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U.S. markets climb sharply higher

NEW YORK, Oct. 29 (UPI) -- U.S. markets turned sharply higher Thursday after the Commerce Department said the gross domestic product rose 3.5 percent in the third quarter.

The reading was the first rise in the nation's economic output since the second quarter of 2008 and better than expected. The consensus forecast called for a rise of 3.2 percent.

Markets surged after losses in three of the past four trading sessions. By close, the Dow Jones industrial average gained 2.05 percent, 199.89 points, to 9,962.58. The Standard & Poor's 500 added 2.25 percent, 23.48 points, to 1,066.11. The Nasdaq composite index rose 1.84 percent, 37.94, to 2,097.55.

On the New York Stock Exchange, 2,502 stocks advanced and 546 declined on a volume of 5.5 billion shares traded.

The benchmark 10-year Treasury fell 21/32 to yield 3.492 percent.

The euro rose to $1.4834 from Wednesday's $1.4717. Against the yen, the dollar rose to 91.48 yen from Wednesday's 90.79 yen.

In Tokyo, the Nikkei 225 index fell 1.83 percent, 183.95, to 9,891.10.

In London, the FTSE 100 index rose 1.13 percent, 57.30, to 5,137.72.

Royal Mail accuses union as strike begins

LONDON, Oct. 29 (UPI) -- The Royal Mail in Britain accused union leaders of bringing new terms to the negotiations the day before a national strike.

The allegedly new terms included paying overtime to clear the buildup of work that would result from a strike and a strategy of banding together to work with the government on the Royal Mail's pension deficit of $16.5 billion.

A three-day strike began Thursday, The Times of London reported.

The Royal Mail's managing director, Mark Higson, said both sides closed in on a "sensible agreement" in talks Monday and Tuesday. After Wednesday, however, he suggested the union "get independent help to resolve its own internal position."

Dave Ward, director general secretary of the Communication Workers Union, said it was "complete nonsense" to suggest the union had brought fresh demands to the table.

"The proposal that we tabled yesterday was in line with the progress that we had made in negotiations," he said.

A total of about 120,000 CWU workers are scheduled to strike, including 43,000 Thursday and 77,000 delivery and collection workers Saturday, the newspaper said.

Bair counters Treasury reform package

WASHINGTON, Oct. 29 (UPI) -- Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., told House committee members she disagreed with key points of a Treasury reform initiative.

Hours after Treasury Secretary Timothy Geithner testified before the House Financial Services Committee, Bair said the council made up of members of several regulatory agencies proposed by the Treasury would not have the power "to effectively address systemic risks," The New York Times reported Thursday.

Bair also said the council should be chaired by someone independent of the agencies involved, rather than the Treasury secretary, as the initiative proposed.

The Treasury's proposal calls for large financial firms to take care of their own, rather than taxpayers, if one of them fails. It calls for companies to pay for interventions necessary with a funds that would be raised after one of them fails.

Bair said she preferred raising the funds ahead of time. "A pre-funded Financial Company Resolution Fund … allows all large firms to pay risk-based assessments … not just the survivors after any resolution," she said.

Foreign exporters bemoan currency rates

WASHINGTON, Oct. 29 (UPI) -- The same weak dollar that is giving the U.S. economy a boost is causing consternation abroad, foreign exporters say.

The dollar has dropped 18 percent against the euro in about a year and more that 40 percent against the Australian dollar, The Washington Post reported Thursday.

As the dollar declines, so does the price of U.S. goods abroad. Concurrently, imports become more expensive in the United States.

"We're losing 15 percent a year (in revenue) because of the exchange rate," said Jose Bordillo, director general of a major Spanish olive exporter.

"The United States has borrowed so much from foreigners. They've got a rising budget deficit and few ways to bring it under control that investors see as viable," said HSBC economist Stephen King in London.

While the dollar has fallen, with the exception of China, U.S. trade deficits with other countries have declined.

The Chinese yuan is closely tied to the fate of the U.S. dollar. That means the yuan has also declined, and countries other than the United States have found their goods less competitive in China.

"If the dollar is going down this way, it is because that is what the Americans want," economic analyst Yves de Kerdrel in France wrote this week.