HONG KONG &<51; What do you do when your passengers do not fly as much as they used to?

In the United States, many airlines have responded to the drop-off in travelers by tacking on charges for meals, headphones and other things that were once part of a ticket &<51; even as they have drawn fire for letting service levels slide.

But extra niceness is the approach adopted by many carriers in the Asia-Pacific region, who have decided that the way to persuade people to fly, preferably in business or first class, is to pamper them.

Korean Airlines, for example, is spending $200 million to equip its aircraft with high-end seats and upgrade its entertainment in all cabins. On the meal front, the menu includes organic food. And this year, the carrier even introduced beef and chicken raised organically at its own ranch on Jeju Island.

The Hong Kong carrier Cathay Pacific&S217;s latest initiatives include new cabins on long-haul flights; a new first- and business-class lounge in Kuala Lumpur; and a home wine delivery service. Starting next year, passengers will be able to choose from at least 21 movies, up from 18.

The world&S217;s airline industry will lose a combined $11 billion this year and $5.6 billion next year, according to the International Air Transport Association, and carriers across Asia have not been immune from the downturn. Like their counterparts in Europe and the United States, Asian airlines have had to drop routes, shed employees and scrap aircraft orders. Some are shrinking the number of seats in first and business class, where demand has fallen sharply. Japan Airlines is even seeking a government bailout to keep going.

But the tradition of perks has remained sacrosanct in the region and is likely remain so, analysts say.

Outside of mainland China, Asian airline passengers expect top service because it is part of the region&S217;s cultural makeup and because no-frills, budget carriers are not as established here yet. For many carriers, the top end of the market makes up a huge part of revenue, and none can afford to be the first to cut corners when it comes to service levels.

&S220;Asian airlines have been very reluctant to start going down the track that the Americans have gone,&S221; said Peter Harbison, chairman of the Center for Asia Pacific Aviation, a consulting firm based in Sydney.

Alex McGowan, product manager at Cathay, said: &S220;When the financial crisis overwhelmed the industry a year ago, we took a decision that maintaining that premium service was vital to our future. So whatever cutbacks we made, we did not make any to the areas our customers value.&S221;

Singapore Airlines is installing new seats in the premium cabins on some aircraft and has improved in-flight entertainment systems. Like Cathay, it is based in one of Asia&S217;s financial hubs and was hit hard by the turmoil in the banking industry. But about 40 percent of its revenue comes from its premium classes. That may explain why it has not only maintained its annual wine budget for first class &<51; 10 million Singapore dollars, or $7 million &<51; but also has introduced new meals for first-class passengers on Chinese routes, specially created by a leading Chinese chef, Zhu Jun.

Qantas, the Australian carrier, canceled orders for several aircraft in June. But it has pressed ahead with a program devised to cut check-in times in half on domestic flights by allowing members of its frequent-flier program to check in with a membership card fitted with a special chip.

Asian airlines&S217; obsession with service shows through in the quality rankings of Skytrax, a consulting firm based in London. Five of the six airlines in Skytrax&S217;s five-star category are based in the Asia-Pacific region, as are nearly half of the 27 carriers that hold four stars Same day payday loans.

By contrast, only a few four-star carriers are North American and fewer than 10 are European. Carriers in Europe have started to move down the road of charging for extras and easing back on some services. But the practice is not nearly as entrenched in Europe as it is in the United States, where a recent survey by J.D. Power &&8; Associates showed that customer satisfaction with North American airlines has declined for the third consecutive year as airlines added fees for items like drinks, baggage and even pillows.

Such &S220;ancillary income&S221; &<51; revenue from sources other than the ticket price &<51; has become increasingly important for airlines, which have had to resort to heavy discounting to fill seats. Passenger numbers have begun to recover recently, but intense competition means ticket prices remain well below where they used to be: the International Air Transport Association&S217;s most recent statistics show that economy fares in August were 13 percent below a year earlier, and premium fares were 17 percent lower.

For no-frills carriers like Easyjet or Ryanair in Europe, fees for drinks and headphones make sense: The airlines are charging only for what the passenger wants, said Mr. Harbison of the Center for Asia Pacific Aviation.

&S220;But when you are posing as a full-service airline and are trying to show that you&S217;re not just a commodity carrier, you risk undermining your image and passenger loyalty if you start charging for add-ons, or cutting back on established services,&S221; he said.

The airlines will not say how much they are spending to keep the perks coming. And there has been at least one recent exception: Cathay Pacific announced last month that it would give all passengers, not just loyalty program members, the chance to secure extra-legroom seats &<51; for a fee of $100 on long-haul flights. But such developments are not expected to become standard among Asian carriers any time soon.

At the same time, budget airlines are a relatively recent phenomenon in Asia and have not shaken up the market with rock-bottom pricing as much as in Europe and the United States. Carriers like AirAsia, Tiger Airways and Jetstar are growing, but &S220;this is not going to change the established carriers&S217; attitude&S221; in the way it has elsewhere, Edward Plaisted, chief executive of Skytrax, said in a phone interview from London.

Asia&S217;s low-cost carriers have mostly expanded the pie, rather than intensifying the squabble over an existing market. Their fares draw in many passengers who could not afford to fly with traditional carriers.

And Asian low-fare airlines, like their full-service brethren here, often have a higher service mentality than their counterparts elsewhere. AirAsia charges for meals and drinks, for example, but its new aircraft have leather seats, conveying an aura of luxury.

Jetstar, another low-cost carrier, is testing a technology that will transmit boarding passes by text message to any mobile phone &<51; whether it is Internet-enabled or not.

All that means that flying in Asia is likely to remain more pleasant than in Europe or the United States for the foreseeable future &<51; and not necessarily at outrageously higher prices. For although the higher service levels come at a premium, that premium pool has shrunk, as carriers rush to entice travelers with lower ticket prices.

&S220;Whether they want to or not, airlines in the region cannot compromise on quality,&S221; Mr. Plaisted said. &S220;Fares have become very much more level than they were two years ago.&S221;

Airlines in Asia Resist the No-Frills Trend

WASHINGTON – The Securities and Exchange Commission must tighten its process for deciding which investment advisers to inspect if it is to avoid colossal breakdowns like the one that allowed Bernard Madoff's multibillion-dollar fraud to go undetected for 16 years, the agency's inspector general says.

A report released Thursday by the office of Inspector General David Kotz proposes new requirements that the SEC's inspections office examine databases and documents related to investment advisers that may be inspected.

The Office of Compliance Inspections and Examinations and the SEC's enforcement division should also establish procedures for sharing tips, complaints, disciplinary history and violations regarding investment advisers, Kotz recommends.

The IG's review found that the inspections office never undertook an exam of Madoff's investment business — which was separate from his brokerage operation — even after he was forced by the SEC in August 2006 to finally register the investment business.

The inspector general found that "failures to communicate" within the SEC led to the agency's OCIE never inspecting Madoff's investment business.

It was Kotz's second set of proposals for the OCIE in less than two months easy payday loans. In late September, he recommended that the office establish a specific process for identifying red flags and potential violations of securities laws.

Kotz has detailed how the SEC bungled five investigations of Madoff's brokerage business between June 1992 and last December, when the financier confessed to his sons that he was operating a fraudulent scheme. Top SEC officials have pledged to fix the problems and say they already have made major changes.

Madoff pleaded guilty in March to charges that his secretive investment operation was a multibillion-dollar Ponzi scheme that destroyed thousands of people's life savings and wrecked charities. He is serving a 150-year sentence in federal prison in North Carolina.

Kotz asked OCIE, the enforcement division and the division that oversees investment companies to submit a corrective action plan within 45 days to address the recommendations. The three entities, plus the office of SEC Chairman Mary Schapiro, told Kotz that they agree with his recommendations.

SEC told to improve ways it chooses probe targets

BARCELONA (Reuters) – Vivendi could exit from U.S. media group NBCU Universal as it has no intention to be part of the future joint venture being discussed by Comcast and General Electric, its chief financial officer said on Thursday.

Philippe Capron also told the Morgan Stanley Media & Telecoms conference that selling its 20 percent stake in NBCU would give Vivendi "additional financial headroom" after it gained control of Brazil&&9;s telecoms operator GVT last week.

"We are not interested in staying onboard a new GE-Comcast ownership of NBCU ... we will exit and it will give us more headroom," Capron said, adding "We are not there yet."

Capron later told Reuters on the sideline of the conference: "We have never been closer to the end of this story."

But Vivendi&&9;s board had made no decision on the matter, he said.

When asked if negotiations over NBCU were about the price, he said: "It often is."

General Electric, which owns 80 percent of NBCU, and Comcast Corp have agreed on the structure of the board for the proposed joint venture with NBC Universal, a person familiar with the matter said last week payday loans.

Any deal between GE and Comcast would depend on Vivendi selling its NBCU stake.

Each year between mid-November and mid-December, Vivendi has to decide whether to exercise its put option to sell the stake.

This year, Vivendi is eager to dispose of the stake and is determined to get good value for it, sources have said.

Last week, Vivendi snatched Brazilian telecom group GVT from under Telefonica&&9;s nose in a dramatic and high-priced purchase.

Vivendi&&9;s bid values GVT at 7.2 billion reais, or about &&6;4.8 billion against Telefonica&&9;s offer of &&6;4 billion.

Faced with a more costly acquisition pricetag, Vivendi was however more likely to now sell its holding in U.S. media group NBCU to help fund the deal, some analysts have said.

(Reporting by Dominique Vidalon and Georgina Prodhan; Editing by Jon Loades-Carter)

Vivendi eyes NBC Universal exit: CFO

WASHINGTON (AP) &<51; A politically connected financial firm and two of its executives were indicted Thursday for what prosecutors say was a bid-rigging scheme in the municipal bond business.

The charges in the nine-count indictment filed Thursday in Manhattan federal court against CDR Financial Products are the first resulting from the Justice Department&S217;s inquiry of the municipal bonds industry. CDR, based in Beverly Hills, Calif., has also come under scrutiny for its ties to Gov. Bill Richardson of New Mexico.

The indictment accuses two CDR executives and one former executive from the firm of engaging in bid-rigging conspiracies in which CDR was hired by public entities that issue municipal bonds to act as their broker and conduct a supposedly competitive bidding process.

&S220;This case is fundamentally about collusion, the illegal rigging of a purportedly competitive bidding process,&S221; said Joseph Demarest, head of the FBI&S217;s New York office.

The result of the scam, Mr. Demarest said, was less money for the states, cities and counties that hired CDR.

CDR is also known as Rubin/Chambers, Dunhill Insurance Services Inc.

Prosecutors said that CDR&S217;s company&S217;s owner and president, David Rubin, vice president Evan Zarefksy and former chief financial officer Zevi Wolmark took part in two wire fraud schemes. The three are also charged with obstructing the Internal Revenue Service faxless pay day loans.

Because such bonds are tax-exempt, the competitive bidding process is regulated by the I.R.S.

Prosecutors said the company secretly manipulated the bidding process to enrich themselves and the bidding companies at the expense of the municipalities, the I.R.S. or both.

Under the scheme, CDR would arrange in advance which company would win a particular bid for bond business and arrange kickbacks to CDR in the form of inflated fees, authorities said.

In one 2006 state bond deal, one of the bidders agreed to pay CDR a $475,000 kickback, according to the indictment.

The municipal bond business is huge: In 2007 and 2008, about $800 billion worth of municipal bonds were issued across the country.

If convicted of the most serious charge against them, the three men face a maximum prison sentence of 20 years.

Mr. Rubin&S217;s lawyer Donald Etra said the government had &S220;no basis&S221; for the charges.

&S220;The bottom line is that David Rubin has done nothing wrong,&S221; Mr. Etra said. &S220;He&S217;s a brilliant businessman and a prominent philanthropist.&S221;

Lawyers for the other two men could not immediately be located.

3 Accused of Bid-Rigging in Municipal Bonds Sales

I HAVE always professed to dislike the grandly named George Bush Intercontinental Airport in Houston.

For years, I associated that airport with two annoyances: One, the incessant repetition on loudspeakers of a grating security announcement that warns passengers that they face arrest for making &S220;inappropriate comments&S221; about security. And two, the mad dash I usually have to perform between terminals to make my connection on Continental, the airline I fly most often to and from that airport, Continental&S217;s main hub.

Evidently nothing can be done about the irritating security announcements except to stick your fingers in your ears and loudly sing, &S220;La, la, la,&S221; which I presume is not an inappropriate comment.

But not long ago, thanks to the reduction in schedules being made by all airlines, I had a layover of almost three hours at the Houston airport. For the first time, I was able to actually experience the place.

For lunch, I had decent ribs at Harlon&S217;s Bar-B-Q. I had my shoes shined. Then I wandered over to the next terminal, past an expanse of nice shops and restaurants, and entered a Continental Presidents Club, where I had free Wi-Fi to check e-mail messages, browse the news and write some posts. On the way to my gate, I bought a book I had been planning to read.

It was one of those &S220;duh&S221; revelations, I recently told Greg Principato, the president of Airports Council International North America, the trade group representing airports. As it turns out, I like the Houston airport just fine, security announcements aside. My previous negative assessment, I realized, came solely from the fact that all I knew about the place was that 20-minute dash from one terminal to another.

Mr. Principato said that was not an uncommon reaction.

&S220;For years, airports have been sort of behind the eight ball in public perception. When you have a lost bag, or your flight is canceled, or the screener doesn&S217;t treat you right, whatever happens, you tend to say, &S216;Oh, I hate that airport,&S217;&<60;&S221; he said.

It seems to me that the only thing about air travel that has actually improved over the last 15 years is the airport, or at least most airports.

&S220;Part of the stress of the airport experience is running from Point A to Point B after an airline drops you on one concourse and expects you to be at another one in 20 minutes online payday loans. So you never get a chance to kind of smell the roses along the way,&S221; said Joan Ryzner, the senior vice president for retail at HMSHost, which manages shops and restaurants in airports.

Now I&S217;m not going to argue that spending extra time in an airport is desirable. It is, however, inevitable as airlines cut schedules and reduce customer service in the terminal and in the air.

In recent years, moreover, the airport more often steps in to assist passengers who are inconvenienced by airlines. While there is a perception that airlines are increasingly indifferent to customer opinion, airports are almost always owned and managed locally. As such, they see a need to fill in gaps left by deteriorating airline service, Mr. Principato said.

&S220;There was no meeting where airlines and airports got together and the airlines said, &S216;We can&S217;t do this stuff any more, you have to do it.&S217; It just happened over a period of time,&S221; he said.

Nerves have frayed between airports and airlines over the issue of so-called stranded passengers, people who are held on parked planes for three hours and more without food or water, while toilets malfunction and cabin ventilation deteriorates.

Though the responsibility lies with the airlines, Mr. Principato said, many local airport authorities have developed contingency plans to deal with these events. Some airport officials even intervene, in some cases taking the initiative to get food, including pizza deliveries, to passengers on a stranded airplane.

&S220;The airport is there, it&S217;s part of the community,&S221; Mr. Principato said. &S220;The folks who run the airport feel that, and they can&S217;t turn their backs. They need to step up to the plate.&S221;

&S220;Of course there are limits,&S221; he added. &S220;As I testified in Congress, we are not looking for the authority to go out and get a plane and bring it back in against an airline&S217;s wishes. And we&S217;re certainly not going to go out and pound on the locked airplane door and go, &S216;Let me in! I got pizza!&S217;&<60;&S221;

On the Road: Airports Step Up When Airlines Fall Short

THE United States government is borrowing money like never before. The national debt rose by more than a third over a one-year period, far more than it ever did at any time since World War II.

In the past, when the government became a heavy borrower, there was talk about crowding out private borrowers. But this time, interest rates have remained low and no one seems to be worried about that.

The reason is simple: Rather than crowding out the private sector, Uncle Sam is now standing in for it. Much of the government borrowing went to investments in financial institutions needed to keep them alive. Other hundreds of billions went to a variety of programs aimed at stimulating the private economy, including programs that effectively had the government pick up part of the cost for some home buyers and some auto buyers.

This week, the Federal Reserve published its quarterly report on debt levels in the economy. While Uncle Sam borrowed more, others borrowed less. The accompanying chart shows that total domestic debt &<51; the amounts owed by individuals, governments and businesses &<51; climbed just 3.7 percent from the second quarter of 2008 through the second quarter of this year. That is the smallest increase since the Fed started these calculations in the early 1950s.

Moreover, domestic debt declined in the second quarter, falling 0.3 percent to $50.8 trillion. The figures are not seasonally adjusted, making quarter-to-quarter comparisons risky, but it was the first such decline since the first quarter of 1954, when total debt was less than $500 billion.

Over the 12-month period, nonfinancial businesses increased their debt by just 1.3 percent. Since that number is well below the interest rate most of those companies pay, it indicates that they paid back more in old loans than they took out in new ones.

Until this recession, the idea that American individuals would ever cut their overall debt levels seemed as likely as an August snowfall in Miami. But that was before the bottom fell out of the housing market, something that Florida condo developers had considered to be equally unlikely quick payday loans.

Over the year, total household debt fell by 1.7 percent, and mortgage debt &<51; the largest component of household debt &<51; fell a bit more, at a 1.8 percent pace. This is the 10th recession since the Fed began collecting the numbers, but the first in which the amount of home mortgage debt fell. Some of that decline, of course, came from foreclosures that canceled debt and left lenders with big losses.

For most of the last two decades, the biggest increase in debt in America came from financial companies. Much of that debt came from financial innovation rather than actual economic activity. Once, a homeowner took out a mortgage, and household debt increased. But by early this decade, the mortgage could be used to secure a mortgage-backed security, and the mortgage-backed security could be used to secure a collateralized debt obligation. Those last two loans counted as financial obligations. There was no more real economic activity, but there was a lot more borrowing.

In some cases, the newly created financial debt was guaranteed only by the underlying assets &<51; like the home mortgage. But other financial borrowing became the equivalent of government debt, at least as seen by the lenders. That was because the money was either borrowed by government-sponsored enterprises like Fannie Mae, or guaranteed by them or by government agencies.

Such debts rose at a 10.2 percent rate over the last two decades. Debt issued by financial companies without such guarantees rose even faster, at a 10.6 percent rate. By contrast, the debt of nonfinancial businesses climbed at a rate of 5.9 percent.

Twenty years ago, nonfinancial businesses in the United States borrowed $1.70 for every dollar borrowed by the financial sector, government-guaranteed or not. Now the figure is 68 cents.

Floyd Norris&S217;s blog on finance and economics is at nytimes.com/norris

Off the Charts: A Rich Uncle Is Picking Up the Borrowing Slack

LONDON – World stocks traded in narrow ranges Friday as investors looked to leaders of the Group of 20 rich and developing economies assembled in the U.S. for assurance that they will not stifle global economic recovery by prematurely taking away stimulus measures.

In afternoon trading in Europe, Britain's FTSE 100 was up 0.4 percent to 5,105.61 and France's CAC 40 climbed 0.02 percent at 3,759.01. Germany's DAX was down 0.1 percent at 5,600.09.

Asian markets closed down, with Tokyo the heaviest loser &<51; down 2.6 percent &<51; and Wall Street was set to open marginally higher after markets fell Thursday. Investors had pulled out of stocks amid worries about the sustainability of this year's rally and news of an unexpected drop in sales of existing homes in August.

Dow Jones industrial average futures rose 0.3 percent to 9,661 and Standard & Poor's 500 futures added 0.3 percent to 1,047.60.

Investors are increasingly nervous that governments will unwind emergency measures that have helped money flow through financial markets since the crisis erupted last year. This week, the U.S. Federal Reserve announced it would slow its purchases of mortgage-backed securities, while the European Central Bank said it would curtail certain types of dollar-denominated loans.

"Investors are a bit nervous after the run the markets have had, which is entirely rational," said David Hussey, head of European equities at MFC Global Investment Management. "We have had a bit of a sell-off this week. The market's probably got a bit overextended in the short term and there has been retrenchment across the board, in America, Asia and Europe has followed that."

Amid the concern, G-20 leaders were gathered for a two-day meeting in the U.S. dedicated to bringing about a strong and sustainable turnaround after the world's worst downturn in decades. Both President Obama and British Prime Minister Gordon Brown said nations should not move too quickly to end low interest rates, stimulus spending and other props to growth payday loans.

"Much of the gains across asset classes so far this year &<51; to levels not justified by fundamentals &<51; have been a direct result of cheap and easily available funding," Dariusz Kowalczyk, chief Investment strategist for SJS Markets in Hong Kong, wrote in a note. "News that the amount and availability of liquidity will be imminently limited caused fears that asset bubbles will be diffused sooner."

With little economic and corporate data due for release in Europe, investors were awaiting figures on U.S. durable goods orders in August, due later Friday.

"Anything that gives traders cause for concern &<51; and an unexpected decline in durable goods would do precisely this &<51; could easily act as the trigger to take more money off the table ahead of the weekend break," said Anthony Grech, market strategist at IG Index.

In Japan, the Nikkei 225 stock index shed 278.24 points, or 2.6 percent, to 10,265.98 after Nomura, the country's leading brokerage, announced its biggest shares sale ever, weighing on the broader market.

Hong Kong's Hang Seng lost 0.1 percent to 21,024.40, and China's Shanghai index dropped 0.5 percent.

Elsewhere, South Korea's Kospi shed 0.1 percent, India's Sensex edged lower by 0.1 percent and Indonesia's index lost 1.0 percent. Taiwan and Australia's markets were up 0.3 percent.

Overnight on Wall Street, the Dow fell 0.4 percent to 9,707.44 and the S&P 500 index lost or 1.0 percent to 1,050.78.

Oil prices gained slightly after a two-day plunge. Benchmark crude for November delivery was up 35 cents at $66.24 in European trade.

___

AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.

World stock markets mixed as G-20 eyes recovery

TOKYO (Reuters) &<51; Japan Airlines pleaded on Thursday for a government bailout, but the new transport minister withheld support on concerns that the carrier&S217;s cost-cutting plans would not go far enough.

The request by the chief executive of Japan Airlines, Haruka Nishimatsu, for a capital injection from the state came as the carrier&S217;s shares tumbled 16 percent to a record low, hit by media reports that lenders might seek to break up the company and that the company had asked for a bailout.

Japan Airlines, weighed down by $15 billion of debt and headed for its second consecutive annual loss, is being wooed by Delta Air Lines and a rival group led by American Airlines, which are offering capital in return for closer business ties.

Japan Airlines has been scrambling to put together a restructuring plan to submit to the government this month, a condition of a state guarantee on a billion-dollar loan earlier this year.

The likelihood of further state support has been thrown into doubt by a change in government in August that brought the Democratic Party to power, ending the rule of the Liberal Democratic Party, which had supported state help for the airline.

The transport minister, Seiji Maehara, met with Mr. Nishimatsu on Thursday. He reiterated that he did not want the airline to go bankrupt but said he was not ready to approve a request for the state to prop up the carrier by buying shares.

Mr. Maehara said he wanted to finish restructuring plans by the end of October payday loans for bad credit.

Japan Airlines is seeking about $2.7 billion through a mixture of equity and debt to meet its financing needs through the financial year-end in March. Bankers have said they will not lend more to the company unless there is deeper state involvement, either through loan guarantees or a capital increase.

Mr. Nishimatsu, talking to reporters after meeting Mr. Maehara, said Japan Airlines needed government help but did not give an exact amount.

&S220;Considering debt repayments planned ahead, we thought asking for the public fund injection would make the most sense,&S221; he told reporters, adding that the company was not considering a breakup. &S220;If we were a manufacturer, then that could have been a choice. But for us, an airline company, that&S217;s not an option.&S221;

Yoshihisa Miyamoto, an analyst at Okasan Securities, said investors were becoming increasingly skeptical about Japan Airlines&S217; future.

&S220;It won&S217;t be able to stay alive as it is,&S221; Mr. Miyamoto said. &S220;It&S217;s got to sharply downsize operations or sell off businesses in bits and pieces to other companies. Our image of JAL as Japan&S217;s national carrier no longer exists.&S221;

Japan Appears Reluctant as Airline Seeks a Bailout

LONDON (AFP) – European equities edged up on Wednesday, lifted by overnight gains on Wall Street and buoyant commodity prices, with investors on tenterhooks before a US Federal Reserve interest rate call.

The FTSE 100 index gained 0.29 percent to 5,157.26 points in late morning deals.

Frankfurt&&9;s DAX 30 advanced 0.17 percent to 5,719.06 points and in Paris the CAC 40 added 0.14 percent to 3,828.97 points near the half-way stage.

The DJ Euro Stoxx 50 index of top eurozone shares climbed 0.26 percent to 2,889.36 points.

London stocks pared gains after news that Bank of England policy-makers had voted unanimously earlier this month to freeze British interest rates at a record low and maintain its credit-easing policy.

Later on Wednesday, the Federal Reserve will conclude a two-day meeting and is expected to hold to its massive economic stimulus programme as it seeks to support a fragile US recovery from recession.

Analysts say that the Fed is certain to keep a near-zero interest rate along with an array of programs to keep credit flowing.

The accompanying statement could provide hints on the speed and shape of the economic recovery, and any monetary policy response in the coming months.

"All eyes (are) on the Fed rate announcement and the tone of any accompanying statement," said Arifa Sheikh-Usmani, equity trader with financial betting firm Spreadex.

"I would expect markets to trade fairly sideways until that comes out later," she added.

"We are still seeing clients buying on weakness which shows that there is still some momentum in the market, however, the rally is certainly less enthusiastic than it was a couple of weeks ago my credit score."

The Federal Open Market Committee (FOMC), headed by Fed chairman Ben Bernanke, will issue a statement at 1815 GMT.

In foreign exchange trade on Wednesday, the dollar fell to a new one-year low against the euro amid expectations that US interest rates will remain low for a considerable length of time.

The dollar has fallen sharply this week as many investors sold safe haven assets on the back of growing economic optimism, dealers said.

The European single currency jumped as high as 1.4842 dollars in Asian trade on Wednesday, before pulling back slightly.

Across the Atlantic on Tuesday, Wall Street had struck fresh 2009 highs on economic recovery optimism and company earnings prospects.

The Dow Jones Industrial Average gained 0.52 percent to 9,829.87 points.

The tech-heavy Nasdaq composite rose 0.39 percent to 2,146.30 while the broad-market Standard & Poor&&9;s 500 index added 0.66 percent to 1,071.66 points.

Meanwhile, leaders of the G20 key developed and developing countries will kick off two-day talks in the US city of Pittsburgh, Pennsylvania, on Thursday.

They are expected to discuss ways to unwind their unprecedented support to fight the global economic crisis -- although they remain cautious for fear of jeopardizing a return to growth.

The Tokyo stock market will reopen on Thursday after a series of public holidays.

European markets rise before Fed rate decision

Filed at 7:00 a.m. ET

WASHINGTON (AP) -- President Barack Obama says the world's leading economic powers have made progress in stabilizing the global financial system but much work remains to produce needed jobs and growth.

''The good news is that we've made real progress since last time we met -- here at home and around the world,'' Obama said in his weekly radio and Internet address Saturday. The G-20 summit in Pittsburgh next week comes five months after the group of 20 nations with the world's leading and emerging economies met in London.

Obama said it will offer a good chance for a ''checkup to review the steps each nation has taken -- separately and together -- to break the back of this economic crisis.'' He recalled that the April meeting came at the height of the crisis.

Obama noted several steps have been taken to spur the U.S. economy, pointing to the stimulus package, efforts to unlock frozen credit markets and free more loans for people investing in homes, cars, education or financing small businesses. And he said other nations have been challenged to address underlying problems that caused a deep global recession.

But Obama said his administration knows that ''stopping the bleeding isn't nearly enough. We know we still have a lot to do here at home to build an economy that is producing good jobs for all those who are looking for work today.

''And we know we still have a lot to do, in conjunction with nations around the world, to strengthen the rules governing financial markets and ensure that we never again find ourselves in the precarious situation we found ourselves in just one year ago Low fee payday loans.''

He said it's essential that the U.S. government update the rules governing financial firms and markets.

''At next week's G-20 summit, we'll discuss some of the steps that are required to safeguard our global financial system and close gaps in regulation around the world -- gaps that permitted the kinds of reckless risk-taking and irresponsibility that led to the crisis,'' he said.

He said another important step for the U.S. is establishment of a consumer protection agency that would be intended to protect people from signing up for mortgages they can't afford and contracts they can't understand.

Lobbyists for big financial institutions are working to stop these changes, said Obama, who added that it's critical to follow through on the changes.

''We cannot let the narrow interests of a few come before the interests of all of us,'' he said. ''We cannot forget how close we came to the brink, and perpetuate the broken system and breakdown of responsibility that made it possible.''

^------

On the Net: www.whitehouse.gov

Obama Lays Out Economic G-20 Goal

Stock markets stampeded higher on Wednesday and major Wall Street benchmarks touched their highest levels in 11 months on optimism that an economic rebound was under way.

Financial shares like credit-card companies and regional banks led a buying spree that lifted most corners of the financial markets.

Investors anticipating a resurgence in industrial output clamored to snap up crude oil, copper and other raw materials used to feed factories. Those who expect inflation pushed the price of gold sharply higher. And optimistic stock traders helped to send the Dow 100 points higher.

At the close, the Dow Jones industrial average was up 108.30 points or 1.12 percent, to 9,791.71, and the broader Standard &&8; Poor&S217;s 500-stock index was 1.5 percent or 16.13 points higher at 1,068.76, climbing to its highest levels since early October. The Nasdaq rose 1.45 percent or 30.51 points, to 2,133.15.

&S220;We&S217;ve been riding this thing for a long time,&S221; said Bill Strazzullo, chief market strategist at Bell Curve Trading. &S220;You notice that the sell-offs never last more than a couple days. We&S217;re going to stay with it. We still think there&S217;s a little bit more to go.&S221;

Mr. Strazzullo said his firm was eyeing benchmarks of 1,100 and 1,150 on the S.&&8;P. 500 (it is currently trading at about 1,060) as moments to pause and take some profits and reassess whether the markets seem primed for more gains.

It has been a good week for the bulls on Wall Street.

A new report on industrial production showed that factories, mines and utilities ramped up their output for a second month in August, a harbinger that a recovery was under way. On Tuesday, the Federal Reserve chairman, Ben S instant payday loans. Bernanke, said that the recession was most likely over, though he warned of a plodding recovery.

&S220;You&S217;re getting more evidence that the economy&S217;s turning,&S221; said Anthony Dwyer, equity market strategist at FTN Equity Capital Markets. &S220;This is going to be a big recovery because it was a big decline.&S221;

Shares of Bank of America and JPMorgan Chase were each up more than 2 percent, and a closely watched index of regional bank shares was up more than 5 percent.

And as stocks surged, Wall Street&S217;s gold rush intensified.

The price of gold leaped $13 to $1,018 an ounce as traders bet that prices of precious metals would continue to climb as the dollar weakened and the economy healed. Investors rushed to buy crude oil, copper and other commodities that could weather an outbreak of inflation.

Some investors believe that inflation &<51; or at least, the fear of inflation &<51; is seeping back into the economy as factories restart production and industrial output rebounds. The government reported on Wednesday that retail prices rose 0.4 percent last month, largely because of a spike in gasoline costs.

Even though the Federal Reserve expects inflation to remain under wraps with so much slack in the economy and millions of people out of work, investors anticipating a surge in prices and a weaker dollar are betting heavily on commodities and other currencies. Crude-oil prices rose to $72 a barrel in New York, and the dollar&S217;s value slumped against six major currencies, dipping to its lowest levels in almost a year.

Gold and Stocks Move Sharply Higher

The United States stock market has just completed its best six months since 1933. From March 9 to Sept. 9, the Standard &&8; Poor&S217;s 500-stock index leaped by 53 percent.

But the gain over that period, which began when stocks reached their nadir in March, was not enough to offset the losses recorded in the previous six months. Not since 1932 had the market suffered a half-year period as bad as that one.

Investors clearly found it difficult to determine whether the Great Recession would turn into Great Depression II.

Amazingly, however, the American stock market was one of the least volatile markets in the world in the last year. It was among the best markets when it was plunging, and among the worst when it was soaring. Over all, it ranked near the bottom among international markets.

Whatever else you might want to say about the virtues of international diversification, in this cycle it has done little to balance the risks of investing in any one market. When the markets went down, they nearly all went down. When the markets rose, they soared together.

If history is a guide, the strong recovery may be an indication that better prices are still ahead. Since World War II, there have been eight periods before the current market when the S.&&8; P. 500 managed to rise at least 30 percent over a half-year period &<51; in 1963, 1971, 1975, 1980, 1982-83, 1991, 1997 and 1999. A year later, the index had made further gains in seven of them.

The exception was 1980, when the economy went into a double-dip recession and dashed the hopes of investors who had bet on a continued rise in stock prices.

Before that, the record was less impressive. Soaring prices in 1929 presaged the Great Depression, and a sharp rebound in 1930 proved to be a suckers&S217; rally. But big gains in 1932-33 and 1935 were followed by additional gains. Prices were little changed a year after large gains in 1938 and 1943.

The accompanying graphic demonstrates the truth of an old adage: If you lose 50 percent of your money, and then gain 50 percent, you have not come close to breaking even.

Italy provides one of the best examples of that. Over the six-month period ending on Wednesday, the FTSE/MIB index of Italian stocks rose 81 percent in euros payday loans. With the euro also strong against the dollar during that period, the Italian index more than doubled, rising 109 percent from the perspective of a dollar-based investor.

But an investor who put money in the Italian stock market exactly one year before, on Sept. 9, 2008, suffered a decline of 55 percent in euros, or 60 percent in dollars, during the next six months. The Italian market, like the American market, hit bottom on March 9 of this year.

The net impact: For the 12 months, the Italian market was down 17 percent, whether measured in euros or in dollars.

The accompanying graphic shows the performance of major stock market indexes in each of the 19 countries in the Group of 20, as well as of a European-wide index that is shown because the European Union is the final member of the Group of 20, whose leaders will meet later this month in Pittsburgh, to discuss efforts to fight the world financial crisis.

For the entire year, the best performances were turned in by emerging markets, which are back in favor with investors hopeful of a resumption of global growth. China, whose market had plunged earlier than most, was the only one to rise during the six-month period through March 9, and was the best performer for the entire year. Brazil, Indonesia and South Africa also showed gains for the 12 months, while the Indian market broke even and the South Korean market nearly did the same.

For the entire year, the largest declines were in Saudi Arabia and Russia, oil producers that suffered from lower oil prices brought on by the global slowdown.

The similarity in international performance can also be seen within markets. During the most recent six months, the three best-performing sectors in the S.&&8; P. 500, and in the S.&&8; P. Europe 350, were financials, industrials and materials. During the previous six months, they were the worst-performing sectors in both indexes.

Floyd Norris comments on finance and economics in his blog at nytimes.com/norris.

Off the Charts: Globally, It’s Markets See, Markets Do

Cheers echoed through Morgan Stanley when John J. Mack returned to save the soul of the bank, the bluest of Wall Street&S217;s blue-bloods, in the summer of 2005.

Four years on, Mr. Mack &<51; his bank and reputation smarting from the financial crisis &<51; is bequeathing Morgan Stanley to a relative newcomer: James P. Gorman, the quiet power behind a new push to lure ordinary investors to the bank&S217;s blossoming brokerage business.

The appointment, announced on Thursday, ends months of speculation over who will succeed Mr. Mack as head of what was, until recently, one of the most prestigious and successful banks on Wall Street. Unanswered are the many questions still swirling over Mr. Mack&S217;s legacy &<51; and, now, over Mr. Gorman, his handpicked successor.

Mr. Gorman, 51, will become chief executive on Jan. 1; Mr. Mack, 64, will remain chairman. The handoff is far smoother than the one that occurred when Mr. Mack returned in triumph after a shocking boardroom coup.

But the bitter, internal feud that opened the door for Mr. Mack was nothing compared to the turmoil that followed. Mr. Mack presided over an era of unprecedented profits &<51; and then record losses. Only a year ago, Morgan Stanley nearly foundered like Lehman Brothers. It was saved, like so much of Wall Street, by a multibillion-dollar bailout and other government aid.

Wall Street has rendered a harsh judgment on Mr. Mack&S217;s stewardship. On his watch, Morgan Stanley&S217;s share price lost nearly a third of its value, while the stock of its archrival, Goldman Sachs, has gained. After skating so close to the edge, Mr. Mack retreated from the high-risk businesses that almost cost him his bank. To many, Morgan Stanley seemed to lose its old swagger.

To Morgan Stanley insiders, the diminished role for Mr. Mack, who spent all but a few years of his career at the bank, is not only a changing of the guard but the end of an era. He and Mr. Gorman will hold a town hall-style meeting at Morgan Stanley&S217;s Manhattan headquarters on Friday.

&S220;It will be emotional,&S221; said one senior executive.

Mr. Gorman will come to the job with a far different pedigree than Mr. Mack. A lanky, cerebral Australian-born executive who dislikes being called Jim, Mr. Gorman is currently co-president in charge of Morgan Stanley&S217;s global wealth management. He joined Morgan Stanley less than four years ago, from Merrill Lynch, where he ran the global private client business. Before that he was a senior partner at McKinsey &&8; Company.

For much of the last year, Mr. Gorman and another executive, Walid A. Chammah, who runs the investment banking and capital markets operations, had been vying for the top job. Mr. Mack seemed to have favored Mr. Gorman, whom he had hired and promoted through the ranks.

Mr. Chammah, a flamboyant man with a penchant for smart suits and monogrammed shirts, also ruled himself out by insisting on staying in London, where he lives in South Kensington Payday Loan for Bad Credit. He will become chairman of Morgan Stanley International.

After a dismal second quarter because of problems in Mr. Chammah&S217;s half of the bank, the scale tipped decisively in Mr. Gorman&S217;s favor. While questions remained over Mr. Mack&S217;s charismatic but sometimes unstructured management style, the board had been impressed by Mr. Gorman&S217;s ability to switch quickly between jobs and learn fast, important in a vast conglomerate like Morgan, and especially appreciated his presentations to the board on the long-term future of the firm.

For Mr. Gorman, the good news came Monday evening, over dinner and drinks with Mr. Mack at Ilili, an upscale Lebanese restaurant in the Flatiron district in Manhattan (Mr. Mack is of Lebanese descent). After a 10 a.m. conference call on Thursday with board members, the deal was done. The vote for Mr. Gorman was unanimous.

In an interview on Thursday, Mr. Mack characterized the succession as orderly. He said the process of finding a successor had been under way for about 18 months when he first told the board he wanted to step down when his contract ended next year and before he turned 65. He will turn 65 in November. The bank hired a recruiter to draw up a list of outside candidates, but none of them were interviewed.

Still, Mr. Mack and other executives said he had faced resistance to his decision to step down, describing a conversation with S. Parker Gilbert, former chairman and a man who represents old school Morgan Stanley. He had been one of the so-called Group of Eight who had agitated to oust Mr. Mack&S217;s predecessor, Philip J. Purcell, and brought Mr. Mack back to the firm.

&S220;I want you to stay longer,&S221; Mr. Parker said. &S220;I am confident you can enjoy the fruits of your work.&S221; But Mr. Mack answered: &S220;Parker, after getting through the financial crisis and the way this firm was pushed around financially and the fear&S221; of going under, he said he had decided he wanted to go.

Mr. Mack will most likely remain a force behind Mr. Gorman. The two men will still have offices next to each other. Mr. Gorman, for his part, said Mr. Mack&S217;s legacy was secure. &S220;John came back and stabilized the company and brought back the pride,&S221; he said. &S220;He made the right calls at the right time in an incredibly stressful situation,&S221; he said.

While Mr. Gorman lacks Mr. Mack&S217;s flash and is far less known in financial circles, people who know him said he was up to the job.

R. Glenn Hubbard, dean of Columbia Business School, who has known Mr. Gorman since his days at Merrill Lynch, said he was a &S220;strategic thinker&S221; and his qualities made him &S220;a good recipe for success.&S221; He described Mr. Gorman as a &S220;terrific pick.&S221; Mr. Gorman sits on the school&S217;s board.

Morgan Stanley Announces New Chief

The simmering conflict between Armenia and Azerbaijan has entered a new theater: the Eurovision Song Contest.

The talent show, in which television audiences help select a winner from among dozens of European national champions, is supposed to be apolitical. Voters are barred from supporting their country&S217;s representatives in the competition, which is organized by the European Broadcasting Union, a group of public television companies.

But some Azerbaijanis who took impartiality to impressive lengths, voting for the Armenian entry in the 2009 final in May, reportedly were called in to the Azerbaijani National Security Ministry.

&S220;They were trying to put psychological pressure on me, saying things like, &S216;You have no sense of ethnic pride; how come you voted for Armenia?&S221;&S217; one of them, Rovshan Nasirli, told Radio Free Europe. &S220;They made me write out an explanation, and then they let me go.&S221;

Previously, the Armenians had raised tensions by slipping images of a memorial in Nagorno-Karabakh, the enclave at the center of the dispute between the countries, into the video presentation that introduced their representative in a preliminary round faxless payday loan.

Ictimai, the Azerbaijani public television company, said last week that it had been assured that &S220;no one was invited to or interrogated at the Ministry of National Security with regard to the 2009 Eurovision Song Contest.&S221;

&S220;Therefore, all reports on this issue in the media are groundless and continuing them does not follow any logic,&S221; Ictimai said in a statement.

But the European Broadcasting Union said Friday that it would examine the matter further at a meeting in September in Oslo. &S220;Any breach of privacy regarding voting, or interrogation of individuals, is totally unacceptable,&S221; Jean R&>33;veillon, director general of the broadcasting union, said in a statement.

A Song Contest Becomes a Hot Spot in Feud Between Countries

SINGAPORE (Reuters) – Oil eased below &&6;73 a barrel on Friday, reversing an earlier surge to a seven-week high, as optimism over the pace of demand recovery in top energy consumer, the United States, faded on the back of mixed economic data.

Industry data on Wednesday showing a surprise 8.4 million barrel plunge in weekly U.S. crude stocks -- against analysts&&9; forecasts for a 1.3 million barrel build -- had buoyed sentiment.

But oil&&9;s surge proved short-lived as consensus grew on Thursday that this was due to a fall in imports rather than signs of a genuine rebound in U.S. fuel demand. Upbeat leading economic indicators in July and weak labor market figures last week further muddied the outlook.

The market will scour Federal Reserve Chairman Ben Bernanke&&9;s speech before the Federal Reserve Bank of Kansas City Economic Symposium later in the day for more clues on the health of the world&&9;s largest economy.

By 0525 GMT, the new front month contract for October delivery was down 56 cents at &&6;72.35 a barrel, off a seven-week high of &&6;73.24 earlier. It had settled 92 cents lower at &&6;72.91 the previous day. London Brent crude for October was down 44 cents at &&6;72.89.

Oil is on track for a 7.3 percent gain this week.

"Wednesday&&9;s inventory report was definitely positive for the market, but the data is volatile, and you need to see a trend forming, rather than a one-off decline, before it gets fully priced into the market," said Ben Westmore, commodities analyst with the National Australia Bank.

"Although sentiment is positive, it&&9;s very shaky, as fundamentals are still weak. You will see more volatility until the fundamentals correct," he said, adding that crude was likely to trade in a range of &&6;70-&&6;75 next week.

So far, U.S. economic signals have been mixed. The index of leading economic indicators rose for a fourth month in July, suggesting the recession was abating, but data showing the number of U.S. workers filing new claims for jobless benefits unexpectedly rose last week, highlighting the fragile state of the recovery.

As yet, there are few signs of recovering U.S. fuel demand. Freight traffic across North America fell 17.9 percent in the week ended August 15 from the same 2008 week, a trade group said on Thursday in a weekly report.

Key policymakers are gathering in Jackson Hole, Wyoming, this week to mull how to prevent the crisis from recurring. Bernanke&&9;s speech at 1400 GMT could shed more light on the U.S. economy&&9;s rebound from its worst recession in 70 years.

The National Association of Realtors will release existing home sales for July at 1400 GMT. Economists forecast a total of 5.00 million annualized units versus 4.89 million in June.

Apart from economic data, traders will also take cues from the direction of currency and equity markets.

U.S. stocks rose for a third straight session on Thursday with financial shares leading gains after U.S. manufacturing data and a rebound in Chinese stocks reassured investors.

China equities, viewed by investors as a weathervane of risk sentiment, were flat to higher on Friday, after surging 4.5 percent on Thursday on technical buying, following the index&&9;s 20 percent fall in the two weeks to Wednesday&&9;s close.

The yen jumped to a one-month high against the dollar, as traders fretted that Chinese shares could take a hit following a report on Chinese measures to tighten banks&&9; capital rules.

On the supply front, increased oil output to a year-high from OPEC president Angola, flouting agreed limits, has stacked the odds against any change when the producer group meets next month.

Without a sharp slide in crude prices, OPEC is likely to leave its output targets unchanged when it meets on September 9, most OPEC delegates and analysts said.

Oil below $73 after surge to 7-wk high, eyes Fed speech