NEW YORK (MarketWatch) — Bank stocks led the financial sector lower Monday morning, ahead of details contained in a Democratic bank-reform bill to put before a key Senate panel.

The Keefe Bruyette & Woods Bank ETF shed 0.4%, which helped drive the broader exchange-traded fund Financial Select Sector SPDR down more than 0.5%. Shares of KeyCorp and Citigroup led all decliners.

On the upside, American International Group Inc. and Legg Mason topped the gainers column payday advance loans.

After months of efforts to craft bipartisan legislation, Senate Banking Committee Chairman Chris Dodd, D-Conn., plans to introduce a revised version of sweeping bank reform legislation on Monday, most likely without the support of the panel’s Republican members.

Financial Stocks: U.S. financial stocks slip in early trading

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

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

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

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

I have a frequent and pleasant daydream in which the Virginia lottery board calls and says, "Congratulations! You've won the highest jackpot ever! Would you like to take that in a lump sum or divided up over 30 years?" This is truly the stuff of fantasy, though, particularly because I don't buy lottery tickets. Much more realistic for my family is what to do in the face of too many important financial goals and too little money to fund them all.

For example, we have:

Several children to send to college.A retirement to plan for.The desire for an extra-large emergency fund.

In addition, our 1994 Honda Civic and 2000 Dodge Caravan will someday go to the great junkyard in the sky, leaving us scrambling for replacements. And somewhere along the line, we'd like to take a trip to China when our youngest (who was adopted from Jiangsu province) is old enough to remember it.

How does the average American family meet these kinds of goals? And which should take precedence if you can't contribute to them all? If you have similar questions and concerns, here's how you can set about prioritizing your goals.

Goal 1: Emergency FundIf you can accomplish only one of your goals, this is it. Saving at least $200 to $300 a month in a high-yield savings account would be a good first step. Your emergency fund should include enough money to pay for three to six months' worth of basic living expenses (rent or mortgage, utilities, medical bills, groceries, and the like).

Don't let the large sum intimidate you into not saving; set a goal of having your emergency fund fully funded within three years. If your initial goal is to save $10,000, it'll take just $278 a month for 36 months to reach that milestone.

In a true emergency, you can rely on credit cards. But if you can't pay off that debt soon, you'll quickly find yourself going backward financially. Better to have the money squirreled away for a stormy day and to pretend it doesn't exist until disaster strikes.

Get creative: Make a deal with yourself that any "found" or windfall money will go to your emergency fund. Whether it's a tax refund check, cash back on a credit card, or a gift check from great-uncle Joe, deposit it immediately in your savings account. Hold a yearly yard sale with all proceeds to go to your retirement fund.

Goal 2: RetirementSecond (or even better, concurrently), fund your retirement, especially if your contributions to your work plan are matched by your employer (that's free money — plus tax breaks — that you shouldn't pass up). If you don't save for retirement, you won't be able to retire.

Get creative: Once a debt is paid off (for example, the $185 a month you pay on your college loans) continue taking out $185, but now designate it for retirement business cards. That's a painless way to bulk up your savings.

Goal 3: Save for CollegeIt may feel disloyal to many of you to put your children's higher education funds close to the bottom of the list. After all, we're used to putting our kids' needs first in most every other way. However, think about it this way: An emergency requires that you access money because you so desperately need it. Taking money out of a college account such as a 529 savings plan means that the earnings are taxed as ordinary income, plus you'll be slapped with a 10% penalty.

If you don't save for your kids' education, they aren't out of luck; there are scholarships and loans that can fund their higher education needs. No such resources are available if you didn't save for your retirement; you can't borrow your way into a retirement income, and there aren't Golden Years scholarships.

Get creative: If you'll be using a credit card anyway, why not sign up for a Upromise credit card that lets you save for your child's college education while you spend? When you use these cards at participating merchants, you'll get a small rebate deposited into a 529 savings account for your child. Grandparents can sign up too and link their cards to your child's account.

Goal 4: Vacation FundAs a mental-health therapist, it pains me to put this at the very bottom of the list. After all, a well-balanced life includes relaxation and fun, especially in today's fast-paced world. Time away can help you put things into perspective and help your cares melt away. But the hard truth is that a vacation is a luxury that someone without an emergency fund can't really afford to take. That doesn't mean you shouldn't go for a cheaper version of R&R, however.

Get creative: Cut one of your household perks: Switch to a lower tier of cable, or cancel altogether, cut your lawn yourself, reduce your cell phone charges, or go out to eat less. A savings of just $5 a day adds up to a nifty $1,825 in one year.

In an ideal world, all of us would have enough money for all of the things we want to do. But if your real world involves making tough choices, start with establishing an emergency fund, and follow this roadmap all the way to financial security.

For more Foolishness:

And the Worst Stock for 2010 Is Why Are Homeowners Idiots?6 Companies You Can Buy Today

Juggling Your Financial Goals

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.

__

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

Northern Rock renews Newcastle sponsorship

Hot News: IMF chief: double-dip a risk if stimulus ends to early

IT may not feel that way right now, but the last 10 years may go down in world history as a big success. That idea may be hard to accept in the United States. After all, it was the decade of 9/11, the wars in Iraq and Afghanistan, and the financial crisis, all dramatic and painful events. But in economic terms, at least, the decade was a remarkably good one for many people around the globe.

The raging economic growth rates of China and India are well known, though their rise is part of a broader trend in the economic development of poorer countries. Ideals of prosperity, freedom and the rule of law have probably never been more resonant globally than they’ve been over the last 10 years, even if practice often falls short. And for all of the anticapitalistic rhetoric that has emerged from the financial crisis, national leaders around the world are embracing the commercialization of their economies.

Putting aside the United States, which ranks third, the four most populous countries are China, India, Indonesia and Brazil, accounting for more than 40 percent of the world’s people. And all four have made great strides. Indonesia had solid economic growth during the entire decade, mostly in the 5 to 6 percent annual range. That came after its very turbulent 1990s, marked by a disastrous financial crisis and plummeting standards of living.

Brazil also had a consistently good decade, with growth at times exceeding 5 percent a year. There is lots of talk that the country has finally turned the corner, and, within its borders, there is major worry that its currency is too strong — a problem that many other countries would envy.

Elsewhere in South America, Colombia and Peru have made enormous progress and Chile is on the verge of becoming a “developed” country; it will soon be joining the Organization for Economic Cooperation and Development.

To be sure, in Africa, there is still enormous misery. Nonetheless, overall standards of living rose in a wide variety of countries there, with economic growth for the continent as a whole at more than 5 percent in most years. Many basic essentials, like water, sanitation, electricity and especially telephones, are more commonly available.

One lesson from all of this is that steady economic growth is an underreported news story — and to our own detriment. As human beings, we are prone to focus on very dramatic, visible events, such as confrontations with political enemies or the personal qualities of leaders, whether good or bad. We turn information about politics and economics into stories of good guys versus bad guys and identify progress with the triumph of the good guys. In the process, it’s easy to neglect the underlying forces that improve life in small, hard-to-observe ways, culminating in important changes.

In a given year, an extra percentage point of economic growth may not seem to matter much no fax pay day loan. But, over time, the difference between annual growth of 1 percent and 2 percent determines whether you can double your standard of living every 35 years or every 70 years. At 5 percent annual economic growth, living standards double about every 14 years.

Nonetheless, despite the positive news in much of the world, it’s questionable whether the decade as a whole has been good for Americans, economically speaking. Median wages have not risen much, if at all, and the costs of the financial crisis and irresponsible fiscal policies have become increasingly obvious. Those facts support a pessimistic interpretation.

Still, most economic models suggest that the fundamental source of growth is new ideas, which enable us to produce more from a given set of resources. To the extent that the rest of the world becomes wealthier, there’s more innovation, as my colleague and co-blogger Alex Tabarrok, professor of economics at George Mason University, argued recently. China, for instance, is moving toward the research frontier in areas such as solar power, scientific instruments, engineering and nanoscience, all of which can benefit the United States. Unlike the situation of just a few decades ago, a genius born in Mumbai now stands a good chance of becoming a notable scientist, whether at home or abroad.

It might be pleasant to boast that America is — or should be — a world leader in every area, but the practical reality is that if some other country solves the problem of green energy, so much the better for us.

The subtler point is that a wealthier China, India, Brazil and Indonesia will lead to more customers for new innovations, thereby producing greater rewards for successful entrepreneurs, no matter where they live. There are so many improvements in cellphones these days because there are so many cellphone customers in so many countries.

TO put it bluntly, if the United States takes one step back and the rest of the world takes two steps forward, even in purely selfish terms we should consider accepting the trade-off, if only for the longer run. Most of us gain from the wealth and creativity of other countries, even if we can’t always feel like the top dog.

When asked what he thought of the French Revolution, Zhou Enlai, the premier of China from 1949 until his death in 1976, reportedly replied, “It is too soon to tell.”

That is also a fair response to the last 10 years, and it will be for some time to come. The point remains that if we look beneath the surface just a bit, the picture is a good deal rosier than we might otherwise think.

Tyler Cowen is a professor of economics at George Mason University.

Economic View: For Much of the World, a Fruitful Decade

SHANGHAI — UTStarcom, an American telecommunications company, has agreed to pay $3 million in fines after U.S. officials accused it of a long-running plan to bribe Chinese and other foreign officials with cash, travel junkets and other gifts.

The U.S. Department of Justice and the Securities and Exchange Commission said Thursday that UTStarcom paid nearly $7 million from 2002 to 2007 for hundreds of employees of China’s state-owned telecommunications companies to visit the United States for “training programs” that were often sightseeing vacations to Hawaii, Las Vegas and other tourist spots.

The company, based in Alameda, California, was also accused of offering jobs to the family members of clients, paying clients’ university tuition, helping secure travel visas and arranging for a “consultant” to bribe a government official in Mongolia in order to secure a business deal.

U.S. officials did not say why UTStarcom and its executives were not prosecuted. But the authorities said the actions appeared to have violated the Foreign Corrupt Practices Act, which forbids Americans from bribing government officials while doing business overseas.

Often, U.S. officials choose not to prosecute violators because of the complexities in proving a case beyond a reasonable doubt. Instead, they put pressure on companies to settle with large fines and pledges to change their operations.

In a statement released Thursday, UTStarcom agreed to the fine and said it took responsibility for the actions listed in the government complaints. A company spokesperson could not be reached for comment.

The settlement is a window into how U.S. and European companies sometimes do business in China, where bribery and corruption are widespread.

Every year, tens of thousands of Chinese officials are arrested for corruption. Many legal experts say that steering clear of bribery here has become increasingly difficult, largely because state officials control access to most markets in a booming economy. And often, they want to sell that access.

Two years ago, the S.E.C. accused Lucent Technologies, another telecommunications giant that since 2006 has been a part of Alcatel-Lucent, of spending $10 million for about 1,000 employees of Chinese state-owned companies to travel to the United States and elsewhere from about 2000 to 2003 to inspect Lucent’s facilities and for training payday loan. The S.E.C. said most of those trips did not involve visits to Lucent facilities but instead were sightseeing tours for potential customers to see Hawaii, Las Vegas, the Grand Canyon, Disney World, Universal Studios and other tourist spots. Lucent settled the allegations without admitting or denying wrongdoing.

This past week, China Mobile, one of China’s big state-owned telecommunications companies, said it had removed its vice chairman, Zhang Chunjiang, for “serious economic issues” and “discipline breach,” the Communist Party’s code words for corruption.

For UTStarcom, which designs, produces and sells networking equipment and handsets, China is a key market. From 1998 to 2004, about 75 percent of the company’s sales were to Chinese state-owned companies, according to the Justice Department.

UTStarcom engaged in complex swindle to please its customers in China, according to U.S. officials. Company executives arranged for Chinese officials and their relatives to travel to the United States and falsely recorded some of those trips as “training sessions,” even though no training took place, the officials said. The S.E.C. alleged that there were also “lavish gifts and all-expense paid executive training sessions” in the United States for customers.

“This was apparently a standard practice,” Steven D. Buchholz, an attorney with the S.E.C.’s San Francisco office, said of the junkets. Sometimes, the government said, customers were given cash allowances and on other occasions UTStarcom hired a relative and put them on the payroll, even though they never worked at the company. The company “paid and provided benefits to at least three of these individuals for a period of two years each as if they were real employees, even though they never worked,” the S.E.C. said in its complaint.

U.S. Telecom Firm Pays $3 Million in Fines Over China Business

NEW YORK (Reuters) – U.S. stocks rallied in a brief pre-holiday session on Thursday, closing at 2009 highs, after data showing a drop in initial jobless claims and growth in durable goods orders suggested an economic recovery was picking up steam.

Stocks racked up a fifth day of gains on light volume before the Christmas holiday. After finishing early for Christmas Eve on Thursday, markets will be closed on Friday.

Data showed initial jobless claims fell more than forecast last week to the lowest tally since September 2008, while a separate report showed durable goods orders, excluding transportation, surged 2.0 percent, beating expectations.

The reports were "more wind at the market's back," said

Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

Stocks that have performed well this year received an extra lift from year-end window dressing as portfolio managers sold laggards to buy shares that have rallied recently. Apple Inc (AAPL.O), which has gained 144.9 percent this year, closed at a record high — up 3.4 percent at $209.04. Earlier in the abbreviated session, which ended at 1 p.m., Apple also hit a fresh intraday high of $209.35.

"There's far more people who have gains on a lot of names this year, who are less likely to want to sell," James said.

The Dow Jones industrial average (.DJI) gained 53.66 points, or 0.51 percent, to end at 10,520.10. The Standard & Poor's 500 Index (.SPX) gained 5.89 points, or 0.53 percent, to finish at 1,126.48. The Nasdaq Composite Index (.IXIC) rose 16.05 points, or 0.71 percent, to close at 2,285.69.

NASDAQ UP 45 PERCENT FOR 2009

For the week, the Dow gained 1.9 percent, the S&P 500 rose 2.2 percent, and the Nasdaq jumped 3.4 percent, capping its longest winning streak since October.

With the Dow setting a 14-month closing high on Thursday,

the blue-chip average is up 19 fast payday loan no faxing.9 percent for 2009.

The S&P 500, which also finished Thursday's abbreviated session at a 14-month high, is up 24.7 percent for the year.

The Nasdaq — ending at a 15-month closing high on Thursday — is up an eye-catching 45 percent for 2009.

In Thursday's session, Apple's stock also got a boost as excitement intensified over the expected release of its tablet computer.

Healthcare was the lone S&P 500 sector to end slightly lower after the U.S. Senate approved an overhaul measure Thursday morning.

Health insurer Cigna Corp (CI.N) slipped 0.4 percent to $36.33, and the Morgan Stanley Healthcare Payor Index (.HMO) declined 0.3 percent.

Health insurers and related stocks have rallied recently as legislation appeared less ominous for the sector than originally feared. But the Senate health bill must be reconciled with the measure approved recently by the U.S. House of Representatives, adding to uncertainty.

The U.S. dollar (.DXY) dipped 0.08 percent against a basket of major currencies, which helped push commodity prices higher. That, in turn, lifted shares of natural resource companies. Shares of steelmaker Nucor Corp (NUE.N) gained 2.2 percent to $47.10.

Volume was light on the New York Stock Exchange, with only 319.3 million shares changing hands, sharply below last year's estimated daily average of 1.49 billion. On the Nasdaq, about 613.8 million shares traded, also well below last year's daily average of 2.28 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of 3 to 1, while on the Nasdaq, eight stocks rose for nearly every five that fell.

(Reporting by Leah Schnurr; Editing by Jan Paschal)

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