Oil price falls below $86 on mixed economic data (AP)

NEW YORK – Oil prices fell Thursday after a series of reports pointed to higher demand and growing supplies in coming months.

Here's how energy contracts traded.

On the New York Mercantile Exchange:

Crude fell 81 cents to end at $85.30 per barrel.

Gasoline rose less than a penny to finish at $2.6755 per gallon.

Heating oil added 4.89 cents to end at $3.0301 per gallon.

Natural gas increased 4.4 cents to finish at $3.630 per 1,000 cubic feet.

On the ICE Futures exchange in London:

Brent crude rose $1.37 to end the day at $109.76 per barrel.

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Wall St. edges higher; Europe anxiety remains (Reuters)

NEW YORK (Reuters) – Stocks ended with modest gains on Thursday, shifting back and forth on incremental developments in Europe where leaders sought to reassure investors that a solution to the debt crisis would come soon.

The S&P has alternated gains and losses for seven days at the close and has kept to a tight range as markets watch for the latest news out of Europe.

Germany and France released a statement on Thursday saying leaders would now hold two summits to discuss the debt crisis, with a solution in place by Wednesday's second meeting.

"The statement was enough for us to come off the lows, but there is still a long way to go," said Robert Pavlik, chief market strategist at Banyan Partners LLC in New York.

Market anxiety remained elevated. The CBOE Volatility Index VIX (.VIX), Wall Street's "fear gauge," rose more than 1 percent to near 35, extending gains after rising nearly 10 percent on Wednesday.

Supporting the market, U.S. economic data showed factory activity in the U.S. Mid-Atlantic region rebounded in October while a separate report showed U.S. jobless claims fell last week.

On the negative side, other data showed a drop in sales of existing-homes last month and only a small rise in a gauge of future growth.

Financial and materials stocks were the day's top gainers. The S&P 500 financial sector index (.GSPF) rose 1.8 percent and materials (.GSPM) climbed 1 percent.

The Dow Jones industrial average (.DJI) ended up 37.16 points, or 0.32 percent, at 11,541.78. The Standard & Poor's 500 Index (.SPX) was up 5.51 points, or 0.46 percent, at 1,215.39. The Nasdaq Composite Index (.IXIC) was down 5.42 points, or 0.21 percent, at 2,598.62.

Progress by EU leaders toward a solution is considered vital for Wall Street stocks to break out of their trading range.

The S&P 500 has struggled after reaching the top end of a two-month trading range at around the 1,230-1,250 level.

Investors are also closely watching the developing U.S. earnings season. According to Thomson Reuters data, of the 109 companies in the S&P 500 that have reported earnings, 70 percent have topped analysts' expectations.

After the closing bell, Microsoft shares (MSFT.O) fell 0.5 percent to $26.87 following quarterly results. During regular trading Microsoft finished at $27.04, down 0.3 percent.

Ingersoll Rand Plc (IR.N) posted lower quarterly earnings, and its fourth-quarter profit forecast fell short of some Wall Street estimates, due to depressed housing and consumer markets, sending shares down 7.9 percent to $27.38.

Polycom Inc (PLCM.O) fell more than 25 percent to $16.33 and weighed on the Nasdaq after the videoconferencing company reported quarterly revenue well below market expectations. The NYSEArca networking index (.NWX) lost 1.8 percent.

Trading volume was about 7.8 billion shares on the New York Stock Exchange, NYSE Amex and Nasdaq, below this year's daily average of about 8 billion.

On the NYSE, advancers beat decliners by a ratio of three to two, while on the Nasdaq, decliners beat advancers by a ratio of 12 to 11.

(Reporting by Angela Moon, Editing by Kenneth Barry)

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Occupy Wall Street becomes NYC tourist stop (AP)

NEW YORK – Shawn Lahey, a ruler factory worker from Poughkeepsie, was watching the show. A dancing man held a pole marked "corporation," attached to a noose marked "financial system" — from which another dancing man was "hanging." Masked drummers provided a thumping soundtrack.

Times Square? Nope. He was all the way down in Manhattan's financial district, where the Occupy Wall Street protesters have camped out for more than a month.

Zuccotti Park has become a hub for more than demonstrators. Visitors, curious to see protest in action, are regular arrivals. Some take photographs of themselves, protesters and their signs in the background. On a typical day they clog the pedestrian traffic in the area, which is often bustling with financial district employees pushing their way through.

"I think it's great — they're trying to make a point," Lahey said, though he added with a wry smile, "... I don't think it'll make any difference. ... The government won't make any changes, because it's all about money."

Jackie Qualizza of Bucyrus, Kansas, challenged protester Art Udeykin, asking him to explain the purpose of the demonstration, which has inspired similar activism in many cities across the nation and around the world.

"Right now, we don't have a goal — except to back away from the system that's not working," replied Udeykin, a 23-year-old Russian-born Iowan. "This is a way to feel free, to feel normal."

Qualizza said she couldn't see herself demonstrating, but added, "I don't disagree with them. The government bailed out everyone, and things are still not working. Something has to change."

The protest against corporate influence in government and wealth inequality has many of the things tourists look for, including photo-worthy moments and even some trinkets. In this case, the T-shirts and buttons offered by protesters are generally free, though they accept donations.

The double-decker buses offering tours of Manhattan pass by on Broadway, with guides pointing out the park site and tourists — in sunny weather — often waving sympathetically at protesters from the top decks.

Wednesday was rainy, but visitors included a group of Chinese tourists accompanied by an interpreter and a guide.

Molly Schwad, a jeweler from Kansas traveling with Qualizza and other friends, said she was surprised by what she saw, compared to the TV coverage of the protest movement.

She saw a rather quiet encampment in the rain, of only about 200 people. At times several hundred people have camped at the park, and some of the demonstrations organized as part of the Occupy Wall Street movement have drawn thousands.

"I thought it was much bigger," Schwad said. "We were afraid there might be violence here."

Marsha Spencer, an unemployed seamstress knitting in the rain at the park Wednesday, gives visitors a view of the protests they may not have expected to see. She returns to her home in the Hell's Kitchen neighborhood at night but spends most of each day at the protest.

"When people see a 56-year-old grandmother sitting here, knitting — they pay attention," she said. "... I tell them I'm here because I want things to change for my five grandchildren."

Some visitors echoed her concerns, including Karen Conrad of Johnstown, Pa., who was in New York last week to visit family and stopped by to show her support.

"I'm a middle-class mother and I can't get ahead. If anything, I'm going downward," she said. She said her two children are burdened by debt from college loans and "won't be out of debt until their own children are ready for college probably."

Demonstrator Julian DeMayo, a law student from Montreal bundled up against the wind and rain, said the tourists' attitude toward the protest has changed over the weeks.

"At first, they seemed skeptical, looking at this like it was a circus show," he said. But more recently, he said, many visitors "looked genuinely interested, and inspired. And they seem impressed by the level of infrastructure."

He added, "I think they also see that there's a huge variety of people here — young and old, of all races, from everywhere."

Some nearby businesses are far less enamored of the protesters, and say the hubbub outside their doors is costing them money.

Stacey Tzortzatos, manager of Panini & Co., a casual restaurant that's normally bustling as it serves financial district clients, said the eatery has been losing business because police barricades discourage customers from coming in, and media vans are blocking the view.

But the biggest problem, she said, was protesters coming in to use the bathroom — "30 at a time." She said she put locks on the bathroom doors in response.

"They take showers using the sink, they brush their teeth, and they make a huge mess," she said.

Tzortzatos said she's been harassed and verbally abused by protesters, who have come in eating donated food.

"I was called `evil' for asking whether they were customers, when they came in eating their free pizza, smelling so bad," she said. "It's a constant battle, and it's getting worse as the weeks go by."

Other food venues didn't mind.

"Business is business!" said Alex Gervis, who works behind the counter at Manon, a cafe near Zuccotti Park that sells imported Italian coffee and Belgian chocolates.

He said protesters have come in "six, or even 10, at a time. And as long as they buy something and don't make a mess, we're happy to have them."

The only disruption came several days ago, "when they tried to play guitar," he said. "We can't have that."

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Exclusive: Nasdaq hackers spied on company boards (Reuters)

(Reuters) – Hackers who infiltrated the Nasdaq's computer systems last year installed malicious software that allowed them to spy on the directors of publicly held companies, according to two people familiar with an investigation into the matter.

The new details showed the cyber attack was more serious than previously thought, as Nasdaq OMX Group had said in February that there was no evidence the hackers accessed customer information.

It was not known what information the hackers might have stolen. The investigation into the attack, involving the FBI and National Security Agency, is ongoing.

"God knows exactly what they have done. The long term impact of such attack is still unknown," said Tom Kellermann, a well-known cyber security expert with years of experience protecting central banks and other high-profile financial institutions from attack.

The case is an example of a "blended attack," where elite hackers infiltrate one target to facilitate access to another. In March hackers stole digital security keys from EMC Corp's RSA Security division that they later used to breach the networks of defense contractor Lockheed Martin Corp.

Nasdaq had previously said that its trading platforms were not compromised by the hackers, but they attacked a Web-based software program called Directors Desk, used by corporate boards to share documents and communicate with executives, among other things.

By infecting Directors Desk, the hackers were able to access confidential documents and the communications of board directors, said Kellermann, chief technology officer at security technology firm AirPatrol Corp.

Investigators have learned that hackers were able to spy on "scores" of directors who logged onto directorsdesk.com before the malicious software was removed, said Kellermann and another person familiar with the investigation who was not authorized to discuss the matter publicly.

It was still unclear how long Nasdaq's system was breached before the attack was discovered last October.

A Nasdaq spokesman confirmed the investigation into the attack continues, but declined to give further details.

NSA HELPS NASDAQ

Executive Assistant FBI Director Shawn Henry said the financial services sector was losing hundreds of millions of dollars to hackers every year, and the attacks were increasingly "destructive" in nature.

"We know adversaries have full unfettered access to certain networks. Once there they have the ability to destroy data," he told Reuters in a phone interview. "We see that as a credible threat to all sectors, but specifically the financial services sector." Henry declined to comment on the Nasdaq attack.

U.S. Army General Keith Alexander, head of the National Security Agency and U.S. Cyber Command, said the NSA was working with Nasdaq to help protect its network against further attacks.

Alexander told security experts at a Baltimore conference that the United States was shoring up its defenses, but still had "tremendous vulnerabilities" to a growing number of increasingly destructive electronic attacks.

"Nation states, non-nation state actors and hacker groups are creating tools that are increasingly more persistent and threatening, and we have to be ready for that," he said.

Amid a spate of high-profile cyber crimes, the Obama administration wants Congress to pass comprehensive cyber-security legislation that would increase the government's ability to thwart the growing threat.

Alexander and other top officials held a classified meeting with lawmakers on Wednesday and Thursday to discuss the issue, according to sources familiar with the meeting.

Nasdaq CEO Robert Greifeld said in July that the exchange is under constant attack, requiring it to spend nearly a billion dollars a year on information security.

"As we sit here, there are people trying to slam into our system every day," Greifeld said in the interview. "So we have to be ever vigilant against an ever-changing foe."

(Reporting by Jim Finkle. Additional reporting by Jonathan Spicer in New York, Andrea Shalal-Esa in Baltimore and Diane Bartz in Washington. Editing by Tim Dobbyn, Tiffany Wu, and Bob Burgdorfer

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Ford Invests $200 Million, 1,200 New Jobs at Illinois Plants (ContributorNetwork)

This Wednesday, Illinois Gov. Pat Quinn announced that Ford Motor Company will be expanding its operations in Illinois and bringing more opportunities for residents and the state's economy.

* Ford Motor Company will be investing $200 million into expanding its Chicagoland facilities, specifically on the city's far south side at its assembly plant and at the company's Chicago Heights stamping plant.

* The company's investment will also help create approximately 1,200 jobs at its facilities in Chicago and Chicago Heights.

* Currently the assembly plant produces several Ford models, including the Explorer, Taurus, and Lincoln MKS.

* Gov. Quinn commented on the importance of Ford's decision to expand in the state, "Creating jobs for Illinois workers is our number one priority. This investment package not only will help create 1,200 new jobs and boost the local economy, but it will ensure the next generation of Ford vehicles are built by Illinois workers - the best workers in the world."

* Additionally, the expansion will also help support the automaker's launch of new police interceptors, specifically a sedan and an SUV.

* In order to support more jobs and the launch of producing new police interceptors at its assembly plant in Chicago, Ford will be adding a third shift for its workers and production.

* The Wall Street Journal reported that on the same day, Ford Motor Company and the United Auto Workers ratified a new labor contract that will affect 41,000 of the company's workers.

* "I want to thank Governor Quinn for his continued strong support of Ford," said Mark Fields, Ford Motor Company's president of The Americas. "The state's investment package is a critical component in helping support our investment in Illinois and in creating additional jobs."

* Similarly, Chicago Mayor Rahm Emanuel has continued to work with Ford on expanding its operations in the Windy City, especially since his inauguration this past May.

* Mayor Emanuel also spoke about Ford's decision today by saying, "I am pleased that Ford is making this additional investment in Chicago and creating 1,200 high-paying jobs for the City's hard-working, dedicated workforce. Ford's increased presence in Chicago bolsters our economic competitiveness and demonstrates that Chicago is a city on the move where businesses are growing and creating new opportunity."

* The automaker's decision to expand its stamping plant in Chicago Heights will also count for 400 more jobs.

* Fields added, "I want to thank Mayor Emanuel and his team for working on key infrastructure issues that will support Ford's increased production in Chicago and new jobs."

Rachel Bogart provides an in-depth look at current environmental issues and local Chicago news stories. As a college student from the Chicago suburbs pursuing two science degrees, she applies her knowledge and passion to both topics to garner further public awareness.

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Factory, jobs data offer hope for economy (Reuters)

WASHINGTON (Reuters) – Factory activity in the Mid-Atlantic region rebounded in October and the number of Americans claiming new jobless benefits fell last week in fresh signs that the economy was likely to duck a new recession.

Optimism over the economy was tempered, however, by other data on Thursday showing a drop in sales of previously owned homes and only a small rise in a gauge of future growth.

"The numbers we have seen today provide some hints that the domestic economy is doing a little bit better, even with the challenges that are unfolding in Europe," said Michael Strauss, chief economist at Commonfund in Wilton, Connecticut.

Initial claims for state unemployment benefits slipped 6,000 to 403,000 last week, the Labor Department said. A four-week average, which smoothes out weekly volatility to give a better view of trends, hit its lowest level since April.

Separately, the Philadelphia Federal Reserve Bank's business activity index rebounded to 8.7 in October, the highest reading in six months, from minus 17.5 in September.

A reading above zero indicates factory activity is expanding in the region, which covers eastern Pennsylvania, southern New Jersey and Delaware.

U.S. stocks initially rose on the data, but surrendered most gains on nagging doubts over whether European leaders would decisively deal with the euro zone debt crisis at a summit this weekend. Prices for U.S. Treasury debt were little changed while the dollar was a touch weaker against a basket of currencies.

Fears had been mounting that the sickly U.S. economy was heading back toward recession after growth wobbled in the first half of the year and after consumer confidence plunged in August amid signs both the United States and Europe were having trouble coming to terms with their huge debts.

But the recent stream of data, including figures on retail sales and trade, suggest output sped up in the third quarter.

Analysts estimate U.S. gross domestic product grew at an annual pace of anywhere between 2.3 and 2.7 percent, a sharp step up from the second quarter's tepid 1.3 percent rate.

"There is little evidence the economy is ready to enter a downturn based on the Philadelphia Fed (data)," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank in New York.

JOBS MARKET TONE IMPROVING

That view was also underscored by the four-week moving average of initial jobless claims. The claims data covered the survey week for the government's closely watched nonfarm payrolls count for October.

Initial claims dropped 25,000 between the September and October survey periods, suggesting a step-up in nonfarm employment after payrolls increased 103,000 last month.

After spiking in mid-September, jobless claims appear to have settled near the 400,000 mark that is usually associated with some improvement in the jobs market.

Weak unemployment is a thorny issue for the Federal Reserve, which is weighing further options to boost output and lower the jobless rate after slashing interest rates to near zero and pumping about $2.3 trillion into the economy.

On Thursday, St. Louis Fed President James Bullard acknowledged the improved tone in economic data but his counterpart at the Cleveland Fed, Sandra Pianalto, did not believe growth would pick up soon. For more see

While most parts of the U.S. economy are plodding along, the housing market continues to show little signs of life, however.

Sales of existing homes dropped 3.0 percent to an annual rate of 4.91 million units in September, the National Association of Realtors said.

In another report, the Conference Board said its index of leading economic indicators edged up 0.2 percent in September, pointing to continued sluggish growth. Still, it warned that the economy faced a 50 percent chance of recession whereas a month ago it said recession risks were lower than that.

Most economists, however, see a lower chance of recession, and signs of continued manufacturing expansion have bolstered hopes another downturn can be avoided.

Factories in the Mid-Atlantic region this month reported growth in order books after shrinkage for two straight months. Shipments rose too and there was an increase in unfilled orders, although employment slowed from September.

Still, manufacturers remain leery on the economic outlook.

Diversified manufacturer Danaher Corp, air conditioner maker Ingersoll Rand Plc and electrical products company Cooper Industries Plc all reported higher-than-expected earnings but were guarded about the fourth quarter.

"Clearly, we're seeing some moderation in the economy," Danaher CEO Larry Culp said. "(But) I don't think we'll see anything like an '08, '09 collapse."

(Additional reporting by Pedro da Costa and Jason Lange in Washington and Nick Zieminski in New York; Editing by James Dalgleish)

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Jack Daniel's distillery targeted for more taxes (AP)

NASHVILLE, Tenn. – For decades, Jack Daniel's whiskey has celebrated its small Tennessee hometown of Lynchburg with folksy, black-and-white advertisements urging folks to slow down and have a sip.

Now local officials want the maker of the world's top-selling whiskey to pay a bigger bar tab as they struggle with their budget. How does up to $5 million sound?

A measure approved by the Moore County Council asks the Tennessee legislature to authorize a local referendum on whether the distillery should pay that much in new taxes on the 500,000 barrels it fills with whiskey each year.

The 145-year-old distillery, tucked away on 1,700 hilly acres down the road from Lynchburg's quaint town square, now pays $1.5 million in local property taxes.

If the barrel tax is approved, it would be a huge help to the local government, whose annual budget is $3 million and would get every last drop, so to speak, of the money.

Distillery officials say they already do their civic and fiscal duty.

"We're paying our part, our fair share," said Tom Beam, senior vice president and general manager of production at the facility. He said the distillery has already helped the area in several ways, including assisting with renovations at the courthouse and a swimming pool.

"We operate as a partner with the county," he said.

He worries such a law would be a terrible precedent for other businesses in the state.

"Other counties could try to do the same thing, attacking businesses. It could be a job killer," he said.

Nevertheless, supporters of the referendum say Jack Daniel's still owes more.

"Lynchburg and the people of Moore County have been involved in the success of the Jack Daniel's brand; the value of the brand worldwide is due in no small measure because they have marketed our town and people successfully," said Charles Rogers, who has led the campaign for the new tax.

The town and Jack Daniel's brand are entwined like few other products. The iconic black-and-white label of Jack's "Old No. 7" whiskey even lists Lynchburg's population. The bottle says 361, but the town and county really have about 6,400 people. Ten million cases of the sour mash whiskey, led by Old. No. 7, are sold worldwide every year.

"They owe something back to the county," said Rogers, a Lynchburg native and retired executive with the Chrysler Corp.

For those with thirsty throats fearing a retail price increase if the proposal passes, corporate officials would not speculate. But Beam offered this sobering thought: "We'd be out several million dollars a year. We'd have to look to save money."

The proposal will go to the General Assembly early next year. If authorized there, the referendum in the county could be held as early as next November.

Rogers believes it will be a spirited fight in the legislature, but if authorized there, "I feel pretty certain it would pass (locally)."

State Rep. Debra Maggart, chairwoman of the Republican majority in the Tennessee House of Representatives, agrees the proposal will face opposition in the legislature, where anti-tax sentiment is strong in her party.

"No taxes will be raised on our job creators," she predicted.

The Tennessean newspaper reports that the distillery's owner, Brown-Forman Corp., is ready to make political contributions as a possible fight looms: The company's political action committee has $278,000 heading into the 2012 elections.

About 210,000 people visit the distillery annually, making it a top tourist draw in Tennessee. With 450 employees, it's the biggest industry in the county. According to Brown-Forman, Jack Daniel's brands had an 8 percent gain in net sales for the full year ending April 30. The company's net sales for fiscal 2011 was more than $3.4 billion.

Rogers, who moved back to Lynchburg after a career in corporate work, said he has nothing personal against the whiskey.

"I never was a heavy drinker, but I liked Jack Daniel's when I had a drink," he said. "I was a good customer."

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Capital One posts 3rd-qtr profit edges up 1 pct (AP)

NEW YORK – Capital One Financial Corp. on Thursday said its third-quarter profit edged up 1 percent, as it wrote more auto and commercial loans and defaults eased.

A spike in marketing and operating expenses and an increase in a reserve set aside to handle claims against the bank related to soured mortgages tempered the gains.

The McLean, Va.-based bank had net income for the quarter ended Sept. 30 of $813 million, or $1.77 per share, compared with $803 million, or $1.76 per share, in the year-ago period.

Total revenue rose 3 percent to $4.15 billion, from $4.02 billion last year.

Analysts, on average, were expecting profit of $1.68 per share on revenue of $4.04 billion, according to data provided by FactSet.

Net interest income, or money earned from deposits and loans, rose 6 percent to $3.28 billion, from $3.11 billion a year ago. Total deposits jumped nearly 8 percent to $128.32 billion. Total loans gained 3 percent to $129.95 billion.

"Overall, I think the results were pretty good," said Keefe, Bruyette & Woods analyst Sanjay Sakhrani.

The bank, best known for its ubiquitous "What's in your wallet?" advertising campaign, said U.S. credit card use rose 17 percent from the prior-year quarter. Sakhrani said the increased usage was "very strong."

Its auto finance unit wrote 40 percent more loans than last year, bringing total loans in this segment to $20.42 billion. Commercial loans also increased, rising 9 percent to $32.11 billion. CEO Richard Fairbank said during a conference call to discuss results that the growth in commercial loan commitments, which indicates future loan growth, was "even stronger."

"We believe the period of shrinking loans through the Great Recession has come to an end," Fairbank said.

Capital One wrote off $812 million in uncollectible loans, a drop of 47 percent from last year. That enabled the bank to reduce the amount it set aside to cover soured loans by 28 percent, to $622 million.

Fairbank said improvements in the performance of the bank's credit card and auto loans "have outpaced the modest and fragile economic recovery." The bank has been monitoring its outstanding credit in search of signs that recent economic difficulties will lead to another round of worsening payment performance, but said so far "we have yet to see any evidence of this."

The gains in lending were partially offset by higher marketing and operating expenses, which rose 15 percent.

Capital One also said it increased its reserve for mortgage-related claims by 3 percent to $892 million. The bank said it now believes the upper end of potential losses from such claims, which stem from mortgages that were used to back investment vehicles that have since soured, could be $1.5 billion.

The company said the pending acquisition of HSBC's U.S. credit card portfolio should close by the end of the year, pending regulatory approval. It is also still waiting for regulators to OK its purchase of ING Direct.

Capital One shares added 74 cents, or 2 percent, to close Thursday trading at $40.49. Shares rose 11 cents to $40.60 in aftermarket trading.

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Feeble Windows holds back Microsoft profit (Reuters)

SEATTLE (Reuters) – Microsoft Corp's flagship operating system made only slight gains last quarter, largely due to business and emerging market spending, holding back profit growth for the world's largest software company.

Sales of Windows, which still runs more than 90 percent of the world's personal computers, edged up only 2 percent from the year-ago quarter, in line with limp PC sales across the board.

That broke the streak of three straight quarters of declines, but it fell short of some analysts' hopes.

"We still had Windows miss again, although not by nearly as much as it has the last couple quarters," said Brendan Barnicle, an analyst at Pacific Crest Securities.

Sales of Windows 7, Microsoft's latest system, have leveled off after a big launch in 2009. Growth is now dependent on Microsoft's core business customers, which are still spending on technology despite the slow economy.

In contrast, hard-up consumers are waiting for next year's Windows 8, putting off purchases indefinitely, or opting to buy Apple Inc iPads instead.

Microsoft Chief Financial Officer Peter Klein said the cycle of businesses buying new PCs to replace aging machines was still in the "middle innings," offering hope of continuing modest growth.

"We expect that dynamic of business PCs growing faster (than consumer) to last throughout this fiscal year at least," Klein said on a conference call with analysts.

Microsoft's shares, which have traded in the $20-$30 range for the last decade, fell 0.7 percent in after-hours trading, to $26.85. They closed at $27.04 on Nasdaq.

BING LOSS NARROWS

The brightest spot for the world's largest software company was an indication that its perennially money-losing online services unit -- including the MSN Internet portal and Bing search engine -- may have turned a corner.

The unit lost $494 million in the quarter, the lowest loss in the last seven quarters, slowing the flood of red ink that has cost Microsoft more than $5 billion since it launched Bing in mid-2009, as it invests heavily to catch up with Google Inc.

Microsoft made no new statements about Yahoo, which is up for sale. Reuters and the Wall Street Journal have reported that Microsoft may work with private equity firms in putting together a bid for the ailing Internet giant, which it tried and failed to buy outright in 2008.

CFO Klein sidestepped an analyst's question on whether a sale of Yahoo might interfere with Microsoft's search engine cooperation with the company, which has yet to yield the expected profits.

"This is a long-term alliance," said Klein. "They're super-focused on what we need to do. And no matter what, that's the goal at hand."

NO BEAT

The Redmond, Washington company reported fiscal first-quarter net profit up 6 percent to $5.74 billion, or 68 cents per share, compared with $5.41 billion, or 62 cents per share, a year ago.

That met Wall Street's average estimate, according to Thomson Reuters I/B/E/S. It is the first time in 10 quarters that Microsoft has not exceeded the average estimate.

"They were just in line on EPS, which typically Microsoft beats," said Barnicle. "Q1 is seasonally not a big quarter for Microsoft, and this was no exception."

Overall sales rose 7 percent to $17.37 billion, helped by Office, which remains popular with businesses even in the difficult global economy.

The Office unit posted an 8 percent gain in sales to $5.6 billion, making it Microsoft's biggest-selling and most profitable unit.

The server and tools unit, which sells the server software behind the datacenters enabling "cloud" or Internet-based computing, rose 10 percent to $4.2 billion, but even that fell short of some analysts' expectations for the fast-growing area of the technology market.

The entertainment and devices unit posted a 9 percent gain in sales, helped by the Xbox, which remains the most popular game console in the United States.

MORE CASH OFFSHORE

Microsoft said its $8.5 billion deal to buy online chat service Skype, which closed last week, would add about $600 million to expenses this fiscal year. The company now estimates costs of $28.6 billion to $29.2 billion for fiscal 2012, which started July 1.

Microsoft has a cash hoard of $57.4 billion, with $51 billion of that -- or 89 percent -- parked overseas. The company is increasing its overseas cash aggressively. Three months ago, Microsoft said it had $52.8 billion in total cash, with only $45 billion -- or 85 percent -- overseas.

Faster-growing rival Apple on Tuesday reported it has $81 billion in cash.

(Additional reporting by Lisa Richwine in Los Angeles; Editing by Richard Chang and Matthew Lewis)

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Free necklaces and shipping for holiday shoppers? (AP)

NEW YORK – Retailers are so desperate this holiday season that they're willing to lose money to get you to spend yours.

Take online jeweler Stauer. It's offering a $249 amethyst necklace for free — provided customers pay the $24.95 it costs to ship it. Stauer will lose money on the deal, but it hopes to reel in new customers who will buy other jewelry.

"In this economy, you have to be outrageous in your offers," said Michael Bisceglia, the president of Stauer who found that more than a third of customers who took advantage of a similar deal on a $179 pearl necklace in 2009 bought additional items. "You have to shake up the world a bit."

Not every retailer will go as far as giving away merchandise during the holidays, but many will offer profit-busting incentives to lure cost-conscious consumers. It's a critical time of year for merchants, which can make up to 40 percent of their annual revenue in November and December. And they're so worried that Americans are spooked by the weak economy that they're willing to sacrifice profit for sales.

Nordstrom, for instance, is one of the first retailers to offer free shipping on most orders, no matter how small, even though it could wind up paying $3 to ship a $7 pair of socks. Furniture chain Raymour & Flanigan is allowing customers to go four years without paying interest on their purchases — the longest period it has ever offered — even though it will have to help cover a chunk of those charges itself. And Sears is not only offering to match the cheapest prices customers find online, but the department store chain is giving them an additional 10 percent off the difference.

"You may be making a $1 profit instead of a $3 profit," Fiona Dias, chief strategy officer of members-only shopping service ShopRunner.com, said about retailers. "But you're not losing a sale."

Retailers are rolling out incentives that essentially make their merchandise more affordable because they know the only way to get holiday sales is to offer the one thing that will attract shoppers these days: low prices. That's a change from better economic times when stores could lure customers with promises of higher quality products or better customer service.

The shift is happening as Americans continue to cut back on their spending as they grow increasingly concerned about the stubbornly high unemployment rate, stock market turmoil and an overall fragile U.S. economy. In fact, a recent Gallup poll found that eight of 10 Americans think the country is in a second recession.

"Retailers are now scared because some believe they're in a second recession," said C. Britt Beemer, chairman of America's Research Group. "And the second recession is hitting them in the biggest shopping season of the year."

Despite the challenging environment, revenue in November and December is expected to be up about 3 percent from those months last year. Such an increase — below last year's 5.2 percent spike over 2009 — would be above the 2.6 percent average gain over the last 10 years.

But Americans are expected to do more online comparison shopping and spend less time in stores. ShopperTrak, a Chicago research firm that tracks how many customers come in at more than 25,000 stores, expects foot traffic to drop 2.2 percent during the holiday season compared with a year ago. So far this year, consumers have gone to an average of three stores during a mall trip, down from an average of five stores in 2006.

To get people to spend more money once they're in stores, retailers are offering incentives that could shrink their profits.

For instance, merchants long have matched prices at competing bricks-and-mortar stores, but not online retailers. After all, it's hard for them to compete with the online-only guys that can offer lower prices because they don't have the high overhead costs of running physical locations. But now a growing number of bricks-and-mortar stores like Bed Bath and Beyond Inc. are matching prices with online-only merchants like Amazon.com.

Staples Inc. doesn't have a formal policy to do so, but it has started leaving price matching with online-only competitors to the discretion of its store managers. Amy Lee, 40, found this out when she saw an Epson printer for about $25 cheaper on Amazon.com. A Staples sales clerk in New York City agreed to give it to her for the lower price.

"I was surprised. Twenty-five dollars off is huge," said Lee, who paid $124.95 for the printer. "I would have gone home and ordered on Amazon."

Sears Holdings Inc. is going one step further by giving customers an additional 10 percent off the difference between its price and a competitor's online price. So, if a shopper finds a TV that's $30 cheaper at Best Buy Co., the consumer would get the lower price and an additional $3 off. The catch? The retailer will only match online prices of retailers that have physical locations, not online-only merchants.

"We're not focusing on short-term profits," said Tom Aiello, a Sears spokesman, about why the retailer is offering the deal. "We believe that if customers know they're going to get the product at the price they want, they will come to us more and more."

Some retailers, meanwhile, are sweetening incentives they already offer to the point that it could erode profits.

Raymour & Flanigan, for instance, is beefing up the terms of its no-interest loans, which have become popular among retailers of big-ticket items like furniture and TVs. The loans typically enable customers to forgo paying any interest on purchases for one to three years provided they make the monthly payments on time. Retailers, along with manufacturers, must help pay some of customers' interest charges — about 12 percent for three-year terms — to the financing companies that provide the loans. But the companies hope to make up for those costs in sales volume.

This holiday season, Raymour & Flanigan is offering the loans on sofas and dining room sets until Jan. 1, 2016. Lisa King, the chain's senior vice president of marketing, declined to say how much Raymour & Flanigan will have to pay its financing company, but analysts estimate that it could wind up shelling out up to 16 percent on each purchase.

"These programs do come at a cost to all retailers that offer them," King said. "This reduces the profit in a sale to the retailer."

Likewise, luxury retailer Nordstrom Inc. used to require that customers spend at least $200 to qualify for free shipping because bulk orders make up for the merchant's cost to ship items. Now, Nordstrom will ship most items for free, which means it could wind up losing money: it could pay up to $3 to ship a $7 pair of socks, for example. Nordstrom is following a similar move by catalog retailer L.L. Bean, which got rid of its minimum-order requirement for free shipping in March.

"This is increasingly becoming an expectation of customers," said Colin Johnson, a Nordstrom spokesman.

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Anne D'Innocenzio can be reached at http://twitter.com/ADInnocenzio.

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California subpoenas BofA over mortgages: report (Reuters)

(Reuters) – The California attorney general's office subpoenaed Bank of America Corp this week about the sale and marketing of troubled mortgage-backed securities to investors in the state, the Los Angeles Times reported.

The state is trying to determine whether the bank and Countrywide Financial had sold the securities to investors under false pretenses, the paper reported, citing a person familiar with the matter.

Bank of America bought Countrywide in 2008, leaving itself with billions in losses from soured loans and lawsuits.

The subpoenas come as state attorneys general and federal officials are negotiating a broad mortgage settlement with Bank of America and other major lenders. California reportedly walked away from those talks two weeks ago, although it is possible the state could still sign onto an agreement.

Bank of America declined to comment to Reuters.

The company's shares were down 2.8 percent at $6.22 in morning trading.

(Reporting by Rick Rothacker in Charlotte, North Carolina, editing by Gerald E. McCormick and Lisa Von Ahn)

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More cuts voted in Greece; riots leave 100 hurt (AP)

ATHENS, Greece – Greek lawmakers passed a deeply resented new austerity bill Thursday, caving in to the demands of international creditors in order to avoid a national bankruptcy, as a second day of riots left one protester dead and more than 100 people wounded.

The austerity measures won 154-144 in the 300-member parliament despite dissent from a prominent Socialist lawmaker who voted against a key article of the bill. The vote was expected to pave the way for a vital euro8 billion ($11 billion) payout from creditors within weeks so Greece can stay solvent.

Clouds of tear gas choked central Athens ahead of the vote as riot police intervened to separate rival demonstrators who fought for several hours with firebombs and stones outside parliament.

A 53-year-old construction worker died of heart failure after attending a mass rally, while 74 protesters and 32 police officers were hospitalized with injuries, police and state hospital officials told The Associated Press. Several dozen more injured protesters received first aid from volunteer medics who set up a makeshift treatment site on Athens' main Syntagma Square.

Police said they detained 79 people suspected of violent conduct.

After initial hours of calm, the rioting erupted when hundreds of masked anarchist youths attacked a peaceful rally of about 50,000 people outside parliament, pelting them with firebombs and jagged chunks of marble. The Communist-backed union members counterattacked, and chaos ensued as the two sides fought with sticks and rocks before riot police fired volleys of tear gas to separate them.

Running battles ensued through the avenues and side streets of central Athens, with anarchist rioters ripping up paving stones, hewing masonry from buildings and using garbage to set up burning barricades.

Unions kept the country's services crippled on the second day of a general strike, in opposition to the new measures that include pay and staff cuts in the civil service as well as pension cuts and tax hikes for all Greeks.

Former Labor Minister Louka Katseli voted against one article that scales back collective bargaining rights for workers. Although she voted in favor of the overall bill, Prime Minister George Papandreou expelled her from the party's parliamentary group, whittling down his parliamentary majority to a bare three seats — down from ten seats two years ago.

Passing the entire bill was "a matter of national responsibility for the critical negotiations that lay ahead in the next few days," Papandreou said in a statement announcing Katseli's expulsion. "The government exhausted every possible effort to incorporate proposals made by members of parliament."

Greece now heads into a series of tough negotiations in Brussels involving the 17 finance ministers of the eurozone and European leaders. The meetings kick off on Friday, when eurozone finance ministers gather, with the finance ministers of the full 27-nation European Union in talks on Saturday, and the EU heads of state and government on Sunday.

Greece has avoid bankruptcy only with an euro110 billion ($152 billion) bailout loan from its 16 eurozone partners and the International Monetary Fund since May of last year. Creditors worried about Greece missing budget targets had demanded that Athens pass extra austerity measures before its gets the next payout. Greece says it will run out of money in mid-November without the next euro8 billion ($11 billion) installment.

In Athens, deputies voted after an acrimonious debate held as rival groups of demonstrators outside fought police and each other in a second day of violence.

"That it was voted on is one thing. Its implementation is another. The people will tear it apart, they will dismiss it in practice," retiree Kleanthis Kizilis said at the protest.

The meetings on Greece this weekend are crucial because the efforts so far to get the country back on track financially have been failing. In July, eurozone leaders tentatively agreed to a second euro109 billion ($150 billion) bailout for Greece, conceding that the first was not enough.

That second bailout would also see banks and other private bondholders give Greece easier terms on its debt. European banks that hold Greek bonds are fighting efforts to make them accept larger losses, and many experts are concerned about the ability of European banks to handle a Greek default.

But Greece's international creditors are warning that even the second bailout may not be enough to save the country from bankruptcy, according to a draft of a debt inspectors' report obtained Thursday by the AP in Berlin.

The inspectors said Greece has missed its deficit-cutting targets and called the pace of its reforms insufficient. They still added that Athens should get the next euro8 billion tranche as soon as possible so it does not default.

Papandreou called on Greece's eurozone partners to urgently end a deadlock in negotiations over a broader European debt deal.

"Europe is now at risk because of its inability to grasp the scale of the crisis in time — the systemic problems — and take the necessary decisions," he told an emergency Cabinet meeting in Athens. "Europe must now assume its responsibilities — all of us in Europe. A small fire has become a pan-European fire."

But fury at his government echoed across Athens.

"He (Papandreou) doesn't know what is going on. For me, it's the worst government of all time," said protester Haralambos Tahoulas.

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Demetris Nellas and Elena Becatoros in Athens contributed.

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HP loses strategy chief as overhaul rumbles on (Reuters)

SAN FRANCISCO (Reuters) – Hewlett-Packard Co's chief strategy and technology officer has retired, becoming the latest senior executive to leave the storied Silicon Valley giant struggling to restore its tarnished credibility.

Shane Robison, 57, will step down on November 1, ending an 11-year term at the company, which is now pondering a sale or spinoff of its core personal computing division and trying to assure skeptical investors it can restructure to return to growth.

HP appointed former California gubernatorial candidate Meg Whitman CEO just last month, after firing former leader Leo Apotheker for a series of missteps, including a poor run at convincing Wall Street he had not overpaid for British software firm Autonomy Plc.

Robison, a pivotal figure in crafting long-term strategy for the largest U.S. technology company through mergers and acquisitions and research and development, will not be replaced, HP said in a statement.

"Shane has been a powerful innovator for our business groups and other corporate divisions," Whitman said in the statement.

But "in an effort to drive strategy, research and development closer to the company's businesses, it will not be replacing the role of chief strategy and technology officer," HP's statement read.

Shares in the company have plunged 17 percent since August 18, when it announced the $12 billion acquisition of Autonomy and its decision to consider a spinoff of its PC business, the world's largest. HP later acknowledged that the decision to announce may have been premature, and may have alienated some partners.

(Editing by Bob Burgdorfer)

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Fed debate about more easing heats up (Reuters)

NEW YORK (Reuters) – Two top Federal Reserve officials are arguing the U.S. central bank should consider resuming controversial large-scale mortgage bond purchases to support a fragile economic recovery.

In his first speech explicitly on the economic outlook since joining the Fed in 2009, Fed Governor Tarullo on Thursday said there was "ample room" for policymakers to do more. Tarullo said mortgage bond purchases should be on the table, a sentiment echoed by Boston Fed President Eric Rosengren in an interview with the Wall Street Journal on Wednesday.

Tarullo and Rosengren's comments mark the first public discussion of the possibility of more mortgage bond purchases, which were a controversial part of the first round of quantitative easing in 2009.

Other Fed officials said on Thursday the Fed's current policy stance is appropriate.

For his part, St. Louis Fed President James Bullard told reporters that with recent economic data looking better, "monetary policy is appropriately calibrated for this situation." Cleveland Fed President Sandra Pianalto also said Fed policy actions were "appropriate."

The remarks suggest a growing debate among Fed officials about how aggressively to support an economy that is not growing quickly enough to make a significant dent in an unemployment rate hovering around 9 percent.

Pianalto described the economic recovery as "painfully" slow and unlikely to gather pace soon, while Tarullo likened it to a "slogging through the mud and occasionally hitting stretches of dry pavement."

"There is need, and ample room, for additional measures to increase aggregate demand in the near to medium term, particularly in light of the limited upside risks to inflation over the medium term," said Tarullo, who as a Fed Governor has a permanent vote on monetary policy.

ONGOING HOUSING PROBLEMS

Because the ongoing housing problems are so central to the recession and the anemic nature of the subsequent expansion, the Fed should refocus its efforts on housing, Tarullo said.

"I believe we should move back up toward the top of the list of options the large-scale purchase of additional mortgage-backed securities," he added. The Fed bought $1.25 trillion worth of mortgage-related debt, starting in 2009.

Given the controversial nature of mortgage bond purchases -- some Fed officials criticize them as propping up a specific sector of the economy. JPMorgan economist Michael Feroli said he did not expect the Fed's policy-setting Federal Open Market Committee to adopt this option anytime soon.

"Nonetheless, Tarullo's speech does show that there is a relatively-silent faction on the FOMC that favors continued action to get the economy to grow faster," he wrote in a note to clients.

"A faltering in growth or a decline in inflation could further embolden this faction."

Tarullo said the effectiveness of an MBS purchase program could be improved by further action to help borrowers whose mortgages are worth more than their homes.

He suggested a government program that helps borrowers whose loans are backed by Fannie Mae and Freddie Mac which could be adjusted, but also said steps could be taken to help underwater borrowers whose loans are not guaranteed by the two government-controlled firms.

"Policy changes directed at this last, larger group of homeowners would have to be carefully designed so as not to transfer credit risk from private investors to the government, and could well require legislation," he said.

The Obama administration and the regulator for Fannie Mae and Freddie Mac are expected to unveil new steps to help distressed homeowners in the next week or two, a senior congressional aide said on Thursday.

WAIT AND SEE

Bullard, who like Pianalto, does not have a vote on monetary policy this year, said the Fed should wait and see how policies it has put in place, including a recent decision to replace shorter-term securities it holds with longer-term ones, affect the economy before taking any further actions.

"Given that the tone of the data has been better in the last six weeks ... then I think you probably want to get into next year before you start thinking about what you do on top of Operation Twist," he said.

The Fed at its September meeting said it will replace $400 billion of short-term securities on its portfolio with longer term ones to push longer-term interest rates lower -- which is known as Operation Twist. It will also replenish its holdings of mortgage-related debt to support the depressed housing market. Tarullo said Operation Twist, while helpful, was "by definition limited".

Operation Twist was the latest in a long series of extraordinary steps to boost growth through a financial panic and deep contraction. The Fed cut rates to near zero almost three years ago and announced in August rates would likely stay that low through the middle of 2013. The central bank has also bought $2.3 trillion in securities to encourage borrowing.

Another Fed official, Minneapolis Fed President Narayana Kocherlakota said unemployment, which he described as "disturbingly high" now, would have been higher without the actions the Fed has taken.

(Additional reporting by Mark Felsenthal in St. Louis, Pedro da Costa in Washington, Larry Vellequette in Toledo, Ohio, David Bailey in Minneapolis and Ann Saphir in Chicago; editing by Bob Burgdorfer, Bernard Orr)

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Mortgage rates for the past 52 weeks, at a glance (AP)

The average rate on the 30-year fixed mortgage rose sharply this week after falling below 4 percent for the first time in history, Freddie Mac said Thursday. Here's a look at rates for fixed and adjustable mortgages over the past 52 weeks.

Current week's average Last week's average 52-week high 52-week low

30-year fixed 4.12 3.94 5.05 3.94

15-year fixed 3.37 3.26 4.29 3.26

5-year adjustable 3.06 2.96 3.92 2.96

1-year adjustable 2.90 2.95 3.43 2.81

All values are in percentage points.

Source: Freddie Mac Primary Mortgage Market Survey.

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Safeway 3Q profit climbs on improved revenue (AP)

PORTLAND, Ore. – Safeway Inc. says it coming up with new answers as it finds itself facing the same economic challenges that have plagued the grocery industry for years.

It's a tough time for the grocers: shoppers are still carefully watching what they spend, food prices continue to rise and competition is intensifying. The chains that are succeeding have found new ways to do so.

Safeway did not increase its sales volume during its most recent quarter and it saw fewer shoppers in its stores.

But the company managed to increase its fiscal third-quarter profit as it increased its sales of private-label products and relied more on gasoline sales to drive its revenue. It also has also put a heavy emphasis on reducing product loss, due to breakage, theft or other means, to control costs and improve its profitability.

"I think that it's a good assumption, the economy is not going to get materially better and then you've got to play in that environment and utilize the things that you have uniquely developed to win with," Safeway's CEO Steve Burd told investors Thursday. "And, you know, we wish our sales progress was much faster, but we love the fact that it's steady."

Safeway, based in Pleasanton, Calif., reported that its net income rose to $130.2 million, or 38 cents per share, for the period that ended Sept. 10, up from $122.8 million, or 33 cents per share, a year ago.

Revenue climbed 7 percent to $10.06 billion, largely on increased fuel sales and improved sales at established stores.

The results topped analysts' average expectations for earnings of 35 cents per share on revenue of $9.85 billion, according to a survey by FactSet.

Safeway's shares rose in morning trading on the news, but dropped later in the day as investors got a bigger, and not necessarily brighter, picture of the quarter and what lies ahead.

Safeway, like all grocers, has been struggling with higher food prices. While the company has passed along most of these price increases, this has continued to dampen the supermarket's performance.

Its gross margin fell to 27 percent from 28.1 percent in the third quarter. Fuel sales caused a 0.88 percentage point drop, and the cost of goods sold rose 8.8 percent.

While traffic was down in its stores as shoppers consolidated their trips, they spent more due to higher prices.

Safeway, which operates Von's, Dominicks, Safeway and other grocery chains, reported that revenue at stores open at least a year increased 1.5 percent, when excluding fuel. This figure is a key gauge of a retailer's health because it excludes results from recently opened or closed stores.

The company did manage to maintain its market share during the period, its first time in several quarters to do so.

Safeway does face increasing competition as Wal-Mart Stores Inc., which relies heavily on its low prices to attract shoppers, reported Wednesday that it plans to aggressively open more stores in the U.S.

But Safeway leaders were not concerned about the threat from the world's largest retailer, saying price alone has not won shoppers over to date. Safeway has managed to build a loyal customer base on a mix of environment and competitive prices that it thinks it can maintain.

It's still a split economy among shoppers, Burd said. Those that are financially comfortable are buying flowers, nicer wine and the products they had prior to the recession. The majority of shoppers — about 75 percent — are still carefully watching what they buy, switching products or trading down to keep their costs under control as they feel the pressure of higher gas prices, high unemployment and general economic unease in their lives.

"I think that's been true for probably more than two years now," Burd said. "And I don't expect it's going to change in the next 12 months."

Safeway expects sales momentum to pick up in the second-half of the year but stood by its full-year earnings guidance of $1.45 and $1.65 per share and revenue at stores open at least a year to be up about 1 percent when removing fuel.

Analysts predict full-year earnings of $1.66 per share.

Safeway, which runs 1,681 stores in the United States and Canada, has seen its stock price fall 16 percent over the past year, as of Wednesday's close at $17.97. The company's shares jumped in morning trading but fell 18 cents to $17.80 in afternoon trading.

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AP Business Writer Michelle Chapman contributed to this report from New York.

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Fitch downgrades UBS, puts other banks on review (Reuters)

(Reuters) – Fitch Ratings downgraded UBS AG (UBS.N) on Thursday and placed seven other U.S. and European banks on credit watch negative, citing challenges in the economy and financial markets, as well as the impact of new regulations.

The ratings agency lowered UBS's long-term issuer default rating to A from A+.

Fitch is also reviewing ratings for Barclays Bank Plc (BARCBB.UL), BNP Paribas (BNPP.PA), Credit Suisse Group AG (CSGN.VX), Deutsche Bank AG (DBKGn.DE), Societe Generale (SOGNNY.UL), Bank of America Corp (BAC.N), Morgan Stanley (MS.N) and Goldman Sachs Group Inc (GS.N) for further possible downgrades.

The cuts would in most cases be one notch and in some cases two notches, Fitch said. A lower bond rating can make debt more expensive to issue and lead to higher collateral requirements.

Earlier on Thursday, Fitch also lowered its ratings on Royal Bank of Scotland (AAHAUS.UL) and Lloyds Banking Group PLC (LLOY.L) two notches to A from AA-.

Exposure to the European debt crisis and concern about the business model of pure-play investment banks were catalysts for most of the ratings actions, Joo-Yung Lee, a managing director in Fitch's financial institutions group, told Reuters.

"Some of these banks have greater reliance on wholesale funding and greater reliance on what we view as volatile trading earnings," Lee said. "That's particularly true of Goldman Sachs and Morgan Stanley in the U.S. They are less diverse than their global universal bank peers."

In the case of Bank of America, its exposure to mortgage-related litigation was a driver for Fitch's review. Competitors like Wells Fargo & Co (WFC.N) and JPMorgan Chase & Co (JPM.N) were not targeted because they have diverse business models, steady funding streams and no company-specific issues that put them at serious risk, Lee said.

Fitch does not have a specific deadline to finish its review, but Lee said it hopes to resolve the matter quickly to reduce market uncertainty.

(Additional reporting by Herb Lash in New York; Editing by Gary Hill)

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