NEW YORK, March 6 (UPI) -- U.S. markets declined Thursday on news from the Mortgage Bankers Association that foreclosure rates had increased.

The mortgage delinquency rate is at its highest level since 1985, the bank association said.

The Dow Jones industrial average spent the day in negative ground, dropping 214.60 points at the close to 12,040.39, down 1.5 percent. The Standard & Poor's 500 index declined 2.20 percent on a loss of 29.35 points to 1,304.35. The Nasdaq composite index fell 2.30 percent to 2,220.50, down 52.31 points.

On the New York Stock Exchange 358 shares advanced and 2,797 declined on 4.205 billion shares traded.

The 10-year U.S. Treasury note gained 22/32 to yield 3.602 percent.

The euro traded at $1.538 Thursday from $1.5265 Wednesday, while the dollar traded at 102.655 yen from 103.957 yen Wednesday.

In Tokyo, the Nikkei average gained 243.36 points Thursday to close at 13,215.42, up 1.8 percent.

In London, the FTSE 100 index dropped 87.10 points to 5,766.40, down 1.49 percent.

U.S. firm ducks taxes with Cayman loophole

HOUSTON, March 6 (UPI) -- A former Halliburton Corp. Texas subsidiary may have avoided more than $500 million in Social Security and Medicare payments, The Boston Globe said Thursday.

Houston construction firm Kellogg Brown and Root has set up two shell companies in the Cayman Islands that exist only on a computer file in order to avoid payroll expenses, the report says.

Based on a $63,000 average salary for 10,500 U.S. workers, The Globe calculated the company has avoided $100 million in payments a year.

The practice also gives it a competitive edge in bidding for military work.

Many of the workers don't know until they return home that they cannot claim unemployment benefits or that they have not added to their their Social Security accounts, The Globe reported.

The company, a subsidiary of Halliburton until 2007, is estimated to have $16 billion in military contracts.

"It's costing our citizens in the name of short-term corporate greed," Sen. John Kerry, D-Mass., said.

The largest of the shell companies was begun two years before Vice President Dick Cheney became Halliburton's chief executive, the report said. The smaller company -- with 1,020 employees -- was begun two months after Cheney took over the company.

Realtors predict stronger second half

WASHINGTON, March 6 (UPI) -- The National Association of Realtors predicted "a notable rise" in home sales in the United States but said it would be in the later part of the year.

"The higher loan limits for both FHA and conventional loans will increase consumer choice and provide greater access to lower interest rate mortgage loan limits," the association's chief economist Lawrence Yun said in a statement issued Thursday. "Therefore, a notable rise in home sales can be anticipated in the second half of the year."

The association projects a flattening of the market in the first half of the year with an annualized level of 4.9 million homes sold. This is projected to jump to 5.8 million in the second half.

The projected median price is expected to fall 1.2 percent to $216,000 this year and then rise 3.5 percent to $223,800 in 2009, the association said.

Future of New Zealand railroad uncertain

WELLINGTON, New Zealand, March 6 (UPI) -- The sale of a New Zealand rail network is back on track but it could be derailed by political concerns if the National Party wins the next election.

The rail network in New Zealand was government owned but was privatized in 1993. Now, the government wants to buy the service back from Australian-owned Toll NZ.

The two were miles apart on price with the government offering $500 million and the company demanding $1 billion, The Dominion Post newspaper in Wellington reported.

On Thursday, however, talks resumed in the wake of threats by the government to demand a full accounting of $57 million it said it was owned in fees for track access and track depreciation.

As talks resumed, National Party finance spokesman Bill English said, "We need to look at the taxpayers' interests and the network and the best way to do that is to have a competent operator."

If the government, under the Labor Party, buys Toll NZ's train and ferry service, the National Party will sell it again, as soon as possible, English said.