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U.S. markets turn higher

NEW YORK, Oct. 21 (UPI) -- U.S. markets turned higher Wednesday during a week with few government reports to clutter the economic landscape.

The Commerce Department said Tuesday that housing starts in September rose 0.5 percent over August, but the increase was less than expected and markets turned lower.

Wednesday includes the release of the Federal Reserve's Beige Book report, which could include signals of policy makers' thinking on raising interest rates. On Friday, a report on existing home sales is due.

In late morning trading, the Dow Jones industrial average added 30.31 points, 0.30 percent, to 10,071.79. The Standard & Poor's 500 gained 0.42 percent, 4.55 points, to 1,095.61. The Nasdaq composite index rose 0.44 percent, 9.45 points, to 2,173.01.

The benchmark 10-year Treasury fell 14/32 to yield 3.393 percent.

The euro rose to $1.4994 compared to Tuesday's $1.493. Against the yen, the dollar rose to 90.86 yen from Tuesday's 90.71 yen.

In Japan, the Nikkei 225 index lost 0.03 percent, 3.45, to 10,333.39.

Auto group seeks flexibility in fuel rules

DETROIT, Oct. 21 (UPI) -- The Alliance of Automobile Manufacturers said it would back a U.S. government plan to raise automotive fuel efficiency, given the plan includes flexibility.

The National Highway Traffic Safety Administration is pushing for fuel-standards to jump from an average of 27.5 miles per gallon for cars to 35.5 mpg by 2016. The new standards would be phased in starting in 2010, USA Today reported Wednesday.

The alliance includes 11 automakers, including three U.S. and eight foreign companies.

"There is no question these standards will add costs to vehicles," said Charles Territo, spokesman for the trade group.

But Brendan Bell, Washington representative for the Union for Concerned Scientists, said, "The auto industry has great accountants, and great lawyers, and it's in their interest to find ways to comply that don't cost much."

The Union for Concerned Scientists is wary that "flexibility," is another name for loopholes, the newspaper said.

Report: TARP cost government in credibility

WASHINGTON, Oct. 21 (UPI) -- The inspector general of the $700 billion financial firm bailout said the program helped banks, but with serious costs to U.S. government credibility.

"The American people's belief that the funds went into a black hole, or that there was a transfer of wealth from taxpayers to Wall Street, is one of the worst outcomes of this program, and that is the reputational damage to the government," said Neil Barofsky in a 256-page report, USA Today reported Wednesday.

TARP -- the Trouble Asset Relief Program -- was assembled in the fall of 2008 as a plan for the U.S. Treasury to buy frozen assets from banks to free up credit for consumers and businesses and reduce foreclosure rates.

Instead of purchasing frozen assets, the government invested in 685 banks, which helped banks recover from collapsing share values, the report says.

The report also says the $50 billion federal program to assist banks in modifying mortgages "will yield no direct results."

Forty-seven financial companies have returned $72.9 billion in TARP funding, but Barofsky said it was "highly unlikely" taxpayers would recoup $77 billion given to the auto industry or $60 billion given to American International Group.

EU calls for study on unified market

BRUSSELS, Oct. 21 (UPI) -- European Union Commissioner Jose Manuel Barroso has asked for a study on moving the EU to a more unified market system.

Former commissioner Mario Monti, currently the president of Bocconi University in Milan, Italy, has agreed to take on the task, the Euobserver reported Tuesday.

A single market system has fewer cross-border restrictions than a common market approach to economic cooperation. While the EU has a single market system in place, in practice the economic crisis of the past year has tested individual country's resolve with calls for more protectionism and individual states moving to shore up the financial system with different approaches.

"Clearly state aid in the financial sector was needed, because there was a real risk of major problems, not only for individual firms but for the financial sector and the European economy as a whole," Andre Sapir, a senior fellow at Bruegel, a think tank in Brussels, told the EUobserver.