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TOKYO – Japan’s central bank is escalating the fight against deflation by offering more cheap loans to banks.

In a split decision, the Bank of Japan’s policy board decided Wednesday to double the amount available under its short-term lending program to 20 trillion yen ($221 billion) from 10 trillion yen.

Introduced in December, the three-month loans at a fixed rate of 0.1 percent are intended to nourish credit flows and reduce longer-term interest rates.

The seven-member board voted unanimously to keep its key interest rate at a super lean 0.1 percent. In a statement, it pledged to maintain an “extremely accommodative financial environment” for the time being. The central bank has not changed the overnight call rate target since December 2008, when the policy board lowered it from 0.3 percent.

The central bank’s expected move came amid growing political pressure to take stronger action to combat falling prices, which threaten to undermine Japan’s patchy economic recovery.

“The Bank recognizes that it is a critical challenge for Japan’s economy to overcome deflation and return to a sustainable growth path with price stability,” the central bank said. “To this end, the Bank will continue to consistently make contributions as a central bank.”

The world’s second biggest economy grew at an annualized pace of 3.8 percent in the fourth quarter thanks to robust exports, but that has done little to bolster demand or wages at home. Japan’s key consumer price index, which fell for the 11th straight month in January, is expected to keep declining for the next two years.

The troubling outlook separates Japan from growing economies elsewhere in Asia, where central banks are winding down stimulus measures and tightening monetary policy low interest personal loan. Interests rates are rising in Australia and Malaysia, while central banks in China and India are reducing liquidity to control inflation.

Meanwhile, Japan struggles with a familiar foe. The country has battled periods of deflation since the “Lost Decade” in the 1990s. Lower prices may seem like a good thing, but it hamstrings economic growth by shrinking company profits, sparking wage cuts and causing consumers to postpone purchases. It also magnifies debt burdens.

The government’s ability to counter deflation with increased spending is constrained because of Japan’s ballooning debt, the highest among industrialized countries and rising. Prime Minister Yukio Hatoyama has proposed a record $1 trillion budget for the next fiscal year starting April, which will require the government to issue some 44.3 trillion yen ($492 billion) in bonds.

With limited room to maneuver on the fiscal policy front, Finance Minister Naoto Kan has repeatedly called on the central bank to do more. He wants deflation gone by the end of the year and has suggested establishing an inflation target.

The latest move may appease the government for now. But it falls short of a meaningful fight against deflation, economists say.

Richard Jerram, chief economist at Macquarie Securities in Japan, described a temporary increase in liquidity or even a modest interest rate cut as “irrelevant.” Japan needs aggressive, government-led changes to shock prices higher, he writes in a recent report.

“Japan is in such a deep deflationary hole that marginal policy changes are likely to be ineffective,” he said.

Bank of Japan expands lending to fight deflation

CINCINNATI – The Kroger Co.’s profit fell 27 percent in the fourth quarter, even as sales rose with a boost from the grocer’s gasoline incentives for regular customers.

The nation’s largest traditional grocery chain Tuesday reported profit of $255.4 million, or 39 cents per share, down from $349.2 million or 53 cents, a year ago.

Sales rose 7 percent to $18.6 billion. Excluding fuel, sales were up 2 percent.

Analysts expected 34 cents per share on $17 cash advance america.73 billion of revenue.

In the heated competition for recession-strapped households, Kroger has expanded discounts at its gas stations for regular customers, who can get at least 10 cents off a gallon for every $100 in grocery store purchases.

Kroger 4Q profit down 27 percent

ALAMEDA, Calif. – Celera Corp., a laboratory testing products and disease management services company, reported a fourth-quarter profit on lower costs and a tax benefit.

The company said it earned $7.8 million, or 9 cents per share, compared with a loss of $6.1 million, or 8 cents per share, during the same period a year prior. Revenue fell 15 percent to $40 million from $47.3 million.

Analysts polled by Thomson Reuters expected a loss of 3 cents per share on revenue of $39.6 million.

Celera was part of Applera Corp. until July 2008, but was separated from Applera after that company’s other component, Applied Biosystems, was sold to Invitrogen Corp. Those two companies combined into Life Technologies Corp.

Lab services revenue fell 25 percent to $22 million, while products revenue increased 1 percent to $11.3 million. Corporate revenue fell 3 percent to $6.7 million.

Meanwhile, selling and general expenses fell 17 percent to $22.4 million. The company had a tax benefit of $9 payday loans guaranteed no fax.1 million.

For the full year, the company lost $32.7 million, or 40 cents per share, compared with a loss of $124.6 million, or $1.56 per share, in 2008. Revenue fell to $167.1 million from $175.2 million.

Looking ahead, the company expects a loss between 11 cents and 13 cents per share on revenue between $30 million and $32million in the first quarter. It expects a loss between 15 cents and 21 cents per share on revenue between $145 million and $155 million in 2010.

Analysts expect a loss of 1 cent per share on revenue of $40.5 million in the first quarter and profit of 4 cents per share on revenue of $173.5 million in 2010.

Shares of Celera rose 1 cent to $6.15 in after-hours trading after falling 1 cent to close at $6.14 during the regular trading session.

Celera sees 4Q profit on tax benefit, lower costs

Hot News: BJs Wholesale Club 4Q profit climbs, sales rise

Warner Chilcott PLC said Monday that its fourth-quarter loss narrowed as its acquisition of Procter & Gamble’s global branded prescription drug unit added to revenue.

The Irish company, which makes women’s health and dermatology products, recorded a loss of $9.5 million, or 4 cents per share, in the three months that ended Dec. 31. That compares with a loss of $115.7 million, or 46 cents per share, in the same quarter of 2008.

Revenue more than doubled to $686.2 million.

Not counting one-time items like a $127 million amortization charge, adjusted earnings were 65 cents per share for the quarter.

The company also recorded a $33.5 million gain in the quarter from the sale of certain inventories to Leo Pharma in connection with a deal it completed in the third quarter of 2009.

Analysts polled by Thomson Reuters expected, on average, earnings of 60 cents per share on $588.1 million in revenue business cards.

In October, Warner Chilcott completed a $3.1 billion buyout of P&G’s global branded prescription drug unit. The company gained a portfolio of products worth about $2.3 billion in annual revenue including blockbuster osteoporosis drug Actonel.

Products from P&G contributed a total of $351.8 million in revenue growth in the fourth quarter. Aside from Actonel, that included the ulcerative colitis treatment Asacol and Enablex, a treatment for overactive bladders.

Warner Chilcott also said selling, general and administrative expenses more than quintupled in the quarter, to $277.5 million, due in part to costs tied to the P&G deal.

The company’s shares fell 67 cents, or 2.5 percent, to close at $26.55.

New products help Warner Chilcott narrow 4Q loss

In the financial turmoil of the past decade, mutual fund investing has gotten decidedly more complicated. After all, over the course of just 10 years, investors have looked on as two bear markets ravished the economy, as a pair of bull markets jolted stocks back to life, and as the Internet and housing bubbles inflated to their breaking points and then burst.

For investors, the search for the perfect mutual fund has always been something of a holy grail quest. But in the midst of the past decade's abrupt market cycles, investors have approached their fund-hunting efforts with newfound intensity. With that in mind, U.S. News has created a unique rankings system that is designed for long-term investors looking for broad access to information about funds. In the process, U.S. News has assigned scores to upwards of 4,500 distinct mutual funds.

[Use the U.S. News Mutual Fund Score and the rankings of trusted fund analysts to find the best mutual funds for you.]

Overall, the scores–which are based on data from Morningstar, Zacks, Lipper, TheStreet.com, and Standard & Poor's–take into account short- and long-term performance, risk, expenses, and future prospects.

[See our methodology.]

So what do the best mutual funds look like? To explore this, U.S. News has analyzed its top-ranked fund from each of the following 11 Morningstar categories: large growth, large value, large blend ("blend" funds have both growth and value characteristics), foreign large blend, diversified emerging markets, health, short-term bond, intermediate-term bond, intermediate government bond, world bond, and moderate allocation. Overall, the 11 category-topping funds have quite a bit in common. Here are some traits that they share:

[Slide Show: 11 category-topping funds]

High-conviction portfolios. Pat English, a comanager of FMI Large Cap (FMIHX), which is the top-scoring large-blend fund in the U.S. News rankings, likes to say that only his team's best ideas will make it into the fund's portfolio. And he means it: FMI Large Cap generally owns just 25 to 30 stocks at a time. "We're not big believers in sheer numbers of names," says English.

Neither is Don Yacktman, a comanager of the Yacktman Fund (YACKX), which tops the large-value category. At the end of 2009, the fund owned fewer than 50 securities. "Beyond a certain point," Yacktman says, "the more diversification, the more likely one will get mediocre returns."

Meanwhile, for its part, Fidelity Select Medical Equipment and Systems (FSMEX), the best-ranked health fund, finished 2009 with just under 60 stock holdings.

Broadly speaking, running a heavily concentrated fund is a risky proposition. If even one bet goes sour, the fund is certain to feel the blow. At the same time, though, concentrated portfolios allow managers to invest only in companies they know intimately. "Concentrated portfolios can be more volatile but aren't necessarily so," says Adam Bold, the founder of the Mutual Fund Store, an investment management firm with more than 65 U.S. locations.

Another measure of portfolio conviction is a fund's turnover ratio, which quantifies how frequently management trades. Funds with low ratios have buy-and-hold mentalities and tend to have high degrees of confidence in their picks. Overall, the 11 funds have turnover ratios that are an average of 78.7 percent lower than their category averages.

Low costs. It's one of the perennial mutual fund debates: Should investors focus primarily on costs or on returns? In a vindication of cost-based fund picking, the 11 mutual funds examined by U.S. News have expense ratios (a measure of annual fees) that are, on average, 0.32 percent less than their category averages.

[See Should You Deep-Six Your Mutual Fund?]

"Costs play a big role in fund returns. You tend not to see it if you look too close up. In other words, if you look at a single year, that advantage of, say, 50 basis points or whatever isn't that big, especially in years like '08 or '09 when you've got huge negative or positive returns," says Russel Kinnel, Morningstar's director of mutual fund research. "But over time, it adds up to quite a significant difference."

Overall, this phenomenon is somewhat circular in nature. "Good performance leads to more assets, and more assets generally drive down expenses," says Kinnel.

Still, costs are one of the most contentious issues in the fund industry. "There are some things in life that are worth paying more for. There's a reason that a Mercedes-Benz costs more than a Kia," says Bold. "To me, it doesn't matter how much you pay the mutual fund company. What counts is how much they pay you cash till payday advance."

Ultimately, though, this tension between costs and returns may be more imagined than it is real: The funds that top the U.S. News rankings provide superior returns, and they do so at low costs.

Talented and consistent management. Six of the 11 category leaders have at least one manager who has been on board since the fund's inception. Overall, this continuity of management seems to boost a fund's ability to consistently apply strategies that will pay off in the long term.

English, who has been a comanager of FMI Large Cap since it launched in 2001, says low manager turnover helps funds develop coherent cultures. "The main thing is the culture," he says. "You need continuity because it's hard to spread that culture if you have a lot of change."

For his part, Bold says that picking a good management team is one of the most important decisions an investor can make. "The name of the fund doesn't matter," he says. "What counts are the people who are every day making the buy, sell, and hold decisions."

Among the top-performing funds in the U.S. News rankings, the biggest question mark in the management arena pertains to TCW Total Return (TGLMX), the best-scoring fund in the intermediate-term bond category.

Late last year, TCW fired Jeffrey Gundlach, who had served as the company's chief investment officer and was a celebrated comanager of the flagship Total Return fund. In the aftermath of the firing, Philip Barach, the other Total Return manager, also left TCW, as did dozens of other employees.

[For more on Gundlach's ouster, see The Decade's 10 Worst Fund Disasters.]

With the fund's two managers out the door, TCW quickly turned control of Total Return over to Tad Rivelle of Metropolitan West Asset Management. Rivelle brings significant experience to the job, but it remains to be seen how the shake-up will affect the fund's long-term performance.

Another management theme is that all 11 category leaders have active managers. "Actively managed funds are going to have a wider dispersal of performance," says Kinnel. "Those are the ones that are always going to be at the top and bottom of the rankings." At its most basic level, this cuts to the core of the active-passive debate. A good index fund, Kinnel says, will consistently earn investors market performance, but that's as far as it will go–its mandate isn't to beat the market.

Downside protection. After two bear markets in the course of a single decade, investors have learned the hard way that high-quality funds not only will earn more than the competition during strong markets but will also lose less during downturns.

The 11 top performers' returns beat their category averages by an average of 7.4 percent in 2008, primarily thanks to some well-timed defensive positions. Some residual indicators of these funds' defensive stakes still linger, largely in their cash holdings. As recently as the end of last month, for example, Sextant International (SSIFX), the top-ranked foreign large blend fund, had roughly 40 percent of its portfolio stashed away in cash.

Many of the other top-ranked funds also have large cash stakes. "When we feel that we've filled up on the really good ideas … we'd just as soon sit on some cash. If the opportunities are there, we'll buy things. It's just a matter of if they aren't attractive enough, we'd rather just sit on some [cash]," says Yacktman, whose fund had upwards of 11 percent of its portfolio in cash at the end of last year.

The reason large cash positions helped during the downturn is that they shielded funds from losses in the stock and bond markets. "A lot of the funds with good cash stakes naturally lost less in 2008," says Kinnel. "I don't think there's anything inherently good or bad about running with a lot of cash. I think it's just what works for the manager."

Another way the 11 funds protect their investors during bear markets is through careful stock picking. "We spend a great deal of time protecting the downside by making sure we don't overpay for anything on the front end," says English.

Meanwhile, some of the top-ranked funds hold up decently during recessions because of the very nature of their mandates. Health funds, for example, are commonly considered to be among the most defensive of investments, and they tend to outperform their competitors during weak markets. In 2008, Fidelity Select Medical Equipment & Systems lost 23.4 percent. By comparison, the S&P 500 was down by 38.5 percent that year.

The Best Mutual Funds for 2010

DETROIT — The chief executive of Toyota, Akio Toyoda, accepted an invitation on Thursday from the House Oversight and Government Affairs Committee to testify next week in Washington in the aftermath of the recall of millions of cars because of sudden unintended acceleration.

Mr. Toyoda’s decision to testify came in a brief statement released in late afternoon by the automaker, hours after the invitation was made by Representative Edolphus Towns, a Democrat of New York who chairs the committee.

“I have received Congressman Towns’ invitation to testify before the House Committee on Oversight and Government Reform on February 24 and I accept,” Mr. Toyoda said in the statement. “I look forward to speaking directly with Congress and the American people.”

In a letter earlier to Mr. Toyoda, Mr. Towns said it was important for Mr. Toyoda to appear to “help clarify the situation.”

Previously, the committee had invited the president of Toyota North America, Yoshimi Inaba, to appear at next Wednesday’s hearing, one of three scheduled in Congress in the next two weeks.

“We are pleased Mr. Toyoda accepted the invitation to testify before the committee,” Mr. Towns and the committee’s ranking Republican member, Darrell Issa of California, said in a statement. “We believe his testimony will be helpful in understanding the actions Toyota is taking to ensure the safety of American drivers.”

“As you know, there is widespread public concern regarding reports of sudden unintended acceleration in Toyota motor vehicles,” Mr. Towns wrote earlier in his letter. “Toyota has recalled millions of its vehicles and even halted production. In addition, there are reports that this problem may have been the direct cause of serious injury and even death.”

He continued, “There appears to be growing public confusion regarding which vehicles may be affected and how people should respond. In short, the public is unsure as to what exactly the problem is, whether it is safe to drive their cars, or what they should do about it.”

Mr. Towns said Mr. Toyoda could submit written testimony, but should be prepared to provide a five-minute opening statement and to answer questions.

The decision to testify now turns the spotlight on Toyota, where there has been debate inside the company in the United States and Japan over whether Mr. Toyoda should appear, or send company executives in his place. Until Thursday, neither of the two House or one Senate committees holding hearings on Toyota had invited him to attend.

Analysts and public relations experts say that it was in the company’s interest for Mr. Toyoda to appear.

“This is a moment when Toyota is going to be in the world’s eyes,” said Michael Useem, professor of management at the Wharton School at the University of Pennsylvania. “It’s going to be the most powerful and effective if the C.E.O. does appear.”

But there are enormous risks for any chief executive who testifies before Congress, as leaders from Wall Street and Detroit can attest, and that is causing concern within Toyota, people with knowledge of the company’s deliberations said Wednesday.

Just 14 months ago, the chief executives of the Detroit automakers endured hours of questions before Congressional committees, along with heated criticism over their use of corporate jets best humidifiers.

In 2000, Jacques Nasser, chief executive of Ford, and Masatoshi Ono, his counterpart at Japanese tire maker Bridgestone/Firestone, also were questioned by members of Congress after accidents involving exploding tires on the Ford Explorer. Both left their companies within about a year.

In the hearings next week, the role of N.H.T.S.A., the federal safety agency, is also expected to be addressed, including whether it acted promptly enough on information it received from consumers.

They are set for Tuesday, by the House Energy and Commerce Committee, and Wednesday, by the House Oversight and Government Reform Committee. (The energy panel moved up its hearing.)

The energy panel has invited James Lentz, the president of Toyota Motor Sales U.S.A., to testify at its hearing on Tuesday.

On Thursday, the Texas governor, Rick Perry, sent a letter to a member of the committee, reminding him of the importance of the company to the Texas economy. Toyota has a truck plant in San Antonio that employs 3,000 people, while the state’s 83 dealers employ another 7,500 people.

In the letter to Representative Joe L. Barton, a Republican of Texas, Mr. Perry said it appeared negative news about the company “is being encouraged by plaintiffs’ trial lawyers, union activists and those interested in cutting Toyota’s market share.”

Mr. Perry went on, “Toyota is a valued employer and corporate citizen and an integral part of the Texas economy. Many Texas families depend on Toyota not only for safe, reliable transportation but for a good paycheck.”

Mr. Perry is the latest governor to come to the company’s defense. The governors of Mississippi, Indiana, Kentucky and Alabama, which all have Toyota plants, also have written letters to members of Congress backing the automaker.

Mr. Toyoda would probably find a more hospitable audience if he were to appear on March 2 at a hearing by the Senate Commerce Committee. Its chairman, John D. Rockefeller IV, Democrat of West Virginia, has known the Toyoda family for decades and has a Toyota plant in his home state.

A spokeswoman for the Senate committee said no decision had been made on whether to invite Mr. Toyoda.

One complexity in inviting Mr. Toyoda is that he most likely would speak through a translator during the question-and-answer session, though he is conversant in English. Mr. Toyoda, who attended business school at Babson College and lived in New York and California, spoke in English to an industry conference held last August in northern Michigan, and uses it in interviews. But he has spoken primarily in Japanese during the recent series of news conferences that he has held in Japan.

Mr. Toyoda has traveled to Washington in the past, for meetings with dealers and members of Congress, and has met a number of representatives who have Toyota facilities in their districts. Company executives had planned for him to visit the United States in March and have been exploring ways he could meet with lawmakers outside of a formal Congressional setting.

Toyota Chief Agrees to Testify Before House Panel

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ATHENS, Greece – Greek drivers lined up for gas at the few stations still open Friday as a customs strike against government austerity measures left many pumps running dry.

The fuel shortage was the first serious consequence of growing labor protests against the Socialist government’s emergency spending cuts program, aimed at easing the debt crisis in Greece and shoring up market confidence.

Customs workers have extended their strike against salary freezes and bonus cuts through next Wednesday, when unions across Greece will hold a general strike that is set to bring the country to a standstill.

European finance ministers have told Athens it must demonstrate signs of fiscal improvement by March 16 or it will be ordered to impose even tougher budget cuts. Greece has promised to slash its deficit from an estimated 12.7 percent of gross domestic product to 8.7 percent this year.

Finance Ministry officials say they are under EU pressure to ax the public servants’ so-called “14th salary.” Greek workers get their annual salary divided into 14 payments, with two of them given as holiday bonuses, in a measure originally designed to alleviate those with low incomes.

“We would consider cutting the 14th (salary) to be an act of war,” said Yiannis Papagopoulos, leader of Greece’s trade union umbrella group, the GSEE.

“The measures must be socially just. And this is something that we have not seen so far. They are generally aimed at wage-earners and pensioners, while business remains immune sears kerosene heaters. It is finally time for those who for so many years gathered riches to pay up, invest, and help deal with the major problem at this time, which is unemployment.”

The customs walkout has hampered imports and exports, but the supply of fuel has been the most affected. Gas stations around greater Athens were rationing fuel while stocks lasted. Traffic policemen were posted at some gas stations in Athens as cars queued for hundreds of meters (yards).

“We’re out of regular unleaded, and now we’re only selling diesel,” said attendant Ioanna Antoniou at a gas station in the northern Athens suburb of Halandri. “There were a lot of cars lined up here earlier while we still had some unleaded left.”

Antoniou said the gas station had rationed fuel to limit sales to euro20 ($27) per customer so they could serve more people.

Taxis also held a 24-hour strike Friday, protesting parts of the austerity package that increased fuel tax and will force them to issue receipts. Taxi drivers chanting “The measures mean unemployment” staged a noisy protest in central Athens that choked traffic.

“These measures won’t do anything, all they will do is throw us out of work,” cab driver Anastasis Damianidis said. “We can’t become tax collectors — that’s what they’re trying to do. We will keep demonstrating.”

Fuel shortage hits Greece as strikes grow

BRUSSELS – European Union leaders on Thursday offered Greece moral support but no money to help it weather a debt crisis — vague assurances that didn’t calm the market fear that has shaken the entire EU and undermined the shared euro currency.

The 16 countries that use the euro said only that they “will take determined and coordinated action, if needed, to safeguard financial stability in the euro as a whole.”

But no money or loan guarantees were put on the table in the statement from a summit meeting in Brussels.

Markets appeared disappointed at not seeing a concrete backstop to ward off a potential default by Greece, which needs to borrow euro54 billion this year to cover its outsized budget deficit.

The Greek crisis is the leading edge of the debt troubles that have hit governments in the developed world during the world’s three years of economic turbulence, as they run up deficits bailing out banks and stimulating their economies.

A default would be a serious blow to Europe’s monetary union, and fears that Athens might not be able to pay its debts have already led markets demanding higher borrowing costs for Greece.

There are also concerns that the contagion could spread to other financially wobbly countries, such as Portugal and Spain, and that other governments will have to pay more to borrow.

The leaders said Greece had not requested financial support and called on Athens to push through “in a rigorous and determined manner” its budget cuts that have already triggered protests and strikes — and to prepare bigger cuts if needed.

Neil Mackinnon, global macro strategist at VTB Capital said, “it just looks like a pledge of solidarity, but no actual details of a program which is why the euro is still in the doldrums.”

“They have to stop this right now…they are firefighting at the moment but they need to put out this fire right now,” said Neil Mellor, currency strategist at Bank of New York Mellon. “It won’t appease those looking for a bona fide rescue plan.”

The euro hit a new nine-month low of $1.3635, having been as high as $1.38 earlier in the day on hopes of more substantive Greek bailout news. It was $1.51 in December. German and French stocks were down, while shares in Britain, which doesn’t use the euro, rose.

Markets see Greece at risk of defaulting on its massive borrowings because it faces several years of sluggish growth and mounting debt that current austerity plans may not be able to stem payday loans guaranteed no fax.

Those fiscal problems have also exposed the vulnerability of Europe’s monetary union in times of crisis. Euro members countries agree to limit their budget deficits to 3 percent of gross domestic output because overspending can undermine their shared currency. But those deficit rules have been broken repeatedly and have not been prevented Greece and other countries from trouble.

The leaders may make more comments on Greece later in the day.

Luxembourg government spokesman Guy Schuller said no firm bailout figures are on the table at this point, but many options are under discussion. “Paris and Berlin are at the head” of efforts that would be shared by all 16 eurozone nations, he said.

Among possibilities for Greece that have been floated in recent days are EU member countries guaranteeing Greece’s debt, a special credit line for the Greek government, and bilateral loans.

But German Chancellor Angela Merkel talked down a full financial bailout, but said other European governments would not leave Greece in the lurch.

“We won’t let Greece be alone but there are rules and they have to be respected and based on that we’ll issue a statement and an explanation,” she said.

Greece needs to borrow euro54 billion (nearly $75 billion) from bond markets this year to plug its budget gap. So far it has been able to borrow from markets but is facing increasing interest costs as markets price in higher risk of a possible default.

Greek Prime Minister George Papandreou has promised to reduce Greece’s deficit to 8.7 percent of gross domestic product this year, from 12.7 percent last year, the highest in the EU and four times above an EU limit.

But markets doubt Greece’s credibility after it admitted falsifying statistics for years to make the deficit look smaller. They also worry that Greece can’t carry out any cuts because it risks social unrest.

Greek workers shut down schools, grounded flights and walked out of hospitals Wednesday to protest austerity measures, and a much broader strike is planned for Feb. 24.

___

Associated Press writers Pan Pylas, Angela Charlton and Leslie Patton in Brussels contributed to this report.

EU leaders offer Greece support, but no money

FACTORY GROWTH AHEAD: Manufacturers’ new orders, a signal of future production, soared to their highest point since 2004. Companies said their customers’ inventories were still too low, so they foresee more production as customers restock.

HIRING UNLIKELY SOON: Rising production won’t necessarily equal a bump in full-time hires. Manufacturers still have excess capacity and access to contract labor. Jobs are scarce, and wages and salaries crept up only 0.1 percent in December. Many economists expect economic growth to slow to about 2 cashadvance.5 percent for the full year as spending remains constrained.

HOUSING ROCKY: Construction spending dropped 1.2 percent in December despite support from the Federal Reserve to hold down mortgage rates and a federal tax credit for homebuyers. Both programs are set to expire this spring.

Summary Box: Manufacturing activity shows strength

HONG KONG (Reuters) – Stocks in Asia tumbled on Friday, hurt by weak technology and resources shares and fresh worries about Greece's debt levels, which dragged the euro to a six-month low against the dollar.

However, leading European shares (.FTEU3) were expected to inch higher, halting the market's worst sell-off in a year, despite mounting worries about weak euro zone members.

U.S. stock futures pointed to a slightly weaker open after key Wall Street indexes fell by up to 1.9 percent overnight as poor earnings and outlooks from Motorola (MOT.N) and Qualcomm (QCOM.O) dented optimism in the tech sector. (.N)

A massive recall of millions of vehicles by the world's top automaker Toyota Motor Corp (7203.T) added to concerns about corporate earnings, while falling commodity prices hurt miners such as BHP Billiton Ltd (BHP.AX).

Samsung Electronics (005930.KS), the world's top maker of memory chips and LCD screens, failed to lift the gloom despite its forecast-beating earnings as Asian shares head for their worst monthly decline since January 2009.

Asia Pacific stocks outside Japan as measured by MSCI (.MIAPJ0000PUS) fell 2 percent to a 2-month low, with the materials index down 3.4 percent and the technology index off 1.8 percent.

Concerns over public finances in Greece and Portugal pulled the euro down to a six-month low against the dollar and a nine-month low versus the yen, a trend which has gained momentum as investors cut risky trades which had been funded by borrowing in the yen and dollar.

Investors have also been nagged this week by fears that the global economic recovery may be losing momentum, China's steps to cool its surging economy and political and regulatory wrangling in Washington.

"There is a general adjustment going on in risk appetite and risk sensitivity," said Peter Redward, head of Emerging Asia Research, Barclays Capital.

But he said the recent drop has been orderly and the sell-off has been notable because of the absence of panic.

"It shows there hasn't been a lot of large option-related, speculative position building. There isn't a lot of gamma floating around in terms of equities or fx," he added, referring to derivatives instruments which when triggered can lead to accelerated selling.

According to data from fund tracker EPFR Global, emerging markets equity funds saw their first week of net outflows in the period ended January 27 after 11 weeks of inflows as investors pared back their exposure amid fears of slowing growth in China, where authorities are reining in bank lending.

U.S. equity funds saw their biggest weekly outflow since late June while European equity finds suffered net redemptions for the third week in five, the data showed same day payday loans. But bond funds saw inflows, particularly emerging market local currency-denominated bonds.

The recent strength of the yen currency also hammered Japanese stocks, which received a further setback after Toyota announced it would extend to Europe and China a recall of millions of vehicles due to faulty accelerator pedals and floor mats.

Japan's Nikkei average (.N225) fell 2 percent to a six-week closing low, hurt by negative earnings surprise from chip equipment maker Advantest Corp (6857.T) which came after Nippon Steel Corp's (5401.T) warned of a first annual net loss in seven years. Advantest shares tumbled more than 10 percent.

Toyota fell 2 percent, bringing its losses this week to around 14 percent.

But analysts said broader market selling appeared to be largely driven by short-term investors, and funds with a longer-term horizon remained upbeat on the region's fundamentals.

"Some markets are quite oversold at the moment — the 12 month fundamentals for economies and earning are likely to be reasonably good," said Khiem Do, head of the Asia multi-asset group at Baring Asset Management, which oversees $50 billion.

"Prices are getting cheaper as a result of the liquidation of trading position. Our view is positive over next 6-12 months."

CURRENCIES

Currencies linked to global growth such as the Australian dollar and the New Zealand dollar fell to multi-week lows as investors moved out of higher-risk assets and on caution ahead of U.S. fourth-quarter GDP data to be released later on Friday at 8:30 a.m. EST.

Even though data on Thursday showed U.S. durable goods orders rose and jobless claims fell in the world's largest economy, analysts are wary it is not a strong recovery.

Mixed economic data from the world's other leading economies also continues to keep investors cautious.

After Japan's better-than-expected export growth earlier this week, data released on Friday showed the economy was in the grips of deflation with core consumer prices marking their tenth straight month of decline.

In commodities markets, crude oil looked set for a possible fourth day of losses sparked by forecasts of tepid oil demand in rich industrialized nations. U.S. crude futures eased 20 cents to $73.44 a barrel.

A firm dollar and concern over the pace and scope of credit tightening in China drove Shanghai copper down 3.5 percent, following a drop in London prices in the previous session.

(Editing by Kim Coghill)

Asia shares slide on resources, euro zone woes