own resources.”

Europe Takes Its Own Path Toward Economic Recovery

HONG KONG (MarketWatch) — When China began its massive stimulus and bank-lending program, almost immediately its equity markets moved higher. But rather than this being an example of the Efficient Market Theory at work, the explanation was the more messy unintended consequences — the huge bank-lending effort was spilling directly into the stocks and not just building roads and railways.

When that stimulus goes into reverse, you might expect equity markets to follow. So far, they’re right on cue. Shanghai’s benchmark share index has fallen 9% this year, and last week, China XD Electric became the first A-share to fall on its debut in nearly four years. In Hong Kong, the Hang Seng Index is now testing the psychologically important 20,000-point level, and there have also been IPO casualties, the latest being SouthGobi , which debuted with an alarming 11% fall on Friday.

Only days ago, accountants were forecasting Hong Kong and Shanghai would again lead the world with record IPOs this year. This may need to be rethought. Already stories have been circling that regulators in Shanghai are planning another moratorium on new issues to shore up the market, while in Hong Kong, at least one IPO luncheon was abruptly cancelled last week.

As the first month of 2010 has progressed, investors have grown rattled as Beijing’s exit strategy from its stimulus program has taken on an increasingly desperate look. First we had a hike in reserve requirements for banks before it was reported that all new loans for the rest of the month had been banned, amid reports new lending had already reached 1.45 trillion yuan in the first three weeks — nearly 20% of the full-year target.

It also appeared mainland Chinese banks were scrambling to raise fresh capital and drop lending projects. Bank of China’s proposed fund raising ballooned from an initial 40 billion yuan ($5.86 billion) to a stock offering of up to 230 billion Hong Kong dollars ($29.6 billion). The new frugality has led to China shelving some of its high-speed rail infrastructure projects, according to a report last week in the South China Morning Post.

The need for Beijing to find a change of gear for the economy has taken on greater urgency after the consumer price index came in 1.9% higher for last December, up from a 0.6% rise a month earlier.

At the same time authorities do not want to stall the economic recovery. This, to some extent, is no different from governments around the world seeking a painless exit from last year’s giant stimulus programs — but for China’s unbalanced economy, withdrawal could be particularly challenging payday loan companies. According to Morgan Stanley Asia Chairman Stephen Roach, who spoke in Hong Kong recently, stimulus investment and bank lending accounted for almost 95% of China’s growth in 2009.

Another complication China faces is that, unlike many countries coming out of the deep global recession, it has to tighten into a potential property-market bubble after steep price-rises last year. It may look as if it all doesn’t quite add up, although some brokers say there is no need to worry.

CLSA’s strategists argue the tightening noise is just a speed bump in a bull market, and those with a view extending beyond two months should buy more interest-rate-sensitives in China, such as property and bank stocks. They add that talk of a slowdown or “collapse” in residential property sales this month should be ignored, as the Chinese government wants to see a cooling off, as authorities hope to use the continuing residential-property development cycle to drive economic growth.

A new report from HSBC research also dismisses concerns over tightening, saying regulators are only seeking to smooth quarterly lending, not restrict loans. They suggest a good way to assess the current period of tightening is to look back to 2004, when Beijing also raised interest rates. Then, the H-share market bottomed one month after the first tightening measure with a 15%-20% correction, although less reassuringly, the A-share market entered a two-year bear market.

Fast forward to today and added into the mix is a general weakening in emerging-market equity risk appetite for global investors, as the U.S. dollar strengthens and uncertainty over new regulation on banking and capital movements overhangs the market.

We can expect news on policy coming out of Beijing to be watched closely in the days ahead. It’s odds-on that regulators will tread carefully so as not to destabilize equity markets further with planned cash calls for banks and a new listing pipeline ahead.

Still, while authorities may find its possible to efficiently control bank lending by decree — and even to do so with year-end gross domestic product numbers — stock markets and property markets are quite different animals.

Craig Stephen’s This Week in China: Low follows stimulus high in China

PORT ARTHUR, Texas – About 450,000 gallons of crude oil spilled in a southeast Texas port Saturday after two vessels collided, the U.S. Coast Guard said. No injuries have been reported, but part of the port has been closed.

U.S. Coast Guard Petty Officer Renee Aiello told The Association Press that the crude spilled at the Port of Port Arthur when a 600-foot tanker carrying oil collided with a towing vessel pushing a loaded barge. The Coast Guard was notified of the collision around 9:50 a.m., she said.

The crash left a 15-by-8-foot hole in the tanker, Aiello said low fee pay day loans. The towing vessel then ricocheted and hit another tanker that was tied to a pier. Aiello didn’t know what damage was caused to that ship.

Aiello said a portion of the oil in the damaged tank has been moved to another holding tank on the ship.

Port Arthur is about 90 miles east of Houston.

Oil spilled at east Texas port as ships collide

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

TAIPEI (Reuters) – Suppliers for Apple Inc's new tablet computer have begun shipping touchscreen panels and will start delivering aluminum casings for it next month, sources said, implying a second-quarter product launch.

AVY Precision Technology Inc, a Taiwanese manufacturer of covers for electronic products, will begin production of the cases in February, two sources familiar with the situation said on Friday.

TPK Solutions, an unlisted touch screen panel maker also based in Taiwan will also supply panels for the product, a third source said, on top of those already being manufactured by another Taiwan company, Wintek Corp.

"Production of the cases will begin in February, so everything points to a second-quarter launch right now," said one of the sources. "It doesn't take that long for the company to assemble the PC together, but a second-quarter shipment date is what we're looking at now."

The sources declined to be named because they were not authorized to speak to the media. Apple's spokesman would not comment. Officials at AVY and TPK also declined to comment.

A barrage of manufacturers are jockeying for attention ahead of Apple's widely expected announcement of a 10- to 11-inch tablet computer in late January, which analysts say could redefine the nascent category much as the iPhone did for phones fast payday loan. Apple has not publicly confirmed its existence.

Hewlett-Packard Co, Microsoft Corp, Dell Inc and Lenovo Group Ltd were among the global technology names that launched thin, touchscreen, multimedia devices this week at the Consumer Electronics Show in Las Vegas.

These wireless gadgets can stream video, download music, surf the Web and play games, aiming to win over consumers by bridging the gap between smartphones and laptops.

Some analysts doubt consumers would take to tablets or slates, which join a market crowded with netbooks, e-readers, smartphones and laptops of all configurations.

Most technology companies do their own design work in-house, but outsource much of the assembly and manufacturing to companies based in Asia, which operate large production facilities in lower cost countries.

(Reporting by Kelvin Soh; editing by Edwin Chan and Andre Grenon)

Apple tablet supply chain points to Q2 launch: sources

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

HANGZHOU, China — Roughly 28,000 young women crowded into the Dragon Sports Arena here for a three-day gathering in September hosted by Mary Kay Cosmetics.

The goal was to pump up the crowd, and the song-and-dance troupe, the video testimonials about transformed lives and the awarding of the signature pink Cadillac to a top earner had the desired effect.

“I love the corporate culture of Mary Kay,” said Zhang Xiaoying, a 19-year-old woman from Guizhou, one of the country’s poorest regions, as she and several colleagues dabbed on makeup during a break in the event. “This company teaches you to aspire to a higher level.”

Ms. Zhang earns very little in her new job. But the promise of future rewards is what has persuaded her and about 200,000 other women to become “beauty consultants,” or independent sales agents, for Mary Kay in China.

Avon and Amway, two other American companies that use independent representatives, have even larger sales forces here. Avon says it recruits up to 50,000 women a month and now has one million agents.

Indeed, as China’s economic boom unfolds here, door-to-door sales and what is known as direct selling is sweeping the country, breathing new life into old American brands and creating hundreds of thousands of jobs, often for disadvantaged or poorly educated young women.

But that growth has not come without controversy. Many direct sellers in China have been accused of operating sophisticated pyramid schemes and other sales swindles. (In one widely publicized case a few years ago, people were conned into buying stakes in ant farms.)

Even American companies operating in China have been accused of manipulating and misleading sales recruits.

“Some of them recruit people in a deceptive way, like you can become super-rich in a month,” says Chen Defa, chairman of the Chinese Academy of Direct Selling Management.

Because of such concerns, China banned direct selling in 1998, saying that it was often used as a cover for “evil cults, secret societies and lawless and superstitious activities.”

Big direct-selling companies disputed those claims, saying regulators simply misunderstood their business model.

In 2006, after heavy lobbying from American companies, China lifted its ban. And since then, direct selling, with some modifications, has flourished in China, growing into an $8 billion industry that now markets products as diverse as health supplements, cosmetics, toothpaste and dishwashing liquid.

“Direct sellers see unlimited opportunities here,” says Kent Kedl, a Shanghai-based analyst at Technomics Asia, the market research firm. “They see the combination of entrepreneurial sellers and adventuresome consumers.”

Companies engaged in direct selling are succeeding in China by using many of the same techniques that worked elsewhere, analysts say. They often recruit young women and motivate them to sell aggressively, particularly to friends and family members. Companies also use multilevel marketing programs that reward workers for recruiting other agents.

Revenue in China for Mary Kay, which is based in Dallas, has doubled to $600 million in the last three years payday advance loan. “We’re going to grow another 20 percent this year,” despite the economic downturn, says Paul Mak, head of Mary Kay China, despite the global economic slowdown. “People haven’t stopped buying cosmetics.”

The company’s message of female empowerment and femininity seems to resonate in China, a country where young women have few opportunities to start their own businesses.

“The direct-selling industry has quite a low entrance threshold,” says Wang Yi, who teaches at the Beijing Business Management College.

Like other direct sellers, Mary Kay has expanded in China — one of the 35 countries where it operates, generating total revenue of $2.6 billion last year — by working hard to recruit new representatives.

The company operates with a kind of missionary zeal, analysts say, pushing sales agents to invite friends and family members to makeup classes and seminars that quickly evolve into small communities of women who follow the sales gospel of Mary Kay.

Many Mary Kay sales agents say that before joining the company they held low-paying jobs as secretaries, cashiers and rural schoolteachers. Many were also looking for a new focus of their lives. “Because my husband is a businessman, and he is busy, we talked less and less,” says Lu Laidi, a Mary Kay sales director. “I felt my life was boring. I stayed home and barely dressed up.”

While many Mary Kay sales representatives say they earn very little, those who follow the company’s sales and recruiting strategies can become wealthy.

One sales director, Jin Yan, said that after 12 years at Mary Kay, she earned nearly $400,000 last year.

She now drives a pink Cadillac, a reward from the company.

But not everyone succeeds. Shang Qun, a 28-year-old sales agent in eastern Jiangsu Province, said she was pressured to meet unrealistic sales goals and to deliver dozens of names of potential clients to the company during her first months of selling.

“Mary Kay has many direct-selling refugees,” she says. “They claim Mary Kay can make you big money, but their pockets are empty.”

Crayton Webb, a Mary Kay spokesman, defended the company. “Mary Kay is extremely careful in communicating to members of the independent sales force that their success is up to them,” he wrote in an e-mail message. “There are no guarantees and that they should invest in their business carefully.”

Many other agents interviewed in recent months agreed, saying Mary Kay had helped them earn a good living, and also transformed their lives.

Zhang Xiaoying, the 19-year-old woman at the September seminar, said that a year ago she was a cashier in the coastal boomtown of Shenzhen when a friend introduced her to Mary Kay.

Today, she is paid just $200 a month, not much more than she got as a cashier. But, she says, it’s a start.

“I love this company because they give us professional training,” she said.

Bao Beibei contributed research from Shanghai.

Direct Selling Flourishes in China

BOSTON (AP) — The State Street Corporation, the financial services provider, said Tuesday that it would buy the securities services business of Italian banking group Intesa Sanpaolo for about $1.87 billion in cash.

State Street said the acquisition would broaden its presence overseas, as the Intesa unit has offices in Italy and Luxembourg. State Street anticipates financing the transaction with available capital.

The deal includes the global custody, depository banking, correspondent banking and fund administration components of the securities services operations. About 555 employees will join State Street when the deal is closed.

The transaction may also include about $16 billion in cash deposits if levels stay consistent with those as of June 30.

Additionally, State Street expects to support the acquired Intesa balance sheet with approximately $800 million of additional capital at the closing

As part of the acquisition, State Street will enter into a long-term investment servicing arrangement with Intesa to service all of its investment management affiliates, including Italy’s biggest fund manager, Eurizon Capital no credit check payday loan.

State Street anticipates about $120 million in acquisition-related costs over a five-year period, with most costs taking place in the first three years.

The Boston company expects to save about $90 million over five years and sees the deal modestly adding to its fiscal 2010 earnings.

The acquisition is expected to close in the second quarter.

State Street to Buy Securities Business of Italian Bank