Stimulus plan and IBM earnings outlook lift stocks

U.S. Treasuries fell, with yields climbing from a more than three-year low, as global stocks rose before President George W. Bush announces plans to bolster the economy.

The Bush administration is close to completing an economic-stimulus proposal that economists say may have a modest effect on boosting the economy and averting a recession.

IBM on Thursday raised its 2008 estimates, further boosting a stock that was already buoyed by strong fourth-quarter earnings.

Still bleeding from a costly acquisition, Advanced Micro Devices Inc. accounted in the fourth quarter, for overspending $1.6 billion on a graphics chip-maker -- but it posted a narrower loss than analysts feared on surging sales of microprocessors.

Washington Mutual Inc., the largest U.S. savings and loan, reported its first quarterly loss since 1997 after writing down the value of its home mortgage unit and setting aside $1.5 billion to cover bad loans.

Large regional banks across the U.S. plunged on Thursday after reporting earnings hit by the ever-expanding mortgage industry deterioration.

Merrill Lynch's outlook was put on watch with negative implications by both S&P & Moody's.

The overall volume of commercial paper climbed by $35.5 billion to $1.849 trillion in the week to Wednesday, its third consecutive weekly rise, the Fed reported on its Web site. Asset-backed commercial paper rose by $26.3 billion to $805.0 billion, the central bank said.

MBIA Inc. and Ambac Financial Group Inc., the two biggest bond insurers, have a more than 70 percent chance of going bankrupt, credit-default swaps show...."In this market, a credit downgrade could mean the beginning of that company's eventual collapse,'' said Matt Fabian, an analyst with Municipal Market Advisors in Westport, Connecticut.

The turmoil on Wall Street is beginning to rock a foundation of the financial system: the ability of institutions to make good on their many trades with one another. Today, a struggling bond insurer, ACA Financial Guaranty Corp., will ask its trading partners for more time to repay debt.

Chicago Leads Muni Borrowers; Sales Fall on Insurer Concerns. Sales of long-term municipal debt for the year to date are about 49 percent behind the pace during the same period in 2007.

UBS will shut a U.S. group that makes bets on fixed-income investments as it scales back risk-taking after writing down the value of subprime mortgage investments by $14.7 billion last year. The bank said last week that 2008 will be another "difficult'' year for the financial industry.

New Star Posts Record Drop as Clients Withdraw Funds. The Asset Management Group will post a pretax profit of about 40 million pounds ($78.8 million) in 2008, down from his previous forecast of 99 million pounds. "We said back in September that we didn't like the outlook for 2008, and everything we thought then has been borne out.''

Rams Home Loans Ltd.'s collapse will be repeated by other mortgage lenders in Australia after the cost of funding rose to a record, said John Symond, founder of Aussie Home Loans Ltd.

European banks say they will make it harder for companies and consumers to get loans in the next three months, weakening the case for further interest rate increases.

KfW Group, Germany's state-owned development bank, started the sales process for its stake in IKB Deutsche Industriebank AG, the German bank bailed out after investing in U.S. subprime loans.

Banco Santander SA, Spain's largest bank, said yesterday Spanish mortgage-lending growth may slow to 5 percent this year. A report by the country's mortgage association last week said housing loans grew 17 percent in the year through October, the slowest pace in more than a decade.

General Electric Co. said fourth- quarter profit rose 15 percent, led by higher overseas sales of jet engines, power-plant turbines and locomotives to help compensate for slower U.S. economic growth.

Schlumberger Ltd., the world's largest oilfield-services provider, said fourth-quarter profit rose 22 percent after record crude prices led to an increase in spending on exploration and production.

Metro AG, Germany's largest retailer, rose in Frankfurt trading after agreeing to sell its Extra supermarkets to Rewe Group, reducing debt.

Luminar Group Holdings Plc, the U.K.'s biggest nightclub owner, said second-half sales growth slowed as Britons facing higher household bills spent less on nights out. The shares fell to a five-year low.

Beter Bed Holding NV fell the most in more than seven years in Amsterdam trading after the owner of Europe's largest mattress retailer said full-year profit trailed the company's forecast. Beter Bed said today fourth-quarter sales rose 4 percent to 94 million euros, slowing from a 12 percent increase in the first nine months.

China Life Insurance Co., the country's biggest insurer, said it booked premium income of 196.6 billion yuan ($27.1 billion) in 2007.

ThyssenKrupp AG, Germany's largest steelmaker, rose the most in almost two weeks in Frankfurt trading as first-quarter pretax profit fell less than expected and it forecast a "positive performance'' for the full year.

Copper rose, leading other industrial metals higher, on speculation Chinese wire and pipe manufacturers will replenish stockpiles to ensure output isn't disrupted during the Lunar New Year holiday starting Feb. 6.

U.K. retail sales unexpectedly dropped by the most in 11 months in December as higher borrowing costs and falling house prices curbed consumer spending.

Japanese consumer confidence hit a four-year low in December, according to the Cabinet Office’s most recent survey, as inflation expectations soar and wage growth remains tepid.

Mexico's central bank will probably keep its benchmark lending rate at the highest in almost two years as a slowing U.S. economy and lower-than-forecast industrial production outweigh inflation concerns.

Asian shares rebounded Friday in volatile sessions. The Nikkei closed up 0.56%, almost 500 points above an intraday low. The Hang Seng ended the day up 0.35% after an early 3.9% decline. The Shanghai Composite closed up 28 points or 0.56 percent.
European stocks rose for the first time in four days, led by Rio Tinto Group, on speculation the world's third-largest mining company will get a takeover bid. Markets in Austria, Belgium, Denmark, Finland, Norway, Poland and Sweden have extended their declines from highs reached last year to more than 20 percent, the common definition of a bear market. National benchmarks gained in 10 of the 18 markets in western Europe. The U.K.'s FTSE 100 added 1.3 percent, and France's CAC 40 rose 0.3 percent. Germany's DAX was little changed.

U.S. overnight and premarket: