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UPI NewsTrack Business

Jan. 8, 2013 at 2:42 PM   |   Comments

Investors cautious, markets slide

NEW YORK, Jan.8 (UPI) -- U.S. stock indexes slid Tuesday morning as investors remained cautious after last week's surge.

The European Union's data agency Eurostat reported unemployment rose October-to-November in the 17-nation currency region, climbing from 11.7 percent to 11.8 percent, a record high.

Despite the report, stocks were mixed in Europe.

In early afternoon trading on Wall Street, the Dow Jones industrial average lost 62.37 points or 0.47 percent to 13,321.92. The Nasdaq composite shed 9.32 points or 0.30 percent to 3,089.49. The Standard and Poor's 500 dropped 6 points or 0.41 percent to 1,455.89.

The 10-year treasury note rose 9/32 to yield 1.871 percent.

Against the dollar, the euro fell to $1.3078 from Monday's $1.3117. The dollar was lower at 87.20 yen from 87.79 yen.

In Tokyo, the Nikkei 225 index lost 0.86 percent or 90.95 points to 10,508.06.

In London, the FTSE 100 index fell 0.18 percent, 10.95 points, to 6,053.63.


Report predicts gloomy EU economy in 2013

BRUSSELS, Jan. 8 (UPI) -- Unemployment in Europe is soaring, household incomes have declined and the risk of poverty or exclusion is on the rise, a European Commission report indicated.

The 2012 Employment and Social Developments in Europe Review, released Tuesday, said these conditions -- exacerbated by five years of economic crisis and the return of a recession in 2012 -- were especially prevalent in southern and eastern European Union bloc countries.

A schism is emerging between countries that may be trapped in a downward spiral of lower output, higher unemployment and eroding disposable incomes and those countries that have shown good or at least some resilience, the European Commission, based in Brussels, said in the report.

"2012 has been another very bad year for Europe in terms of unemployment and the deteriorating social situation", said Laszlo Andor, European commissioner for Employment, Social Affairs and Inclusion. "But our analysis shows how appropriate labor market reforms and improvements in the design of welfare systems can increase member states' resilience to economic shocks and facilitate faster exit from the crisis."

Andor said Europe likely wouldn't see much improvement in 2013 "unless it achieves greater progress also on credibly resolving the euro crisis, finding resources for much needed investment, including in people's skills, employability and social inclusion and making finance work for the real economy."

The report also found:

-- The average unemployment rate was nearly 11 percent in 2012.

-- The lack of tangible recovery has pressured household incomes in the majority of the bloc and increased the risks of long-term exclusion.

-- Countries with higher minimum wages have not priced low-skilled workers out of the market and tend to have higher employment rates for them. Minimum wages also can potentially narrow the gender pay gap.


Bailed out AIG considers suing U.S.

NEW YORK, Jan. 8 (UPI) -- American International Group may join a lawsuit challenging the U.S. government program under which the insurance giant was bailed out, court papers indicate.

The lawsuit, filed in 2011 by major shareholder and former AIG Chief Executive Officer Maurice Greenberg, alleges terms of the $182 billion bailout of the firm cost shareholders tens of billions of dollars.

The lawsuit alleges the government used the bailout -- part of the Trouble Asset Relief Program administered in response to the financial sector meltdown in 2008 -- to pay off AIG creditors at full value while exacting a heavy price on AIG, which had to sell valuable assets to repay the government. The suit calls that a "back door bailout."

Greenberg has pressured the AIG board to consider joining the lawsuit, Forbes magazine reported Tuesday.

The government says TARP rescued the financial system and in some cases earned taxpayers a profit. In AIG's case, the government has said it made $22 billion on the deal at 14 percent interest.

AIG recently paid off the government and has begun a marketing campaign with the tagline "Thank you, America."

Joining the lawsuit, however, may backfire in the court of public opinion, Forbes said. On the other hand, should AIG refuse to join the lawsuit, shareholders could sue the company for missing a big opportunity if Greenberg wins his case.


Sears CEO D'Ambrosio stepping down Feb. 2

HOFFMAN ESTATES, Ill., Jan. 7 (UPI) -- Sears Chief Executive Officer Louis J. D'Ambrosio will step down Feb. 2 because of family health issues, the Hoffman Estates, Ill., company said Monday.

Chairman Edward S. Lampert will take over as CEO of Sears Holdings Corp., the Chicago Tribune reported.

"In light of Lou's decision to step down, the board feels it is important that there is continuity of leadership during this important period of transformation and improvement at Sears Holdings," Lampert said in a statement.

"I have agreed to assume these additional responsibilities in order to continue the company's recovery and sustain the momentum we are experiencing, as well as further the development of the management team under the distributed leadership model, which provides our business unit leaders with greater control, authority and autonomy."

Sears Holdings, which operates Sears and Kmart stores, said Monday it expects to report net losses of between $280 million and $360 million for the quarter ending Feb. 2, the newspaper said.

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