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European confidence in the economic outlook unexpectedly worsened in February after the euro region’s recovery almost stalled in the fourth quarter.

An index of executive and consumer sentiment in the 16 nations using the euro slipped to 95.9 from a revised 96 in January, the European Commission in Brussels said today. The economic recovery may fail to gather strength for most of 2010, the commission said in a separate report.

European domestic demand remains weak and it’s not yet clear to what extent the euro region will benefit from a global recovery, the commission said. As governments seek to bolster the recovery, they also are trying to stem investor concern about widening budget deficits in Greece and other nations, which is pushing up bond yields.

“There are still some dark clouds in the air,” European Union Economic and Monetary Affairs Commissioner Olli Rehn said today at a press conference in Brussels. “Clearly, turning the European economy back on a strong and sustainable path is now our overriding objective.”

The February drop in the confidence index was the first in 11 months. Economists had projected an increase to 96.4 from a previously reported January reading of 95.7, according to the median of 25 forecasts in a Bloomberg News survey.

The euro declined against the dollar and was at $1.3489 as of 1:12 p.m. in London, down 0.4 percent. The yield on the German 10-year bond fell 2 basis points to 3.11 percent.

Cautious Outlook

The German economy, Europe’s largest, may fail to grow in the three months through March before expanding 0.3 percent in the following two quarters, the commission forecast. France may grow 0.4 percent in the first quarter and stall in the second. The U.K., which isn’t part of the euro area, is seen expanding 0.2 percent in both quarters.

The commission sees the euro-area economy expanding 0.7 percent this year after a 4 percent contraction in 2009, unchanged from its previous forecast in November. In the fourth quarter, the economy expanded just 0.1 percent.

Carrefour SA doesn’t “see any change in the European environment for the next six months at least,” Chief Executive Officer Lars Olofsson said on Feb. 19, after Europe’s largest retailer reported a 70 percent drop in full-year profit.

Separate data today showed that loans to households and companies in Europe declined in January from a year earlier after the economic expansion curbed demand for credit. German unemployment increased for a second month in February.

Deficit Woes

Concern about Greece’s ability to finance its deficit and debt has roiled financial markets since the government revealed it had a budget gap of 12 guaranteed approval cash loans.7 percent of GDP last year. That’s more than four times the limit allowed for countries using the euro and the highest in the 27-nation EU.

Standard & Poor’s said late yesterday that it may lower its BBB+ rating on Greece by the end of March and Moody’s Investors Service said today that it may reduce its A2 grade in a few months.

The commission said its deficit forecasts remain “broadly unchanged” from its November assessment, when it projected the region’s average budget gap would widen to 6.9 percent of GDP in 2010. All euro-area nations will breach EU deficit limits this year and next, the commission forecast.

It also said there’s a possibility that the impact of sliding sovereign bonds could be “broader, weighing further on the recovery” by pushing up financing costs.

Euro-Area Inflation

Euro-area inflation may accelerate to 0.8 percent in the current quarter and 1.3 percent in the second quarter, according to the commission. For the full year, the commission sees inflation averaging 1.1 percent, compared with 0.3 percent in 2009. In the confidence report, a gauge of consumers’ price expectations over the next 12 months rose to the highest since March 2009.

The European Central Bank, which aims to keep inflation just below 2 percent, earlier this month kept borrowing costs at a record low of 1 percent. The Frankfurt-based central bank will decide next month on a further “gradual” phasing-out of emergency measures introduced to fight the economic crisis, ECB council member George Provopoulos said.

“It’s premature to talk about a self-sustaining, jobs- creating recovery,” said Martin Van Vliet, an economist at ING Group in Amsterdam. The confidence data “highlight the need for the ECB to tread carefully in unwinding unconventional stimulus and to keep interest rates firmly on hold for the time being.”

Companies across Europe are already seeking ways to expand in faster-growing economies to help boost sales. Paris-based Pernod Ricard SA, the world’s second-largest liquor maker, said on Feb. 18 that sales from China will shortly overtake those in Spain, and emerging markets such as Russia are “starting to turn around.”

“The question is how robust the global cycle will prove to be and how much EU economies will benefit from it,” the commission said. “A rather cautious export outlook is therefore warranted.”

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Elizabeth Washko has been named managing shareholder at the Nashville office of labor law firm Ogletree, Deakins, Nash, Smoak & Stewart PC.

She replaces Tom Davis, who had held the position for five years.

“As managing shareholder, I look forward to growing the Nashville office and continuing to provide our clients with the best and most responsive legal services.” Washko said in today’s announcement.

In addition to representing employees, Washko has helped companies create employment policies, conducted harassment investigations and provided training on employment issues.

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U.S. venture investment activity in 2009 was as low as its been since 1997, according to a report from the National Venture Capital Association and PricewaterhouseCoopers.

The $17.7 billion invested was down 37 percent from 2008 and the 2,795 deals was down by 30 percent.

There was $6.98 billion invested in Silicon Valley companies, about 40 percent of the U.S. total, down from $10.7 billion in 2008. That is the lowest valley total since the end of the tech bust in 2003 when only $6.4 billion was invested.

The number of deals in the Bay Area dropped to 863 from 1,232 in 2008.

By sector, the report said:

— Biotechnology investing declined in 2009 by 19 percent in both dollars and deals, but was the largest investment sector for the year in terms of dollars with $3.5 billion going into 406 deals.

— The medical device sector fell 27 percent in dollars and 19 percent in deals in 2009, finishing the year as the third largest sector with $2.5 billion going into 309 deals.

— The life sciences sector (biotech and medical devices combined) accounted for 34 percent of all venture capital dollars invested in 2009 compared to 28 percent in 2008 fast cash advance.

— In the software sector, venture capitalists invested $3.1 billion into 619 deals, a 40 percent decline in dollars and a 35 percent decline in deals from 2008. Software was the largest single industry category in terms of deal volume and second largest behind biotechnology in terms of dollars.

— Clean technology investing saw a significant decline in 2009 with $1.9 billion invested in 185 deals. This is a 52 percent decrease in dollars and a 31 percent decline in deal volume from 2008.

— Investing in Internet-specific companies dropped 39 percent to $2.9 billion. There were 629 deals in 2009, down 30 percent.

The industries with the biggest declines were telecommunications (down 67 percent); semiconductors (down 53 percent); and industrial/energy (down 50 percent). The media and entertainment industry decreased 32 percent in terms of dollars and 38 percent in terms of deals with $1.2 billion going into 251 deals in 2009.

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Asset bubbles are the No. 1 threat to financial stability in Asia, meaning policy makers should avoid an excessive focus on inflation, said Norman Chan, the head of Hong Kong’s de facto central bank.

Asia’s experience in the past 20 years shows the biggest threat “is from asset bubbles, rather than inflation,” Chan, chief executive of the Hong Kong Monetary Authority, said in a speech posted on the organization’s Web site today. “I’m not saying that Asia does not need to worry about or guard against inflation, but I think we should focus more on the risk of asset bubbles forming and the associated damages.”

Chan said more than HK$640 billion ($82.6 billion) flowed into Hong Kong since October last year, helping to drive up housing prices for 10 straight months. Donald Tsang, the city’s chief executive, said Nov. 13 that he was “scared” that money flowing into Asia because of low interest rates in the U.S. could lead to another crisis in the region.

“Many Asian governments are concerned about asset-bubble risks,” said Irina Fan, an economist at the Hong Kong-based Hang Seng Bank Ltd. “Not only are low interest rates in the U.S. and the euro zone fueling concerns, many governments are also pumping money into their markets.”

Chan didn’t say that Hong Kong or Asia had bubbles. It’s difficult to assess when they’re forming, he said.

‘Extremely Loose’ Policies

“If it’s considered that bubbles have started to form, we should adopt appropriate and strong measures to prevent the bubbles from expanding too much,” Chan said in his Chinese- language speech.

Financial officials in Japan and China, Asia’s two largest economies, warned last month that the Federal Reserve’s interest-rate policy risks spurring speculative capital that may inflate asset prices and derail the global economic recovery.

“The current extremely loose global monetary policies and huge capital inflows provide the ideal conditions and ingredients for Asian asset bubbles to grow, so the potential risk of asset bubbles is not small,” Chan said No teletrak payday loan.

Hong Kong’s monetary policy is limited by the local dollar’s peg to the U.S. currency, meaning that the city’s interest rates track those of the U.S.

Prices for existing Hong Kong homes rose 29 percent this year, according to the Centa-City Leading Index, a weekly measure developed by Centaline Property Agency Ltd. and the City University of Hong Kong.

Betting on Property

Hang Lung Properties Ltd. Chairman Ronnie Chan said Dec. 4 that Hong Kong’s home market is a “good bet,” joining billionaire Lee Shau-kee in forecasting rising prices. Sun Hung Kai Properties Ltd. Vice Chairman Raymond Kwok said Dec. 3 that property prices in Hong Kong are still “reasonable.”

In October, the city tightened down-payment requirements for luxury homes for the first time since 1991 to curtail speculation.

Hong Kong should consider tightening lending rules to stop rapid credit growth and asset-price gains from damaging the economy, the International Monetary Fund said Dec. 3.

“Strong capital inflows and the resultant large liquidity overhang in the financial system could potentially lead to rapid credit growth, fueling asset markets and creating macroeconomic volatility,” the IMF said. “Countervailing prudential measures could play a role in mitigating the credit-asset price cycle.”

In Hong Kong, consumer prices advanced at the fastest pace in nine months in October as the government ended subsidy programs and the city’s economic recovery encouraged spending. The increase was 2.2 percent from a year earlier. In China, consumer prices rose in November for the first time in 10 months.

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The Dallas real estate community lost an industry icon with the death Saturday of Henry S. Miller Jr.

Miller Jr., who was 95, greatly expanded the real estate company his father started in 1914. He joined Henry S. Miller Co. in 1946, became chairman and CEO in 1960, and is known for building the firm's expertise in brokerage, property management, as well as the development of shopping centers and office buildings.

Under Miller Jr.’s leadership, the Henry S. Miller Co. helped launch the careers of many notable real estate professionals who went on to form their own companies, including Roger Staubach, Herb Weitzman and Wayne Swearingen.

Henry S. Miller III said Sunday that his father pioneered the concept of specialization of services in different areas of commercial real estate.

“Before, it was all generalists,” Miller III said. “We were the first real estate company to break it up into divisions,” such as retail, multifamily, industrial, office and investment properties.

“We contended that that was the best way for people to really become expert in their fields,” Miller III said.

Other Henry S. Miller Co. innovations included establishing pension and profit-sharing trusts for employees and using psychological assessments for prospective employees, as well as formulizing training for new brokers, according to “The Book,” profiles of Dallas real estate pioneers published in 2008 by the North Texas Commercial Association of Realtors.

Miller III said his father’s business success began with his philosophy of treating everybody equally.

“He was so humble,” Miller III said. “He couldn’t have done all the things that he did if he had an ego that got in the way. He never claimed credit for anything, so it was easy for other people to work with him. They didn’t feel like somebody else was competing with them.”

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Roughly 9 million U.S. households have no checking or savings account while many who do have bank accounts struggle to build credit histories, according to a Federal Deposit Insurance Corp. survey released Wednesday.

An additional 21 million households with checking accounts are considered "underbanked" because they use problematic alternatives such as payday loans or overdraft programs that provide quick cash but carry fees or triple-digit interest rates.

"In addition to paying more for basic transaction and credit financial services, these households may be more vulnerable to loss or theft and often struggle to build credit histories and achieve financial security," according to the report.

According to the survey roughly 7.7 percent of U.S. households have no bank accounts, or are "unbanked," while 17.9 percent are underbanked.

For the St. Louis metro area, the percentage was 7.5 percent and 22.4 percent, respectively.

The survey also reported that minorities were more likely to have no checking account or use problem alternative services. Approximately 21.7 percent of U.S. black households are unbanked, while 19.3 percent of Hispanic households are unbanked. Roughly 3.5 percent of Asian and white households have no checking or savings accounts payday loans.

An estimated 31 percent of black households are underbanked, while 24 percent of Hispanics are underbanked.

The disparity was greater in St. Louis: 31 percent of the area’s black households are unbanked, while 34 percent are underbanked. In contrast, the figures were 1.1 percent and 19.2 percent, respectively, for the area’s white, non-Hispanic households.

St. Louis’ unbanked percentage among black households was the highest among 20 metro areas studied by the FDIC, though seven areas didn’t report a breakdown on black households. Detroit was the second-highest at 30 percent, followed by Chicago’s 25.5 percent.

"The report shows that banks in the St. Louis region have done a poor job reaching out to African Americans," Mira Tanna, assistant director of the Metropolitan St. Louis Equal Housing Opportunity Council, said in an e-mail.

"It is time for banks to offer equitable access to credit to African Americans in the St. Louis region."

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A key measure of consumer confidence gained slightly in November, snapping a two-month declining streak, a research group said Tuesday.

The Conference Board, the New York-based research group, said its Consumer Confidence Index rose to 49.5 in November from an upwardly revised 48.7 in October.

Economists were expecting the index to dip to 47.5, according to a Briefing.com consensus survey. The figure, which is based on a survey of 5,000 U.S. households, is closely watched because consumer spending makes up two-thirds of the nation’s economic activity.

The overall index remains at historically low levels. A reading above 90 indicates the economy is solid, and 100 or above signals strong growth.

Despite the modestly upbeat figure, Lynn Franco, director of the Conference Board, said "consumers are entering the holiday season in a very frugal mood."

The index component that evaluates consumers’ judgment of the present situation was virtually unchanged, slipping to 21 in November from 21.1 the previous month. The measure stands at the lowest level since the 17.5 measured in February 1983.

Consumers’ assessment of the job market also continued to deteriorate. The percentage of those claiming that jobs are currently hard to get reached a new high of 49.8%, while the number of consumers claiming that jobs are "plentiful" hit a new low at 3.2%.

Employers continued to cut jobs from their payrolls in October, as the unemployment rate rose to 10.2% and hit another 26-year high last month, according to a report from the Labor Department.

The percentage of consumers expecting their incomes to increase declined to 10% from 10.7%.

Despite their current outlook, however, consumers are optimistic about a recovery.

The expectation index, which measures consumers’ outlook over the next few months, climbed to 68 payday loan no fax no credit check.5 from 67 last month.

Franco said the "moderate improvement was a result of a decrease in the percent of consumers expecting business and labor market conditions to worsen, as opposed to an increase in the percent of consumers expecting conditions to improve."

While the percentage of those expecting the job market to improve edged down to 15.2% from 16.8%, the percentage of consumers expecting fewer jobs dropped to 23.1% from 26.1%.

Likewise, the percentage of consumers expecting an improvement in business conditions over the next six months dropped to 20% from 20.8%, but those expecting conditions to worsen decreased to 15.1% to 18.2%.

But even the "underlying data is abysmal," said Mark Vitner, senior economist at Wells Fargo.

"Fewer people think things will get worse, which isn’t very comforting. You’d have to be a real pessimist to think things will get worse than they already are," said Vitner, adding that the consumers’ assessment of the economy might be "overly bleak."

Given the amount of stimulus the government has pumped into the economy, Vitner said he is "disappointed that this is all we’re getting in consumer sentiment for economic recovery."

For a healthier reading, Vitner said consumers need to believe jobs will be created and incomes will rise so they will increase spending.

The data followed a government report that said GDP, the broadest measure of economic activity, rose at an annual rate of 2.8% in the third quarter of this year, less than the 3.5% it originally reported. 

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Hitachi Ltd, Japan’s biggest electronics firm by revenues, plans to raise up to 400 billion yen ($4.5 billion) by issuing new shares and convertible bonds to shore up its battered capital base, two sources familiar with the matter said.

The sources, who asked not to be identified ahead of an official announcement anticipated as early as Monday, said Hitachi plans to sell about 300 billion yen worth of shares and another 100 billion yen in convertible bonds.

The public share offering would be its first in 27 years.

No one could be immediately reached at Hitachi for comment.

Faced with its fourth straight year of losses, Hitachi’s shareholders’ equity ratio has slipped to just below 11 percent, roughly half that of rival NEC Corp, which earlier this month announced it would raise up to $1.5 billion.

The ratio is calculated by dividing shareholders’ equity by total assets and is a measure of financial strength.

Issuing 300 billion yen worth of stock at Friday’s closing price of 294 yen would boost Hitachi’s shares outstanding by about 30 percent.

Hitachi, a sprawling conglomerate with more than 900 group firms, is trying to restructure unprofitable businesses while shifting resources to its power operations, which include nuclear power plants, railway systems, elevators and batteries for hybrid cars.

Some of the funds raised would help pay for this group restructuring, the sources said.

Hitachi launched a $3 billion bid earlier this year to make five listed units, including magnetic tape maker Hitachi Maxell

and plant engineering firm Hitachi Plant Technologies Ltd, wholly-owned.

Hitachi also must shoulder an investment of about 80 billion yen to pave the way for a merger of Renesas Technology — its chip venture with Mitsubishi Electric — and chipmaker NEC Electronics next year.

Massive losses have also taken their toll. Hitachi lost 787 billion yen in the past business year ended in March, a record for a Japanese manufacturer, and is forecasting a loss of 230 billion yen in the current year to March 2010.

The share and convertible bond offering will mark the first major step by Takashi Kawamura, a veteran of the power business who took over as president in April, to shore up the finances.

Hitachi will be joining a rush of Japanese companies raising money from the stock market following a recovery in the benchmark Nikkei average, which has rallied some 40 percent since hitting a low for the year in March. 

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The unemployment insurance bill that President Obama signed Friday won’t just help the jobless and the homebuyer. It also includes a long-awaited break for businesses that will let them quickly turn their recent losses into cold cash.

The bill will let all businesses apply their losses from either 2008 or 2009 to any five years prior to 2008. By doing so, they can get a refund from the IRS on the taxes they paid for those five years.

A loss is defined as the amount by which a company’s tax deductions exceed its gross income.

Under current law, the so-called "net-operating loss carryback" is only allowed for two years.

There are only two restrictions to the new provision. The first is that no business that has accepted funding from the Troubled Asset Relief Program (TARP) would be eligible for the break. And the second is that any refunds for taxes in the fifth year would be reduced by 50%.

The provision is estimated to cost $10.4 billion over 10 years, according to the Joint Committee on Taxation.

Businesses have been angling for this break throughout the recession. And they expected it to come a lot earlier. A similar measure was proposed for inclusion in the $787 billion stimulus package passed in February. But it ended up being watered down so that only small businesses with gross revenue of $15 million or less could qualify.

While those small businesses represent about 98% of companies, they only represent roughly 5% of taxable income, said Clint Stretch, managing principal of tax policy at Deloitte, at the time.

Not surprisingly, the estimated cost of that provision in the stimulus bill was considerably lower, just under $1 trillion.

Who is likely to benefit most

While most businesses have suffered during the downturn, those in the hardest hit industries are going to enjoy the biggest break.

"The homebuilders and banks that have never taken TARP money are the most obvious beneficiaries," said Anne Mathias, director of research at Concept Capital’s Washington Research Group, in a research note.

But she also noted others in line to benefit include semiconductor companies, materials companies, retailers and print media companies.

While an overwhelming majority of lawmakers voted for the overall bill, not all lawmakers are happy with the provision.

Calling it a "corporate giveaway, Rep. Lloyd Doggett, D-Texas, said, "This is a textbook example of how not to deal with the economic challenges facing our country," according to a CongressDaily report on Thursday.

A supporter of the provision, House Ways and Means Select Revenue Measures Subcommittee Chairman Richard Neal, D-Mass, said it would help businesses hard up for cash. "It will provide quick capital at a time when it is nearly impossible to find," Neal said.

The quid pro quo

One way the legislation seeks to pay for the cost of the tax breaks is to delay the implementation of a tax relief provision for multinational companies that was supposed to be enacted in 2011. Under the bill, it will now be enacted in 2018.

The tax relief measure is intended to create more of an incentive for multinationals to invest in the United States. And the way it is structured it would benefit financial services companies the most.

The delay in implementation is expected to raise $20.1 billion over 10 years, the JCT estimates.

Multinationals aren’t happy about it but they haven’t fought the measure because "they have bigger fish to fry," such as the potential loss of their ability to defer paying U.S. tax on income they haven’t brought back to U.S. soil, said Joanne Thornton, director of international research at Concept Capital, in her research note.

There is also a possibility that the delay in the measure could become permanent in part because it will be a tempting revenue raiser to pay for other legislation.

The House health reform bill, for example, already calls for a full repeal of the multinational tax relief measure for a savings of $26.1 billion over 10 years.

Now, Thornton said, "there will be a $20.1 billion hole in the health care bill."

Anticipating that the unemployment bill would pass, House lawmakers have already proposed another measure to compensate, which potentially could raise nearly $24 billion. But they’re still negotiating the legislative language and that could reduce how much the measure raises.

– CNN’s Deirdre Walsh contributed to this report 

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Kraft faces a tougher task winning over Cadbury shareholders in its bid battle after disappointing results late Tuesday cut analyst estimates of what it could afford to pay for Cadbury.

Kraft’s results, released after the market close, reinforce the view it will rubber stamp an original offer and turn the bid hostile, before using a $9 billion bridge loan to sweeten the cash element of its offer at a later date, they added.

Pablo Zuanic at broker JP Morgan said Kraft’s results were likely to cap any improvement in its offer.

“Re: the Kraft bid, we now assume a lower price on lack of competing bids, lower synergy assumptions and our growing belief Kraft could walk away… We doubt Kraft will go over 780 pence,” he added.

Kraft launched a cash-and-shares offer for the British confectionery group in early September which Cadbury promptly rejected, and by late September the UK Takeover Panel ruled that Kraft had until November 9 to make a formal binding bid for Cadbury.

The initial approach was priced at 745p a Cadbury share, or 10.2 billion pounds ($16.8 billion), but the fall in Kraft shares make it presently worth around 733p, against a current Cadbury share price of around 776p.

VALUE MAY DIP

The value of Kraft’s offer - some 60 percent in new Kraft shares - is likely to dip further when Kraft shares open later on Wednesday. Kraft shares were off 2.7 percent at 18.23 euros in early European trading.

For current values based on the latest share prices, click on.

One Cadbury top-ten investor has indicated to Reuters that a Kraft bid of 820p “certainly stacks up” and would be looked at seriously, while some brokers such as Credit Suisse still see Kraft having to pay 850p to win Cadbury.

“We believe Kraft and Cadbury are still far apart on valuation, so that offer when it comes will be hostile,” said analyst Graham Jones at broker Panmure Gordon.

He added that Kraft will be able to raise the cash level of its bid to 400p a Cadbury share from 300p after raising $9 billion of bridge finance, but its lower share price is unlikely to help its cause.

Although Kraft beat earnings expectations, it reported weaker than expected third-quarter revenue and cut its full-year 2009 sales growth forecast to about 2 percent, from 3 percent previously, pushing its shares down in after-hours trading.

Panmure’s Jones point out Kraft’s results disappointed on sales growth for the fourth quarter in a row, with underlying sales only up 0.5 percent compared to Cadbury’s impressive 7 percent third-quarter growth, as reported last month.

Other analysts said this reflected the description of Kraft by Cadbury Chairman Roger Carr as a “low growth conglomerate business model,” in a September letter to Kraft’s CEO Irene Rosenfeld emphasizing why Cadbury was rejecting Kraft approach. 

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