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Market gains fade Thursday

NEW YORK, Aug. 26 (UPI) -- Early market gains slipped away Thursday, despite a Labor Department report that said first-time unemployment claims fell sharply in the week ending Aug 21.

The department said there were 31,000 fewer initial claims filed in the week, although the four-week rolling average moved up by 3,250 claims to 486,750.

Morning gains were modest and did not hold. By close, the Dow Jones industrial average lost 74.25 points, 0.74 percent, to 9,985.81. The Standard & Poor's 500 index lost 0.77 percent, 8.11, to 1,047.22. The Nasdaq composite index shed 1.07 percent, 22.85, to 2,118.69.

On the New York Stock Exchange, 1,064 stocks advanced and 1,928 declined on a volume of 5 billion shares traded.

The benchmark 10-year treasury note rose 16/32 to yield 2.484 percent.

The euro rose to $1.2716 from Wednesday's $1.265. Against the yen, the dollar fell to 84.44 yen from Wednesday's 84.71 yen.

In Tokyo, the Nikkei 225 index rose 0.69 percent, 61.09, to 8,906.48.

In London, the FTSE 100 index added 0.91 percent, 46.44, to 5,155.84.

FAA hits American Airlines with $24M fine

WASHINGTON, Aug. 26 (UPI) -- The U.S. Federal Aviation Administration said it had proposed levying its highest fine ever on American Airlines for failing to correctly inspect 286 planes.

The FAA said it had proposed a $24.2 million fine on the carrier after determining in 2008 the airline failed to follow an Airworthiness Directive involving McDonnell Douglas MD-80 planes that were used on 14,278 passenger flights.

The problem was discovered in March 2008 with an inspection of two planes, which the FAA said went through inspections without maintenance personnel examining bundles of wires in the wheel wells of the aircraft that could chaff, which could cause an arc of electricity, resulting in a fire or loss of hydraulic functioning in an auxiliary pump.

The airline has 30 days to respond to the fine, the FAA said in a statement.

"We put rules and regulations in place to keep the flying public safe … There can be no compromises when it comes to safety," U.S. Transportation Secretary Ray LaHood said.

Ford plans for growth in India

DEARBORN, Mich., Aug. 26 (UPI) -- Ford Motor Co. said the growing market in India would be pivotal to future growth, with auto sales expected to reach 35 million for the industry by 2018.

To reach its stride in the subcontinent, Ford said it would introduce eight new vehicles in India within the next five years and expand the visibility of the Ford Figo, which is made in India.

The Figo is scheduled for export to 50 countries, Ford said, the Detroit Free Press reported Thursday.

Currently, Ford controls a slim 1 percent of the market share in India with sales of fewer than 30,000 vehicles in 2009, J.D. Power and Associates said.

The president of Ford Asia Pacific and Africa, Joe Hinrichs, said that would change.

"By the middle of this decade, we will introduce eight new vehicles to India from our global platforms, in segments appropriate for this market," he said in a statement.

"We have big plans for India and this region," he said.

In its expansion push, Ford has pledged $500 million to increase manufacturing in India, including construction of a new engine plant.

The company currently produces an Indian version of the Ford Fiesta and the Endeavor SUV. Ford launched the Figo, a subcompact, this year.

FEMA flood insurance seeks bailout

WASHINGTON, Aug. 26 (UPI) -- The Federal Emergency Management Agency is seeking $19 billion in federal bailout funds to cover a flood insurance program observers call badly flawed.

"If this were a private insurer, it would be bankrupt," the president of the Insurance Information Institute, Robert Hartwig, said, USA Today reported Thursday.

Flood safety specialist David Conrad, an environmentalist with the National Wildlife Federation, said FEMA's flood insurance "does seem to fit Albert Einstein's definition of insanity -- to somehow expect something different when you do the same thing over and over again."

The program is flawed by a lack of political willpower to force homeowners repeatedly making claims to move or to elevate their homes, the newspaper said.

As a result, thousands of homeowners have received benefits that were many times over the value of their home. Owners of a home in Mississippi worth $69,900 have been awarded $663,000 in benefits since 1978 on 34 separate flood claims, the newspaper said.

The program also "artificially inflates the value" of older homes -- on average by $24,000 -- by providing discounts to owners of homes built before 1975, a FEMA report from 2006 says.

While the program losses an average of nearly $1 billion each year, "there's always been a few in Congress that have had enough political muscle" to keep rates low and restrictions loose, former FEMA Assistant Administrator David Maurstad said.