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

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

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WASHINGTON — “On the Internet, the First Amendment is a local ordinance,” said Fred H. Cate, a law professor at Indiana University. He was talking about last week’s ruling from an Italian court that Google executives had violated Italian privacy law by allowing users to post a video on one of its services.

In one sense, the ruling was a nice discussion starter about how much responsibility to place on services like Google for offensive content that they passively distribute.

But in a deeper sense, it called attention to the profound European commitment to privacy, one that threatens the American conception of free expression and could restrict the flow of information on the Internet to everyone.

“Americans to this day don’t fully appreciate how Europeans regard privacy,” said Jane Kirtley, who teaches media ethics and law at the University of Minnesota. “The reality is that they consider privacy a fundamental human right.”

Google understands.

“The framework in Europe is of privacy as a human-dignity right,” said Nicole Wong, a lawyer with the company. “As enforced in the U.S., it’s a consumer-protection right.”

But Ms. Wong said Google’s policies on invasion of privacy, like its policies on hate speech, pornography and extreme violence, were best applied uniformly around the world. Trying to meet all the differing local standards “will make you tear your hair out and be paralyzed.”

The three Google executives were sentenced to six months in prison for failing to block a video showing an autistic boy being bullied by other students. The video was on line for two months in 2006, and was promptly removed after Google received a formal complaint. The prison sentences were suspended.

Still, Judge Oscar Magi’s ruling, in effect, balanced privacy against free speech and ruled in favor of the former. And given the borderless quality of the Internet, that balance has the potential to affect nations that prefer to tilt toward the values protected by the First Amendment.

“For many purposes, the European Union is today the effective sovereign of global privacy law,” Jack Goldsmith and Tim Wu wrote in their book “Who Controls the Internet?” in 2006.

This may sound odd in America, where the First Amendment has pride of place in the Bill of Rights. In Europe, privacy comes first.

Article 8 of the European Convention on Human Rights says, “Everyone has the right to respect for his private and family life, his home and his correspondence.” The First Amendment’s distant cousin comes later, in Article 10.

Americans like privacy, too, but they think about it in a different way, as an aspect of liberty and a protection against government overreaching, particularly into the home. Continental privacy protections, by contrast, focus on protecting people from having their lives exposed to public view, especially in the mass media.

The title of a Yale Law Journal article by James Q. Whitman captured the tension: “The Two Western Cultures of Privacy: Dignity Versus Liberty.” And historical experience helps explain the differing priorities.

“The privacy protections we see reflected in modern European law are a response to the Gestapo and the Stasi,” Professor Cate said, referring to the reviled Nazi and East German secret police — totalitarian regimes that used informers, surveillance and blackmail to maintain their power, creating a web of anxiety and betrayal that permeated those societies. “We haven’t really lived through that in the United States,” he said.

American experience has been entirely different, said Lee Levine, a Washington lawyer who has taught media law in America and France. “So much of the revolution that created our legal system was a reaction to excesses of government in areas of press and speech,” he said.

It was not until 1890 that Samuel Warren and Louis D flexcheck cash advance. Brandeis wrote “The Right to Privacy,” their groundbreaking Harvard Law Review article. Influential though it was, it came awfully late in the life of the republic.

The word privacy does not appear in the Constitution, and, outside the context of government searches, the document has almost nothing to say about the concept. This was perhaps best demonstrated by how hard the Supreme Court had to work in Griswold v. Connecticut, the 1965 ruling that established a right to marital privacy.

That right, Justice William O. Douglas wrote, was suggested by the First, Third, Fourth, Fifth and Ninth Amendments. The “specific guarantees in the Bill of Rights have penumbras, formed by emanations from those guarantees,” he wrote, in a much-mocked passage.

European courts, by contrast, have Article 8.

In 2004, the European Court of Human Rights relied on it to rule that Princess Caroline of Monaco could block German magazines from publishing pictures of her — quite tame pictures — that had been taken in public. “I believe that the courts have to some extent and under American influence made a fetish of the freedom of the press,” Judge Bostjan M. Zupancic of Slovenia wrote in a concurrence. “It is time that the pendulum swung back to a different kind of balance between what is private and secluded and what is public and unshielded.”

The differing conceptions can have profound consequences. “Europeans are likely to privilege privacy protection over both economic efficiency and speech,” Susan P. Crawford, who teaches Internet law at the University of Michigan, wrote in an e-mail message. “They’re willing to risk huge economic losses and erect trade barriers in order to protect privacy.”

The Italian prosecution would be unimaginable in America. The Communications Decency Act of 1996 leaves online companies free of liability for transmitting most kinds of unlawful material supplied by others. Prosecutions for truthful speech on matters of public interest are almost certainly barred by the First Amendment.

Still, said Marc Rotenberg, executive director of the Electronic Privacy Information Center, there may be something to learn from the Italian episode. “This video was enormously controversial, widely seen and very upsetting,” he said. “Sometimes,” he added, “there are egregious acts and there should be some responsibility.”

But Professor Crawford cautioned against thinking about the problem in categorical terms. Privacy is a broad enough concept, and Europe and America are varied enough, that it is easy to find counterexamples. Britain, for one, is only slowly moving toward the Continental model.

And what Italian prosecutors labeled a battle over principle may well have had another goal.

“Italian media is full of naked women and embarrassing revelations about both celebrities and ordinary people,” Professor Crawford wrote. “Any concern for privacy in this case is a pious cover for an (also naked) assertion of power over online companies.”

In some ways the Italian video represents the easy case. Google was merely a conduit for other people’s information, and that may well be enough to protect it in most of Europe.

The harder cases arise when Google is more active in gathering and disseminating information, as in its StreetView service, which provides ground-level panoramas gathered by cars with cameras on them. The program has generated legal challenges in Switzerland and Germany.

“Google is digitizing the world and expecting the world to conform to Google’s norms and conduct,” said Siva Vaidhyanathan, who teaches media studies and law at the University of Virginia. “That’s a terribly naïve view of privacy and responsibility.”

When American and European Ideas of Privacy Collide

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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

LONDON – The British subsidiary of Reader’s Digest filed for administration, a form of bankruptcy protection, in a move intended to help its parent company complete restructuring under bankruptcy protection in the U.S.

The parent, the Reader’s Digest Association Inc., said the action to isolate the British unit would allow it “to emerge from Chapter 11 promptly.”

The British subsidiary’s filing follows its failure to gain regulatory approval for a plan for funding a pension deficit, the company said Wednesday. Without approval for its plan to deal with the British pension issue, the company said the U.K. unit was unable to meet its debts and sustain its operations, the company said.

Reader’s Digest had hoped to emerge from Chapter 11 protection — under which a company in financial trouble is allowed to shed debts and restructure — by the end of the January but was delayed by the pension problem in Britain.

The pension proposal had been accepted by the company, pension trustees and the U saving account pay day loan.K. Pension Protection Fund, but was rejected by the U.K. Pensions Regulator.

“The agreement, which contemplated a lump sum payment by parent company RDA plus an equity stake in RDA UK, was authorized by the U.S. bankruptcy judge overseeing RDA’s U.S. Chapter 11 proceedings, and would have relieved RDA UK of significant financial obligations associated with its underfunded UK pension plan,” the company said in a statement from its headquarters in Pleasantville, N.Y.

“Absent an agreement, RDA UK is financially unable to meet those obligations and sustain its operations.”

The British pension issue does not affect any other part of the company, Reader’s Digest said.

A U.S. judge has already approved the company’s Chapter 11 plan, which cuts its debt load to $555 million from $2.2 billion.

Reader’s Digest UK unit files for administration

In 1870, the French novelist Victor Hugo had a vision. Planting an oak tree in his yard, he predicted that by the time it matured, a “United States of Europe” would have sprung up, strengthened by a common currency that would one day make the Continent a force to be reckoned with.

One hundred and forty years later, the dream, like Hugo’s tree, is alive — if a little twisted.

Around Europe, 27 nations now fly the flag of the European Union next to their own. Sixteen have ditched the drachmas, marks and other bills that symbolized their sovereignty to embrace a single currency, the euro, lending new power to their economic and trade bloc.

All that is now being called into question, however, as European leaders struggle to prevent ruinous spending by Greece from spiraling into a wider crisis or even breaking up the euro union. How they handle this problem could either propel Europe to greater economic and political clout in the decades ahead, or downgrade it to a sideshow in a global economic theater directed by China and the United States.

For the moment, things don’t look comforting for the euro. As the troubles in Greece drove the currency ever lower against the dollar last week, Europe’s politicians did what everyone has by now come to expect: they talked about a bailout for Greece, then talked some more about the need to take “coordinated action.”

Yet details of a rescue plan were put off to a future date. No mention was made of how they would prevent Portugal, Spain or other deficit-saddled economies from falling like dominoes. And questions about who would pay for any future blowups were answered with silence.

“Now is the time when Europe needs to speak as one voice,” said Simon Tilford, chief economist at the Center for European Reform in London. “The crisis should lead to political unity, but it could just as easily lead to a divided Europe.”

What explains this inertia? Even as the euro was being conceived, Germany, Europe’s sturdiest economy, was fretting about Europe’s tendency to freeze during a crisis. The German chancellor at the time, Helmut Kohl, and Otmar Issing, a German who was then the chief economist for the European Central Bank, feared that unless they set strict rules on euro membership, the new currency union could stumble.

Germany and other wealthy northern European nations might one day even find themselves transferring taxpayer money to support their poorer kin in the south, among them Greece, Portugal, Spain and Italy cheap pay day loans. Britain, one of Europe’s wealthiest nations, saw the writing on the wall and never surrendered its pound.

The seeds of the current debacle were planted early. In 2003, four years after the euro’s birth, France touched off a firestorm by spending lavishly to tame a recession, declaring with a shrug that it had agreed only to “the principle of Europe.” Nations like Portugal, which made painful budget cuts to qualify for euro membership, asked why they should sacrifice if a heavyweight like France didn’t. Greece and Italy echoed similar views.

With more governments using the euro like a credit card, it was only a matter of time before investors questioned their ability repay debt. In January, when Greece tried to raise funds to pay down some of its 53 billion euro deficit, investors forced the government to pay an annual interest rate of more than 6 percent on bonds that will mature in five years.

Now governments in Spain, Portugal and Italy are also facing demands for higher rates, and fears that they might have to quit the euro club are mounting. On Friday, the French bank Société Générale became the latest to question whether a bailout of Greece simply postponed “the inevitable breakup of the euro zone.”

What this means for dreams of a more united Europe remains far from clear.

When the dust settles, Europe will probably still be a union with separate national parliaments and fiscal policies, says Thomas Mayer, the chief economist of Deutsche Bank. But he says he foresees economic policies that will be more tightly coordinated between countries, with a mechanism to resolve crises like the one brought on by Greece today. If that happens, the number of stable countries adopting the euro would probably grow, cementing Europe’s economic might as the decades pass.

But if the politicians fail, Hugo’s vision of a United States of Europe would become more clouded, and Europe’s economic weight in the world would decline.

Already, some of the small Baltic nations that had been clamoring to get into the euro club are having second thoughts. And if Britons were wary of adopting the euro before, they must surely be nursing a silent schadenfreude as they watch Germany and France scramble to clean up after Greece. Don’t expect them to change their minds any time soon.

Contemplating the Future of the European Union

CAMARILLO, Calif. – The average price of regular gasoline in the United States fell 5.76 cents over a two-week period to $2.67.

That’s according to the national Lundberg Survey of fuel prices released Sunday.

Analyst Trilby Lundberg says the average price for a gallon of mid-grade was $2.80. Premium was at $2.91.

Cheyenne, Wyo., had the lowest average price among cities surveyed at $2 short term personal loan.38 a gallon for regular. Honolulu was the highest at $3.32.

In California, a gallon of regular cost an average of $2.94.

Fresno had the state’s least expensive gas at $2.86 a gallon. San Francisco remained the steepest at $2.97.

Average gas prices down 5.76 cents nationwide

BERLIN/ZURICH (Reuters) – German politicians were divided at the weekend over whether to buy the bank data of up to 1,500 possible tax evaders with accounts in Switzerland that media say an informant has offered to sell authorities.

The respected Frankfurter Allgemeine Zeitung reported that the whistleblower is asking for 2.5 million euros for the confidential data, which tax investigators believe could rake in 100 million euros for German state coffers.

The case risks prompting a fresh row over bank secrecy between Germany and Switzerland. Top Swiss politicians, including President Doris Leuthard, and bankers warned Germany against acquiring the data.

Without citing sources, Financial Times Deutschland reported in its online edition that the data belonged to German clients of HSBC (HSBA.L) and was among the information stolen from its private banking arm in Geneva by ex-employee Herve Falciani.

France already acquired some of that information last year by raiding the computer specialist's house, and used it to track down fraudsters, infuriating Switzerland.

A spokesman for the German Finance Ministry declined to comment on the report but said it would be the responsibility of individual German states to deal with such data.

A senior ally of Chancellor Angela Merkel, Defense Minister Karl-Theodor zu Guttenberg, said Germany would have to carefully check its legal right to purchase the alleged data cash advance.

"I have a problem with handing over money for something that has come into someone's possession in a legally questionable fashion," Guttenberg told Swiss daily Neue Zuercher Zeitung.

Members of the opposition Greens and Social Democrats (SPD) however encouraged the government to buy the data on behalf of "honest taxpayers."

Nicolette Kressl, SPD finance expert, told Die Welt am Sonntag the government should proceed as it did in 2008, when it purchased data on tax evaders from an informant about clients of a Liechtenstein bank.

The case snared former Deutsche Post chief Klaus Zumwinkel, who was given a suspended jail term for evading nearly a million euros in taxes using a Liechtenstein trust.

Former Finance Minister Peer Steinbrueck repeatedly accused Germany's neighbors Switzerland, Liechtenstein and Luxembourg of serving as havens for German tax evaders, but the three countries have taken steps in the last year to improve transparency on taxes amid a global crackdown on tax havens.

(Reporting by Sarah Marsh and Hans-Edzard Busemann in Berlin and Catherine Bosley in Zurich; writing by Sarah Marsh; editing by Andrew Roche)

Germany divided over buying secret Swiss bank data

NEW YORK (MarketWatch) — Citigroup Inc. said Tuesday that it posted a fourth-quarter loss of $7.6 billion, in line with analysts’ estimates, accounting for more than $6 billion in expenses associated with the payback of some government investments.

The $7.6 billion loss amounted to 33 cents a share, compared with a loss of $17.24 billion, or $3.40 a share, in the year-ago quarter.

Citigroup Chief Financial Officer John Gerspach in the company’s fourth-quarter earnings release Tuesday said that although Citi remains “cautious and continues to monitor the future impacts of our current loss mitigation efforts, we continue to see indications that credit may be stabilizing or improving, particularly in Asia and Latin America.”

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The CFO said the company had made “significant progress” in 2009. “While the environment continues to be challenging, we have a strong capital base and client franchise.”

“Provisions and charge-offs were lower than we expected, suggesting that Citi’s outlook for its loan book has improved, particularly in corporate and international portfolios,” Standard & Poor’s analysts said in a Tuesday report prepared for clients. “We think the pace of reserve building will continue to slow, allowing for an earnings improvement in 2010.”

The S&P analysts raised their Citi earnings estimate 2010 by 7 cents, to breakeven, but kept their share-price target price at $4.50, labeling that level “a premium to projected tangible book value, but a discounted multiple to peers.”

Citigroup shares responded initially by retreating 3% in early trades Tuesday. Read more about share price in MarketWatch First Take.

On an adjusted basis, excluding the $6 no fax needed payday loans.2 billion after-tax loss associated with TARP repayment and exiting a loss-sharing agreement, the fourth-quarter net loss was $1.4 billion, or 6 cents a share, the company said. Analysts polled by Thomson Financial had, on average, had expected the company to lose 33 cents a share in the quarter.

Citi said fourth-quarter net credit losses fell by about $800 million from the third quarter to $7.1 billion, marking a second straight quarter of improvement.

It said it added $700 million to its loan-loss reserve, down from roughly $800 million in the prior quarter.

Grooming the ‘dogs’ for a comeback

Despite lackluster recent performance, the Dogs of the Dow investment strategy still has fans. And this year’s roster may be kinder to investors.

The total allowance for loan losses at the end of 2009 was $36 billion, or 6.1% of total loans, compared with $36.4 billion, or 5.9% of total loans, in the third quarter, the bank said.

At year-end, the Tier 1 capital ratio was 11.7%. Tier 1 common ratio was 9.6%, up from 2.3% a year ago. Tier 1 common was $104.6 billion, up from $22.9 billion a year ago.

Citi sees higher credit costs in first quarter of 2010

Citigroup forecast higher credit costs in the first quarter of 2010 as loan losses continue in its the mortgage and credit-card businesses.

However, the financial-services heavyweight said that there could be improvement after the first quarter, depending on the direction of the U.S. economy. The company was also optimistic about its overseas businesses.

Citi shares went on to reverse their morning losses, and then some, climbing 3.2% to $3.54.

“Credit looks much better than we expected,” Jeff Harte, an analyst at Sandler O’Neill, wrote in a note to investors. “Credit improvement seems more pronounced in Citi’s international businesses.”

Citi’s $7.6 bln loss hits Wall Street target

LONDON – Nationalized mortgage lender Northern Rock PLC said Monday it has signed a new four-year sponsorship deal with Newcastle United football club, worth up to 10 million pounds ($16 million).

The deal extends Northern Rock’s relationship with its hometown club as both target renewal — the bank is on the hunt for a buyer to return to the private sector while League Championship leader Newcastle is closing in on promotion to the Premier League after a year in the second tier.

The total value of the contract will vary between 1.5 million pounds and 10 million pounds, depending on Newcastle’s performance on the pitch.

The maximum value will only be realized if the team fulfills expectations and is promoted back to the Premier League — and stays there for the whole of the four-year period beginning next season.

Newcastle-based Northern Rock, which was taken into public ownership in 2008 after it became the first major British victim of the global credit squeeze, said that the agreement represented a good deal for taxpayers.

Northern Rock Chief Executive Gary Hoffman added that it was “an important community link” as he defended the decision to renew the sponsorship deal despite being owned by the government.

“Brand awareness and promotion are important elements in the continuing development of the company,” Hoffman said.

“We remain mindful of our responsibilities under government ownership and only consider those advertising and promotion channels that deliver a high return on investment and good strategic fit,” he added.

Northern Rock was split in two at the beginning of this year, forming a “good” bank that is being readied for a return to the private sector and a “bad” bank that is charged with repaying the taxpayer. Monday’s deal is between the “good” bank and Newcastle United. Reported suitors for the bank include National Australia Bank and Virgin Money.

Newcastle United’s managing director Derek Llambias said extending the sponsorship agreement — Northern Rock’s logo has adorned Newcastle’s Adidas-manufactured jerseys since 2004 — would help the club achieve its goal of a return to the Premier League next season guaranteed pay day loans.

“This alliance underpins the desire of two of the region’s most well known names to continue to work together over the next four years,” Llambias said. “Newcastle United’s aim is to return to the Premier League next season and we believe that collaboration will help both companies achieve our respective goals in the local, national and international marketplace.”

Newcastle is currently at the top of the League Championship table by two points after 24 out of 48 games, leaving it well positioned to achieve promotion.

The Magpies were expected to struggle after leading players Obafemi Martins, Michael Owen, Sebastien Bassong, Damien Duff and Habib Beye left following relegation on the final day of last season.

But coach Chris Hughton rallied the team and has been appointed manager until the end of next season. Newcastle has lost just three league games all season, all of them away from home.

The club’s owner, Mike Ashley, took it off the market last October after failing to find a buyer at the reduced price of 80 million pounds, a bargain compared to the 134 million pounds he paid for it two years ago while it was still in the Premier League.

Ashley is hugely unpopular with fans after overseeing relegation and failing to keep former striker Alan Shearer on as manager.

Fans were also angered by the club’s announcement in October that it is looking to boost revenue by selling naming rights to its famous St. James’ Park stadium for next season.

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AP Sports Writer Stuart Condie in London contributed to this report.

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