UPI NewsTrack Business

U.S. markets gain early Monday

NEW YORK, Nov. 10 (UPI) -- U.S. markets leaned upward Monday morning in a global rally that began with China announcing a $586 billion economic spending package.

Markets in Asia rose, boosted by construction and machinery concerns that will benefit from China's spending on infrastructure. European markets followed suit.

The Hang Seng index in Hong Kong rose 3.5 percent. The Nikkei index in Tokyo surged 5.81 percent to 9,081.43, up 498.43 points.

The Euro Stoxx index gained 3.1 percent. In Paris, the CAC was up 3.6 percent, while the DAX in Germany was up 3.4 percent.

In midmorning trading, the Dow Jones industrial average rose 124.73 points or 1.39 percent to 9,068.54. The Standard & Poor's 500 gained 11.33 or 1.22 percent to 942.32. The Nasdaq composite index gained 8.72 or 0.53 percent to 1,656.12.

The benchmark 10-year U.S. Treasury bond fell 6/32 to yield 3.82 percent.

The dollar was mixed on Monday. The euro fell to $1.2802, compared to $1.2813. Against the Japanese yen, the dollar fell to 98.77 yen, down from 99.06 yen.

Bailout has failed to boost auto loans

DETROIT, Nov. 10 (UPI) -- The $700 billion bailout package hasn't helped banks loosen their credit standards for automobile loans, a credit analyst said.

"I haven't seen any impact yet. We're starting to see a little bit of a loosening but it has not been significant," Melinda Zabritski, director of automotive credit at Experian told The Detroit News Monday.

Lenders are taking a "wait and see" approach to the automotive industry with some only making loans to customers with perfect credit, the newspaper said.

A lack of credit availability has hurt sales numbers with truck and car sales falling 31.9 percent in October, compared with earlier years.

The 838,156 new vehicles sold in the United States in October was the worst sales month since January 1991, Autodata Corp. said.

"Banks would like to exit the market, but there are no willing buyers for their auto operations. So, banks are withdrawing from the business by slowing originations and winding down portfolios," Curt Beaudouin, a senior analyst at Moody's Investors Service, told the News.

Treasury restructures AIG bailout

WASHINGTON, Nov. 10 (UPI) -- The U.S. Treasury said Monday it would purchase stock in the nation's largest insurance company as part of a plan to restructure its federal aid.

The Treasury is restructuring the previous plan in which the Federal Reserve allowed American International Group $123 billion in credit. Instead, the Treasury will fold the company into the $700 billion Emergency Economic Stabilization Act.

The new terms -- in a package worth $150 billion -- should ease the company's financial obligations to the government, The Wall Street Journal said Monday.

AIG would secure $40 billion with the Treasury's purchase of senior preferred stock, which the company will then use to pay down its dept to the Federal Reserve, the Treasury said.

Besides the $40 billion equity deal, the package includes a $60 billion loan and $50 billion in capital to purchase some of AIG's toxic assets.

Implied in the new agreement, the Journal reported, is acknowledgment that the credit lines of $85 billion and $37.8 billion failed to put the company to rights. AIG, in spite of the credit program, reported a third-quarter net loss of $24.47 billion as it continued to suffer investment losses and asset downgrades.

Airlines shift surcharges to fare charges

NEW YORK, Nov. 10 (UPI) -- U.S. airlines are dropping fuel surcharges on many domestic flights but folding the savings into increased ticket prices, a plane fare analyst said.

"We have seen a tectonic shift in domestic airfares but it's not great news for consumers, because the major airlines have, for the most part, simply shifted the surcharge amount into the base airfare," Rick Seaney, chief executive officer of FareCompare.com, told USA Today.

American Airlines dropped its $170 fuel charges for a select round-trip ticket from Dallas/Forth Worth to Washington on Nov. 1, the newspaper reported. By, Nov. 6, however, the previous $680 ticket price had gone up to $850.

"We still need to be able to charge enough for our product to be profitable and we aren't there yet," United Airlines spokeswoman Valerie Wunder told USA Today.

Given the "financial disaster" many airlines are facing, "shifting the name from 'fuel surcharge' to 'fare' is not ripping the public off," aviation consultant Michael Boyd said to the newspaper.