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The head of the International Monetary Fund says she wants the fund to contribute euro28 billion ($36.7 billion) to a euro130 billion bailout for Greece.

Christine Lagarde said Friday that “the scale and length of the fund’s support is a reflection of our determination to remain engaged” in helping Greece.

The euro28 billion likely includes euro10 billion left over from the IMF’s contribution to Greece’s first euro110 billion bailout.

Lagarde said the IMF’s executive board would decide on the final contribution next week.

Debt-ridden Greece needs the bailout to avoid a disorderly default that could destabilize the rest of Europe.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

ATHENS, Greece (AP) _ Greece’s private creditors agreed Friday to take cents on the euro in the biggest debt writedown in history, paving the way for an enormous second bailout for the country to keep Europe’s economy from being dragged further into chaos.

Greece would have risked defaulting on its debts in two weeks without the agreement, sparking turmoil in the financial markets and sending shock waves through the other 16 countries that use the euro.

Prime Minister Lucas Papademos called the deal _ which shaves some euro105 billion ($138 billion) off Greece’s euro368 billion ($487 billion) debt load _ an important “historic success” in a televised address to the nation Friday night. “For the first time, Greece is not adding but taking debt off the backs of its citizens.”

The country said 83.5 percent of private investors holding its government debt had agreed to a bond swap, taking a cut of more than half the face value of their investments as well as accepting softer repayment terms for Greece.

The radical swap aimed to put the country’s debt-ridden economy on the road to recovery, and was a key condition to secure a euro130 billion ($172 billion) rescue package from other eurozone countries and the International Monetary Fund.

Charles Dallara, the managing director of the Institute of International Finance, which negotiated the deal with the Greek government on large investors’ behalf, described the bond swap as “the largest ever” restructuring.

“This has been painful and the pain is not over yet. But I now can see light at the end of the tunnel for the Greek economy,” Dallara told Greece’s Mega television. He estimated Greece could return to the markets “within a few years” and said that if recovery continues, “I think the risk for Greece and the risk on the eurozone will be very manageable.”

Of the investors holding the euro177 billion ($234 billion) in bonds governed by Greek law, 85.8 percent joined. The deadline for those owning foreign-law bonds was extended to March 23.

Creditors holding Greek-law bonds who refused to sign up will be forced into the deal _ breaking a taboo that the eurozone had upheld until just weeks ago.

The decision to force losses on some bondholders means that the debt relief will trigger payouts of so-called credit default swaps, a type of insurance on bonds.

The International Swaps and Derivatives Association, the private organization that rules on such cases, said its committee “resolved unanimously that a Restructuring Credit Event has occurred.”

When the debt relief plan was first announced last year, eurozone leaders and the European Central Bank worked hard to avoid a credit event because they feared the payout of credit default swaps could destabilize big financial institutions that sold them.

But since then, that prospect has started to look less threatening. The ISDA said that if triggered, overall payouts will be significantly below the $3.2 billion in net outstanding CDS contracts linked to Greece. The exact level of payouts will be determined on March 19.

“We do not foresee a significant impact of the Greek credit event on financial markets,” ISDA CEO Robert Pickel said.

The Fitch ratings agency downgraded Greece to “restricted default” over the bond swap _ a move that had been expected. Fitch was the third agency to downgrade Greece into default, after Moody’s and Standard & Poor’s. The agencies are expected to raise the country’s credit rating after the completion of the swap.

Earlier Friday, finance ministers from the 17-nation eurozone said Greece had fulfilled the conditions to get approval for the bailout next week. The IMF has set a tentative date of March 15 to discuss the size of its own participation.

The ministers also released up to euro35.5 billion ($47 billion) in bailout money to fund the debt swap. Investors exchanging bonds will receive up to euro30 billion _ or 15 percent of the remaining money they are owed _ as a sweetener for the deal and euro5.5 billion for outstanding interest payments.

European leaders hailed the deal as a seminal moment in their effort to stem the crisis and get Greece on its feet.

“The page of the financial crisis is being turned,” said French President Nicolas Sarkozy.

And Greek Finance Minister Evangelos Venizelos told Parliament Friday: “I believe everyone will soon realize that this is the only way to keep the country on its feet and give it a second historic chance that it needs.”

“A window of opportunity is opening” to reduce the country’s euro368 billion debt by euro105 billion, or about 50 percentage points of gross domestic product, he said.

However, some economists are concerned that Greece is merely buying time. The breather allows European governments and banks to strengthen their financial defenses, leaving them less vulnerable if Greece eventually cracks.

The deal and expected bailout do “more to protect Europe from Greece than for Greece itself,” said Jacob Funk Kirkegaard, research fellow at the Peterson Institute for International Economics.

Europe also has to contend with spiraling debt problems of Spain, Portugal and Ireland and Italy.

Markets, which had rallied on Thursday on expectations of a successful deal, were muted on Friday. The Stoxx 50 of leading European shares was up 0.6 percent, but the main stock index in Athens closed down 2.15 percent. The euro retreated 1.19 percent from recent highs to $1.3110.

On the streets of Athens, however, many were skeptical about the deal and pessimistic about the future. Panayiotis Theodoropoulos said the writedown was good “for them.”

“For us? Nothing. Everyone looks out for themselves. In a while the people will be living on the streets,” he said.

The debt crisis, sparked by years of overspending and waste, has left Greece relying on funds from international rescue loans since May 2010. Austerity measures including repeated salary and pension cuts and tax hikes have led to record unemployment with more than 1 million people out of work, a fifth of the labor force.

The country released statistics Friday showing the recession in the last quarter of 2011 was deeper than initially forecast, reaching 7.5 percent instead of 7 percent. The economy is expected to shrink for a fifth straight year in 2012, stagnate in 2013 and modestly expand in 2014.

____

Gabriele Steinhauser reported from Brussels. Nicholas Paphitis, Derek Gatopoulos, and Demetris Nellas in Athens and Geir Moulson in Berlin contributed to this report.

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Satellite images of an Iranian military facility show trucks and earth-moving vehicles at the site, indicating that crews were trying to clean it of radioactive traces possibly left by tests of a nuclear-weapon trigger, diplomats told The Associated Press on Wednesday.

Two of the diplomats said the crews may be trying to erase evidence of tests of a small neutron device used to set off a nuclear explosion. A third diplomat could not confirm that but said any attempt to trigger a so-called neutron initiator at the Parchin site could only be in the context of trying to develop nuclear arms.

The images, provided to the IAEA by member countries, are recent and constantly updated, said one of the diplomats.

The diplomats are nuclear experts accredited to the International Atomic Energy Agency, and all asked for anonymity to discuss sensitive information.

Iran is under growing international pressure over its nuclear program, which it insists is peaceful. Israel has warned that it may resort to a pre-emptive strike against Iran’s nuclear facilities to prevent Tehran from obtaining atomic weapons payday loans.

The IAEA has already identified the Parchin military site as the location of suspected nuclear weapons-related testing. In a November report, it said it appeared to be the site of experiments with conventional high explosives meant to initiate a nuclear chain reaction.

It did not mention a neutron initiator as part of those tests but in a separate section cited an unnamed member nation as saying Iran may have experimented with a neutron initiator, without going into detail or naming a location for such work.

In contrast, the intelligence information shared with the AP by the two diplomats linked the high-explosives work directly to setting off a neutron initiator at Parchin.

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U.K. house prices fell in February for a third month in four, as economic uncertainty weighed on demand for housing, Halifax said.

Prices (UKHB3MYR) dropped 0.5 percent from January to an average 160,118 pounds ($253,400), the mortgage unit of Lloyds Banking Group Plc (LLOY) said in a statement in London today. From a year earlier, values were down 1.6 percent.

While inflation is cooling, a recovery in consumer confidence is being kept in check by rising unemployment and concern about the impact of Europe

The nationwide average for gasoline prices hovered just above $3.74 a gallon Friday, according to the motorist group AAA.

The average price of regular unleaded gasoline ticked up three-tenths of a cent in the latest 24-hour period, marking the 24th straight increase, AAA said. A month ago, the nationwide average was $3.45 a gallon.

Gas prices are up about 14% so far in 2012. The average price is down 37.3 cents, or about 9%, from the record high of $4.11 on July 17, 2008.

Average prices for regular gasoline top $4 a gallon in California, Alaska and Hawaii. At $4.36 a gallon, Hawaii ranks as the nation’s high. Prices are within a nickel of the $4 mark in New York and Connecticut, according to AAA.

Wyoming has the nation’s lowest gas prices, averaging $3.18 a gallon.

Check gas prices in your state

Gas prices have been rising on the back of soaring oil prices, which have surged 10% over the past month amid fears that tensions with Iran will lead to an all-out war that causes a disruption in oil supplies.

Brent crude, Europe’s benchmark, hit $128.40 a barrel, while U.S. oil futures eclipsed $110 after a disputed report Thursday on Iran’s Press TV and other Middle East outlets of a pipeline explosion in Saudi Arabia.

Prices for Brent crude dropped to $125.45 and U.S. crude was at $108.50 on the NYMEX early Friday.

Signs of an improving economy have also boosted oil prices, as has the stock market. All three major indexes hit multi-year highs this week, and the S&P 500 () has risen by more than 8% in 2012.

As gas prices soar, Republican presidential candidates have tried to tie President Obama’s policies to the increase.

On Thursday, Mitt Romney said Obama "should be hanging his head" over his energy policies and accused the president of slowing domestic production. Romney advocated opening federal lands to drilling and easing regulations on fracking, a controversial policy that involves pumping water into rocks to harvest gas.

Also on Thursday, Obama delivered a speech in New Hampshire that stressed that domestic oil and gas production is at its highest point since 2003. But he also emphasized the need to develop new energy sources, as domestic production alone is not enough to keep up with U.S. demand.

The president also called on Congress to end the $4 billion in subsidies to the oil industry so as to better incentivize companies to seek out clean-energy technologies.  

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While record-low interest rates have cut income for savers, they will ultimately nurse the U.S. economy back to health, increasing returns for savers and investors alike, a top Federal Reserve official said on Thursday.

“Critics of the Federal Reserve’s accommodative monetary policy are correct that the low level of interest rates represents a strain on households who rely on income from interest-bearing assets,” Federal Reserve Governor Sarah Bloom Raskin said in a speech to the Y’s Men of Wesport/Weston.

But she said the Fed’s goal was “to strengthen the economic expansion and, over time, return the economy to sustainable rates of output growth, unemployment, and inflation.”

Ultimately, Raskin said that would lead to higher returns for stocks, real estate, businesses and retirement accounts, where the bulk of household wealth is held.

“For these other types of assets, rates of return depend primarily on the strength of the economy and how fast the economy is growing,” Raskin said.

The Fed has cut interest rates to near zero and said it will likely hold them there through 2014.

ECONOMY STILL FACING SLOW RECOVERY

Raskin said such an unprecedented period of low rates is necessary to support an economy that, while improving, is only likely to expand at a gradual pace over the coming months.

The Fed expects the U.S. economy to grow between 2.2 and 2.7 percent this year, not much different from the pace seen in the second half of 2011.

Higher gas prices may reduce household purchasing power in coming months, she said, but probably would not raise inflation expectations or inflation, which Raskin said is expected to run at or below the Fed’s long-term goal of 2 percent.

With housing still depressed and credit still hard to come by for small businesses, “the headwinds that have been restraining the expansion for some time have been easing, at best, only gradually,” Raskin said.

Raskin said low rates are also helping households, as evidenced by increased purchases of motor vehicles and other big-ticket durable goods that can be financed cheaply.

“And in many cases, households have been able to refinance their mortgages into lower-rate loans, freeing up income for other uses,” she said.

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General Motors is likely to spend more than $500 million on employee bonuses and profit-sharing based on the company’s performance last year.

GM, which made a record profit in 2011, will pay bonuses of at least $182 million to white-collar workers such as engineers, car designers and managers on Wednesday, according to a formula obtained by The Associated Press. That’s on top of $332.5 million in profit-sharing it already agreed to pay factory workers.

In the past, such payments have drawn criticism from those who believe the government shouldn’t have bailed out GM and Chrysler. But GM, which made a record $7.6 billion last year, says the payments are needed to hold on to skilled employees. It’s also keeping fixed costs down by giving bonuses instead of annual pay raises.

The bonuses will go to most of the company’s 26,000 salaried employees, many of whom make more than $100,000 a year. The bonuses will range from 8 percent of base pay to 14 percent, according to the formula.

The company would not release the percentages, nor would it say how much it will spend on the bonuses. But it’s likely the average bonus for salaried employees will be more than the $7,000 that each of GM’s 47,500 factory workers will get in March.

The white-collar bonuses are determined by a worker’s pay grade, individual performance and company metrics that measure whether GM met goals including pretax earnings, market share, cash flow and quality. This year’s salaried bonuses will be smaller than last year’s, when the company met all of its goals. A small number of top performers will get pay raises or larger bonuses, the company has said.

“It’s a pay-for-performance type approach that really drives accountability in the organization and helps employees connect their compensation with performance,” says GM spokeswoman Lynda Messina.

GM must reward employees because the labor market is starting to become competitive again, especially for computer experts, engineers and other skilled jobs, says James Stoeckmann, senior compensation specialist for World at Work, an organization of human resources executives who specialize in pay issues.

“Companies are having a hard time finding all those critical skills they need,” he says. At almost every company, white-collar bonuses are higher than those given to blue-collar workers, he says.

The U.S. spent nearly $50 billion to save GM three years ago, and some Republicans think the government should get its money back before bonuses are paid. The company nearly ran out of cash when auto sales dried up in the middle of the financial crisis. With little or no private loans available, GM needed a bailout to make it through bankruptcy protection.

The government agreed to take stock in GM in exchange for most of the debt. So far it has recouped more than $22 billion. Taxpayers still own 500 million shares of GM, or 26.5 percent of the company. If the government sold those shares at the current price of around $26, it would get about $13.2 billion. But it’s waiting for the stock price to rise before selling. Shares would have to sell for more than $53 each for the government to get all its money back, which is unlikely.

Sen. Charles Grassley, R-Iowa, a critic of the bailout, said the Obama administration needs to figure out a way to get the money back.

“As the company gives out bonuses, the Treasury Department needs to have an exit strategy for getting GM to repay the taxpayers for helping the company survive,” he said in a statement. “Without an exit strategy, GM can expect more questions and scrutiny regarding employee bonuses.”

The formula to calculate the bonus percentages was given to the Associated Press by a person familiar with GM’s compensation. The person didn’t want to be identified because the company did not make the formula public.

The company announced earlier this month that it plans to freeze its U.S. pension plan for white-collar workers and move to a 401 (k)-type plan. GM also gave salaried employees five more vacation days.

White-collar workers fared better at crosstown rival Ford Motor Co. Ford said last month that 20,000 salaried workers will get 2.7 percent pay raises on April 1, plus bonuses based on individual performance.

In addition, Ford will make profit-sharing payments of around $6,200 each to its 41,600 U.S. factory employees in March.

GM CEO Daniel Akerson has been against giving annual raises, saying the added costs limit the company’s flexibility in an economic downturn.

But that could hurt GM over time, if Ford workers get pay raises and their salaries grow far larger than those at GM, says David Whiston, auto equity analyst for Morningstar.

Ford, which borrowed billions from banks but avoided a government bailout, said the raises are needed to stay competitive with other big companies. The automaker made a $20 billion profit last year

Salaried workers at Chrysler Group LLC, which made far less money than GM or Ford, also will get profit-sharing checks. The company, which is not publicly traded, would not disclose the amounts. About 26,000 union workers at Chrysler, which also took a government bailout, will get checks of about $1,500. Chrysler made $183 million last year.

GM, Chrysler and Ford agreed to the profit-sharing for factory workers in contract talks last year with the United Auto Workers union. Most of the workers won’t get pay raises.

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White House hopeful Rick Santorum lags behind both his 2012 competitors and wealthy Americans in general when it comes to charitable giving, according to tax documents.

Santorum gave $81,500 to charity over the past four years, or 2.2% of the more than $3.6 million in total income he earned since leaving the Senate, the documents showed.

The tax returns, provided to CNN on Thursday, did not break down charitable giving by recipient.

From 2007 to 2009, Santorum’s rate of charitable giving fluctuated between 2.03% and 2.67% of his earnings.

In 2010, the rate dropped to 1.76% of his $923,411 in income. That same year, President Obama gave 14.2% of his income to charity, while Mitt Romney donated 13.8% and Newt Gingrich gave 2.6%.

Ron Paul has not released his tax returns.

Rich, Gingrich and crazy rich

According to data from the IRS and the Congressional Budget Office, taxpayers with income in excess of $500,000 donate 3.4% of their income to charity on average.

"His donation level is on the low side," said Ken Berger, the president and CEO of Charity Navigator, who also noted that research suggests religious individuals donate more than the non-religious.

"When you put it in the context of people of faith, then it really is on the low side," Berger said.

The relatively low contribution level is also a bit puzzling for a senator who championed non-profits and charitable organizations while in office.

"We should be proactive in finding ways to more fully engage the American public in charitable giving," Santorum said in a 2005 statement on the CARE Act, a bill he sponsored that sought to promote the interests of charities and provide incentives for Americans to donate.

Santorum has also come under fire for the giving practices of a charity called Operation Good Neighbor that he started more than a decade ago.

In his "founder’s letter," Santorum wrote that one of the charity’s goals was to help "break the cycle of poverty that sours the lives of too many men, women and children in our nation."

The group collected at least $2.3 million in contributions between 2001 and its termination in 2007, but only spent around 45% of total revenue on beneficiaries, according to IRS documents.

The rest went to fundraising, office space and personnel costs. In essence, the charity was spending more on itself than the people it was designed to help.

The charity, Berger said, lagged far below industry standards.

Get more from your donation to charity

"Seventy-five percent or more reaching beneficiaries is excellent, and 65% or more is okay. If you fall below 50% you’re really performing poorly," he said. "I would recommend donors flee from an organization like this."

While the Santorum campaign did not respond to calls and e-mails from CNNMoney on Thursday, the campaign did provide comment to the Washington Post, which detailed the charity’s practices in January.

"Senator Santorum was very committed to helping raise funds for Operation Good Neighbor and did so with the understanding that those funds would be used to help many organizations and families located in urban areas of Pennsylvania," Santorum campaign adviser John Brabender told the paper.

CNN’s Dana Bash contributed to this report 

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Manufacturing in the New York region expanded in February at the fastest pace since June 2010, a sign factories are propelling the expansion.

The Federal Reserve Bank of New York

China

Japan