World stocks mixed amid Greek debt talks

Asian stock markets rose Friday amid signs that the U.S. economy was picking up steam, but European shares opened lower as nervous traders awaited results of crucial negotiations between debt-mired Greece and its lenders.

Benchmark oil hovered above $100 per barrel while the dollar rose against the euro and the yen.

European stocks fell in early trading. Britain’s FTSE 100 shed 0.1 percent to 5,733.14 and Germany’s DAX was 0.3 percent lower at 6,396.62. France’s CAC-40 lost 0.5 percent to 3,306.20. Wall Street also appeared set to open lower, with Dow Jones industrial futures down 0.2 percent to 12,567 and S&P 500 futures shedding 0.3 percent to 1,306.50.

Critical negotiations were under way in Athens between the government and private creditors over a debt restructuring. Greece cannot afford to repay its debts and is trying to persuade its creditors to accept losses of at least 50 percent on billions of euros (dollars) in Greek bonds.

Failure to seal a deal would likely result in a financially disastrous default by Greece.

“For the moment, the market expects a deal to be made while downside risk still exists and any disappointment could end the week of rallies,” Credit Agricole CIB in Hong Kong said in an email.

Signs out of the U.S. on Thursday indicating the U.S. economic recovery was on track powered Asian shares higher earlier in the day.

On the last trading day before Chinese New Year holidays begin Monday, the Shanghai Composite Index climbed 1 percent to 2,319.12. Japan’s Nikkei 225 index rose 1.5 percent to close at 8,766.36. Hong Kong’s Hang Seng added 0.8 percent to 20,110.37 and South Korea’s Kospi jumped 1.8 percent to 1,949.89.

Strong U.S. corporate earnings boosted investor risk tolerance. IBM Corp.’s fourth-quarter earnings beat Wall Street expectations, while Bank of America and Morgan Stanley both reported results that were better than analysts were expecting no teletrack payday loans.

That helped lift shares in Japan’s major banks, including Mitsubishi UFJ Financial Group, which jumped 5.1 percent. Mizuho Financial Group was up 5.5 percent and Nomura Holdings surged 5.2 percent.

Another positive sign for the U.S. economy was data that showed a strengthening job market. The number of people seeking unemployment benefits fell last week to 352,000, the fewest since April 2008.

“The U.S. has better job figures and China’s central bank pumped money into the banking system to provide money to cash-starved enterprises so they can pay new year bonuses. I think after the Chinese New Year, be prepared for a correction,” said Francis Lun, managing director of Lyncean Holdings in Hong Kong.

Some Hong Kong-listed banks and insurers fell as investors sold shares to book profits ahead of the Lunar New Year, analysts said. The Industrial & Commercial Bank of China fell 1.1 percent. Ping An Insurance shed 0.8 percent.

Resources stocks advanced following strong gains in metals prices overnight.

Mining giant Rio Tinto Ltd. rose 1.2 percent. Fortescue Metals Group, Australia’s third-biggest iron ore producer, gained 2.6 percent.

Benchmark crude for February delivery was down 4 cents at $100.35 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 20 cents to finish at $100.39 per barrel in New York on Thursday.

In currency trading, the euro fell to $1.2932 from $1.2936 late Thursday in New York. The dollar rose to 77.21 yen from 77.17 yen.

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China Said to Let Biggest Banks Boost Lending by 5% - Bloomberg

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Europe

The European Financial Stability Facility, the euro area

China Economic Growth May Slow to 10-Quarter Low With

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EU Iran Oil Embargo Over Nuclear Work Said Likely to Be Delayed Six Months - Bloomberg

A European Union embargo on imports of Iranian (OPCRIRAN) oil will probably be delayed for six months to let countries such as Greece, Italy and Spain find alternative supplies, an EU official with knowledge of the talks said.

The embargo, which would need to be accepted by the 27- nation bloc

China Trade Triggers $115 Billion Australia Ports, Railway Boom: Freight - Bloomberg

Australia is set for an A$112 billion ($115 billion) infrastructure boom as the nation adds ports and railways to feed China and India

Turning foreclosures into rentals

Federal officials hope to launch a pilot program in early 2012 to convert government-owned foreclosures into rental properties.

The program, which was cited by Federal Reserve Chairman Ben Bernanke last week as one way to address the housing crisis, would sell foreclosed homes now owned by Fannie Mae (, Fortune 500) and Freddie Mac (, Fortune 500) to investors in bulk. The properties would then be converted into rentals.

The initiative began back in August, when the Federal Housing Finance Agency, the Treasury Department and the U.S. Department of Housing and Urban Development announced they were seeking suggestions on ways to dispose of repossessed homes now owned by Fannie Mae, Freddie Mac and the Federal Housing Administration.

In addition to getting the properties off the government’s books, officials are hoping putting the homes back into productive use will stabilize neighborhoods and housing values. Also, it is looking to expand the supply of rentals, which are increasingly in demand.

The agency is not releasing details on how the rental program would work, instead saying it is "proceeding prudently but with a sense of urgency to lay the groundwork for the development of good initial transactions in early 2012."

Administration officials said they are continuing to work with the agency to develop the program.

Housing, stocks, gold and oil: Hot or not in 2012?

Until now, most foreclosed homes have been sold individually because investors have demanded bigger discounts to buy large numbers of properties.

But federal officials are warily eyeing the expected surge in foreclosures as banks ramp up their action against delinquent homeowners. The process had been stalled since late 2010 when banks’ shoddy paperwork practices came to light.

There are close to 2 million homes in the late stages of delinquency, according to Lender Processing Services. Since foreclosed properties often sell below market value, they can wreak havoc on home prices.

Converting these homes to rentals can both help the neighborhood and minimize losses to Fannie, Freddie and the FHA, which hold about 250,000 properties, Bernanke told lawmakers last week.

He urged lawmakers to ramp up their efforts to fix the housing market, placing particular emphasis on the problem of vacant homes on the market.

"Restoring the health of the housing market is a necessary part of a broader strategy for economic recovery," he said.

Bernanke’s comments launched a full-court press by Federal Reserve officials last week to raise awareness of the continuing problems plaguing the housing market.

His proposals were quickly followed by Fed Governors Sarah Bloom Raskin, who spoke on ramping up enforcement of mortgage servicers, and Elizabeth Duke, who said Fannie Mae and Freddie Mac could do more to help heal the housing market.

Meanwhile, New York Fed President William Dudley gave a speech that touched on a wide range of housing policies — including principal reduction and mortgage refinancing — that he believes will boost the economy.

The Fed has already tried to boost real estate sales by pushing mortgage rates down to record lows through massive bond-buying programs.

But the renewed push for housing help indicates that the Fed, which has basically run out of monetary policy ammunition to revive the real estate market, is urging the federal government to ramp up its efforts.

"The Federal Reserve is signaling in even stronger terms the need for the government to do more to help housing," said Jaret Seiberg, a policy analyst with the Washington Research Group. 

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UN agency confirms Iran nuke work at bunker

The U.N. nuclear agency on Monday confirmed that Iran has begun enriching uranium at an underground bunker to a level that can be upgraded more quickly for use in a nuclear weapon than the nation’s main enriched stockpile.

Comment from the International Atomic Energy Agency came after diplomats said that centrifuges at the Fordo site near Iran’s holy city of Qom are churning out uranium enriched to 20 percent. That level is higher than the 3.5 percent being made at Iran’s main enrichment plant and can be turned into fissile warhead material faster and with less work.

“The IAEA can confirm that Iran has started the production of uranium enriched up to 20 percent … in the Fordow Fuel Enrichment Plant,” said an agency statement, which used the alternate spelling for the site.

The move was expected, with Tehran announcing months ago that it would use the Fordo facility for 20 percent production. Iran began to further enrich a small part of its uranium stockpile to nearly 20 percent as of February 2010 at a less-protected experimental site, saying it needs the higher grade material to produce fuel for a Tehran reactor that makes medical radioisotopes for cancer patients.

But with the time and effort reduced between making weapons-grade uranium from the 20-percent level, the start of the Fordo operation increases international fears that Iran is determined to move closer to the ability to make nuclear warheads _ despite insistence by the Islamic Republic that it is enriching only to make reactor fuel.

Its dismissal of findings by the International Atomic Energy Agency of secret experimental work on a nuclear weapons program also worries the international community.

British Foreign Secretary William Hague called the move “a provocative act which further undermines Iran’s claims that its program is entirely civilian in nature.”

Tehran’s “claim to be enriching for the Tehran Research Reactor does not stand up to serious scrutiny,” he said in a statement. Hague said that Iran “already has sufficient enriched uranium to power the reactor for more than five years and has not even installed the equipment necessary to manufacture fuel elements” out of the enriched material.

Iran recently threatened to blockade the Strait of Hormuz, an important transit route for almost one-fifth of the oil traded globally. Tehran also has been angered by the West’s efforts to sanction Iran over its nuclear program, including a possible ban on European imports of Iranian oil.

Fordo’s location increases concerns.

The facility is a hardened tunnel and is protected by air defense missile batteries and the Revolutionary Guard. The site is located about 20 miles (32 kilometers) north of Qom, the religious nerve center of Iran’s ruling system. The semiofficial Mehr news agency quoted Iran’s nuclear chief, Fereidoun Abbasi, as saying Sunday that “the enemy doesn’t have the ability to damage it.”

Built next to a military complex, Fordo was long kept secret and was only acknowledged by Iran after it was identified by Western intelligence agencies in September 2009.

Hague said Fordo’s size _ it is too small for an industrial enrichment complex of the type Iran says it needs to make fuel _ “location and clandestine nature raise serious questions about its ultimate purpose.”

U.S. State Department spokeswoman Victoria Nuland also questioned Iran’s motives.

“When you enrich to 20 percent, there is no possible reason for that if you’re talking about a peaceful program,” she told reporters. “So it generally tends to indicate that you are enriching to a level that takes you to a different kind of nuclear program.”

Two diplomats spoke to The Associated Press on condition of anonymity because their information was confidential and based on an inspection of Fordo last week by the International Atomic Energy Agency.

They said 348 machines were operating at Fordo in two cascades _ the linked up configuration needed to enrich. Two other cascades were nearly assembled but not working, they said.

The centrifuges appeared to be the standard old-generation machines in use at the main enrichment site at Natanz and not advanced, more efficient prototype versions cheapest personal loan rates.

That, too, was confirmed by the IAEA, which said it was monitoring operations at the plant.

About 8,000 centrifuges are operating at Natanz, where five years of enrichment have turned out enough material for several nuclear warheads.

The Fordo startup was first reported Sunday by the daily Kaynan, a hardline newspaper close to Iran’s Supreme Leader Ayatollah Ali Khamenei, who has the final word on all important matters of state. Abbasi was more circumspect, saying Saturday that his country will “soon” begin enrichment at Fordo.

It was impossible to reconcile the two reports. But the diplomats speculated that they could be a further reflection of divisions within Iran’s ruling circles about how upfront the nation should be with nuclear activities that are drawing increasingly severe international penalties beyond four sets of U.N. Security Council sanctions.

Iran _ which claims it only seeks nuclear reactors for energy and research _ has sharply increased its threats and military posturing against stronger pressures, including U.S. sanctions targeting Iran’s Central Bank in attempts to complicate its ability to sell oil.

A senior commander of the Revolutionary Guard force was recently quoted as saying Tehran’s leadership has decided to order the closure of the Strait of Hormuz, a strategic oil route, if the country’s petroleum exports are blocked. Revolutionary Guard ground forces also staged war games in eastern Iran in an apparent display of resolve against U.S. forces just over the border in Afghanistan.

Iranian officials have issued similar threats, but this was the strongest statement yet by a top commander in the security establishment.

“The supreme authorities … have insisted that if enemies block the export of our oil, we won’t allow a drop of oil to pass through the Strait of Hormuz. This is the strategy of the Islamic Republic in countering such threats,” Revolutionary Guard deputy commander Ali Ashraf Nouri was quoted as saying by another newspaper, the Khorasan daily.

Adding to Iran-U.S. tensions, Iran’s state radio reported Monday that a Tehran court has convicted an American man of working for the CIA and sentenced him to death.

Iran charges that as a former U.S. Marine, Amir Mirzaei Hekmati received special training and served at U.S. military bases in Iraq and Afghanistan before heading to Iran for his alleged intelligence mission. The radio report did not say when the verdict was issued. Under Iranian law, Hekmati, a dual U.S.-Iranian national has 20 days to appeal. His father, a professor at a community college in Flint, Michigan, has said his son is not a CIA spy and was visiting his grandmothers in Iran when he was arrested.

In an interview broadcast Sunday, U.S. Defense Secretary Leon Panetta said Iran is laying the groundwork for making nuclear weapons someday, but is not yet building a bomb. Panetta reiterated U.S. concerns about a unilateral strike by Israel against Iran’s nuclear facilities, saying the action could trigger Iranian retaliation against U.S. forces in the region.

“We have common cause here” with Israel, he said. “And the better approach is for us to work together.”

Panetta’s remarks on CBS’ “Face the Nation” reflect the U.S. administration’s long-held view that Iran is not yet committed to building a nuclear arsenal, only to create the industrial and scientific capacity to allow one if its leaders to decide to take that final step.

President Barack Obama approved new sanctions against Iran a week ago, targeting the central bank and its ability to sell petroleum abroad. The U.S. has delayed implementing the sanctions for at least six months, worried about sending the price of oil higher at a time when the global economy is struggling.

The U.S. and Israel have said that all options remain open, including military action, should Iran continue with its enrichment program.

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George Jahn can be reached at http://twitter.com/georgejahn

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IRS estimates 17 percent of taxes went unpaid

People and businesses underpaid their taxes by an estimated 17 percent in the most recent year studied, meaning they failed to send the government $450 billion it was owed, according to an Internal Revenue Service report released Friday.

The study covered 2006, the most recent year for which the IRS said it had data available. The amount of underpaid taxes far exceeded the size of the entire federal budget deficit at the time.

After IRS audits and other enforcement efforts, non-compliance shrank to 14 percent, leaving the final amount of unpaid taxes at $385 billion.

That is still larger than the budget deficit for fiscal 2006, which was $248 billion. Fiscal years begin in October of the previous year.

Altogether, the IRS estimates it was owed nearly $2.7 trillion in taxes in 2006.

Since then, federal deficits have mushroomed out of control, hitting a record $1.4 trillion in 2009 and barely receding to $1.3 trillion last year. President Barack Obama and Republicans in Congress have agreed to some spending cuts but have remained deadlocked over how to curb the massive budget shortfalls that are projected indefinitely.

The IRS has made efforts to improve compliance, such as increasing oversight of professional tax return preparers and increasing the information that must be reported to the agency by stock brokers, mutual fund companies and for some business transactions high quality business cards.

Even so, tax analysts said there was no reason to believe today’s compliance rate has changed significantly from the 2006 figures. That is chiefly because significant portions of the underpaid taxes are believed to come from businesses and individuals who report information about their income that is difficult for the IRS to verify.

“It’s hard to get to that,” said Clint Stretch, a tax policy expert for Deloitte Tax LLP. “Nobody wants a bunch of IRS police hammering on small-business people.”

The 2006 compliance rates were roughly similar to 2001, the last year the IRS had examined.

In that year, 16 percent of taxes were unpaid initially, while enforcement efforts lowered the non-compliance rate to 13 percent.

That meant that $345 billion in taxes were uncollected initially and $290 billion remained unpaid even after IRS audits and other enforcement efforts.

The dollar amounts of unpaid taxes were larger in 2006 largely because the size of the economy and the amount of taxes owed had grown.

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Bids Double Offers on Tax-Exempt Debt as RBI Says Rates Peak: India Credit - Bloomberg

India