NEW YORK (MarketWatch) -- U.S. financial stocks rose in morning trade, led by gains in select retail investment firms as analysts grew more sanguine about their outlook. T. Rowe Price and Charles Schwab led gainers following an upgrade of both at Deutsche Bank.

On the downside, Citigroup shares fell after news that Abu Dhabi's sovereign wealth fund wants out of a commitment to invest more than $7 billion in the firm.

The Financial Select Sector SPDR , which tracks the financial stocks in the S&P 500, added 0.7%.

Shares of Citigroup faced a new challenge Wednesday. Abu Dhabi Investment Authority, the Middle East's largest sovereign wealth fund, is demanding that Citigroup Inc. scrap a deal that would see the fund make a heavy loss on a $7.5 billion investment in the bank.

The fund, controlled by the oil-rich rulers of the Persian Gulf city-state of Abu Dhabi, is seeking more than $4 billion in damages from Citi if the deal to invest in the bank is upheld for what it alleges were "fraudulent misrepresentations" of the original agreement, according to the lender.

The dispute with Abu Dhabi follows Kuwait's decision to sell its stake in Citi. The Kuwait Investment Authority, the Gulf country's sovereign-wealth fund known as the KIA, said this month it sold a $4.1 billion stake in Citigroup Inc., for a $1.1 billion profit. Shares of Citigroup fell about 3% in the early going. Read more about the Abu Dhabi, Citi spat.

Asset manager Franklin Resources also fell. It shed about 1.8% as Deutsche Bank analyst recommended clients sell it and buy rival T. Rowe Price , which rose 1 best auto loan rates.8%.

"While core trends at both firms have been solid, including strong investment performance, healthy relative flows, and significant margin improvement, industry trends have favored Franklin since June, which aided its outperformance versus the sector." The analysts concluded.

"That said," they added, "over the next 12 months, we expect industry trends to begin to favor T. Rowe Price, including improving 401k flows, a pickup in institutional flows, and a gradual shift into equities, which should drive its relative outperformance."

The analysts downgraded Franklin to hold, and upped T. Rowe Price to buy.

Also moving on analyst comments, Charles Schwab shares added 2.1%.

Deutsche Bank analysts upgraded the stock to buy from hold, and raised their price target to $25 from $18.

"Schwab has maneuvered well during the downturn, and while the stock has underperformed due to significant rate pressures, the firm is well-positioned to benefit on multiple fronts (flows, rates, and margins) as conditions improve," Deutsche Bank said in a research note.

The analysts said the call could be premature, but they think the risk is justified since they view estimates at our near "trough levels" and forecast earnings-per-share growth in the range of 60% to 80%, or more, in the next two to three years. They said they expect Schwab to outperform over the next 12 months.

Financial Stocks: Financials mixed as Citi slips on Abu Dhabi claims

Hot News: Market Snapshot: U.S. stocks dip after PPI data; dollar rises

NEW YORK (Reuters) – Gold retreated from a record high above &&6;1,120 an ounce on Thursday and global stocks lost ground as doubts about a lasting economic recovery underpinned the dollar.

Stocks slumped as the U.S. dollar strengthened against other currencies, also on technical factors.

The yellow metal pushed to a record high on the momentum of months of dollar weakness, only to drop &&6;15.35 to &&6;1,102.40 as the currency recovered. A weak greenback makes metals priced in dollars less expensive for holders of other currencies.

Gold&&9;s rally from near &&6;800 an ounce in January and the upcoming yearend also prompted investors to book profits.

"Gold&&9;s weakness (on Thursday) was a reflection of profit-taking after the metal&&9;s recent impressive run," said Peter Buchanan, commodities analyst at CIBC.

The dollar also rose after the euro failed to break through and hold above the psychologically important 1.50 level. The euro declined 0.92 percent to &&6;1.4843. The dollar rose 0.56 percent against the Japanese yen, to 90.32 yen.

Prospects that U.S. interest rates will remain at negligible levels for some time are expected to continue weighing on the dollar. It rebounded 0.67 percent against a basket of major currencies on Thursday but is still down nearly 1 percent this month and 14.5 percent since early March.

With a light economic data calendar on Thursday, apart from strong Australian jobs numbers that boosted the Aussie dollar to a 15-month high, the broader market consolidated.

In the U.S., the Labor Department reported that first time claims for unemployment insurance fell to 502,000 in the latest week from 514,000 in the previous period. That was less than forecast, but supported the view of a fragile recovery ay day loans.

STOCKS WEAKER

World stocks weakened, with the MSCI all-country world index (.MIWD00000PUS) down 0.9 percent and the emerging market component (.MSCIEF) off 1.36 percent.

The main U.S. indexes drifted lower. The Dow Jones Industrial Average (.DJI) busted a six-session rally as a stronger dollar hurt commodity shares. Wal-Mart Stores Inc (WMT.N), the world&&9;s biggest retailer, forecast holiday profit that could miss Wall Street expectations but its shares still managed a slight gain.

The Dow Jones average fell 93.79 points, or 0.91 percent, to 10,197.47. The Standard & Poor&&9;s 500 Index (.SPX) declined 11.27 points, or 1.03 percent, to 1,087.24 and the Nasdaq Composite Index (.IXIC) edged lower by 17.88 points to 2,149.02.

European shares dropped with the FTSEurofirst 300 (.FTEU3) index off 0.1 percent to 1,014.91.

Investors globally remained fairly bullish, however, with signs parts of the world economy are gaining traction.

The Baltic Dry Freight Index (.BADI), which can be a proxy for world trade patterns, rose 5.5 percent, pushed up by freight of iron ore to China.

"A 10th straight increase for the Baltic Dry and a 15-month high for AUD/USD (Australian/U.S. dollar) do not imply that sentiment is about to turn over," Kenneth Brough, an economist at Lloyds TSB, said in a research note.

U.S. Treasuries climbed after the government wrapped up &&6;81 billion of sales this week, and as falling stocks increased the allure of bonds as a haven from risk.

The yield on the benchmark 10-year Treasury note fell by 0.04 percentage point to 3.44 percent.

Dollar bounce triggers gold fall, stocks drop

Hot News: APEC Ministers say Economic Recovery is Fragile

LONDON (AFP) – Britain&&9;s government is to create three new high street banks from bailed out lenders Royal Bank of Scotland, Lloyds Banking Group and Northern Rock, according to media reports.

The huge shake-up comes as the government seeks to recoup taxpayers&&9; cash used to prop up the banks during the world financial crisis and increase competition.

Lloyds is 43 percent owned by the state and RBS 70 percent, while Northern Rock was nationalised outright.

The government could confirm the move, to come in by 2015, on Tuesday, reports said.

The new banks would be retail-focused, concentrating on deposits and mortagages.

RBS and Lloyds are also reportedly set to sell off some parts of their businesses, including around 300 branches for RBS low rate payday loans.

EU regulators last week approved the state aid contained in plans to break up and sell Northern Rock.

All three banks received huge government bailouts at the height of the global economic storm but regulatory authorities are concerned about such state-backed banks having an unfair advantage over those that were not helped.

The Sunday Telegraph reported that no current owner of a British retail bank would be allowed to take on the new institutions so buyers could come from the US, Australia and the Middle East.

Britain to create three new retail banks: reports

M&>01;RIGNAC, FRANCE &S212; On a recent afternoon at the sprawling Dassault Aviation plant, on the perimeter of the Bordeaux airport, the smell of kerosene hung in the air as engineers tested hydraulics and fuel systems on the combat jet Rafale.

Those planes are destined for delivery to the French military, just like the previous 70 to 80 that have rolled off the assembly line. But there&S217;s a sense of cautious optimism here that the Rafale is finally within touching distance of a long-sought goal: its first foreign sale.

A tentative, &S364;5 billion deal with Brazil, announced last month, would go some way toward offsetting the downturn at Dassault&S217;s commercially more important Falcon business jet division. It also would help France to recapture some of the glory &S212; and export revenue &S212; lost when the Rafale&S217;s illustrious predecessor, the Mirage, ceased production in 2007.

The Brazilians, emboldened by their booming economy, are looking for a flexible, twin-engine combat jet to guard their offshore oil deposits and the vast Amazon rainforest. But should the deal go through, they would get more than just 36 planes.

The sale also includes a total transfer of technology that would enable Brazil to assemble most of the Rafale jets itself, and the right to sell them regionally. The contract might rise to 120 aircraft.

The terms illustrate the pressures on Dassault and a handful of other defense companies competing in a tightening global market.

Not only are advanced new American and European jets coming to market, but looming on the horizon are the prospect of advanced unmanned fighters and even competition from China, using technology acquired from Israeli and Russian jets.

Jean-Paul H&>33;bert, a strategic expert at the &>01;cole des Hautes &>01;tudes en Sciences Sociales in Paris, says Dassault is facing &S220;an appallingly hard decision&S221; as it debates the post-Rafale era.

&S220;Long-term research costs are very heavy and the French arms industry has not been that commercially very successful alone,&S221; he said.

With defense budgets under pressure and many potential clients tied to U.S. fighters, Dassault, which ranks with EADS and Thales among the biggest French defense contractors, has been fighting for leftovers.

Along with market leaders like Boeing and Lockheed Martin, Dassault&S217;s competitors include the advanced but expensive pan-European twin-engine Eurofighter, which operates in Europe and Saudi Arabia; the Saab Gripen, in Sweden, the Czech Republic, Hungary and South Africa; and the Russian Sukhoi and MIG.

&S220;The market is shrinking and there are too many players,&S221; said Eugene Kogan, guest researcher at the International Institute for Liberal Policy in Vienna. &S220;And it looks like China may soon start to move into some of the markets once dominated by Russia.&S221;

The Rafale was conceived in the mid-1980s and first test flown in 1991, as a successor to a series of aircraft that included the Mirage, which earned its stripes during the Six-Day War in the Middle East. Some 2,800 Mirages were delivered, more than half &S212; 57 percent &S212; for export.

But the French military wanted new capabilities, and so Dassault turned to the Rafale. The first prototype was built in 1986 and it entered service in 2001. Its sleek twin or single seat jets are recognizable by their main Delta wings and mini canard wings below the cockpit; land and sea versions have been built. Its engine is made by the French company Snecma, and Dassault expects the plane to be enhanced by an upgraded RBE2 radar from Thales, in which Dassault this year took a 26 percent stake.

Dassault has come close to exporting the Rafale before, notably to Morocco in 2007 and Singapore and South Korea previously, but those governments opted instead for U.S. hardware. The disappointments were blamed on bureaucratic problems in Paris and Washington&S217;s greater clout.

The Brazil package would be complex. Six jets would be made in France and 30 assembled in Brazil by Embraer, in which Dassault has a stake of 0.9 percent. The contract might expand to 120 aircraft, and comes alongside sales of other French hardware to the country and planned purchases by France of Brazilian transport planes instant payday loan.

&S220;It looks like technology transfer was pretty critical,&S221; said Rebecca Grant, senior fellow at the Lexington Institute, a research body in Arlington, Virginia.

The Saab Gripen, with its General Electric engine and Italian radar, seems to offer less in transfers; Brazilian demands may have gone beyond what Washington was willing to envisage, according to analysts.

Mrs. Grant also noted that the market will get even tougher once the Joint Strike Fighter from Lockheed Martin arrives in the next few years. Also known as the F-35, it appears to be the favored choice among NATO countries like Norway, the Netherlands and Poland, who are tempted by shared production to replace their mainstay F-16s.

&S220;The Rafale hasn&S217;t established itself a big customer base, so it&S217;s less flexible,&S221; Mrs. Grant said. &S220;You can&S217;t underestimate the importance of interoperability and costs.&S221;

&S220;Interoperability&S221; refers to the maintenance of jets on bases across the globe. Dassault argues that the Rafale&S217;s service in Afghanistan since 2007 proves this is not an issue.

Dassualt also says that there have been no cost overruns for the program, scheduled to run until around 2025 and scaled back to 294 jets for &S364;28 billion.

The stike fighter of Lockheed Martin, hit by delays, is now projected by the U.S. Government Accountability Office to cost Washington $300 billion for 2,440 deliveries, above 2001 estimates of $233 billion for 2,860.

Despite interest in the sale to Brazil, Dassault&S217;s most important product is the Falcon business jet, which has been transporting royalty, pop stars and chief executives for decades.

Over the past five years, Falcons represented on average 60 percent of sales and 80 percent of orders; Dassault received 115 orders in 2008, down from 212 a year earlier, and expects even fewer this year.

Falcons, which cost from $30 million to $50 million, are finished in Little Rock, Arkansas, from parts built in France.

At M&>33;rignac, workers were assembling a Falcon 7X for Warren Buffet&S217;s NetJets. Other clients like Royal Bank of Scotland and Citigroup cancelled orders last year during the financial meltdown.

Olivier Brochet, an analyst at Natixis Securities, said Rafale exports might help offset lower demand for the Falcon.

The market consensus for Dassault is 2009 revenue of &S364;3.5 billion and profit of &S364;289 million, down from 2008 revenue of &S364;3.75 billion and profit of &S364;373 million.

Dassault&S217;s share price appears to be influenced partly by liquidity, with 50.5 percent of the company held by the Dassault family &S212; which has a host of other interests in areas as diverse as media, wine, auctions, software and electric cars. Another 46 percent is held by EADS. So far this year, the shares are up 20 percent at about &S364;480.

With its modest size &S212; the group employs 12,500 &S212; Dassault has retained a reputation for agility not always apparent in French industry.

But unless Europeans can cooperate and move away from domestic champions, they will suffer in the race to supply the next generation of fighters, said Mr. Kogan from the Vienna-based institute.

Dassault appears to be thinking along the same lines. Eric Trappier, executive vice president at Dassault Aviation, said that Rafale&S217;s &S220;successor will probably be designed through a European cooperation, from 2025.&S221;

Back in M&>33;rignac, a Rafale was being towed away for delivery to French forces after assembly and testing.

&S220;It&S217;s always difficult to see an aircraft leaving,&S221; an employee sighed, &S220;it&S217;s our baby.&S221;

That pain might be easier to bear if future Rafales are destined for South America.

Jet Deal a Sign of Small Defense Contractors’ Woes

BRUSSELS, Oct. 16 (Xinhua) -- A top European Union competition official has expressed concern over Germany's planned financial aid for a deal that would see car-parts maker Magna and a partner take a majority share in troubled carmaker Opel.

EU Commissioner for Competition Neelie Kroes voiced her concerns by writing to German Economics Minister Karl Theodor zu Guttenberg, a news release from the EU's executive Commission said here on Friday.

Kroes wrote that there were significant indications that the German government's promised aid to Opel was on condition that a specific bidder was selected to acquire a majority of the shares in the carmaker.

Such a precondition would be incompatible with EU state aid and internal market rules, she noted outdoor fireplace plans.

She urged the German government to give Opel's parent company GM an opportunity to reconsider the outcome of the bidding process on the basis of firm written assurances that the aid would be available irrespective of the choice of investor.

The Commission said that Kroes also sent the letter to Austria, Britain, Spain, Belgium, Poland and Hungary, where Opel has activities. Special Report: Global Financial Crisis

EC expresses concern over Opel aid

PARIS &S212; Britain's antitrust regulator said Thursday that it would oppose the planned merger of Ticketmaster and Live Nation, warning that the consolidation of two major players in entertainment in the United States and Europe could lead to higher concert ticket prices and less competition.

When the ticketing agent and concert promoter, both based in California, announced in February that they aimed to unite, the proposal immediately raised antitrust worries in the United States and in other countries.

Together, the two companies would be a player with even greater global reach and estimated annual revenue of about $6 billion. Ticketmaster distributes tickets through thousands of retail outlets all over the world, as well as online. Live Nation is the largest concert producer in the world, and the company says it sells 45 million tickets a year.

Britain's Competition Commission, an independent public agency, said in a statement Thursday that "the merger could severely inhibit the entry of a major new competitor" and result in higher prices for consumers.

The agency noted that the proposed merger would jeopardize an existing agreement between Live Nation and CTS Eventim, a ticketing and live entertainment company based in Germany.

The commission said it expected to issue a final decision on Nov. 24.

John Park, a spokesman for the agency, said that "final decisions usually reflect the provisional. At this point we have a thorough assessment easy fast payday loans."

He added, however, that there were a number of potential remedies that might allow a deal to proceed.

"One option would require Live Nation to use CTS for a portion of its business," he said. "Another is a potential divestment" of all or part of Live Nation's or Ticketmaster's operations in Britain, he said.

In response, Ticketmaster and Live Nation said that they would cooperate with the commission and that they remained committed to the merger. They argued that the deal would be in the public interest.

"We believe this merger will build a more efficient and effective company moving forward," the companies said, "and that working together we will be able to help achieve needed change that will strengthen a flagging music industry."

The two companies' willingness to make concessions will be key to whether or not the deal goes through, but a Ticketmaster spokeswoman declined to comment on their strategy.

The proposed merger is still being reviewed by the Justice Department.

Ticketmaster has said before that it does not set ticket prices and leaves those decisions to the artists. However, the company owns a controlling stake in a major artist management firm, Front Line Management.

CTS saw its shares rise 2.16 percent to 32.69 euros in midday trading.

British Regulator Objects to Ticketmaster Merger

LONDON (Reuters) – European shares look set to finish the third quarter with their best performance in nearly a decade on expectations of economic recovery while world stocks also rose strongly though not as much as in the previous period. The pan-European FTSEurofirst 300 (.FTEU3) index put on 0.4 percent on Wednesday and the MSCI world index added the same, while commodity prices were also firmer but the dollar fell against a basket of currencies.

"We&&9;re ticking higher on the last day of a strong quarter but investors remain a touch cautious ahead of the start of October, always a volatile month, and Friday&&9;s U.S. jobs report," said Mic Mills, senior trader at ETX Capital in London.

Equities have been rallying hard since early March as investors have become more confident about the prospects for economic recovery.

The European benchmark index is up more than 18 percent in July-September, on course to record its biggest quarterly rise since December 1999. It rose nearly 16 percent in the previous quarter but is still 38.5 percent below its peak in mid-2007.

Global stocks gained 17.6 percent this quarter after rising more than 21 percent in April-June, its best ever quarterly rise, while Britain&&9;s FTSE 100 (.FTSE) was set to register its best quarterly gains since the index was launched in 1984.

The corporate outlook has also showed some signs of revival, with the world economy recovering from its worst recession since the 1930s Great Depression.

British retailer Marks & Spencer (MKS.L) on Wednesday posted an improvement in its quarterly sales trend and raised its forecast for full-year profit margin, but cautioned 2010 was likely to be a tough year.

"GDP and earnings are still being upgraded, valuations are not horribly expensive and cash is still zero percent, we are in a sweet spot," said Khiem Do, head of Asia multi-asset group at Baring Asset Management guaranteed approval cash loans.

Crude prices were higher, rising above &&6;67 a barrel as the dollar eased, while investors are focusing on talks over Iran&&9;s nuclear plans.

Metal prices also stayed firm, helped by the weaker dollar. Gold was poised to post its best quarterly performance since the first quarter of 2008.

The U.S. dollar (.DXY) slipped against major currencies on month- and quarter-end buying lifting sterling and the yen. The greenback was down 0.4 percent at 89.76 yen.

The euro held firm ahead of the European Central Bank&&9;s one-year cash tender results. Attention will focus on the amount of liquidity pumped into the system.

Lacklustre demand would strengthen the ECB&&9;s belief that money markets are on the mend, But strong demand would mean levels of cash held by banks remain at exceptionally high levels until the middle of next year, unless the ECB takes steps to drain it from the market.

The Australian dollar, which has been on the uptrend after recent market talk about an imminent rate hike lifts its yield allure, received a further boost as data showed consumers continue spending even as the stimulus programme nears its end. The Aussie dollar was up 1 percent at &&6;0.8795.

Yields on benchmark 10-year U.S. Treasuries were up 2 basis points at 3.316 percent, while the 10-year euro zone Bund yield was up 1 basis points at 3.232 percent.

(Additional reporting by Jon Hopkins and Jamie McGeever in London and Umesh Desai in Hong Kong, editing by Mike Peacock)

Europe shares set for best quarterly rise in 10 years

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

CROMVOIRT, the Netherlands &<51; Putting aside for the moment the advisability of trying to make a living milking camels, you would not think it a particularly difficult business.

But you would be wrong.

The camels grazing on this green patch of farmland a few miles outside of Den Bosch may look happy enough. But milking them is another story; moody camels are known to spit and kick, and mares will give milk only when one of their offspring is nearby.

&S220;You have to show them respect,&S221; said Frank Smits, the proprietor of the camel farm. &S220;They&S217;re a lot more stubborn than cows.&S221;

Mr. Smits, currently the only farmer in Europe with permission to sell camel&S217;s milk, is just as stubborn as his camels. Since starting his farm in 2006, he has run afoul of the European Union, which forbids the importation of camels, animal rights advocates and the Dutch agricultural authorities.

Mr. Smits, 26, saw an untapped market for camel&S217;s milk in the rising number of immigrants to Europe from Somalia and Morocco, where camel&S217;s milk has long been popular for its supposed curative properties. Mr. Smits&S217;s milk sells for upwards of $15 a quart at a few dozen Islamic groceries and health-food stores throughout the Netherlands, with the rest exported to immigrant communities in Belgium, Germany and Britain.

In muddy jeans and boots, Mr. Smits looks every bit the young farmer. Turns out, though, that his father is a neurologist, and that he studied both marketing and agriculture at college.

And there is one thing he wants everybody to know: he&S217;s not in it for the money.

&S220;Working as a checkout boy at the supermarket would pay better,&S221; he said. The camels cost about $11,000 each, he said, and one camel produces only about a gallon and a half of milk per day.

His motivation was a 2006 report from the Food and Agriculture Organization of the United Nations, which has been promoting camel&S217;s milk not only for its nutritional value but also as a revenue source, especially for the nomadic farmers who have been milking camels for millenniums. The report said the market for camel&S217;s milk products could be as large as $10 billion.

Mr. Smits&S217;s professors at college were so taken with the idea, they almost flunked him. His final thesis, on the feasibility of introducing camel&S217;s milk to the European market, earned him the American equivalent of a D-minus.

&S220;They just didn&S217;t understand it,&S221; Mr. Smits said. &S220;I used a lot of research and literature from the F.A.O., but my teachers said the literature I used wasn&S217;t scientific enough. Then I used that same paper to apply for grants and loans, and it worked fine.&S221;

Simply getting the camels was no small feat. The European Union does not allow them to be imported, so Mr. Smits had to find some from within the trading bloc. He managed to do so in the Canary Islands off the coast of Africa, which belong to Spain, a member of the union. Mr. Smits shipped in three pregnant females, and soon began milking them on a small plot of land next to his dormitory in Den Bosch american family insurance.

Local animal-welfare groups cried foul, arguing that the nation already had enough exploited animals. Tamping down that controversy, he managed to get his operation up and running, only to have it shut down a few months later by the Dutch agricultural authorities because camels were not on the official list of commercial farm animals.

Mr. Smits paid to have a Dutch government agency investigate whether camels could be added to that list, which meant having to demonstrate that he could run the farm &S220;without unacceptable animal welfare consequences.&S221; Foxes and chinchillas were removed from the list in 2008, with mink to follow in 2018. But the authorities gave Mr. Smits the go-ahead, granting him a two-year trial period, presumably to show he could milk his camels humanely. That period was recently extended for another two years, until the end of 2010.

Whatever curative properties camel&S217;s milk may have are thought by its devotees to disappear if it is pasteurized, a belief that has limited its distribution &<51; unpasteurized milk is generally forbidden in Europe and the United States.

But Mr. Smits managed to obtain permission to produce unpasteurized camel&S217;s milk, which he does with the help of an automated milking machine he developed with a dairy equipment manufacturer. Some experts estimate that a camel&S217;s daily output could ultimately be raised to as much as five gallons using modern equipment and methods.

Expanding markets is proving to be at least as difficult, with the bans on unpasteurized milk and a ban on camel&S217;s milk altogether in the United States.

But things are looking up. The Food and Drug Administration recently agreed to add camel&S217;s milk to its list of salable products in the United States, but it still cannot be sold or imported for human consumption until it passes a battery of tests. An agency spokesman noted that these things take time &<51; water buffalo milk was approved in 2003, but it took until 2009 before all the tests were completed.

There are several studies under way into the health benefits of camel&S217;s milk. At nearby Wageningen University, for example, researchers are investigating whether camel&S217;s milk can provide some help for people with diabetes. The results are not yet in.

For Mr. Smits, milk is only the beginning. Last year he developed a camel&S217;s milk cheese that sells for around $60 a pound, and he hopes to introduce bread to the world&S217;s growing array of camel&S217;s-milk products, like chocolate, ice cream and soap.

He now owns about 40 camels in Cromvoirt, roughly 10 of which can be milked. He has not applied for European farm subsidies, he says, because the paperwork is too overwhelming.

To make a profit, Mr. Smits said he needs a herd of about 120, a goal he hopes to reach before 2015. He is on the lookout for a bigger farm.

Cromvoirt Journal: The Camel as Cow, a Cautionary Tale

The McDonald&S217;s Corporation said Wednesday that sales at established restaurants rose 2.2 percent globally in August, missing analysts&S217; targets, as strength in Europe failed to offset weakness in the United States and other parts of the world.

Sales at established restaurants, those open at least 13 months, rose 3.5 percent in Europe, helped by Britain and France, and increased 1.7 percent in the United States, where intense fast-food price competition weighed on results. Comparable sales slipped 0.5 percent in the Asia Pacific, Middle East and Africa segment, McDonald&S217;s said Wednesday.

Analysts had expected an increase of 2.8 percent in the United States. On a global basis, some estimates called for a sales increase of as much as 3 percent.

McDonald&S217;s said sales in the United States were supported by the new premium Angus Third Pounder burger and new McCafe coffee drinks payday loan.

McDonald&S217;s said sales rose 1.1 percent systemwide in August, but were up 4.1 percent excluding the impact of currency fluctuations.

As a result of diners&S217; continued cautious spending, McDonald&S217;s has focused its advertising on its core and value menus and away from higher-priced items &<51; with the exception of the new Angus burger, which is being introduced across the United States.

Stock in McDonald&S217;s, which is based in Oak Brook, Ill., fell $1.13, to close at $55.09 a share.

McDonald’s Sales Rise 2.2%, but Miss Analysts’ Targets

LONDON (Reuters) – The world cannot be complacent about economic recovery and will need to keep emergency stimulus packages in place well into next year, British Prime Minister Gordon Brown said on Saturday.

Addressing G20 finance ministers and central bankers meeting in London, Brown noted the improvement in the outlook since the height of the banking crisis last year but said more work was needed to ensure an enduring recovery from the worst recession since World War Two.

"The stakes are simply too high to get these judgments wrong, so to decide now that it is time to start withdrawing and reversing the exceptional measures we have taken would, in my judgment, be a serious mistake," he said.

"With more than half of the total five trillion (dollar) fiscal expansion yet to start, I believe the prudent course is for G20 countries to deliver these fiscal plans and the stimulus packages that have been put in place and make sure that they are implemented in full both this year and the next."

While policymakers appear agreed that economic life-support packages need to remain in place, divisions have appeared over the best way to fix the banking system and ensure no repeat of the credit crisis that plunged the world into recession.

The International Monetary Fund now forecasts the world economy to shrink 1.3 percent in 2009, a shade less than its April forecast of a 1.4 percent contraction, and grow 2.9 percent in 2010, revised up from 2.5 percent previously.

Policymakers remain cautious about declaring victory when unemployment is expected to go on rising and the financial system remains fragile after a two-year crisis that toppled some of the world&&9;s best known banks.

BANKING DIVISIONS

Brown said the G20 group of leading and emerging nations had to think not only about the immediate future but also about how to make the world economy safer for the long-term.

"Making the recovery sustainable does mean, in my view, avoiding unsustainable imbalances between countries," he said business card.

"It makes sense for countries with large current account deficits to boost exports. It makes sense also for countries with large current account surpluses to increase the demand for goods and services from other countries."

Saturday&&9;s meeting will lay the framework for a leaders&&9; summit in the U.S. city of Pittsburgh later this month.

G7 sources have told Reuters that the G20&&9;s communique, due on Saturday, will likely maintain the pledge to keep policy accommodative for as long as was needed.

Fixing the banking system is proving more divisive.

U.S. Treasury Secretary Timothy Geithner has called for strengthened bank capital requirements aimed at curbing some of the risky lending practices blamed for the crisis.

But French finance minister Christine Lagarde said on Friday she could not see the point. A G7 source told Reuters that Germany was also opposed to the idea.

Both European nations also want to see tight restrictions on bankers&&9; pay to curb excesses which encouraged them to run riot with risk.

French President Nicolas Sarkozy has even called for a global tax but Britain and the United States, with their powerful banking industries, have balked at that idea.

Still, ministers are expected to agree some codes at this meeting on the structure of remuneration at financial institutions, many of which have had to be rescued with billions of dollars of public money.

"Pay and bonuses cannot reward failure or encourage risk taking. It is offensive to the public whose taxpayers&&9; money in different ways has helped many banks from collapsing and is now underpinning their recovery," Brown said.

(Writing by Sumeet Desai; editing by Keith Weir)

G20 united on stimulus, divided on bank reform

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NEW YORK (Reuters) – U.S. stocks were little changed on Thursday after data showed the U.S. services sector shrank again in August, but an index measuring activity was at its highest in nearly a year.

The Dow Jones industrial average (.DJI) added 6.73 points, or 0.07 percent, to 9,287.40. The Standard & Poor&&9;s 500 Index ( free credit report online.SPX) gained 1.48 points, or 0.15 percent, to 996.23. The Nasdaq Composite Index (.IXIC) slipped 1.74 points, or 0.09 percent, to 1,965.33.

(Reporting by Leah Schnurr)

Wall Street little changed after ISM data

For investors looking for stability in the financial markets and more signs of a recovery, it was easy to cheer the news on Tuesday: the chairman of the Federal Reserve was named to another term, housing prices showed slender improvement, and consumers grew more confident.

So after a day of listless trading, Wall Street moved higher on Tuesday morning, led by consumer-geared companies and big banks like Bank of America and JPMorgan Chase.

At 10:20 a.m., the Dow Jones industrial average was up 40 points or 0.4 percent while the broader Standard &&8; Poor&S217;s 500-stock index also rose 0.4 percent. The Nasdaq was up 0.7 percent.

The news came in rapid succession on Tuesday morning: President Obama interrupted his vacation in Massachusetts to announce that he was reappointing Ben. S. Bernanke as Fed chairman, citing Mr. Bernanke&S217;s able response to the financial crisis.

As Mr. Obama spoke, Standard &&8; Poor&S217;s released its monthly Case-Shiller Home Price Index, a closely watched barometer of the housing market. Prices of single-family homes in 20 metropolitan areas fell less than expected from last year, and prices in 18 cities were higher in June than a month earlier.

Stocks crested higher still on the heels of new figures showing that consumer confidence had bounded back in August after slipping in July. The Conference Board&S217;s survey of consumers found that fewer people said that business conditions were bad, and that consumers detected some hints of thaw in the job market.

Overall, consumer confidence rose to 54.1 in August from 47.4 a month earlier &<51; marked improvements from the deepest days of the recession, when consumer sentiment hit record lows amid heavy job losses and huge declines in financial markets.

Still, people are worried about finding work as the unemployment rate nears 10 percent, and many expect the job market and the climate for business to remain difficult in the months ahead. Many investors are concerned that consumers will keep a lid on their spending, potentially stifling a broader recovery, as they try to rebuild their finances and worry about losing their jobs or having their wages cut.

&S220;As long as earnings continue to weigh heavily on consumers&S217; minds, spending is likely to remain constrained,&S221; Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.

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 Children wearing masks, sing in their classroom, in Mumbai, 10 Aug 2009India is stepping up measures to control the spread of swine flu, as the death toll from the H1N1 virus rises to 20. The financial hub, Mumbai, has shut down schools and the government has warned against hoarding of face masks and flu drugs. In India's financial hub, Mumbai, students stayed at home after schools and colleges were shut for a week, starting Thursday, to prevent the spread of swine flu. Movie theaters have also been closed. Authorities have called it a "precautionary measure".Mumbai is the second city in the western Maharashtra state to shut educational institutions. Pune, which is 120 kilometers southeast of Mumbai, did the same earlier, in the week.The toll from swine flu has risen rapidly since the country's first death was reported, last week. Most of the victims are in Maharashtra. The infection is spreading ahead of a string of festivals to be observed in the coming weeks. The government is urging people to have low-key celebrations and to avoid large gatherings during these events. Panicked people have been buying face masks, in a bid to ward off the infection. But, as reports of shortages of face masks surfaced, joint Health Secretary Vineet Choudhary warned against any hoarding of masks and flu drugs."Shortages will not be tolerated and, if there is hoarding and black marketing on these items, then the governments need to come down with a heavy hand," Choudhary said. "This is a public health emergency and a crisis in the country and we expect that citizens from all sections of society will cooperate with the government in coping with this crisis." Health authorities are asking people not to overreact, as thousands have been rushing to public hospitals for tests. Health officials are reassuring people that the disease can be treated easily and that India has enough stock of the anti-flu drug, Tamiflu.The health ministry has asked states to establish more testing centers and is also asking private hospitals to help cope with the rising number of patients.      So far, about 1,200 cases have been recorded in the country. But there are worries that the numbers may rise quickly, because of the country's large population and crowded cities, making it difficult for an overburdened public health system to handle the infection.Swine flu first emerged in Mexico in April and has since spread to most countries.

India Steps Up Measures to Control Spread of Swine Flu

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WASHINGTON &<51; What if in the end they got it right?

What if, amid all their missteps and all the harsh criticism, the people in charge of battling the worst financial crisis since the Great Depression &<51; Ben Bernanke, Timothy Geithner, Lawrence Summers, Henry Paulson and the rest &<51; basically succeeded?

It is clearly too soon to know for sure. But the evidence is now pointing pretty strongly in one direction: history books may conclude that the financial crisis of 2008 turned out to be far less bad than it could have been and that Washington deserved much of the credit.

The Labor Department announced Friday that the economy lost fewer jobs in July than in any month since before Lehman Brothers collapsed last fall. Credit markets no longer look anything like they did after Lehman&S217;s collapse and are in considerably better shape than just a few months ago. Stocks are up almost 50 percent from their March low. &S220;It&S217;s over,&S221; the economists at Barclays Capital declared Friday, referring to the Great Recession.

The news has been good enough that the Obama administration spent Friday trumpeting its record. More telling, however, is the fact that even Nouriel Roubini, the prophetically pessimistic economist who saw the crisis coming (and doesn&S217;t think the recession has yet ended), is now praising policy makers. He recently urged that Mr. Bernanke be reappointed as Federal Reserve chairman, saying he helped avert a &S220;near depression that seemed highly likely after the financial collapse last fall.&S221;

Washington&S217;s early responses to the bubbles in real estate and stocks, and then to the crisis that followed, were full of mistakes. But since the collapse of Lehman Brothers, the record has started to change. The government has undertaken one extraordinary effort after another to revive the economy, and the economy has seemed to respond.

Last September, the Fed, the Bush administration and Congress pushed through an unpopular $700 billion bailout plan to keep other parts of the financial markets from collapsing. In subsequent months, the Fed &<51; the subject of much recent criticism from both Democrats and Republicans in Congress &<51; quickly propped up individual credit markets when they sagged.

And the Obama administration, having failed in its early weeks to calm the financial markets, eventually managed to do just that. It pushed for a stimulus bill, over unanimous Republican opposition in the House, that is certainly imperfect but that has already saved more than 500,000 jobs, according to separate estimates by two prominent research firms, IHS Global Insight and Moody&S217;s Economy.com. The White House also endured withering criticism from liberals who argued that credit markets would remain dysfunctional without a government takeover of banks.

&S220;Bernanke, Obama, Geithner and Summers were intelligent enough to know that the right-wing crowd was crazy to say, &S216;Let the banks go bankrupt,&S217; and confident enough to ignore the left-wing &S216;Nationalize the banks&S217; crowd,&S221; said Robert Barbera, a longtime economist and author of the recent &S220;The Cost of Capitalism,&S221; which criticizes the Fed for allowing the housing bubble to grow so large. &S220;I give them very high marks.&S221;

Many people, of course, would not be so charitable. And that&S217;s understandable. The economy remains in very bad shape, and economists think the unemployment rate still has further to rise.

Most confusing of all, no one can know how bad &<51; or how good &<51; the economy might have been if the government hadn&S217;t pursued the aggressive policy it did payday loan. But there are certainly some clues.

A central piece of the Obama administration&S217;s and Fed&S217;s joint financial strategy was the banking stress test. The results of those tests, which showed the system to be in better shape than many (including &<51; full disclosure &<51; me) believed, began to leak in early May. Immediately, credit markets started improving. The TED spread, a comparison of interest rates that measures market fears, fell 43 percent over the next three weeks and is even lower today.

As for the stimulus, economies in countries that enacted relatively large programs, like the United States, China and Australia, have survived fairly well this year, relative to forecasts. Countries that enacted smaller programs, like France, Italy and India, have not done as well, as Christina Romer, a top Obama adviser, pointed out this week.

But the best clue may be history. Washington did not respond proactively to the financial crisis of 1929, and the Great Depression ensued. Japan didn&S217;t respond to its 1990s crisis with much force, and its economy languished.

Even the past year makes the case. On Sept. 14, 2008, policy makers allowed Lehman to go under. Financial panic ensued. Indeed, one notable aspect of Washington&S217;s recent successes is that they have been fashioned by the same people who helped aggravate the crisis.

Mr. Paulson, then the Treasury secretary, made the main call to let Lehman collapse, as David Wessel, economics editor of The Wall Street Journal, reports in his new book on the crisis. But within days, Mr. Paulson was on Capitol Hill arguing for the $700 billion bailout. Mr. Bernanke played down the housing bubble as a Bush administration adviser and at his 2005 confirmation hearing. Once the crisis began, he oversaw perhaps the most forceful policy response in the history of central banking.

Mr. Geithner may be the most fascinating character in the drama. As the president of the New York Fed, he failed to raise alarm about the Wall Street strategies that made the crisis possible. In his early weeks as the Obama Treasury secretary, his uneven performance led a few House Republicans to call for his resignation. In White House meetings, some advisers told Mr. Obama that they were worried the Geithner approach wasn&S217;t aggressive enough.

That could still turn out to be the case: credit markets aren&S217;t yet normal, and jobs are still disappearing every month. And some of the administration&S217;s specific programs, like the public-private partnership to buy toxic bank assets, have fallen flat. But the sum total of the response has been to erase a pervasive sense of fear in the markets and to allow lending to resume.

Having done that, the White House and Fed face a new set of problems. Mr. Bernanke will have to decide how slowly to withdraw the Fed&S217;s enormous interventions. Mr. Obama will have to sell Congress on an agenda that he has vowed will move the economy away from its boom-and-bust cycles. On every item of that agenda &<51; health care, energy, financial reregulation &<51; there are reasons to wonder whether Mr. Obama and Congress will end up with a bill that makes a big difference.

Just look at the record. Washington may be in the process of proving that it can halt an economic crisis. But it utterly failed to keep that crisis from occurring.

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