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St. Louis bargain hunters who love T.J. Maxx and Marshalls will soon have another retail chain to pick from.

The nation’s second-largest off-price retailer — Ross Stores — is entering this market with at least two Ross Dress for Less stores already in the works. The Pleasanton, Calif.-based company has signed leases to open in the shuttered Linens ‘n Things locations in Chesterfield and Fairview Heights. And retail brokers say the chain is still looking for more locations in the area.

The store in Chesterfield Commons is expected to open in March 2012. And the one at the Lincoln Place Shopping Center in Fairview Heights is also slated to open next year.

Ross Dress for Less has been rapidly growing in recent years, adding about 30 stores in the last year for a total of 998 stores as of May. In 2008, it had 838 stores. (By comparison, T.J. Maxx had about 923 stores at the end of 2010. It is part of the largest off-price retailer because the same company also owns Marshalls.)

Ross currently operates in 27 states, mostly in southern and western parts of the country unsecured personal loans. But it now is making inroads to the Midwest.

When I contacted the company this week, it would only say in an email that it was indeed opening locations in Illinois, but did not provide any more details.

According to its website, Ross Dress for Less offers in-season, name brand and designer apparel, accessories, footwear and home fashions for the whole family. It says its prices are 20 to 60 percent off department and specialty store prices.

It’s able to keep prices down by negotiating with manufacturers, buying opportunistically, and having “no frill” stores with simple displays and a centralized check-out.

Also, it buys different merchandise for different stores. So if you see something you like in one of its stores in California, you won’t necessarily find it here in one of the upcoming St. Louis stores.

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Purchases of new houses probably held close to a record low in April, showing the real-estate market remains a weak link in the U.S. expansion, economists said before a report today.

New homes sold at a 300,000 annual pace last month, the same as in March, according to the median forecast of 75 economists surveyed by Bloomberg News. Purchases sank to a 270,000 pace in February, the weakest in 48 years of data.

The prospect that foreclosures will keep driving down property values means that buyers may continue to shun new houses in favor of previously owned dwellings, hurting builders like D.R. Horton Inc. Unemployment at 9 percent, stagnant wages and credit restrictions add to the headwinds, signaling a housing recovery will take years to unfold.

“Until that overhang of existing homes works its way down, new-home sales will remain depressed and construction as well,” said Steve Blitz, a senior economist at ITG Investment Research Inc. in New York.

The Commerce Department’s report is due at 10 a.m. in Washington. Estimates in the Bloomberg survey ranged from 280,000 to 320,000.

Stocks of homebuilders have underperformed the broader market. The Standard & Poor’s Supercomposite Homebuilders Index has fallen 1.4 percent so far this year, compared with a 4.7 percent gain for the S&P 500 Index. (SPX)

‘Struggle’ Through 2012

Demand for new houses will remain weak into next year, said Bill Wheat, chief financial officer of Fort Worth, Texas-based D.R. Horton, the second-largest U.S. homebuilder by revenue. “We feel it could still be a struggle in 2012.”

Builders are cutting back as a result. Housing starts fell 11 percent in April to a 523,000 annual pace, the second-weakest reading since April 2009’s record low, figures from the Commerce Department showed last week.

One reason for the slump is growing interest from investors in buying distressed properties. Previously owned homes sold at a 5.05 million annual rate in April, down 0.8 percent from the prior month, data from the National Association of Realtors showed May 19. All-cash deals accounted for 31 percent of transactions, and distressed properties, including foreclosures and short sales, made up 37 percent, the group said.

The supply of existing houses will probably remain an issue for builders. CoreLogic Inc. in March estimated about 1.8 million homes were more than 90 days delinquent, in foreclosure or bank-owned, a so-called “shadow inventory” set to add to the unsold supply of 3.87 million previously owned homes already on the market.

Sinking Share

As distressed transactions have played a bigger role, new- home sales have shrunk as a share of total sales. They accounted for 5.6 percent of the market in March, down from 16 percent at their peak in July 2005.

Foreclosures have weighed on home prices. The S&P/Case- Shiller index of property values in 20 cities fell 3.3 percent in February from a year earlier, the biggest 12-month decrease since November 2009, the group said last month. The gauge is down 33 percent from its July 2006 peak.

In addition to the drop in values, persistent joblessness may be keeping potential buyers away. The 9 percent unemployment rate last month, almost two years into an economic recovery, compares with an average of 4.8 percent in the three years before the recession began.

That’s helping damp wages. Average hourly earnings for all workers rose 1.9 percent in April from a year earlier compared with a 3.4 percent gain in the 12 months through December 2007, when the recession began, according to Labor Department data.

Douglas Yearley Jr., chief executive officer at Toll Brothers Inc. (TOL), the largest U.S. luxury-home builder, last week said the spring home-selling season has been “disappointing” and that “people are still scared.”

Bloomberg Survey ==================================================== New Home New Home Richmond Sales Sales Fed ,000’s MOM% Index ==================================================== Date of Release 05/24 05/24 05/24 Observation Period April April May —————————————————- Median 300 0.0% 9 Average 301 0.2% 8 High Forecast 320 6.7% 11 Low Forecast 280 -6.7% 1 Number of Participants 75 75 11 Previous 300 11.1% 10 —————————————————- 4CAST Ltd. 303 1.0% — ABN Amro 306 2.0% — Action Economics 295 -1.7% — Aletti Gestielle 310 3.3% — Ameriprise Financial 305 1.7% 6 Banesto 300 0.0% — Bank of Tokyo- Mitsubishi 310 3.3% — Bantleon Bank AG 310 3.3% — Barclays Capital 305 1.7% — BBVA 295 -1.7% 11 BMO Capital Markets 300 0.0% 10 BNP Paribas 310 3.3% — BofA Merrill Lynch 315 5.0% — Briefing.com 290 -3.3% — Capital Economics 300 0.0% — CIBC World Markets 300 0.0% — Citi 290 -3.3% — ClearView Economics 300 0.0% — Commerzbank AG 300 0.0% — Credit Agricole CIB 303 1.0% — Credit Suisse 290 -3.3% — Daiwa Securities America 320 6.7% — DekaBank 290 -3.3% — Desjardins Group 290 -3.3% — Deutsche Bank Securities 300 0.0% — DZ Bank 280 -6.7% — Exane 310 3.3% — Fact & Opinion Economics 300 0.0% 8 First Trust Advisors 310 3.3% — FTN Financial 295 -1.7% — Goldman, Sachs & Co. 285 -5.0% — Helaba 295 -1.7% — HSBC Markets 300 0.0% — Hugh Johnson Advisors 280 -6.7% — Ibersecurities — — 1 IDEAglobal 310 3.3% — IHS Global Insight 286 -4.7% — Informa Global Markets 295 -1.7% — ING Financial Markets 300 0.0% 8 Insight Economics 300 0.0% — Intesa-SanPaulo 310 3.3% — J.P. Morgan Chase 305 1.7% — Janney Montgomery Scott 300 0.0% — Jefferies & Co. 295 -1.7% — Landesbank BW 290 -3.3% — Manulife Asset Management 305 1.7% — Maria Fiorini Ramirez 305 1.7% — MET Capital Advisors 310 3.3% — MF Global 285 -5.0% — Mizuho Securities 303 1.0% — Moody’s Analytics 290 -3.3% — Morgan Keegan & Co. 310 3.3% — Morgan Stanley & Co. 310 3.3% — National Bank Financial 300 0.0% — Natixis 307 2.3% — Nomura Securities 305 1.7% — OSK Group/DMG 300 0.0% — Parthenon Group 295 -1.7% — Pierpont Securities 315 5.0% — PineBridge Investments 312 4.0% 11 PNC Bank 295 -1.7% — Raymond James 305 1.7% — RBC Capital Markets 310 3.3% — RBS Securities 300 0.0% — Scotia Capital 310 3.3% — Societe Generale 287 -4.3% — Standard Chartered 310 3.3% — State Street Global Markets 300 0.0% 9 Stone & McCarthy Research 305 1.7% — TD Securities 290 -3.3% 5 UBS 280 -6.7% — University of Maryland 300 0.0% — Wells Fargo & Co. 310 3.3% — WestLB AG 306 2.0% — Westpac Banking Co. 300 0.0% 10 Wrightson ICAP 300 0.0% 10 ====================================================

To contact the reporters on this story: Bob Willis in Washington at sbwillis@bloomberg.net

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International Monetary Fund Managing Director Dominique Strauss-Kahn’s arrest is an embarrassment that won’t derail attempts to bolster aid for Greece as officials head to Brussels for crisis talks, economists said.

Strauss-Kahn, 62, had been scheduled to meet German Chancellor Angela Merkel today and then attend discussions with euro-area finance ministers in Brussels tomorrow as officials consider further support to stave off a Greek default. He has been charged with attempted rape and a criminal sex act on a woman in a New York hotel. Strauss-Kahn denies the charges.

“Its incredibly embarrassing, and not the IMF’s or Dominique Strauss-Kahn’s finest hour, but I don’t think this ought to undermine what’s going on,” Peter Westaway, chief European economist at Nomura International Plc in London, said in an interview. “I don’t think it will affect negotiations on Greece. In the end, issues for Greece and policy making are more important than that and they’ll carry on.”

European officials are working to prevent the region’s first default as Greek ministers plead for terms to be relaxed on 110 billion-euros ($155 billion) of aid from the IMF and European Union in a debt crisis that has also engulfed Ireland and Portugal. Economists said that talks to reconsider Greece’s aid terms are taking place between institutions rather than individuals and so can endure such turmoil.

“It’s not a fatal blow to the Greek situation,” James Nixon, chief European economist at Societe Generale in London, said in an interview. “Any of these negotiations are larger than a single person.”

EU-Led Aid

The Greek government said in a statement that it “operates institutionally and continues without interruption implementing the program for the country to exit the crisis.” The EU has led efforts to aid Greece and has contributed two-thirds of the funds committed to the rescue of the nation’s economy.

The IMF will be represented at Monday’s euro-area finance ministers’ meeting by Deputy Managing Director Nemat Shafik, who oversees the organization’s work in a number of EU nations, IMF spokesman Bill Murray said in an e-mailed statement today.

Seventeen nations use the euro.

Greece is seeking an extension to the loans and has argued Europe should issue common bonds to stem the region’s fiscal crisis. Eighty-five percent of those surveyed last week in a Bloomberg Global Poll said the country won’t honor its debts, with majorities predicting the same fate for Portugal and Ireland.

Greek Position

Greek Prime Minister George Papandreou on May 13 opposed a debt restructuring, appealing to claims made by the IMF that the country’s debt “is sustainable.” Germany opposes a common-bond issue, saying such a move would weaken member states’ incentives to cut their deficits.

It’s too early to say whether Greece needs more help with its debt crisis, though “extra measures” may be needed if the country can’t return to financial markets next year as planned under the European-led aid program agreed last year, German Finance Minister Wolfgang Schaeuble said in an interview with ARD television in Berlin.

It’s “disappointing” that Strauss-Kahn’s meeting with Merkel is cancelled because the IMF had been pressing for stronger measures that may involve the possibility of a restructuring of Greek debt, Societe General’s Nixon said.

“The meeting could have been quite important in injecting some realism in the discussions and presumably now that voice won’t be heard,” he said. “The IMF have been pushing for a more realistic position, and presumably the gravity of that voice has been lost.”

‘Leadership Vacuum’

Eswar Prasad, a senior fellow at the Brookings Institution in Washington, said that Strauss-Kahn’s arrest may still unsettle investors at a time of tension because of the region’s debt crisis.

“Just the perception that DSK’s departure could create a leadership vacuum at the IMF and shift the institution’s attitude towards Greece and other weak European countries may be enough to roil markets and raise uncertainty at a vulnerable time for the euro zone,” he said.

Hotel Incident

The charges against Strauss-Kahn stem from an incident that allegedly occurred yesterday against a 32-year-old female at a Sofitel hotel in midtown Manhattan, the New York Police Department said in an e-mailed statement early today. He will appear in a Manhattan court later today, police Deputy Commissioner Paul Browne told BBC television in an interview.

Strauss-Kahn played a key role in efforts to stem the European debt crisis which started last year in Greece, with a pledge to contribute about a third of future bailouts in the region by the EU. His term at the IMF is scheduled to expire next year. Speculation in France had mounted that he would leave early to stand for president.

The charges against him won’t affect moves to extend aid to Portugal, which is implementing austerity measures to qualify for an international aid package of as much as 78 billion euros from the EU and IMF, said Gilles Moec, European economist at Deutsche Bank AG.

“The progress can continue and there should not be a change in its dynamics,” he said in an interview.

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Greece said it has no plans for a debt restructuring even as German officials openly discuss the possibility and investors charge a record amount to insure the country’s obligations.

“Restructuring is not an issue we’re discussing,” Greek Finance Minister George Papaconstantinou said in an April 16 interview in Washington. “The pain and the cost” of doing so would be greater than repaying lenders, he told reporters the same day.

Greece found support from International Monetary Fund Managing Director Dominique Strauss-Kahn and French Finance Minister Christine Lagarde after German Finance Minister Wolfgang Schaeuble was quoted as saying “further measures may have to be taken” if Greece fails a June audit. German Deputy Foreign Minister Werner Hoyer told Bloomberg News last week that restructuring “would not be a disaster.”

Traders are betting on a default. The cost of insuring Greek government debt rose to a record 1,155 basis points on April 15, according to CMA prices for credit-default swaps. The contracts indicate investors see about a 63 percent chance the nation will default within five years.

‘Rightly Nervous’

Restructuring would “create realized losses across the global banking system — but mainly in Europe,” David Zervos, head of global fixed-income strategy at Jefferies & Co. in New York, said in a note to clients on April 15. “Markets are rightly nervous.”

Greece’s aid program was designed on the assumption that the country would repay debt rather than restructure, and “nothing has changed,” Strauss-Kahn said as he hosted the IMF’s semi-annual meetings in the U.S. capital. Lagarde said April 14 at the same talks that “there is no discussion about debt restructuring, none whatsoever.”

The yield on 10-year Greek debt rose 55 basis points to 13.83 percent on April 15, widening the spread over German bunds to a record 1,045 basis points. The euro dropped from a 15-month high versus the dollar on concern of the first default by a euro-area country. A basis point is 0.01 percentage point.

“The issue of Greece is not whether there will be debt restructuring, but when it will be done, and whether it will be an orderly market-oriented debt exchange or disorderly like in Argentina,” Nouriel Roubini, the economist who predicted the global financial crisis, said at a conference in Kazakhstan on April 15.

Euro Partners

Greece has asked euro-area partners to consider rescheduling all of its debt, the Wall Street Journal reported citing people familiar with the matter who weren’t identified. A finance ministry press officer in Athens, who declined to be identified citing government policy, denied the report.

Lucas Papademos, an adviser to Greek Prime Minister George Papandreou and a former vice president of the European Central Bank, suggested April 9 that extending maturities of debt would be one option to consider after implementing measures attached to a 110 billion-euro loan package from the European Union and IMF.

Asked April 16 about the possibility, Papaconstantinou declined to comment directly. Rescheduling all debt and pushing back maturity of European loans is “not the same thing,” he said in Washington. “The official sector can choose to do so.”

‘No Need’

European Central Bank governing council member Ewald Nowotny said he sees “no need” for a restructuring by Greece. Such a step “would be very harmful and not efficient,” he said in an April 16 interview with Bloomberg News in Washington.

Questions over Greek finances are mounting while the country steps up efforts to reduce its budget deficit. Greece last week outlined 26 billion euros in cuts and 50 billion euros in asset sales.

The Wall Street Journal reported that IMF officials believe Greece’s debt burden is unsustainable and should be restructured. William Murray, an IMF spokesman, said yesterday that “there is absolutely no truth” to the story. Martin Kotthaus, a spokesman for Schaeuble, said there is “no basis” for a Financial Times report that German officials are considering a plan to let holders of Greek bonds swap them for safer securities guaranteed by euro-member countries.

Greece isn’t the only euro-area country relying on support from neighboring governments and the IMF. Officials are preparing a plan to support Portugal, and Ireland has also received a bailout.

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It’s the eternal Latin American lament: The region’s superpower neighbor either ignores it or pushes it around.

Fair or not, that perception will hang over President Barack Obama’s first official visit to South America, which starts Saturday in Brazil and stops in Chile and El Salvador.

Each new U.S. president brings renewed expectations of closer ties to Latin America, and few leaders stoked those hopes more than Obama. Just three months after taking office, he told fellow leaders at a Summit of the Americas that a new era of cooperation was dawning.

“I know that promises of partnership have gone unfulfilled in the past,” Obama said.

“We have at times been disengaged, and at times we sought to dictate our terms. But I pledge to you that we seek an equal partnership,” he added. “I’m here to launch a new chapter of engagement that will be sustained throughout my administration.”

Latin Americans have been frustrated by the way the Sept. 11 attacks jerked U.S. attention away from their region after President George W. Bush, too, had promised a new focus to Latin America.

Yet two years after Obama’s speech, Latin America is still waiting for action to back the words, and for a new U.S. approach that will help dispel memories of military interventions, support for Cold War-era dictatorships and demands for austere economic policies.

“That speech created high expectations, and he has not delivered,” said Mauricio Cardenas, director of the Latin America Initiative at the Brookings Institution in Washington. “People understand it’s because of Afghanistan and Iran, the economy and everything that has happened in the meantime, but, still, he hasn’t delivered.”

Obama’s trip likely will be long on symbolism and short on achievements.

His two-day visit to Brazil will focus on business. Corporate leaders accompanying the president will seek more investments in the region’s largest economy and in infrastructure for the 2014 World Cup and the 2016 Olympics.

Brazil itself wants more access to the U.S. market for its agricultural goods. It has repeatedly accused the U.S. of protectionist policies and unfair farm subsidies.

But Obama’s hands are tied, at least in the short term. The U.S. Congress, however, is unlikely to cut agricultural subsidies and the current farm bill does not expire until 2012.

Brazil also is seeking U.S. support for a permanent seat on the U.N. Security Council based on its growing clout on the global stage. While Obama has endorsed a similar bid by India, there is little sign that he is unlikely to promote Brazil’s yet.

U.S. Secretary of State Hillary Clinton said last month that she expected “a constructive dialogue with Brazil on this issue during President Obama’s trip and going forward.”

David Fleischer, a political scientist at the University of Brasilia, noted that Brazil’s bid was hurt when the country voted against a new round of U.S.-backed sanctions on Iran in the Security Council last year.

Michael Shifter, president of the Inter-American Dialogue, said the symbolic gestures of Obama’s tour are vital to future progress on economic and political matters.

That is the case with Brazilian President Dilma Rousseff, who three months into her presidency has expressed a desire to deepen ties with the U.S. that were strained in recent years under her predecessor, Luiz Inacio Lula da Silva.

Rousseff has criticized the human rights record of Iran, a nation Silva warmly embraced, and is backing away from Silva’s attempts to mediate the nuclear standoff between Iran and the West. Her foreign minister, Antonio Patriota, was ambassador to the U.S. from 2007-2009. Rousseff is also not showing Silva’s enthusiasm for buying the French-made Dassault fighter jet, giving U.S.-based Boeing Corp. renewed hope of winning a $5 billion contract with its F-18 Super Hornet.

“The main goal of Obama’s trip is to get back on track U.S. and Brazilian relations, which have arguably been the biggest disappointment of Obama’s Latin American policy,” Shifter said.

In Chile, Obama is expected to deliver a speech that Clinton has said will “articulate the importance of Latin America to the United States.”

Chile’s Foreign Minister Alfredo Moreno called Obama’s visit “a significant signal to Chile and the whole region.”

Chile is one of the United States’ closest allies in South America, and even a string of leftist presidents strongly embraced U.S.-style capitalism since the end of former dictator Augusto Pinochet’s regime in 1990. The two nations signed a free trade agreement in 2003.

Chile’s Presidential spokeswoman Ena von Baer told reporters that Obama’s visit will include signing of an accord that could include U.S. training for Chilean nuclear engineers. Despite the nuclear disaster facing Japan, Chilean President Sebastian Pinera says his energy-hungry nation needs the option of nuclear power.

The Chileans are also expected to push for admitting their citizens into the U.S. visa waiver program.

Obama will visit El Salvador at its most violent moment since the civil war of the 1980s. Cocaine seizures are rapidly rising and the murder rate is climbing, in part due to a rise in local drug dealing.

Central America was allotted $165 million for the $1.8 billion Merida Initiative to fight drugs in Mexico, and the U.S. Congress last year created a separate Central America Regional Security Initiative with a total of $248 million to date.

Local leaders say that’s still not enough to battle powerful cartels financed by the U.S. drug market, and expanded security aid is likely to be a topic during Obama’s visit.

Shifter said the U.S. likely sees El Salvador as its best partner in combatting the poverty and violence in Central America, and Salvadoran President Mauricio Funes told business leaders this week that his nation is “recognized for its leadership and desire for integration” in the area’s fight against poverty and crime.

“The government of President Obama has a special interest in establishing with El Salvador an alliance for growth,” Funes said, without offering details.

Evan Ellis, an expert on Latin America at the National Defense University, said Obama’s administration, like so many before it, has been forced to put the region on the back burner because of crises elsewhere.

“Latin America has long suffered the neglected-wife syndrome, where the husband, the U.S., comes back and says, ‘I’ve been a bad partner but things are going to change,’” said Ellis. “That lasts a couple of days, and then the cycle begins anew.”

Source

Ameren Missouri on Friday challenged state regulators’ authority to roll back electric rates by hundreds of million of dollars, as a consumer advocate is urging.

The action would threaten the ability to provide reliable electric service, the St. Louis-based utility asserted. The arguments came in response to requests by Missouri Public Counsel Lewis Mills Jr. and a group of big industrial customers to reset electric rates based on a court order by former Cole County Circuit Judge Paul C. Wilson.

Mills contends that Wilson’s order requires the Public Service Commission to reduce electric rates for Ameren’s customers by $226 million a year.

A group of four companies that belong to the Missouri Industrial Energy Consumers believes rates should be rolled back further. The companies - Anheuser Busch, Doe Run, Noranda and Enbridge - argue that rates should be rolled back to 2007 levels, because a prior rate increase of $163 million that was awarded by the PSC is also still under judicial review.

The companies’ request would undo $390 million of rate increases over the past two years as well as $140 million in fuel surcharges that were authorized by the 2009 rate case. A rate rollback would immediately lower rates. But it would almost certainly not provide refunds of money already paid to Ameren for previous months.

Ameren said the rate rollback requests are both outside of the PSC’s jurisdiction and a misstatement of the legal effect of Wilson’s order payday loans.

A rollback would cut off needed cash flow and leave no choice but to “drastically reduce its spending on items critical to providing reliable service,” Ameren said in a filing.

The company estimated in a regulatory filing last week that it stands to lose $300 million between now and August if the PSC rolls back rates to 2007 levels. Any rollback could be moot in August, when the commission is expected to rule on the utility’s most recent request to boost electric rates.

In Friday’s response to the PSC, Ameren questioned whether a rate increase can be voided in its entirety because parts of it are challenged in court, and whether a stay of a rate increase can be applied to all of its 1.2 million customers when only a few customers appealed it in court.

The companies that appealed the 2010 rate increase in Cole County had to post $430,000 in bonds with the court to make the judge’s decision effective. Ameren would get that back if Wilson’s order is overturned on appeal. But it would have no way to collect millions of dollars from its other 1.2 million customers.

Mills dismissed Ameren’s arguments and disagreed that the rollback being sought would affect its ability to serve customers. “I think it could cause a crimp in cash flow, but it should not prevent the provision of safe and reliable service,” he said.

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Egyptian President Hosni Mubarak’s decision to hand power to the military boosted stocks around the world on Friday as hopes grew for a peaceful transition of power.

Markets had earlier been lower after Mubarak defiantly held onto his position in a speech the day before, fueling concerns that the political standoff was a long way from being resolved. That sentiment was lifted when Vice President Omar Suleiman told state TV that Mubarak had resigned.

“In these difficult circumstances that the country is passing through, President Hosni Mubarak has decided to leave the position of the presidency,” Suleiman said. He has commissioned the armed forces council to direct the issues of the state.”

Stocks jumped across the board on the news.

In Europe, Germany’s DAX traded up 0.4 percent to 7,371.01 while the FTSE 100 index of leading British shares gained 0.7 percent to 6,060.94. The CAC-40 in Paris was 0.3 percent higher at 4,092.51. All had been lower earlier in the day.

After opening lower, Wall Street likewise rallied. The Dow Jones industrial average rose 0.2 percent to 12,254.34 while the Standard & Poor’s 500 index was 0.3 percent higher at 1,325.81.

The news from Egypt also weighed down on oil prices, which had rallied in recent weeks on fears of the impact on crude transportation. By late afternoon in Europe, the benchmark crude for March delivery was down 30 cents at $86.43 a barrel in electronic trading on the New York Mercantile Exchange.

Though Egypt is not a big oil producer, traders were worrying that the unrest might spread to other countries and affect the Suez Canal _ a key route for oil tankers and cargo ships as they steer from the Persian Gulf to the major oil-consuming nations in Europe.

In corporate news, Nokia Corp. shares slumped 14 percent after it revealed a strategic alliance with Microsoft Corp. to build smart phones that can compete with rivals Apple and Google. Analysts said the deal, which was more of a win for Microsoft, showed how desperate Nokia is to get back into the lucrative market. The company also warned its profits would be hurt in coming quarters as it adjusted and restructured.

Fears that Europe’s debt crisis may be about to return have started to haunt the euro following a few weeks of relative calm amid signs that EU leaders were preparing a comprehensive solution.

However, last week’s limited progress in a summit of EU leaders in Brussels reminded investors that the crisis is a long way from being settled and that Portugal could still end up joining Greece and Ireland in getting a bailout personal loan for poor credit.

“All is not well in the eurozone and we expect the pot to shift from the back burner to the front over the next few weeks,” said Jeremy Batstone-Carr, head of private client research at stockbrokers Charles Stanley. “We believe that the eurozone is approaching another crunch moment and that investors should be wary regarding the potential for a disorderly denouement.”

As well as warning of the continued stresses in the banking sector, Batstone-Carr noted that the yield on Portugal’s ten-year bonds has spiked above 7 percent for the first time since a bond auction in January met with widespread investor support and eased concerns that the country would need a bailout imminently.

Portugal has two major bond maturities soon, which it will have to roll over if it’s to avoid the fate of Greece and Ireland.

“We are unsure as to whether the country has the funds necessary to redeem these bonds and we suspect that it will once again have to rely heavily on external sources,” Batstone-Carr said.

Ireland is also in focus as the country gears up for a general election on Feb. 25. Leading ratings agency Moody’s Investors Service on Friday downgraded the creditworthiness of six Irish banks, citing doubts over whether the banks will get a new cash infusion which was due at the end of the month.

The current government has put off the issue until after the election, and the opposition parties most likely to form the next government oppose further aid for banks.

Polls indicate that the main Fine Gael opposition party will form the next government in coalition with Labour.

By late morning London time, the euro was 0.4 percent lower at $1.3555 while the British pound was down 0.6 percent at $1.6003. The U.S. currency was also 0.1 percent firmer at 83.35 yen.

Earlier in Asia, South Korea led the retreat, tumbling 1.6 percent after the country’s central bank suggested it will raise rates in coming months. The Bank of Korea unexpectedly raised the rate in January for the second time in three months.

Australia’s S&P/ASX 200 let go of the previous day’s gains, dropping 0.7 percent, while Hong Kong’s Hang Seng rose 0.5 percent.

Mainland Chinese shares ended the week on an upbeat note, with the benchmark Shanghai Composite Index gaining 0.3 percent and the Shenzhen Composite Index of China’s smaller, second exchange up 1.1 percent.

____

Pamela Sampson in Bangkok contributed to this report.

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Treasury yields were about two basis points away from a nine-month high as the U.S. prepared to sell $72 billion of debt this week starting tomorrow.

The difference between 2- and 10-year rates widened to the most in almost a year as economists said reports this week will show consumer confidence climbed and initial claims for jobless benefits fell. An unexpected decline in the U.S. jobless rate in January spurred speculation employment will improve in 2011.

“Treasury yields will rise,” said Hiroki Shimazu, a Tokyo-based economist at Nikko Cordial Securities Inc., a unit of Sumitomo Mitsui Financial Group Inc., Japan’s third-largest publicly traded bank. “The pace of recovery in the labor market is picking up.”

Benchmark 10-year notes yielded 3.64 percent as of 9:47 a.m. in Tokyo, according to BGCantor Market Data. The 2.625 percent security maturing in November 2020 traded at 91 23/32. The rate climbed to 3.66 percent on Feb. 4, the highest since May 4 cash advance loan no fax.

The spread between 2- and 10-year yields increased to as much as 2.93 percentage points today, the widest since Feb. 18 last year.

The Treasury will auction $32 billion of 3-year notes tomorrow, $24 billion of 10-year debt the next day and $16 billion of 30-year bonds on Feb. 10.

The University of Michigan consumer sentiment index may have increased as the economy showed signs of picking up and stocks gained. The preliminary February reading rose to 75 from 74.2 in January, according to the Bloomberg survey median before the Feb. 11 report.

Labor Department data Feb. 10 will show new applications for unemployment benefits declined by 5,000 last week to 410,000, the surveys show. The unemployment rate fell to 9 percent in January from December’s 9.4 percent, the Labor Department said Jan. 4.

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Japanese housewives’ “secret savings” fell 18 percent to the lowest in three years in 2010 as slumping family incomes and rising prices for food and energy forced them to tap reserves, a survey shows.

The value of so-called hesokuri, the cash and investments that housewives stash without telling their husbands, fell to an average 3.1 million yen ($37,700) in 2010 from 3.7 million yen a year earlier, the lowest since 2007, according to a Sompo Japan Insurance Inc. report published today. Women traditionally handle family finances in Japan, collecting their husbands’ paychecks and making investment decisions.

Higher energy bills sparked by the country’s hottest summer on record and an 18 percent jump in vegetable prices prompted housewives to tap savings and cut pocket money doled to husbands from their bonuses. The use of savings to manage everyday expenses reversed last year’s trend of using hesokuri funds for one-time purchases such as travel or dining out, the report said.

“Because they’re charged with household finances, housewives can tell where Japan’s economy is going,” Minoru Sugiyama, an official at Sompo Japan who helped lead the survey, said in an interview. “Japanese people will be more defensive this year after cutting expenses and facing falling income. Family finances and Japan’s economy seem to be getting worse.”

Income Squeeze

Household confidence has slumped for six straight months as the economic recovery loses steam. Japan’s gross domestic product contracted at an annual 0.8 percent pace last quarter after consumer stimulus programs ended, according to the median estimate of economists surveyed by Bloomberg.

While some food prices rose last year, the country has struggled for more than a decade with deflation that has squeezed corporate earnings and workers’ pay, weakened consumption and made debts harder to pay off. Wages dropped at an average 1 percent pace in the past decade, and monthly pay slid 0.2 percent in November, Labor Ministry data show.

Housewives gave their husbands a smaller share of this winter’s bonuses to spend, today’s report showed, with the allocation falling 5.5 percent from a year earlier to 69,000 yen, the lowest since 2003.

Among the 500 respondents to the survey, 141 said the increase in vegetable prices had the biggest impact on their family budgets last year. The rise in energy bills due to torrid summer was the second and higher tobacco taxes ranked third.

Hot Weather

The average price of vegetables jumped last year in part because of hot weather, according to the Ministry of Agriculture. Onions rose 42 percent to 125 yen a kilogram, potatoes climbed 37 percent and tomatoes increased 21 percent.

Japan in 2010 had the hottest summer since records started in 1898, according to the Japan Meteorological Agency. Ten Japanese power companies sold 84.9 billion kilowatt hours in August, up 9.2 percent from a year earlier, according to the Federation of Electric Power Companies of Japan.

About 37 percent of housewives said declining cash flow forced them to use the secret savings to cover living expenses, while 21 percent used it to pay for one-time luxury spending — almost the exact inverse of a year earlier, the survey said.

The housewives plan to save money by cutting costs of food using spices to and cheap stretch meals. Some 233 respondents said they will use more bean sprouts to cook meals, while 80 housewives will consider tofu for breakfast and dinner, compared with 72 last year and 40 a year earlier. Five said they plan to use traditional seasonings on plain rice to stretch budgets.

More people said total financial assets, excluding hesokuri savings, dropped last year than people who said those assets rose, and the average decline per family was 1.2 million yen, the research said.

Sompo Japan DIY Life Insurance Co., a venture between Sompo Japan Insurance Inc. and Dai-Ichi Life Insurance Co., targeted 57,000 Japanese housewives in their 20s through 50s from Dec. 10 to Dec. 14. Of those, 8,300 responded to the survey, of which 500 answers were used. The average age of participants was 39.7.

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Energy prices dropped Thursday after the government said oil and natural gas supplies fell less than expected last week.

Benchmark crude for February delivery lost $1.28 to settle at $89.84 per barrel. It was the first time in more than a week that oil settled below $90.

Oil has surged for most of December as U.S. petroleum consumption ticked higher and traders looked forward to 2011, when oil is expected to touch $100 per barrel and perhaps go higher.

Rising oil prices have pushed gasoline pump prices higher. They were up again on Thursday. The national average for a gallon of regular hit $3.07, about six cents higher than a week ago and 45 cents more than a year ago. Drivers across the country pay a range of prices at the pump. In California you’ll pay about $3.32 a gallon. In New York gas goes for around $3.30 a gallon. The average is $2.91 in Texas and $2.82 in Colorado.

Some analysts think the national average will hit $3.75 by spring.

The price of benchmark crude tumbled Thursday after the Energy Department’s Energy Information Administration weekly supply report. The EIA said oil supplies declined by 1.3 million barrels last week. A drop in supplies often supports higher prices, but analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., thought the drop would be bigger _ around 3.2 million barrels.

Investors worried that the report showed demand for energy was not continuing to pick up, despite positive economic news. The Labor Department on Thursday said the number of people applying for unemployment benefits fell to 388,000, the lowest level in almost two and a half years.

Meanwhile, Freddie Mac said a fixed-rate 30-year mortgage rose to 4.86 percent, the highest since May. That raised concerns about whether higher mortgage rates would slow the recovery of the housing market.

The EIA also released its weekly report on the nation’s natural gas supplies, which showed they shrank by 136 billion cubic feet. That’s less than analysts expected and a relatively small dent in total supplies of more than 3.2 trillion cubic feet, eight percent above the five-year average. Milder weather across most of the country over the next 10 days should reduce heating demand and keep a lid on natural gas prices.

On the Nymex, natural gas rose 5.1 cents to settle at $4.338 per 1,000 cubic feet. In other energy trading, heating oil gave up 3.61 cents to settle at $2.4854 per gallon. Gasoline gained 0.14 cent to settle at $2.3918 per gallon.

In London, Brent crude fell $1.05 to settle at $93.09 per barrel on the ICE Futures exchange.

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