Finance & Business World

NATO bombs struck a Libyan government complex before dawn Saturday, damaging two buildings, just as Libyan leader Moammar Gadhafi called for a cease-fire and negotiations with NATO powers in a live speech on state TV.

The targeted compound included the state television building, and a Libyan official alleged the strikes were meant to kill Gadhafi. “We believe the target was the leader,” said government spokesman Moussa Ibrahim.

However, the TV building was not damaged, and Gadhafi spoke from an undisclosed location.

Reporters visiting the scene of the strikes were told the damaged buildings housed a commission for women and children and offices of parliament staff. One of at least three bombs or missiles knocked down a huge part of a two-story Italian-style building. In another, doors were blown out and ceiling tiles dropped to the ground. A policeman said three people were wounded, one seriously.

Gadhafi, meanwhile, called for a cease-fire in a speech that was both subdued and defiant and lasted for more than an hour. “The door to peace is open,” said the Libyan leader, sitting behind a desk and repeatedly flipping through handwritten notes. “You are the aggressors. We will negotiate with you,” he said. “Come, France, Italy, U.K., America, come, we will negotiate with you. Why are you attacking us?”

He said Libyans have the right to choose their own political system, but not under the threat of NATO bombings.

“Why are you killing our children? Why are you destroying our infrastructure,” he said, denying that his forces had killed Libyan civilians.

Rebel leaders have said they would only negotiate a truce after Gadhafi has stepped aside, something the Libyan leader has refused to do installment payday loans. The uprising against Gadhafi, Libya’s ruler of 42 years, erupted in mid-February, and has claimed hundreds of lives. Rebels are controlling the east of the country, while Gadhafi has retained most of the west.

Just hours before the speech, Gadhafi’s forces shelled the besieged rebel city of Misrata, killing 15 people, including a 9-year-old boy, hospital doctors said. The city of 300,000 is the main rebel stronghold in western Libya, and has been under siege for two months, with the port its only link to the outside.

On Friday, NATO foiled attempts by regime loyalists to close the only access route to Misrata, intercepting boats that were laying anti-ship mines in the waters around the port.

The Gadhafi regime signaled Friday that it is trying to block access to Misrata by sea.

Ibrahim, the Libyan official, said he was unaware of the attempted mine-laying. However, he said the government is trying to prevent weapons shipments from reaching the rebels by sea. Asked whether aid vessels would also be blocked, he said any aid shipments must be coordinated with the authorities and should preferably come overland.

Gadhafi’s forces have repeatedly shelled the port area in the past. Libyan troops are deployed on the outskirts of Misrata, after having been driven out of the downtown area by the rebels last week.

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More people sought unemployment benefits last week, the second rise in three weeks, a sign the job market’s recovery is slow and uneven.

The Labor Department says applications for unemployment benefits jumped 25,000 to a seasonally adjusted 429,000 for the week ending April 23. That’s the highest total since late January.

The four-week average of applications, a less volatile measure, rose to 408,500, its third straight rise and the first time it has topped 400,000 in two months.

Applications near 375,000 are consistent with sustained job creation. Applications peaked during the recession at 659,000.

Some economists predicted that auto factory shutdowns, stemming from supply disruptions in Japan, would cause applications to rise. But a Labor Department analyst said only one state reported auto-related layoffs and the increase was modest.

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When Ben Bernanke makes history Wednesday as the first Federal Reserve chief to begin a series of regular news conferences, his tasks will be simple. That doesn’t mean they’ll be easy:

Make no unintended news. Defuse critics of Fed policymaking. Say nothing that might spook investors.

“If he succeeds, he will not make any impact whatsoever” on bonds, stocks or the dollar, says Timothy Duy, an economist at the University of Oregon who writes a blog on the Fed.

The historic news conference, the first of three this year, is part of a long-standing Bernanke campaign to make the central bank more transparent and publicly accessible. His efforts have included town-hall meetings and appearances on “60 Minutes.” The chairman’s public appearances have followed criticism that the Fed, an independent government agency, was for too long secretive and unaccountable.

After giving an opening statement, Bernanke is scheduled to take reporters’ questions for 45 minutes. He’ll do so less than two hours after the Fed issues a statement outlining its latest policies on interest rates and the economy. The Fed is expected to say that its benchmark rate will remain near zero and that its $600 billion Treasury bond-buying program will end in June as planned.

By helping to keep downward pressure on interest rates, the bond-buying program was intended to encourage spending and boost growth. But critics say all that spending has raised the risk of high inflation.

Under Bernanke, the Fed’s policies have run into criticism from some of the Fed’s own regional bank presidents. They say the central bank should stop trying to stimulate growth and start fighting inflation by raising interest rates from super-low levels before the year ends. They point to the run-up in gasoline and food prices. Higher interest rates could slow spending and make inflation less likely.

Bernanke and a majority of Fed officials counter that those higher prices are temporary and, apart from energy and food, won’t lead to substantially higher prices overall. The news conference “gives Bernanke a nice opportunity to present the Fed’s case frankly in his own words without a lot of spin,” says Alan Blinder, a Princeton University economist and a former Fed vice chairman.

At the same time, Bernanke must take care not to let unguarded comment unnerve financial markets.

“The press conference is not supposed to add volatility or uncertainty,” says Marc Chandler, head of global currency strategy at Brown Brothers Harriman.

On the other hand, Bernanke will likely try to steer clear of the jargon and bland generalities with which his predecessors once shrouded Fed policy.

“He would not like it if the post-mortems said all he did was blow smoke and speak gobbledygook,” Blinder says.

Bernanke has shown he can field questions deftly in public settings. A former longtime economics professor at Princeton, he is fond of deconstructing complex subjects. He also has plenty of experience handling hostile queries from critics in Congress and on “60 Minutes.”

To prepare for his news conference, Bernanke has watched tapes of how his counterparts in Europe _ Jean-Claude Trichet, president of the European Central Bank and Mervyn King, head of the Bank of England _ have performed at news conferences. Two months ago at a meeting of finance officials in Paris, Bernanke pulled aside Trichet and King to quiz them on how they manage their encounters with reporters.

Despite Bernanke’s experience and preparation, answering questions live in public isn’t without risk. Financial markets can misinterpret or overreact to a stray comment.

“Markets are panic-prone,” Blinder says. “They’re ready to panic at the slightest provocation.”

Bernanke has stumbled in the spotlight before.

Just months into his new job as Fed chairman in 2006, he rattled Wall Street because investors thought he sent them contradictory signals about interest rates. Bernanke complained to CNBC’s Maria Bartiromo at a Washington dinner that investors had misinterpreted recent remarks he made before Congress as a signal that the Fed was preparing to end a two-year effort to tighten credit.

CNBC reported Bernanke’s conversation, and stocks slumped in response. Weeks later, Bernanke told members of Congress that he’d suffered a “lapse of judgment” by speaking to the CNBC anchor.

In theory, the Bernanke news conferences _ four will be scheduled each year _ give him a chance to better control the Fed’s message. He can make himself heard above some of the Fed’s outspoken inflation hawks.

At the same time, any war of words with dissenters could escalate and create public confusion about Fed policy.

“Lack of a consistent message is a problem,” said Ken Thomas, a lecturer in finance at the University of Pennsylvania’s Wharton School. “That is a big fear.”

Joseph Gagnon, a former Fed official who is now senior fellow at the Peterson Institute of International Economics, says he thinks the anti-inflation dissenters at the Fed are drawing too much publicity. They lack the votes to make a difference inside the Fed. Bernanke’s easy-money policies have been approved unanimously this year by the Fed’s policymaking committee.

By talking to the media, Bernanke can “get out there before other guys start to spin it their way,” Gagnon says. “Why should they get all the attention?”

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Verizon announced Thursday that it activated 2.2 million iPhones during the quarter, helping the company more than triple its profit from a year ago.

The wireless division of telecom giant began selling the iPhone on Feb. 10. Verizon only sold the iPhone 4 for 50 days during the quarter, compared to the full 90 days of the quarter that Apple’s (AAPL, Fortune 500) smartphone sold on rival AT&T’s network.

But Verizon (VZ, Fortune 500) was on pace to sell 4 million iPhones over a 90 day period, compared to the 3.6 million that AT&T sold during the quarter.

Verizon said it added 906,000 customers under contract during the quarter. By contrast, AT&T (T, Fortune 500) added just 62,000.

Some analysts said that suggests Verizon is attracting subscribers thanks to the new iPhone, while AT&T is mainly selling iPhones to its existing customers who are due for an upgrade to a new handset.

"There was an influx of customers wanting the iPhone on Verizon, some of whom were existing customers but many of whom switched," said Todd Day, wireless industry analyst at Frost & Sullivan.

Despite drastic improvements to its network, AT&T has suffered from widely publicized complaints about its 3G service in New York and San Francisco, and it recently ranked worst in a Consumer Reports survey of U.S. wireless carriers. Some studies suggested that about 2.5 million AT&T customers would defect to Verizon once AT&T lost its iPhone exclusivity.

The iPhone will continue to be a heated battleground for the two wireless giants: Apple announced Wednesday that its iconic smartphone is still gaining steam. The device maker sold a record 18 paperless payday loans.65 million iPhones in the quarter, up 113% from last year.

Both Verizon and AT&T have fought bitterly over smartphone, tablet and mobile broadband customers, since they’re one of the fastest growing sources of revenue for telecom companies. The two companies both reported more than $5 billion in wireless data revenue, up $1 billion from a year ago.

Verizon is strongly pushing its new, faster, 4G-LTE network. The company said it has activated 260,000 HTC ThunderBolts, Verizon’s first LTE phone, since it went on sale March 17. Those strong sales came despite the phone’s premium price of $250.

Overall, Verizon reported earnings of $1.4 billion on revenue of $27 billion for the quarter. Profit grew more than three-fold from the $443 million the telecom company earned during the same period last year.

Verizon earned 51 cents per share, a penny higher than the median estimate of analysts surveyed by Thomson Reuters. Shares fell 2% in morning trading.

AT&T reported similar figures on Wednesday, saying its profit rose 39% to $3.4 billion on revenue of $31.2 billion.

Sprint Nextel (S, Fortune 500), the next biggest wireless competitor, is expected to have revenue of just $8 billion in the quarter. Sprint will announce its quarterly profit and sales figures on April 28.

AT&T is in the midst of seeking approval for its acquisition of T-Mobile, which would make it the largest wireless provider by far — 30% bigger than Verizon and more than three times the size of Sprint. 

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Fasten your seat belts. It could be a turbulent summer of labour unrest for Air Canada.

With all its major union contracts expired, the airline which, has only recently returned to profitability, is eager to take off in a new direction.

But a proposed low-cost carrier to vacation destinations in Europe and down south to compete with the likes of Air Transat has already set off alarm bells for Air Canada

Japan’s Nikkei 225 index was lower Friday on the back of a strengthening yen that could hurt exporters already struggling in the aftermath of last month’s devastating earthquake.

The Nikkei, one of a handful of exchanges open on the Good Friday holiday, was 0.5 percent lower to 9,639.16. Shares of major exporters slumped, including Canon Inc., by 2.3 percent; Sony Corp., by 1.5 percent; and Honda Motor Corp., down 1.1 percent.

South Korea’s Kospi index was flat at 2,198.50, and mainland China’s Shanghai Composite Index was down 0.2 percent to 3,022.17 as investors booked profits following a week where stocks generally moved up. The smaller Shenzhen Composite Index was also down, 0.3 percent to 1,278.70.

Markets in Hong Kong, the Philippines, Australia and New Zealand were closed for the holiday payday loan lenders.

On Wall Street, strong earnings from large companies like Apple Inc. and UnitedHealth lifted stocks broadly higher Thursday. Gains were spread across the market, with all 10 company groups that make up the S&P 500 index closing the day with gains.

The Dow rose 52 points to close at 12,506. The S&P 500 rose 7 points to 1,337. The Nasdaq rose 18 points to 2,820.

The euro rose $1.4555 from $1.4544 late Thursday in New York. The dollar dropped to 81.85 yen from 81.90 yen.

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Italian carmaker Fiat Spa on Wednesday said it returned to a profit in the first quarter, from a loss a year earlier, on increased sales of luxury brands and strong performance in the components business.

Fiat, which controls Chrysler with a 30 percent stake, made a net profit attributable to majority shareholders of euro29 million ($41.5 million) while revenues rose 7 percent to euro9.2 billion. Luxury brand Ferrari and the Magnetti Marelli components business saw double-digit gains.

Fiat’s Group Automobiles, the unit which owns the Fiat, Alfa Romeo and Lancia brands, saw a 2.6 percent increase in revenues to euro7 billion.

The success of the Alfa Romeo Giulietta and light commercial vehicle sales like vans offset weaker sales for passenger cars, Fiat said.

It is the company’s first quarterly earnings report since the January spinoff of the industrial unit, which makes trucks and farm and construction vehicles. CEO Sergio Marchionne said the spinoff would free up the vastly different businesses to pursue their own strategies and industrial tieups.

Shares rose 3.42 percent to euro6.48 in Milan trading.

Fiat SpA, which since the demerger is focused on cars, light commercial vehicles and related components, confirmed 2011 targets of trading profit _ or earnings before interest, taxes and one-time items _ of between euro900 million and euro1 check cash advance.2 billion on revenues of about euro37 billion.

Fiat SpA’s trading profit rose 9 percent on the year while Fiat Group Automobiles saw its trading profit fall 15 percent as European volumes declined and investments in new models increased.

The car business shipped 245,300 units, down 11 percent on the year. Fiat saw its market share in Europe slide from 7 percent to 5.3 percent as demand for alternative fuel vehicles waned.

The luxury market, however, roared back to life. Ferrari sales in its main market of North America rose 3 percent to 452 vehicles, while in China they rose 3.7 percent to 153 vehicles.

Trading profit for components was up 45 percent to euro61 million a year earlier, thanks to strong results in the Magneti Marelli and Fiat Powertrain units.

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Citigroup’s first-quarter income fell 32 percent on lower revenue from its investment banking business and a decline in consumer loans. The bank was able to set aside fewer reserves for losses as more borrowers were able to keep up with their debt payments.

The New York bank on Monday said it earned $3 billion, or 10 cents per share, compared with $4.4 billion, or 15 cents a share in the first quarter of last year. The earnings were slightly higher than the 9 cents a share estimated by analysts surveyed by FactSet.

First quarter revenue fell 22 percent to $19.7 billion from the same period last year.

As the economy improved and more of its credit card customers made payments on time, Citigroup Inc. released $3.3 billion from reserves set aside for losses, which helped boost first quarter income. The bank also set aside $3.2 billion for future losses, down 63 percent.

Revenue from investment banking fell 25 percent. Lower demand for Citigroup’s currency and interest rate investments led to a 22 percent decline in fixed income revenue to $4 billion. Revenue from underwriting municipal and investment grade debt also fell 19 percent to $851 million.

Citi’s investment banking results were weaker than those reported last week by rivals JPMorgan Chase & Co. and Bank of America Corp.

Citigroup’s revenue from interest collected on consumer loans dropped 16 percent to $12.2 billion. The decline came because Citi has been writing fewer mortgages and has been selling off some of its credit card businesses. Total consumer loans were down 35 percent to $18.1 billion, and included a 50 percent decline in total credit card loans and a 17 percent decline in real estate loans.

Revenues from Citi’s international division rose 8 percent to $4.6 billion. Overseas deposits increased 13 percent to $163 billion, and loans rose 14 percent to $126 billion.

The bank also Citi shares were unchanged at $4.41 in pre-market trading.

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China will continue tightening monetary policy for “some time,” central bank Governor Zhou Xiaochuan said a day after the world’s second-biggest economy reported inflation accelerated to the fastest pace since 2008.

“We will remove the monetary factors that are related to inflation,” Zhou said at a briefing today in the southern Chinese province of Hainan, where he’s attending the Boao Forum for Asia. “Our monetary policy will continue to move from moderately loose to prudent. This means properly tightening. The trend will continue for some time.”

China may increase the reserve requirement ratio for the nation’s banks this month in an effort to curb inflation, which the government said yesterday accelerated to 5.4 percent in March, according to Barclays Capital and Citic Securities Co. The People’s Bank of China has raised interest rates four times and increased reserve requirements six times since the third quarter of last year in a bid to rein in consumer prices.

“Policy tightening should remain firm,” Chang Jian, a Hong Kong-based economist with Barclays Capital, said by phone today. “Inflation risk remains significant. If they maintain the tightening stance and continue to withdraw liquidity and continue to control credit as well as the pace of lending, that at least gives you a higher chance of success.”

Economic Growth

China’s economy grew 9.7 percent in the first quarter, faster than the 9.4 percent median estimate in a Bloomberg survey, according to figures released by the National Bureau of Statistics yesterday.

The central bank reported a day earlier that M2 money supply grew a faster-than-expected 16.6 percent in March, and that new yuan loans for the month also exceeded economists’ estimates at 679.4 billion yuan.

China last increased the reserve requirement effective from March 25 and raised benchmark lending and deposit rates from April 6. The central bank has also imposed differentiated reserve requirements on the nation’s lenders. The reserve ratio is 20 percent for China’s biggest banks and the one-year benchmark for borrowing costs is 6.31 percent.

Zhou said today China would continue to use differentiated regulations for financial institutions based on their systemic importance. He also said there isn’t an absolute ceiling for the level of banks’ reserve requirements.

“I agree with the general view that there is no absolute line or limit for where to set the reserve requirement ratio,” Zhou said. “It depends on many conditions. When those conditions change, the force and room for reserve requirement ratio adjustments will also change.”

Inflation in March was largely driven by food costs, which rose 12 percent last month from a year earlier. Non-food inflation accelerated to 2.7 percent.

–Eva Woo, Henry Sanderson. With assistance from Huang Zhe in Beijing. Editors: Bloomberg News, Reinie Booysen

To contact Bloomberg News staff on this story: Eva Woo in Beijing at +86-10-6649-7537 or ewoo9@bloomberg.net

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Federal Reserve Bank of Richmond President Jeffrey Lacker said policy makers were too slow to withdraw monetary stimulus last decade and should tighten credit this time before inflation picks up too much.

“Four years of 3 percent inflation may not have been the worst of all possible outcomes, but I do not consider it a success,” Lacker said today in a speech in Baltimore, referring to the period from 2004 to 2007. “I hope we do better this time.”

Lacker is among a minority of Fed policy makers who have indicated they may favor a move this year to start reversing record monetary stimulus, while Chairman Ben S. Bernanke’s top lieutenants support keeping near-zero interest rates in place to help reduce unemployment. Lacker dissented four times in 2006 in favor of higher rates.

Fed officials must validate expectations of businesses that inflation will remain low “by conducting monetary policy in such a way that inflation does not accelerate,” Lacker said in the text of remarks at the University of Baltimore. “I believe we need to heed the lesson of the last recovery that inflation is capable of rising even if the level of economic activity has not returned to its pre-recession trend.”

Fed officials are starting to debate what steps to take after completing $600 billion of Treasury purchases through June, a program dubbed QE2 for the second round of quantitative easing. Policy makers were divided at their last meeting on March 15, with a “few” officials saying tighter credit may be warranted this year, while a “few others noted that exceptional policy accommodation could be appropriate beyond 2011.”

FOMC Decisions

Lacker, 55, doesn’t vote this year on decisions by the policy-setting Federal Open Market Committee, which next meets April 26-27 in Washington. He has been president of the Richmond Fed since 2004, giving him the third-longest tenure among the Fed’s 12 regional bank chiefs. He first voted on interest-rate decisions in 2006.

The Fed last began to increase interest rates in June 2004, starting a series of quarter-percentage-point rises from 1 percent that ended two years later at 5.25 percent. While “many forecasters expected inflation to diminish” because of high unemployment and low inflation excluding food and fuel costs, the opposite occurred, Lacker said.

“With hindsight, I think it is fair to say that policy makers overestimated the extent to which high unemployment would keep inflation from accelerating, and as a result, waited too long withdraw monetary stimulus,” Lacker said.

Housing Bubble

Chairman Ben S. Bernanke, who served as a Fed governor from 2002 to 2005, has defended the central bank’s interest-rate policy from last decade, though more against the criticism that it fueled the U.S. housing bubble.

The U.S. government tomorrow is scheduled to report the March change in the consumer price index. Excluding food and fuel, prices probably rose 1.2 percent from a year earlier, based on the median estimate in a Bloomberg News survey, after a 1.1 percent rise in February. Including all items, prices may have climbed 2.6 percent over 12 months, compared with 2.1 percent in the year through February, according to the survey.

Higher gasoline prices may restrain growth in consumer spending, he said. “At this juncture, futures markets are pricing in modest declines in petroleum products,” Lacker said. “If the markets are right, the effect of energy prices on consumer spending should only be temporary.”

‘Moderate’ Pace

The Fed said in its Beige Book report yesterday that the economy expanded at a “moderate” pace across much of the U.S. in February and March, led by manufacturing, with labor markets showing improvements in most regions.

The U.S. economy is “firmly in recovery mode, and the fundamentals for future growth are strong,” Lacker said. The pickup in consumer spending is “solidly grounded in improving fundamentals,” and business expansion “should make a significant contribution to growth this year,” he said.

Economists forecast the U.S. economy will expand at a 2.9 percent annual pace this year, according to the median estimate of 74 analysts in a Bloomberg News survey conducted from April 1 to April 7. That compares with a 3 percent median projection in March.

The FOMC said at its last session March 15 that the economy is on a “firmer footing” and unanimously affirmed plans to buy the Treasuries through June. Bernanke will hold his first press conference following the FOMC’s statement on April 27.

Bigger Than Forecast

The economy added a greater-than-forecast 216,000 jobs in March, and the unemployment rate fell to the lowest level in more than two years, marking a drop of a full percentage point over four months. A Labor Department report yesterday showed job openings increased in February by the most since December 2004, a sign companies are turning more optimistic about hiring.

Lacker was the fifth policy maker giving public remarks today. Fed Governor Elizabeth Duke said in Washington that the central bank is “absolutely committed” to price stability and will “do our job” to control inflation.

Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, said in Helena, Montana, that core inflation “is very low right now” and he doesn’t see many signs of price pressures.

Also, Fed Governor Daniel Tarullo said in Washington that he sees no need to either terminate the central bank’s program of large-scale asset purchases before it’s scheduled to end in June or to increase its size.

Federal Reserve Bank of Philadelphia President Charles Plosser, in a New York speech, restated his call for the central bank to adopt a formal inflation goal, saying it would be “particularly useful when we begin to unwind the extraordinary accommodation measures that we took to mitigate the crisis.”

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