Retailers ring up solid September, holidays loom (Reuters)

(Reuters) – Brisk back-to-school shopping benefited many U.S. retailers in September, with strong sales growth at chains from Kohl's Corp to Nordstrom Inc suggesting optimism for the holiday season.

Shoppers largely brushed off the prolonged economic malaise and the U.S. East Coast's recovery after Hurricane Irene.

Chains with fresh items enticed shoppers while others were left to question their strategies heading into the critical winter holiday shopping season.

Overall, 23 U.S. retailers posted an average sales gain of 5.1 percent at stores open at least a year, or same-store sales, according to Thomson Reuters.

"I'm not saying it's going to be going to an exceptional or a blow-away holiday, but I wonder if people are being overly pessimistic," Madison Riley, managing director for retail consulting firm Kurt Salmon, said after reviewing retailers' September reports.

The S&P Retail Index rose 1.3 percent on Thursday, outpacing the broader S&P 500 Index's 1 percent rise. (Click here for a same-store sales graphic: http://link.reuters.com/muj34s

HOLIDAY WOES OR HOLIDAY HOPES?

Back-to-school shopping is the second-largest retail spending season behind the holiday period of November and December. Early autumn momentum can also indicate how U.S. shoppers will respond to holiday spending.

September sales were "positive signals," said Janet Hoffman, managing director of Accenture's retail practice.

"The consumer has done a great job of focusing on their savings, reducing their debt and they are back in the market place, shopping. But they are choosing where they are going to spend their money," she said.

Meanwhile, new claims for U.S. unemployment benefits rose less than expected last week, hinting at an improvement in labor market conditions.

Holiday season forecasts have largely been tepid as the economy takes its toll on consumer sentiment. The National Retail Federation expects November and December sales to rise 2.8 percent after a 5.2 percent gain in 2010.

NPD Group Chief Industry Analyst Marshal Cohen said he expects holiday sales to rise just 1.5 percent to 2 percent.

Others were more optimistic.

"Despite being buffeted by the winds of inflation, Irene and unemployment, this back-to-school season was the best since 2006," said Craig Johnson, president of retail consultant Customer Growth Partners.

Back-to-school sales from July to September rose 6 percent based on his firm's review, hovering just below its forecast of 6.2 percent.

A 5 percent to 6 percent holiday season gain "is clearly in reach," Johnson said.

Retailers also are preparing for the holidays by keeping inventories lean to avoid the margin-sapping deep discounts they were forced to take in 2008 and 2009.

Port of Long Beach, California, Executive Director Richard Steinke said retailers were being cautious about building up inventory. In August, imports going through the port -- which is a major hub for goods coming from Asia -- were down more than 10 percent.

"This traditional gearing up for the holiday season by retailers may not be happening in 2011," Steinke said in a meeting with Reuters reporters.

EXCLUSIVE GOODS IN DEMAND IN SEPTEMBER

Retailers are doing what they can to appeal to shoppers such as Joanna Polowitz, who said she lost her job a month ago and thinks the economy is getting worse.

"I'm definitely holding back, only buying necessities, socks for my son, food because it's reasonable here," Polowitz said at a Walmart in North Bergen, New Jersey, on Wednesday. "We're buckling down, not going to dinner as much."

Kohl's said it attracted more shoppers as it launched Jennifer Lopez and Marc Anthony clothing lines.

Target saw a rush for the Missoni line it launched on September 13 that even crashed its recently updated website. [ID:nS1E78C20S] The discount chain said children's clothing was one of its strong categories.

"One of the messages is that new launches can drive spending at stores," said Michael Niemira, chief economist of the International Council of Shopping Centers.

Sales figures were lifted as chains raised prices to offset higher commodity costs, but traffic slowed, a concern heading into the holidays, said Joel Bines, a managing director of consulting firm AlixPartners.

Chains catering to teens, young women and families such as Zumiez Inc, Buckle and Limited Brands did much better than expected. Target Corp and Kohl's Corp, each with new exclusive lines, also topped Wall Street's forecasts.

Others in the same categories, such as Wet Seal and JC Penney, fell short of expectations. The largest percentage decline was a 4 percent drop at Gap Inc.

The tally gives a glimpse into consumer spending, as the retailers that issue monthly reports account for a small fraction of overall sales. Wal-Mart, Home Depot, Best Buy, Abercrombie & Fitch and other big chains do not issue monthly sales.

(Reporting by Jessica Wohl in Chicago, Phil Wahba in New York and Nivedita Bhattacharjee in Bangalore; Editing by Maureen Bavdek)

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ECB opens cash taps to avoid new credit crunch (AP)

BERLIN – The European Central Bank is opening its money taps wide to prop up an increasingly shaky banking sector and keep the region's debt crisis from spawning the type of credit crunch that plunged the global economy into recession two years ago.

In the move announced Thursday, the top monetary authority for the 17 euro nations offered to flood banks with any amount of one-year loans through 2013. The hope is that will shield them from malfunctioning credit markets, in which banks are becoming too worried to lend to each other, and keep loans flowing to businesses and households.

But outgoing ECB President Jean-Claude Trichet resisted calls for an interest rate cut to spur growth despite fears that the eurozone economy is sinking toward a renewed recession. The bank's main mandate is fighting inflation, which can be worsened by rate cuts.

The ECB's caution over inflation contrasted with a move by the Bank of England, which reopened a securities purchase program that essentially prints new money to boost Britain's stagnant economy — despite an inflation rate of 4.5 percent.

Trichet, holding his last news conference before retiring at month's end, did not even indicate that a rate cut was possible at the next month's meeting, as many economists expected because of signs the eurozone economy is grinding to a halt.

"The economic outlook remains subject to particularly high uncertainty and intensified downside risks," Trichet said, adding however that "interest rates remain low" and inflation will likely remain well above target for months.

Analysts said that a rate cut was probably postponed, not canceled, and that Trichet may simply have been leaving successor Mario Draghi maximum room to maneuver.

"Falling leading indicators suggest that the ECB will lower its expectations for economic activity considerably," said economist Joerg Kraemer at Commerzbank. "The ECB will presumably cut its key rate towards year-end and again next spring."

That would bring the benchmark refinance rate to 1.0 percent from its current 1.5 percent.

Instead of cutting rates, Trichet focused on emergency credit measures to keep the financial system working properly.

Many European banks are exposed to losses on government debt from Greece and other countries with shaky finances. That has made borrowing between banks, crucial for their daily functioning, increasingly difficult because of fears the money might not be repaid.

Those jitters have intensified in recent weeks and threaten to claim their first victim since the 2007-2009 financial crisis, Franco-Belgian bank Dexia. Dexia was already bailed out in the earlier phase of the crisis and now is struggling again to raise funding.

To help, the ECB will offer an unlimited amount of 12-month and 13-month loans to banks. That will provide them financing for a longer period — into 2013 in the case of the 13-month offering — and shield them from turbulence in borrowing markets.

The ECB will also keep offering unlimited amounts of shorter-term loans, with maturities of up to 3 months, through the first half of next year and buy up to euro40 billion ($53 billion) in covered bonds, a type of security used by banks to raise funding.

Trichet said that the 23-member rate-setting council made its interest rate decision by consensus, not by unanimity, suggesting there were voices calling for a cut — voices that might gain the majority in coming weeks if signs of a downturn increase.

The eurozone economy grew only 0.2 percent in the second quarter. Business and consumer optimism is suffering due to the financial market turmoil over fears that some governments have too much debt and might not pay it all back.

Trichet, who will be succeed by Bank of Italy head Draghi at the end of the month, leaves office with his typical stance — as a strict inflation fighter. Under his tenure the ECB resisted widespread calls to lower rates in 2004 and to not increase them in 2005, calls it ignored.

Lower rates can mean a short-term boost to growth and jobs. But rates that are too low can cause inflation over the longer term and undermine the value of the currency.

The ECB's main role under the EU treaty is defending against inflation, which unexpectedly spiked to 3.0 percent in the eurozone in September from 2.5 percent the month before. The ECB expects inflation to fall below 2 percent by next year.

It was that role that Trichet focused on as he reminisced briefly about his eight years in office, pointing to both the bank's record at keeping inflation close to its goal of just under 2 percent over the nearly 13 years of its existence, and at keeping inflation expectations in line with that.

"Have we delivered price stability? Yes, we have delivered price stability," he said. "Are we credible in delivering price stability over the next 10 years? Yes. These are not words, these are deeds."

"On top of that we have to cope with the worst crisis since World War II," he said.

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Wall St rises for 3rd day on ECB liquidity move (Reuters)

NEW YORK (Reuters) – Stocks rose on Thursday after the European Central Bank launched fresh liquidity measures to help banks weather the euro zone's debt crisis, easing one of the major concerns overhanging markets.

Anxiety that the region's lingering debt crisis could lead to a bank collapse has pressured equities and pushed the S&P 500 briefly into bear market territory earlier this week.

The ECB, wary of the region's fiscal woes spiraling into a global crisis, said it will revive 12-month loan operations and purchases of covered bonds, while it kept key interest rates unchanged at 1.50 percent.

The ECB's buying of covered bonds is intended to boost confidence in stocks and other risky assets such as commodities and high-yielding bonds.

John Brady, senior vice president at MF Global in Chicago, said the move could arrest an upward creep in interbank borrowing costs, seen as a proxy for stress in the banking sector. "Risk assets have responded well thus far," he said.

Shares of Morgan Stanley, which have been hurt recently by fears about its exposure to European banks, rose 4.4 percent to $15.12. The S&P financial index gained 1.3 percent and was one of the best-performing sectors.

Thursday's advance marked the third up day for Wall Street with a more than 5 percent gain for the S&P 500 over the three days.

The Dow Jones industrial average rose 89.95 points, or 0.82 percent, to 11,029.90. The Standard & Poor's 500 Index gained 10.81 points, or 0.94 percent, to 1,154.84. The Nasdaq Composite Index added 31.22 points, or 1.27 percent, to 2,491.73.

The ECB's decision not to cut interest rates in the region and tough comments about the risks facing the economy by ECB President Jean-Claude Trichet left some investors disappointed and added to volatility early in the session.

"The markets are more worried about disinflation and recession than they are about inflation, so the celebration would have been stronger if they reduced interest rates," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville.

European Commission President Jose Manuel Barroso said the EU's top executive body proposed a coordinated recapitalization of banks amid the region's sovereign debt crisis. Officials said nothing was finalized.

Europe's worsening debt crisis could significantly damage the U.S. economy, Treasury Secretary Timothy Geithner warned, as he called on Europe to shore up its bailout fund to protect both governments and banks.

Yahoo Inc fell 4 percent to $15.28 after advancing late Wednesday. Microsoft Corp may make another bid for Yahoo, Reuters reported, citing sources. A deal between the two fell apart in 2008.

U.S.-listed shares of Research in Motion Ltd rose 3.3 percent to $24.37 on continued speculation the BlackBerry maker could be acquired.

Apple Inc gave up its earlier gains and slipped 0.3 percent to $377.10 a day after co-founder Steve Jobs, the driving force behind the creation of the iPod, iPhone and iPad, died of pancreatic cancer at the age of 56.

New claims for unemployment benefits rose less than expected last week, hinting at an improved labor market a day before the closely watched September non-farm payrolls report.

(Editing by Jan Paschal)

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EU works on banks, Obama urges swift action (Reuters)

BRUSSELS/BERLIN (Reuters) – European Union moves to shore up ailing banks moved into higher gear on Thursday as U.S. President Barack Obama urged European leaders to act faster to tackle a sovereign debt crisis that threatens global economic recovery.

The EU's executive arm said it would present a plan for member states to coordinate a recapitalization of their banks, as regulators met in London to reassess the capital buffers of stressed lenders that received a clean bill of health in July.

The European Central Bank threw a lifeline to commercial banks by turning up its liquidity pumps to provide longer-term cheap money for the growing number of European lenders which have seen wholesale funding dry up as market confidence ebbs.

The moves came amid fears that Greece, the most heavily indebted euro zone state, may default within months, setting off a chain reaction of sovereign downgrades and bank failures.

"We are now proposing member states to have a coordinated action to recapitalize banks and so to get rid of toxic assets they may have," European Commission President Jose Manuel Barroso said in a television interview relayed on YouTube.

It was the most explicit statement yet from a top European official on joint action to help restore confidence in a banking sector that is increasingly being shunned by investors as the euro zone debt crisis deepens.

However, a senior EU official told Reuters there would be no common European mechanism to deal with toxic assets, and no joint "bad bank" for Europe.

In Washington, Obama told a news conference that uncertainty about the euro zone crisis was hitting global markets and posed the biggest headwind to the U.S. economy.

Ratcheting up pressure on European leaders, he said he hoped they would have a concrete plan in time for a November 3-4 Group of 20 summit to overcome the debt crisis by creating enough "firepower" to help weaker member states.

U.S. Treasury Secretary Timothy Geithner told Congress in prepared testimony: "The critical imperative is to ensure that the governments and the financial systems under pressure have access to a more powerful financial backstop."

In the first case of a bank felled by the crisis, Franco-Belgian municipal lender Dexia's board will vote on a break-up plan on Saturday as the French and Belgian governments argue over how to split the cost to the taxpayer.

Barroso would not speculate on how much money would be needed for recapitalization across the 27-nation bloc but his comments helped push European shares up 2.4 percent on the day as investors welcoming signs of action.

The ECB disappointed some investors by leaving interest rates unchanged at 1.5 percent, on a split decision, despite signs of a sharp slowdown in the European economy. But it compensated with a raft of measures to boost liquidity.

ECB President Jean-Claude Trichet announced after chairing his final monetary policy meeting before retiring that the ECB will provide unlimited one-year funding in two operations and revive its policy of buying covered bonds for up to 40 billion euros.

SAME FATE?

German Chancellor Angela Merkel said Europe should not hesitate to recapitalize its banks if this prevents greater economic damage, and leaders would take very seriously expert advice that the time was ripe for such a step.

Jean-Claude Juncker, chairman of euro zone finance ministers, said banks in need of capital should turn first to the markets, then to national governments and as a last resort to the euro zone's rescue fund.

Some officials fear other lenders could suffer a similar fate to Dexia, even though they passed the European Banking Authority's (EBA) July stress test of 91 banks in the EU.

Those tests concluded that only eight banks failed and that they needed a collective 2.5 billion euros ($3.3 billion) -- a fraction of the up to 200 billion euros the International Monetary Fund believes EU banks require.

The EBA, which set the criteria for the tests carried out by national regulators, held the second day of a board meeting to review banks' capital needs based on the same data which formed the basis of those tests.

If the banks were forced to mark sovereign bonds holdings to current market prices, 18 would fail with a total capital hole of 40 billion euros, according to a Reuters Breakingviews stress test calculator.

EU Competition Commissioner Joaquin Almunia said there was a need to reassess bank assets, especially sovereign debt, to promote recapitalization, but public money should be used only as a last resort and in line with the bloc's state aid rules.

The EBA is preparing the ground by determining which lenders should be included in any coordinated recapitalization that its members would oversee. The European Commission has no power to impose a recapitalization plan on EU states.

Markets and industry officials say the key missing piece is whether enough money can be found fast enough to fund a recapitalization plan and stop contagion from Greece or Dexia.

"The euro zone knows what it needs to do and should just get on with it," a UK banking industry official said.

The EBA, made up of regulators and central bankers from EU member states, said it was asked by the European Systemic Risk Board last month to "coordinate efforts to strengthen bank capital.

It is under pressure after its chairman, Andrea Enria, admitted on Tuesday that this year's stress test, which Dexia passed with flying colors, failed to reassure investors.

Some banks have come under heavy criticism for not updating investors clearly on the value of their government debt holdings and bumping up capital buffers to cover markdowns.

($1 = 0.751 Euros)

(Additional reporting by Alister Bull, Dave Clarke and Rachelle Younglai in Washington, Huw Jones in London, Philip Blenkinsop and Jan Strupczewski in Brussels,; Writing by Paul Taylor, editing by Mike Peacock, Ron Askew)

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30-year mortgage below 4 pct. for first time ever (AP)

WASHINGTON – The average rate on the 30-year fixed mortgage this week fell below 4 percent for the first time ever, to 3.94 percent.

For those who can qualify, it's an extraordinary opportunity to buy a home or refinance.

On Thursday, Freddie Mac said the average rate dropped from 4.01 percent last week, the previous low. The average rate on a 15-year fixed loan, a popular refinancing option, dipped to 3.26 percent, also a record. The 15-year loan has fallen for six straight weeks.

Mortgage rates are now lower than they were in the early 1950s, when the average rate reached 4.08 percent for a few months, according to the National Bureau of Economic Research. Back then, mortgages typically lasted just 20 or 25 years.

Still, rates have been below 5 percent for all but two weeks in the past year and that has done little to boost home sales. This year is shaping up to be among the worst for sales of previously occupied homes in 14 years.

"Interest rates are obviously not an impediment to housing. It's uncertainty about the economy, about jobs, about incomes," said Mark Vitner, senior economist at Wells Fargo. "It's not a question of affordability. It's simply a lack of wherewithal to buy a home or a lack of confidence to commit to buying one."

Many people are reluctant to take the risk in this market. High unemployment, scant pay raises and heavy debt loads are deterring many would-be buyers.

Others can't qualify for the historically low rates. Banks are insisting on higher credit scores. And many want first-time buyers to put down 20 percent. Few people have that much cash or home equity to satisfy the requirement.

"Considering how far mortgage rates have fallen, we'd expect to see more people refinancing and buying," said Celia Chen, director of housing economics at Moody's Analytics. "It's still the lack of jobs and the difficult credit environment that's pushing most people away."

Total mortgage applications fell more than 4 percent this week from the previous week, according to the Mortgage Bankers Association. Refinancing applications declined more than 5 percent.

Mike Fratantoni, the group's vice president of research and economics, said potential borrowers "largely remained on the sidelines" and were "unimpressed" by the lowest rates in decades.

Mortgage rates have tumbled because they tend to track the yield on the 10-year Treasury note. The yield has fallen in recent weeks, largely because investors are worried about the U.S. economy and the debt crisis in Europe. So they have shifted their money out of stocks and into the relative safety of Treasurys.

And they could fall even further now that the Federal Reserve has started shuffling its investment portfolio to try to lower long-term rates.

A drop in mortgage rates could provide some help to the economy if more people could refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend.

Consider a homeowner who owes $250,000 and is paying 5.09 percent on a 30-year fixed mortgage. That was the average rate being offered in January 2010. Refinancing the loan at 3.94 percent could save him or her more than $2,000 a year.

But many homeowners with good jobs and stable finances have already refinanced. Until recently, any rate below 5 percent was considered extraordinarily low. Just five years ago, the best rate for a 30-year fixed loan was around 6.5 percent; a decade ago, it was near 8 percent.

Most economists say rates would need to fall at least a full percentage point before it makes sense to refinance again. The reason is homeowners typically pay a few thousand dollars in closing costs when they refinance. And the low rates being offered don't include extra fees, known as points, which many borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for the 30-year and 15-year rose to 0.8. The average fees for both the five-year and one-year adjustable-rate loans were 0.6 and 0.5, respectively.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rate on a five-year adjustable-rate mortgage fell to 2.96 percent. The average for the one-year adjustable-rate mortgage ticked up to 2.95 percent.

AP Business Writer Dan Wagner contributed to this report.

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Jobless claims hint at labor market improvement (Reuters)

WASHINGTON (Reuters) – New claims for unemployment benefits rose modestly last week but hovered near levels normally associated with improving labor market conditions, a hopeful sign for the struggling economy.

Initial claims for state jobless aid climbed 6,000 to a seasonally adjusted 401,000, the Labor Department said on Thursday.

It was the second straight week first-time claims hugged the 400,000 mark, which is usually associated with some improvement in the jobs market.

Economists, who had expected claims to rise to 410,000, saw the data as the freshest sign the ailing economy was not falling back into recession.

"Claims suggest that layoffs remain contained despite high uncertainty in the economy. We continue to expect moderate growth rather than a recession," said Guy Berger, an economist at RBS in Stamford, Connecticut.

The data falls outside the survey period for the government's closely watched employment report for September, which will be released on Friday and is expected to show a still sickly labor market.

Nonfarm payrolls likely increased 60,000 last month, according to a Reuters survey, after being flat in August.

The gain, however, will mostly reflect the return of 45,000 striking Verizon Communications workers to payrolls. The jobless rate is seen steady at 9.1 percent.

U.S. stocks rose for a third day, while prices for government debt fell. The dollar was weaker against a basket of currencies.

THREAT FROM EUROPE

The high jobless rate has put pressure on incomes, weighing on consumer spending. However, brisk back-to-school shopping benefited many U.S. retailers in September, with strong sales growth posted at chains from Kohl's Corp to Nordstrom Inc suggesting optimism for the holiday season.

Overall, 23 U.S. retailers posted an average sales gain of 5.1 percent at stores open at least a year, or same-store sales, according to Thomson Reuters. For more see

The National Retail Federation estimated retailers will hire about 480,000 to 500,000 employees this holiday season, about the same as last year, which suggests the sector will not provide a meaningful boost to the government's employment gauge.

While the jobs market remains troubled, data ranging from manufacturing to motor vehicle sales have suggested the economy, which expanded at a 1.3 percent annual rate in the second quarter, will avoid an outright contraction in output.

Europe's debt crisis presents the biggest threat.

Treasury Secretary Timothy Geithner said on Thursday the crisis could significantly damage the U.S. economy, although major U.S. banks and money market funds have little direct exposure.

"Europe is so large and so closely integrated with the U.S. and world economies that a severe crisis in Europe could cause significant damage by undermining confidence and weakening demand," he told Congress.

European Union moves to shore up ailing banks shifted into higher gear on Thursday, with the European Central Bank turning up its liquidity pumps to provide longer-term cheap money.

Slow domestic growth prompted the Federal Reserve last month to announce a new measure designed to push long-term borrowing costs lower by shifting assets on its balance sheet.

Interest rates have dropped in response, with the 30-year fixed mortgage rate falling to a record low 3.94 percent this week, according to mortgage financing source Freddie Mac.

Although the labor market stalled in August, it appears to have regained some footing in late September. The four-week moving average of initial claims -- considered a better measure of labor market trends -- fell for a second straight week.

"If initial jobless claims continue to trend lower that would be an encouraging sign that labor market conditions may be improving," said John Ryding, chief economist at RDQ Economics in New York.

(Editing by James Dalgleish)

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Vintner Constellation Brands' 2Q profit climbs (AP)

ROCHESTER, N.Y. – Constellation Brands Inc. said Thursday its fiscal second-quarter profit jumped 78 percent on improved wine and spirits sales in North America, a lower tax rate and a drop-off in charges after four years of cost-cutting.

Its stock rose more than 7 percent in afternoon trading.

The world's No. 2 vintner raised its full-year guidance, acquired the rest of Italy's Ruffino wines that it didn't already own and said it had bought back $251 million worth of its own shares.

Constellation has been pruning methodically to solidify its supremacy in higher-margin wines priced from $5 to $20 a bottle and revive profits and revenue in a choppy economy.

Its brands range from Robert Mondavi, Clos du Bois and Ravenswood wines to Svedka vodka and Black Velvet Canadian whiskey. Through a joint venture, it also imports moderately priced beers such as Corona Extra, Tsingtao and St. Pauli Girl.

"We continue to make significant progress in a number of areas despite the prospects of an unsettled consumer environment," Chief Executive Rob Sands said in a conference call with analysts.

The June-to-August results exceeded Wall Street expectations, and its shares surged $1.46, or 7.8 percent, to $20.18 in afternoon trading. The stock is trading near the upper end of a 52-week range of $16.42 to $23.19.

Its net income climbed to $162.7 million, or 76 cents per share, in the three months ended Aug. 31 from $91.3 million, or 43 cents per share, a year earlier. Its effective tax rate dropped to 3 percent in the quarter, down from 35 percent a year earlier.

Revenue after deducting excise taxes fell 20 percent to $690.2 million from $862.8 million a year ago, largely because it sold 80 percent of its struggling Australian and British wine business in January.

Excluding $4 million in restructuring and other one-time items, Constellation earned 77 cents per share. Wall Street expected 65 cents per share, according to a survey by FactSet. A year ago, the company recorded $17 million in one-time charges.

Operating income in its beer business fell 4 percent on higher marketing costs despite a 7 percent rise in sales by its Crown Imports joint venture with Mexican brewer Grupo Modelo.

Its wine and spirits sales in North America rose 5 percent. After a sharp drop in wine sales in 2009, especially in bars and restaurants, industry volumes have rebounded this year as Americans take advantage of more discounts to trade up to higher-priced brands.

Constellation jumped into California's coveted wine market by netting Franciscan in 1999, Turner Road and Ravenswood wineries in 2001 and Robert Mondavi Corp. in 2004. Its 21 acquisitions over 21 years ran through 2007 when it bought Fortune Brands' U.S. wine business, maker of Wild Horse and Clos Du Bois. Then came the cost-cutting.

It divested Almaden, Inglenook and other low-priced wines that generally sell for less than $5 a bottle, paring its 300 brands to 100. It has slashed its debt to below $3 billion from $5.3 billion and shrunk its payroll to 4,300 from 9,400.

On Thursday, the Victor, N.Y.-based company raised its full-year guidance by 10 cents to a range of $1.92 to $2.02 per share. Analysts expected $1.97 per share.

It also said it had purchased the 50.1 percent it didn't already own in Ruffino S.r.l. from MPF International S.r.l., which is controlled by the Folonari family of Tuscany, Italy. The price was about $69 million, the company said, and it also assumed about $73 million of debt.

This year, Constellation lost its eight-year status as the world's No. 1 winemaker when it offloaded 80 percent of a once-promising Australian wine business that had gone awry.

It dropped back to No. 2 in the vintner-by-volume rankings behind longtime leader E. & J. Gallo of Modesto, Calif. But it remains the world's biggest premium-category winemaker with an estimated 17 percent share of that segment in the United States, ahead of rivals that include Gallo, Treasury Wine Estates, Kendall-Jackson and Diageo.

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Messages Conflict on Anonymous Hacking Threat on NYSE (NewsFactor)

Anonymous, the "hacktivist" group that has acquired legendary status, may be threatening to take the Occupy Wall Street protests to a new level. This past weekend, a video message on YouTube, purportedly from Anonymous, vowed to "erase" the New York Stock Exchange "from the Internet." But another message, also said to be from the group, claims the threat is a fake.

Anonymous is a loosely knit group, and this is not the first time that different communications with conflicting messages have both claimed to be genuine. On the Pastebin site, a statement posted Tuesday, also allegedly from Anonymous, said that "something very disturbing has come to our attention."

'We Are the 99 Percent'

The Pastebin message said that the "Operation Invade Wall Street" video is a "fake planted operation by law enforcement and cyber crime agencies to get you to undermine the Occupy Wall Street movement." It noted that the video urges attackers to use "depreciated tools that have known flaws," such as LOIC.

The Pastebin statement added that Anonymous would "never tell you to use LOIC," and that it wouldn't attack the NYSE on a holiday, Columbus Day. "It is debatable," the statement says, "if Anonymous would ever even attack NYSE."

The video says the attack will take place on Oct. 10, and is in retaliation for the mass arrests of protesters and for the economic crimes fostered by Wall Street.

In the YouTube video, a computer-processed voice addresses the "citizens of the world." It says: "For too long, the crimes of Wall Street bankers, CEOs and a corrupt political system have created economic injustice that has gone unchallenged."

"We are the 99 percent," the video continues, echoing a frequent rallying cry of the protesters. After listing the perceived grievances of the economic system, the video concludes with the voice saying, "Wall Street, expect us."

Alleged Target: NYSE Website

Text on the video instructs viewers to "use the tools necessary to 'anonymize' yourself," including LOIC, and notes that the "target website" is the stock exchange's www.nyse.com on Oct. 10. There has been some discussion that the threat could include online trading in general, but the video specifies only the website.

The website includes news, corporate information, news and stock feeds, investor and governmental information, and similar material. Networked trading is the lifeblood of the stock exchange, including trading done over private networks and via the public web. According to news reports, the trading systems all route thorough a data center located in Mahwah, New Jersey.

A spokesperson for the NYSE has declined to comment.

Anonymous, or some factions in it, have been active in the #OccupyWallStreet movement, which has been growing in size on Wall Street and in supporting demonstrations around the U.S. and Canada.

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Boehner: Obama has given up on country to campaign (Reuters)

WASHINGTON (Reuters) – House of Representatives Speaker John Boehner on Thursday said President Barack Obama has "given up on the country" to focus on his re-election rather than working with Republicans to boost the economy.

"Mr. President, why have you given up on the country and decided to campaign full time instead of doing what the American people sent us all here to do?" Boehner said. "And that's to find common ground to deal with the big challenges that face our economy and our country."

As Obama held a news conference in the White House a few blocks away, Boehner said the Democratic president had shown no leadership by holding rallies around the country to promote his $447 billion jobs bill rather than negotiating with Republicans to pass legislation that would bring down the 9.1 percent unemployment rate.

"I've had my share of disappointments this year ... but nothing has disappointed me more than what's happened over the last five weeks -- to watch the president of the United States give up on governing, give up on leading, and spend full time campaigning," Boehner said at symposium.

House Republicans have passed roughly a dozen bills as part of their job-creation agenda that would loosen pollution regulations and make it easier to drill for oil and gas domestically. The Democratic-controlled Senate has not taken up any of them for a vote.

"I can't tell you how dangerous our situation, our economy's in and how dangerous the situation in Europe is," Boehner said. "And yet the president, some 14 months before the election, throws in the towel and decides he's going to spend all of his time out campaigning. We're legislating, he's campaigning. It's very disappointing."

(Reporting by Andy Sullivan and Stella Dawson; editing by Xavier Briand)

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Greek government pushing on with harsher austerity (AP)

ATHENS, Greece – The Greek government is to shortly submit a bill Thursday that includes the suspension of thousands of civil servants, as it pushes ahead with harsh austerity measures to stave off a potentially-disastrous default.

Parliament will vote next week on the bill which aims to suspend 30,000 government workers at reduced pay by the year-end and to further cut salaries by an estimated euro2.8 billion ($3.73 billion).

The new cutbacks come on top of salary and pension cuts, as well as a string of tax hikes over the past year and a half that have outraged ordinary Greeks trying to cope with a 16 percent unemployment rate.

A day after a nationwide strike by civil servants shut down the government and much of public transport, about 50 finance ministry workers protested peacefully outside the General Accounting Office over the expected salary cuts.

"We are against much of what this bill contains, that's why we're here," said protester Tassos Goumas, the head of the umbrella group representing finance ministry employee associations.

Retired army officers demonstrated outside the defense ministry over pension cuts, while on the island of Crete, hundreds of angry farmers took over an administrative headquarters to voice their frustration at shrinking salaries.

Greece is struggling to meet budget targets to qualify for the next installment of a euro110 billion ($145 billion) package of international bailout loans it has relied on since May 2010 to pay its bills.

Finance Minister Evangelos Venizelos has said that Greece has enough money to pay pensions, salaries and bondholders through mid-November. But the country needs the next batch of loans, worth euro8 billion ($10.5 billion), to avoid bankruptcy.

Debt inspectors from the International Monetary Fund, European Central Bank and European Commission are now in Athens evaluating reforms before the funds are released.

Greek government spokesman Ilias Mosialos told state TV that the next batch is "assured" as long as the government follows through with public sector reforms and spending cuts.

The Greek economy is expected to contract 5.5 percent this year and many in the markets expect the government to eventually default on its massive debt, despite Venizelos' assurances that Greece will meet its commitments.

It's feared a disorderly Greek default would wreak financial havoc, particularly among Europe's banks, that could trigger another global recession.

Ahead of a trip to Athens, German Economy Minister Philipp Roesler said all of Europe must help Greece to get back on its feet and that German businesses would invest in the country.

"Multibillion-euro investments shouldn't be expected immediately, but it is necessary to help build up the infrastructure and economic structure — because there are two components to the crisis, on one hand the debt, on the other hand the lack of economic competitiveness," Roesler told Germany's ZDF television.

Roesler said the short-term eurozone rescue measures aren't enough in themselves to overcome all the problems.

"We must use intensively the time that we have won (with these measures) to help build up the economy particularly in difficult countries," he said.

Meanwhile, Greece's Deputy Minister of Environment, Energy and Climate Change Yiannis Maniatis said the government has approved a search for offshore hydrocarbon deposits in three areas in the north and southwest of the country with an estimated combined quantity of 250 million barrels.

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APTN producer Theodora Tongas in Athens and Geir Moulson in Berlin contributed.

(This version CORRECTS Corrects to show that bill hasn't yet been submitted.)

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AP source: NY fraudster tried to get witness slain (AP)

NEW YORK – A man convicted of leading a $100 million mortgage fraud scheme tried from behind bars to get a key witness against him killed, plotting in a prison visiting area with an undercover investigator posing as a hit man, a person familiar with the case said Thursday.

Former AFG Financial Group Inc. President Aaron Hand was expected to be arraigned in a Manhattan court Thursday on charges of attempted murder and conspiring to commit murder, said the person, who spoke on condition of anonymity to discuss the case before the arraignment.

Manhattan District Attorney Cyrus R. Vance Jr.'s office declined to comment, but he was expected to make an announcement later in the day. Hand was in custody and couldn't be reached; his former lawyer said through his office he hadn't been aware of the new charges and declined to comment.

The witness, whom the person wouldn't name, was one of several who cooperated with prosecutors to outline a sprawling scheme in which a cast of corrupt mortgage brokers and lawyers pocketed money that banks lent people to buy real estate, duping both sellers and buyers along the way.

Some 27 people have been convicted or pleaded guilty. Hand, 39, was convicted in July 2010 of racketeering and other charges. He was sentenced in September 2010 to 8 1/3 to 25 years in prison.

Fuming that the witness was a "rat," Hand railed about the case and his conviction in his first meeting with the undercover investigator, in August at Coxsackie Correctional Facility in New York's Hudson Valley, according to the person familiar with the case.

"He wants revenge, absolutely," the person said. Hand told the supposed hit man to kill the witness' wife and children as well if they were there when the slaying happened, the person said.

Authorities had gotten a tip earlier that Hand was interested in arranging a hit, and they got an intermediary to refer Hand to the undercover investigator, the person said.

As a start, Hand arranged for an associate to give $150 to the supposed hit man at a Manhattan diner last month, money that was intended to buy a gun, the person said. The associate wasn't aware of the alleged plot, thinking instead that he was helping Hand bribe a prison guard who was giving him problems, the person said.

Then the undercover investigator visited Hand again Sept. 15, saying he'd gotten the gun, had followed the witness a few times in preparation and was ready to go — and there would be no turning back once he left the prison that day, the person said.

Hand enthusiastically told him to do it and agreed to a $2,000 fee, according to the person.

Hand could face 25 years to life in prison if convicted of the new charges, first reported Thursday by The Wall Street Journal.

Garden City, N.Y.-based AFG Financial Group found real estate owned by people in financial trouble and then found straw buyers who had good credit — but needed cash — to front for the purchase of the property, prosecutors said. The buyers were told the deals were investment opportunities that would help people save their homes, earn them and investors a healthy return, and cost them nothing but their signatures.

The conspirators would then get banks to finance the real estate purchases, with the help of inflated property appraisals, phony loan qualification packages and forged W-2 forms, pay statements and bank documents. Once the deals closed, the conspirators simply took the money, without paying the seller or anyone else, prosecutors said.

The straw buyers were left with bad credit and no investment return, and the lenders foreclosed on the sellers' properties.

In some cases, the banks had already sold investments based on the worthless mortgages. Cheated banks and lenders included New Century Mortgage Corp., which lost more than $30 million, and Countrywide Home Loans Inc., which was taken for about $8 million, prosecutors said.

AFG Financial Group was not related to American Financial Group Inc., of Cincinnati, an insurance company that goes by AFG.

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Follow Jennifer Peltz at http://twitter.com/jennpeltz.

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EU crisis poses risk to global recovery: Geithner (Reuters)

WASHINGTON (Reuters) – Europe's worsening debt crisis could significantly damage the U.S. economy, Treasury Secretary Timothy Geithner warned on Thursday as he urged Europe to shore up its bailout fund.

"Europe is so large and so closely integrated with the U.S. and world economies that a severe crisis in Europe could cause significant damage by undermining confidence and weakening demand," Geithner told the U.S. Senate Banking Committee.

A growing number of economists expect the crisis will tip the euro zone into recession, putting a further drag on an already weak U.S. recovery and endangering President Barack Obama's chances of being reelected next year.

The United States and the International Monetary Fund have been trying to get European leaders to put in place a strategy to stabilize the situation and Geithner has been pushing the European Union to leverage its 440 billion euro bailout fund.

Some analysts have estimated that the fund should be expanded to at least 2 trillion euros to safeguard Italy and Spain if the Greek debt crisis continues to escalate.

"The critical imperative is to ensure that the governments and the financial systems under pressure have access to a more powerful financial backstop," Geithner said.

At the hearing, which examined how the U.S. government's risk council is fighting threats to the U.S. financial system, Geithner tried to assuage lawmakers' fears that Europe's debt problems could lead to another Lehman-like crisis. The investment bank's 2008 bankruptcy rippled through the global financial system and triggered a run on money market funds.

"Our firms are in a much stronger position," he said. "Our institutions hold substantial cushions of capital against the potential risk they may face ahead."

U.S. banks have been shoring up capital levels since the 2008-09 financial crisis. Geithner said global regulators would do whatever they could to make sure that European banks also complied with the higher capital levels required by the Basel Committee of bank supervisors.

Europe's sovereign debt crisis has spilled over into the region's financial system and investors have started to lose faith in banks heavily exposed to Greek assets. Customers have been withdrawing funds from Franco-Belgian bank Dexia (DEXI.BR) and the European Commission president is pushing for a coordinated injection of funds into ailing firms.

RISK COUNCIL

Geithner acknowledged that the Financial Stability Oversight Council has limitations in its ability to predict future risks to the system. The council, which draws together top U.S. financial regulators from various agencies, was established in July 2010 and charged with identifying risks to the financial system.

It has been criticized by the business community for imposing another layer of burdensome rules on companies struggling to recover after the crisis.

Bank lobbyists took a fresh swipe at the council and said it was not clear whether regulators were paying attention to sources of systemic risk, such as the depressed housing market.

Chaired by Geithner, the council is made up of the heads of major financial supervisors, including the Securities and Exchange Commission and the Federal Reserve. It is due on Tuesday to issue another proposal on criteria for picking which "systemically important financial firms" will be forced to hold more capital and comply with more rules.

(Reporting by Dave Clarke, Rachelle Younglai and Glenn Somerville; Editing by James Dalgleish)

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Calif. gov signs law expanding auditor authority (AP)

SACRAMENTO, Calif. – California Gov. Jerry Brown has signed a bill that expands the state auditor's authority to investigate misuse of city and county taxpayer funds.

The legislation was introduced by Bell Gardens Assemblyman Ricardo Lara because of the Bell financial scandal. His district includes the tiny Los Angeles County city.

The Los Angeles Times ( http://lat.ms/rmW9Xo) says the new law allows the state auditor to investigate local government agencies to determine whether they are at risk of fraud, waste or mismanagement.

Bell City Manager Robert Rizzo was fired last year after it was learned he had an annual salary and compensation package of $1.5 million and was paying huge salaries to other officials.

Rizzo, his chief assistant and six former council members are charged with fraud and misappropriation of public funds.

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Oil above $80 on positive news for Europe banks (AP)

NEW YORK – Oil rose Thursday as Europe's central bank tried to strengthen the region's financial system.

Benchmark crude rose 79 cents to $80.47 per barrel in New York, while Brent crude rose 21 cents to $102.94 in London.

Oil climbed for a second day after plummeting to 12-month lows earlier in the week. The fall came as credit problems in the eurozone rattled energy markets. Investors fear that a Greek default could spark a wider banking crisis that threatens the U.S. economy and weakens demand for oil.

In an effort to deal with that the European Central Bank on Thursday offered new emergency loans to banks that could shield them from possible losses.

Europe's financial problems have scared many investors out of oil markets this year, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. When Europe's situation appears to improve, investors rush back in, lifting prices, Kloza said.

A stronger Europe and world economy means demand for oil will rise.

The U.S. economy also showed signs of strength, as major retailers posted strong sales increases in September.

Meanwhile retail gasoline prices fell by less than a penny to a national average of $3.392 for a gallon of regular, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has dropped almost every day in the last four weeks. It's down more than 7 percent, but it's still 64 cents higher than at the same time last year.

In other energy commodities trading, heating oil added 2.04 cents to $2.797 per gallon and gasoline futures rose 4.43 cents to $2.6135 per gallon. Natural gas lost 2.9 cents at $3.541 per 1,000 cubic feet.

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World mourns Steve Jobs (Reuters)

NEW YORK (Reuters) – Outpourings of public grief and appreciation swept the globe on Thursday after the death of Apple co-founder Steve Jobs.

Jobs, who touched the daily lives of countless millions of people through the Macintosh computer, iPod, iPhone and iPad, died on Wednesday at age 56 after a long battle with pancreatic cancer. He stepped down as Apple chief executive in August.

Reaction in the stock market was muted as Apple shares quickly recovered from an initial 1.5 percent decline. The shares were up 1 percent to $382.15 at midday.

In New York City, an impromptu memorial made from flowers, candles and a dozen green and red apples was erected outside a 24-hour Apple store on Manhattan's Fifth Avenue, with fans snapping photos of it on their iPhones.

"It was really sad news for us," said Daiichiro Tashiro, 25, visiting from Tokyo. "A lot of Japanese use the iPhone. We're here to thank him."

Tributes poured in both from ordinary people and from the pinnacles of the business and political worlds.

"He's the hero to everybody of this generation because he did something that I think is very hard, which is be both a dreamer and a doer," General Electric Co CEO Jeff Immelt told reporters in Columbus, Ohio, on Thursday.

"I wouldn't be able to run my business without Apple, without its software," said David Chiverton, who was leaving Apple's flagship Regent Street store in London. "I run a video production company. It's allowed me to have my dream business."

News Corp CEO Rupert Murdoch said, "Steve Jobs was simply the greatest CEO of his generation."

At an Apple store in Sydney, lawyer George Raptis, who was five years old when he first used a Macintosh computer, spoke for almost everyone who has come into contact with Apple. "He's changed the face of computing," he said. "There will only ever be one Steve Jobs."

U.S. President Barack Obama remembered Jobs as a visionary. "Steve was among the greatest of American innovators -- brave enough to think differently, bold enough to believe he could change the world, and talented enough to do it," Obama said in a statement.

Microsoft's Bill Gates, who once triumphed over Jobs but saw his legendary status overtaken by the Apple co-founder in recent years, said, "For those of us lucky enough to get to work with him, it's been an insanely great honor."

Nokia CEO Stephen Elop, whose company competes with Apple's iPhone in the handset market, said, "The world lost a true visionary today. Steve's passion for simplicity and elegance leaves us all a legacy that will endure for generations."

When he stepped down as CEO in August, Jobs handed the reins to long-time operations chief Tim Cook. With a passion for minimalist design and a genius for marketing, Jobs laid the groundwork for the company to continue to flourish after his death, most analysts and investors say.

But Apple still faces challenges in the absence of the man who was its chief product designer, marketing guru and salesman nonpareil. Phones running Google's Android software are gaining share in the smartphone market, and there are questions about what Apple's next big product will be.

LEGENDARY ENTREPRENEUR

A college drop-out and the son of adoptive parents, Jobs changed the technology world in the late 1970s, when the Apple II became the first personal computer to gain a wide following. He did it again in 1984 with the Macintosh, which built on breakthrough technologies developed at Xerox Parc and elsewhere to create the personal computing experience as we know it today.

The rebel streak that was central to his persona got him tossed out of Apple in 1985, but he returned in 1997 and after a few years began the roll-out of a troika of products -- the iPod, the iPhone and the iPad -- that again upended the established order in major industries.

A diagnosis of a rare form of pancreatic cancer in 2004 initially cast only a mild shadow over Jobs and Apple, with the CEO asserting that the disease was treatable. But his health deteriorated rapidly over the past several years, and after two temporary leaves of absence he stepped down as CEO and became Apple's chairman in August.

Jobs's death came just one day after Cook presented a new iPhone at the kind of gala event that became Jobs's trademark. Perhaps coincidentally, the new device got lukewarm reviews, with many saying it wasn't a big enough improvement over the existing version of one of the most successful consumer products in history.

Apple paid homage to its visionary leader by changing its website to a big black-and-white photograph of him with the caption "Steve Jobs: 1955-2011."

On Google's home page, the same line appeared just below its search box. It was a link to the Apple site.

(Reporting by Jennifer Saba; additional reporting by Sinead Carew and Liana Baker in New York; Scott Malone in Columbus, Ohio; Sarah McBride in Cupertino, California; Poornima Gupta in San Francisco; Edwin Chan in Los Angeles; Matt Cowan in London; and Amy Pyett in Sydney; editing by John Wallace)

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