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

BERLIN — As protesters upset with sharp cuts in Greece’s budget clashed with police in Athens on Friday, talks here between Greek and German leaders ended with Germany making no public offers of financial support.

In an appearance following their meeting, the German chancellor, Angela Merkel, praised Greece’s latest austerity measures as an “inordinately important step,” and the Greek prime minister, George A. Papandreou, defended the package — which has provoked outrage at home — as critical to stabilizing his country’s finances.

“We had to take difficult decisions, but these decisions were necessary if we are to lead our country out of the crisis,” he said. He added that he had not asked Germany for financial support.

In the Greek capital, meanwhile, strikes hit schools, hospitals and public transportation and police used tear gas on the rioters in Athens as Parliament adopted its latest austerity package. Seven police officers were injured in the protests, among the most violent since Greece’s financial crisis hit, and at least five demonstrators were arrested.

The oversubscribed sale of nearly $7 billion in bonds on Thursday gave the Greek government much-needed breathing room in its scramble for new loans, and also took pressure off Mrs. Merkel to make a firm commitment to help Greece out of its fiscal predicament.

The two countries have been locked in an increasingly bitter war of words fought through the news media and lower-ranking politicians over Greece’s debt problems and the expectation that taxpayers from Germany, Europe’s largest economy, would bail them out. The dispute has exposed a gap between the declarations of solidarity in Europe and the nationalist sentiments that still rule public opinion.

While the Greek government is struggling to convince markets to help it bridge its financing gap, there is plenty at stake for Germany as well. With $43.6 billion in loans, German banks have the third-highest exposure to Greece. Deutsche Bank’s chief executive, Josef Ackermann, even flew to Athens last week to meet with Mr. Papandreou and other senior officials, sparking rumors a deal with the Germans was imminent.

A bailout of Greece would be far less expensive than the potential fallout from a chain reaction a debt crises leading to larger countries with budget woes, like Spain and Italy. But Mrs. Merkel, known at home for her patience and often described by friends and foes alike as a consummate political poker player, has stuck to platitudes, generalities and lectures that the Greeks must do their “own homework.”

“So far she’s kept her cards hidden, which I think is smart,” said Michael Stürmer, the chief correspondent for the German newspaper Die Welt. “In principle, her tactic is to hold herself in reserve, hold Germany in reserve.”

Even before Mr. Papandreou arrived in Berlin Friday, the German economy minister, Rainer Brüderle, had a stark message for him.

“The German government does not intend to give one cent,” Mr. Brüderle told reporters here in the capital.

An interview with Mr. Papandreou published Friday in the German daily the Frankfurter Allgemeine Zeitung ahead of his visit, aimed to calm public sentiment in Germany.

“We have not asked the German taxpayers to rescue us, to pay for our retirements and vacations,” Mr. Papandreou said. “We are not asking for money. What we need is the support of the E.U. and our European partners so that we can receive credit from the market at better terms inferred heaters.” Relations between the two countries have taken a sour turn in recent weeks as German news media outlets accused the Greeks of corruption, tax evasion and falsifying their budget numbers to join the euro zone. Greek politicians in turn have asked for reparations for damage inflicted by Nazi occupiers during World War II.

Germany has the most fiscal flexibility among European Union members to help Greece, but public opposition to any assistance has been vehement. The debate has crystallized broader German misgivings about the European project into a public outcry.

“It’s like a mosaic and the Greece crisis is the last stone,” said Wolfgang Nowak, a former senior adviser to Mrs. Merkel’s predecessor, Gerhard Schröder, and head of Deutsche Bank’s International Forum. “More and more there is the feeling that French farmers, Polish farmers, Spanish infrastructure, that Europe is not a community but something held together by a German pay check.”

While protesters have not taken to the streets of Berlin in large numbers the way they have in Athens, Mrs. Merkel faces rising dissatisfaction at home. A new poll Friday found nearly three-quarters of Germans critical of her government’s performance since she was reelected last September.

With a crucial election in Germany’s largest state, North Rhine-Westphalia, barely two months away, Mrs. Merkel would be taking an enormous political risk by pledging support to Greece, which is seen as having a bloated public sector and excessively generous benefits, even by European standards.

“There would be no understanding in the population or in her own party if Germany would go it alone with help for Greece,” said Jürgen Falter, a political science professor at the University of Mainz.

The German press has been filled with stories detailing the tens of billions of dollars worth of European Union funds Greece has received in recent years. At the same time, stories of tax-dodging doctors and marinas filled with yachts have become staples of news reports here.

One of the most-cited statistics, and for Germans most infuriating, comes from the Organization for Economic Cooperation and Development, showing that the median Greek retiree takes home 95.7 of his or her last salary, while the German pensioner gets only 43 percent. That is viewed as evidence that the Germans have taken painful cuts in their benefits to keep industry competitive and budget deficits under control, while the Greeks have not.

“We Europeans, despite our long history of cooperation, often indulge in the habit of throwing stones at each other, forgetting that we live in a glass house,” said Loukas Tsoukalis, president of the Hellenic Foundation for European and Foreign Policy, an Athens research group. The good news, according to Mr. Tsoukalis, was that a large majority of Greeks recognized that the problem was theirs to solve.

“It’s really something new that you have a government that announces pretty unpleasant measures that will have a real effect on people’s standard of living, and you have 75 percent of Greeks, depending on the opinion poll, who say they agree with the measures,” said Mr. Tsoukalis.

Niki Kitsantonis contributed reporting from Athens.

Germany Makes No Promise of Financial Support to Greece

Hot News: Resolute Energy oil and gas reserves up 31 percent

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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LONDON – European stock markets won some respite Monday ahead of a meeting of eurozone finance ministers in Brussels, where the Greek debt crisis will likely top the agenda. However, public holidays in many Asian countries as well as the U.S. have reined in some of the volatility that gripped markets over the last couple of weeks.

The FTSE 100 index of leading British shares was up 34.48 points, or 0.7 percent, at 5,176.93 while Germany’s DAX rose 34.26 points, or 0.6 percent, at 5,534.65. The CAC-40 in France was 26.54 points, or 0.7 percent, higher at 3,625.61.

The main point of interest for Europe’s markets will continue to be the debt problems afflicting Greece, as finance ministers from the 16 euro countries gather in the wake of last Thursday’s meeting of EU leaders. On Tuesday, the finance ministers of the full 27-nation European Union meet.

Though EU leaders gave Greece some vocal support, no money or guarantee was offered, primarily because Germany was not willing to stump up any cash as it could undermine German bonds and put further pressure on the euro.

Instead, all agreed that Greece’s progress in bringing down its budget deficit will be closely monitored and it would not be allowed to threaten the eurozone. Markets interpreted the latter comment as an implicit guarantee that eurozone policymakers will help the country if its own efforts fail.

An ensuing narrowing in spreads between German and Greek bonds — a sign that the markets think a Greek default is becoming less likely — and a more steady tone to the euro have diminished expectations that anything substantially new will emerge later.

“Risk aversion remains in vogue, though the resilience of equity markets suggests we are seeing nervousness more than outright fear and I sense the dollar’s rally may therefore be losing momentum,” said Kit Juckes, chief economist at ECU Group.

By mid afternoon London time, the euro was unchanged at $1.3610. Last week, at the height of the Greek fiscal concerns, the euro had slid to a nine-month low of $1.3533.

Besides Greece, investors have fretted about the public finances in Spain, Portugal and Ireland easy fast payday loans.

Dubai is also a growing concern amid fears that the highly indebted emirate may repay creditors less than the amounts due — it was November’s debt postponement from Dubai World, a government investment company with around $59 billion in debts, that stoked the markets’ concerns about overborrowed countries.

Dubai’s stock market fell sharply while the cost of insuring against the emirate’s debts edged back up.

“The theme of sovereign debt risk is likely to remain on investors’ agenda as fresh rumblings in Dubai make clear,” said Neil Mackinnon, global macro strategist at VTB Capital.

Earlier, much of Asia was closed for the Lunar New Year holiday, including Hong Kong, Shanghai, Singapore and Seoul.

However, Japanese and Australian markets fell as investors reacted to China’s move late Friday to curtail bank lending to cool off strong growth there.

Better-than-expected Japanese fourth quarter economic growth figures failed to lift Tokyo’s benchmark Nikkei 225 index, which slid 78.89 points, or 0.8 percent, to close at 10,013.30. Analysts said that the monetary tightening in China — the second such move in a month — and uncertainty about the economic outlook in coming quarters weighed on sentiment.

Japan’s gross domestic product grew at an annual pace of 4.6 percent in the October-December period, keeping Japan just ahead of China as the world’s No. 2 economy. Japan’s nominal GDP for the 2009 calendar year came to about $5.1 trillion, ahead of China’s $4.9 trillion.

Australia’s benchmark S&P/ASX200 fell 16.6 points, or 0.4 percent, to 4,545.5.

Wall Street is closed for the Presidents Day holiday.

Elsewhere, oil prices were flat, with benchmark crude for March delivery down 1 cent to $74.12 a barrel.

____

Associated Press Writer Malcolm Foster in Tokyo contributed to this report.

European markets edge up despite Greek debt fears

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

WASHINGTON — Top Republicans on Wednesday were hostile toward President Obama’s plan to create a bipartisan commission on cutting projected deficits, raising doubts about the prospects of a main piece of his budget strategy.

Senator Mitch McConnell of Kentucky, the Republican leader in the Senate, was evasive when pressed by reporters at the Capitol. “I’m not going to decide today what we’re going to do in the future,” he said. But the House Republican leader, Representative John A. Boehner of Ohio, seemed to suggest that Republicans might not take their allotted seats on a commission.

“This sounds like political cover for Washington Democrats who are starting to realize that their out-of-control spending is scaring the hell out of the American people,” Mr. Boehner said of the tentative deal between the White House and Congressional Democratic leaders on Tuesday night.

Under that plan, Mr. Obama would establish by executive order an 18-member bipartisan panel to propose how to balance future tax revenue and entitlement program benefits. The group’s recommendations would be due by Dec. 1 — after the November elections. Then Congressional leaders would put the package to a vote.

Democrats expected that Mr. McConnell and Mr. Boehner would not be supportive given their party’s general opposition to raising taxes and to compromising with Mr. Obama. But Democrats figured that ultimately Republicans would be hard pressed to reject the president’s overture to help reduce the debt, since most of it results from tax and spending policies enacted in recent years, when Republicans controlled the White House and Congress.

The Democrats’ calculations on that and more were upended on Tuesday, when Republicans were emboldened after capturing a Massachusetts Senate seat.

Even two Republicans who have sponsored legislation with Democrats for a bipartisan budget commission — Senator Judd Gregg of New Hampshire, the senior Republican on the Senate Budget Committee, and Representative Frank R. Wolf of Virginia — were quick to oppose a presidential commission.

Mr. Gregg called the idea “a nothing-burger,” and Mr no fax cash advance. Wolf criticized it as “a back-room deal.” They objected that an executive order, unlike a law, could not mandate that Congress vote on the recommendations quickly and without amendments.

Democratic leaders in the House and Senate have pledged to hold a vote. On Wednesday, however, some moderate Senate Democrats were still awaiting “written assurances” from the speaker of the House, Representative Nancy Pelosi, according to Senator Kent Conrad, a Democrat from North Dakota who is chairman of the Senate Budget Committee and was Mr. Gregg’s co-sponsor of a bill to establish a budget commission.

Under the Democrats’ plan, the Senate would vote first on any recommendations from a commission. The House would vote only if senators approved the package.

Though details were in flux, Mr. Obama’s executive order would designate a panel with 10 Democratic members and eight Republicans. Twelve of them would be chosen by the House and Senate leaders of both parties, with each naming three lawmakers. The president would name six people, four Democrats and two Republicans.

The deal on a commission is intended to clear the way for Congress to vote, perhaps on Thursday in the Senate, to raise the $12.4 trillion debt limit enough to allow the government to continue borrowing to pay for its operations through this year.

Also as part of the agreement, Democratic senators are to drop their opposition to a House-passed bill for a so-called pay-go law, which would require that most new spending and tax cuts would have to be offset by tax increases or spending cuts, to avoid adding to the debt.

“We’ve got to get back to fiscal responsibility,” said Representative Steny H. Hoyer of Maryland, the House Democratic leader.

“Of course,” he added, “the key is going to be whether or not Republicans — both in terms of their appointment of people to the commission and cooperation with the statutory pay-go effort — will cooperate.”

Republicans Oppose Obama Deficit Panel

HONG KONG — China’s central bank raised a key interest rate slightly Thursday for the first time in nearly five months, in what economists interpreted as the beginning of a broader move to tighten monetary policy and forestall inflation.

After breaking stride a year ago during the global economic slowdown, the Chinese economy resumed galloping growth over the summer. Government investments, real estate construction and consumer spending are all rising briskly, thanks to a surge in lending by government-controlled banks.

Even exports have begun to recover despite continued economic weakness in the European Union and the United States, China’s two biggest overseas markets.

Raising interest rates may help discourage speculative investments by Chinese companies and individuals in real estate projects and other areas of economic activity. China’s dilemma is that higher rates may also prompt overseas investors seeking higher returns to redouble their efforts to push money into China, despite the country’s stringent capital controls.

The People’s Bank of China announced Thursday that the yield from its weekly sale of three-month central bank bills had inched up to 1.3684 percent. The yield had been stuck at 1.328 percent since Aug. 13.

An increase of less than 0.05 of a percentage point might sound small, but economists said it was a harbinger of more interest rate increases to come.

They cited expectations that consumer and producer prices would rise in the months ahead, particularly compared with low price levels a year ago, when demand temporarily slumped in China as well as the rest of the world.

“It is a turning point,” said Ben Simpfendorfer, an economist in the Hong Kong offices of Royal Bank of Scotland. “There is a convergence of events that will lead to higher rates.”

The increase in the interest rate turned mainland China’s stock markets into Asia’s worst performers Thursday. The CSI 300 index of shares on the Shanghai and Shenzhen stock markets slumped 1.98 percent.

Air freight capacity out of mainland China and Hong Kong was almost fully booked in December, according to shippers, making it likely that China would post strong exports when it released a flood of monthly and annual economic data next week. But in interviews this week, senior corporate executives voiced a range of opinions about whether this strength would continue into the new year, or whether the surge in December represented a flurry of restocking by retailers who went into the Christmas season with meager inventories.

Victor Fung, the nonexecutive chairman of Li & Fung, a Hong Kong-based trading and supply chain management company that is one of the world’s largest, said that overseas demand had not been strong enough to sustain the strength in China’s shipments seen last month. But he added that his own staff was somewhat more optimistic than he is, as are some investment bank economists.

Thursday’s slight increase in interest rates could prove even more significant if it marks the start of an effort by Chinese regulators to limit bank lending. Chinese banks have not only lent heavily at home, but stepped up lending in other countries as well, taking market share from Western banks hobbled by the global financial crisis.

Top officials at the People’s Bank of China concluded an annual two-day policy review on Wednesday with a lengthy statement that had particularly strong cautions against bank lending to sectors of the economy with overcapacity or excessive energy use. Chinese bank regulators also warned banks in late November to show more caution in lending and raise more capital to underpin the surge in lending they have already done; the publicly traded Bank of China is widely expected to take the lead in raising money this year.

Thursday’s interest rate increase is not the first since the bottom of the economic downturn. After cutting interest rates on the same 3-month central bank bills by 2 payday loans.4 percentage points in the last quarter of 2008 as the world’s financial system trembled, the People’s Bank nudged up interest rates by 0.363 from late June to early August last year in a series of increasingly large weekly increases.

But the central bank has been on hold ever since, watching for more evidence of the economy’s health. Thursday’s increase appeared to confirm that the central bank was starting to become concerned again about rising prices, economists said.

Central banks around the world have a history of taking small steps at first when they begin raising interest rates after a long period of keeping them low in response to an economic downturn. Because China does not have a well-developed bond trading market, the yields on the weekly sales of central bank bills are widely watched as a barometer of the central bank’s intentions.

The central bank sells its bills mainly to banks, which pay in renminbi that the central bank then effectively takes out of circulation, slowing growth in the country’s money supply.

Weekly sales of central bank bills are part of a process that economists describe as “sterilization” of China’s extensive intervention in currency markets.

As U.S. dollars and other foreign currencies pour into China from its trade surplus and foreign investment, the central bank prints vast sums of renminbi and issues them to buy those dollars and other currencies.

To prevent all those extra renminbi from feeding inflation, the central bank then claws back the renminbi from the market through a series of measures that include the sale of central bank bills. China also requires commercial banks to keep large reserves on deposit at the central bank, partly to keep the banks from lending too recklessly but also so that the central bank can use that money to finance further purchases of dollars and other foreign exchange.

The goal of sterilization is to keep inflation under control in China while keeping the renminbi weak. That helps make China’s exports competitive overseas and preserves jobs in China, while contributing to unemployment in countries producing rival goods.

The U.S. dollars and other currencies go into China’s foreign exchange reserves, which stood at $2.27 trillion at the end of September; monthly figures through the end of December are due for release next week. China has the biggest foreign exchange reserves of any country, by far.

Because the central bank has essentially borrowed at home to finance that accumulation of reserves, there is considerable worry in China about losses on those reserves if the value of the U.S. dollar weakens further.

Comments on Internet bulletin boards in China about possible currency losses on the foreign exchange reserves are quickly deleted by censors, a sign of officials’ sensitivity.

China’s foreign-exchange regulators have redoubled their efforts in the past two months to prevent inflows of so-called hot money — capital that moves on a short notice to any country providing better returns.

With the exception of investments that bring the transfer of scarce technologies or management expertise, China has a dwindling need for foreign capital. A domestic savings rate of close to 40 percent has made ample money available for new projects.

The central bank is already buying more than $300 billion a year of foreign currencies, mainly dollars, to keep the renminbi weak and preserve the competitiveness of Chinese exports in foreign markets. So the central bank has had little appetite to buy more foreign currencies so as to allow foreigners to invest in China’s growth while preventing the renminbi from appreciating.

To Slow Growth, China Raises an Interest Rate