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Feb. 7, 2013 at 2:23 PM
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Markets slide

NEW YORK, D.C., Feb. 7 (UPI) -- U.S. markets dropped Thursday following declines in Asia and Europe and a report that showed U.S. unemployment benefit claims higher than expected.

The Labor Department said initial filings for unemployment benefits dropped by 5,000 to 366,000. But that was less than half the decline economists had predicted.

In early afternoon trading, the Dow Jones industrial average lost 56.87 points or 0.41 percent to 13,929.65. The Nasdaq composite index lost 16.26 points or 0.51 percent to 3,152.22. The Standard & Poor's 500 shed 5.68 points or 0.38 percent to 1,506.44.

The 10-year treasury note rose 5/32 to yield 1.947 percent.

Against the dollar, the euro fell to $1.3394 from Wednesday's $1.3523. The dollar fell to 93.46 yen from 93.64 yen.

In Tokyo, the Nikkei 225 index dropped 106.68 points, 0.93 percent, to 11,357.07.

In London, the FTSE 100 index shed 1.06 percent, 66.92, to 6,228.42.

Federal Reserve confirms it was hacked

WASHINGTON, Feb. 7 (UPI) -- The U.S. Federal Reserve confirmed that the security system for its electronic data banks had been breached, but did not say how much data had been accessed.

"The Federal Reserve System is aware that information was obtained by exploiting a temporary vulnerability in a website vendor product," the central bank said in a statement.

"The exposure was fixed shortly after discovery and is no longer an issue," the statement said.

The bank said "critical operations of the Federal Reserve System," had not been affected.

CNNMoney reported Thursday that a notice sent to bankers this week said email addresses, phone numbers and other contact information was compromised.

The notice was sent through the central bank's Emergency Communications System, CNNMoney reported.

In a Twitter posting, a group called OpLastResort, which is affiliated with an activist hacker group called Anonymous, took responsibility for the attack and posted a link that allowed users do download the compromised information.

Safety regulator chides FAA

WASHINGTON, Feb. 7 (UPI) -- A U.S. safety official said the Federal Aviation Administration needs to rethink how it certifies batteries such as those used in the grounded 787 Dreamliner.

"The assumptions used to certify the batteries must be reconsidered," said Deborah Hersman, chairwoman of the National Transportation Safety Board.

Two fires aboard the new Boeing jets triggered the grounding of the 50 jets in commercial use after less than 100,000 hours of commercial flights, The New York Times reported Thursday.

The time element is significant, as Boeing had said in its certification application that the lithium ion batteries used in the jet -- and the source of the recent fires -- could be the source of a fire incident fewer than once in every 10 million hours of use.

Hersman said the investigation of the batteries "has demonstrated that a short-circuit in a single [battery] cell can propagate to adjacent cells and result in a fire." What is unknown, however, is what caused the short circuit in the single cell in the first place.

She said the short circuit resulted in a "thermal runaway," with the temperature running up to 500 degrees, then spreading through the rest of the battery.

"We have not yet identified what the cause of the short-circuit is. We are looking at the design of the battery, at the manufacturing, and we are also looking at the cell charging. There are a lot of things we are still looking at," Hersman said.

The FAA, meanwhile, might have taken a more cautious approach concerning the lithium ion batteries, since the agency has experience dealing with overheating issues in those batteries when they are used in cellphones and other devices.

In the case of the Dreamliner batteries, the agency relied on Boeing's tests, the Times said.

ECB leaves policy intact

FRANKFURT, Germany, Feb. 7 (UPI) -- The European Central Bank on Thursday left its monetary policy intact, keeping its key interest rates unchanged while economic expansion remained "subdued."

"The underlying pace of monetary expansion continues to be subdued," said ECB President Mario Draghi at a press conference in Frankfurt, Germany.

Draghi said sovereign debt remains high on the continent and inflation was holding "close to 2 percent."

"Economic weakness in the euro area is expected to prevail in the early part of 2013. In particular, necessary balance sheet adjustments in the public and private sectors will continue to weigh on economic activity," he said.

Draghi acknowledged the need for fiscal discipline. "It is essential for governments to reduce further both fiscal and structural imbalances and to proceed with financial sector restructuring," he said.

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