Financial thoughts

World stock markets were mixed Wednesday, as a modest improvement in manufacturing data from China offered reassurance over its economic slowdown, though Asian markets fell back from early gains.

Benchmark oil hovered below $99 per barrel while the dollar rose against the euro but fell against the yen.

In early European trading, Britain’s FTSE 100 advanced 0.8 percent to 5,724.91 and Germany’s DAX both rose 1.1 percent at 6,525.76. France’s CAC-40 jumped 1.3 percent to 3,340.45. Wall Street was set to open higher, with Dow Jones industrial futures rising 0.2 percent at 12,607 and S&P 500 futures gaining 0.2 percent at 1,310.40.

A better-than-expected Chinese manufacturing index for January, issued by a government federation, fueled an early rally in most markets across Asia. But that evaporated after the release later in the morning of a competing, seasonally adjusted survey by HSBC suggesting conditions were still deteriorating.

Tokyo’s Nikkei 225 edged up less than 0.1 percent to close at 8,809.79. Hong Kong’s Hang Seng was down 0.3 percent to 20,333.37 while Seoul’s Kospi added 0.2 percent to 1,959.24.

By afternoon, shares in mainland China had retreated back into negative territory, with the benchmark Shanghai Composite Index shedding 1.2 percent to 2,268.08.

“Rumors that pension funds will not be invested in shares have raised worries over inadequate liquidity,” said Cai Dagui, an analyst at Ping’an Securities, based in Shenzhen.

Shares will likely remain unstable as investors await annual earnings reports, he said.

The mixed signals from China compounded uncertainties over its outlook, showing that despite resilient consumer demand exports remain sluggish payday loans with no fax.

Such concerns are especially acute for Australia, whose economy has thrived on exports of coal, iron ore and other commodities to China.

Australia’s S&P/ASX 200 fell 0.9 percent to 4,225.70, while India’s Sensex edged 0.1 percent higher to 17,208.68.

Taiwan, Indonesia and New Zealand gained ground, though Singapore declined.

Overnight Tuesday, an unexpected drop in U.S. consumer confidence dragged shares down on Wall Street, where the Dow Jones industrial average lost 20.81 points, or 0.2 percent, to 12,632.91. The S&P slipped 0.60 point to 1,312.41 while the Nasdaq composite index rose 1.90 points to close at 2,813.84.

Overall, though, U.S. shares had their best start in 15 years, thanks to a modest improvement in the economy. Sentiment was further buoyed by hopes of progress in Europe after leaders there agreed on the broad outlines of a deal to tie the countries that use the euro closer together and on hopes that Greece is close to a debt-reduction deal with private creditors.

Benchmark oil for March delivery gained 38 cents to $98.85 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 30 cents to end at $98.48 per barrel in New York on Tuesday.

In currencies, the euro fell to $1.3070 from $1.3084 late Tuesday in New York. The dollar fell to 76.16 yen from 76.20 yen.

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Private nonresidential construction may pick up this year, as demand grows for new U.S. projects.

The Architecture Billings Index held at 52 last month, a sign of expansion, according to the American Institute of Architects. The commercial and industrial component — a proxy for private building activity — climbed to 54.1 in December, the highest in 10 months, the Washington-based association said Jan. 18.

The monthly survey of U.S.-based architecture firms is a leading indicator of nonresidential construction, said Kermit Baker, chief economist for the association.

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The last big name from the old days at Anheuser-Busch is leaving Pestalozzi Street.

Dave Peacock, who went from August Busch IV’s right-hand man to Carlos Brito’s U.S. point man, resigned from Anheuser-Busch InBev Monday, a move some see as one of the final steps of the brewery’s transition to new ownership.

The 43-year-old – a second-generation A-B employee who met his wife on his first day of work there – says the parting was his idea, and amicable. He’ll remain an adviser to the company, but he wants to do something else while he’s still young enough to do so.

“I’ve been really blessed,” Peacock said. “When you grow up in St. Louis and your dad works for the brewery, you never even dream you’re going to have a shot at the job I had. But it’s time to try something different.”

In leaving, according to regulatory filings, Peacock appears to be walking away from stock options that would today be worth roughly $28 million. The arrangement required that he stay five years after the merger and that the company meet financial targets. It was unclear Monday if he received other compensation upon resigning.

Peacock’s departure comes three years into a transition that has seen many of the brewer’s top local executives leave, and as A-B InBev searches for ways to grow its iconic Budweiser and Bud Light brands despite a tough economy for big beer. The well-liked Peacock – whose title was president of Anheuser-Busch - was in charge of U.S. operations for A-B InBev. He played a key role in helping the Belgian-Brazilian conglomerate absorb its big acquisition, said Tom Pirko, managing director of Bevmark, a food industry consulting firm.

Now, with the takeover fading in the rearview mirror, the challenges are different.

“They’re in to Phase Two now,” Pirko said. “Phase Two is an ability to stabilize and grow the business. That requires new thinking, new blood. The company’s got to deliver in a way that it hasn’t been delivering in the last few years.”

That job will fall to Luiz Edmond, a Brazilian who has been been A-B InBev’s North America zone president, and Peacock’s boss, since the takeover. He’s been based in St. Louis and will remain here, and add Peacock’s U.S. duties to his portfolio.

“Dave has been a great colleague, embracing and leading many changes that we agreed would be difficult, but that would ultimately benefit the U.S. business in the long term,” Edmond said in an e-mail to employees Monday. “He has helped Brito, me and the global and zone management teams in transitioning the company in many ways over the last three years.”

Peacock had worked at Anheuser-Busch since 1992 and rose through the ranks to become its vice president of marketing and a close confidant of August Busch IV. He bled Budweiser, colleagues said, and was widely seen as a rising star in the industry.

Peacock played a crucial role in the days after Anheuser-Busch agreed to InBev’s terms in July 2008. He joined Busch – and did most of the St. Louis brewery’s talking – on a Monday morning conference call with Brito announcing the deal. The next day, according to Dethroning the King, a book by writer Julie McIntosh that chronicles the takeover, it was Peacock who gave Brito a ride to the brewery for his first visit as the new boss.

Peacock’s efforts were noticed, and he was alone among top A-B executives in having a major role at the new company. For the last three years, he helped to manage cuts, smooth relations with employees and distributors, and served as A-B InBev’s face in the U.S., including St. Louis.

But some industry-watchers suspect Peacock had had his fill. The business keeps getting tougher for big brewers, said Harry Schumacher, publisher of trade publication Beer Business Daily. Craft beers and spirits are eating market share, and more fights likely loom with distributors.

“They’re really getting sandwiched from both sides, and they’re going to need some changes,” Schumacher said. “I don’t think Dave wanted to go down that road and be the bad cop.”

In an interview Monday, Peacock said he’d been mulling the move for about a year, and that he’s leaving Anheuser-Busch in good hands, both with Brito and Edmond and with a core of U.S.-based executives who worked under him. He’s not sure what he plans to do next, but said he thinks he’ll stay in St. Louis, where his family lives and his children are in school.

And as for leaving behind those stock options – which were likely to start paying out in less than two years – he said it’s not really about the money.

“I didn’t really mind leaving that money on the table,” Peacock said. “It was just the right time for me.”

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Divers have resumed the search for 21 people still missing after a cruise ship capsized off the Tuscan coast.

Divers were scouring the submerged area of the ship Thursday once officials determined it had stablized after shifting on the rocks a day earlier.

Rough seas were forecast for later in the day, adding an element of uncertainty to the search and plans to begin pumping a half-million gallons of fuel from the vessel.

The missing include a 5-year-old Italian girl and her father. The girl’s mother issued a fresh appeal to speed the search and for passengers who saw the pair to come forward to help determine where they were last seen.

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Many non-stop flights from Europe to the U.S. aren’t: Unusually high winds are forcing airlines flying west across the Atlantic to make unscheduled stops to take on more fuel.

The conditions are causing inconveniences to fliers who are often missing connections once they land, costing the airlines money to rebook or otherwise compensate their customers.

United Continental Holdings (, Fortune 500), which is operating under both the United Airlines and Continental Airlines brands as it moves to complete its merger, said it diverted 43 out of 1,100 flights in December using the Boeing (, Fortune 500) 757 jet flying from Europe to the United States. A year earlier it only had to divert 12 flights.

Company spokeswoman Megan McCarthy said the winds were typically 30 knots in December the previous decade, but they averaged 47 knots last month, with half the month averaging 60 knots.

The unusually high winds and the flight diversions have continued in the first 11 days of January, she said, although she did not have any statistics.

Other airlines have also been affected. AMR () unit American Airlines said it has happened occasionally on the trans-Atlantic routes on which it uses the 757, although it could not provide statistics.

McCarthy does not have any estimates on costs to the airlines from the high winds, but said most of the costs have been associated with payments to customers free 3-in-1 credit report.

"We have been offering compensation as a gesture of good will when circumstances merit," she said.

The eastbound flights are saving fuel due to the unusually strong tail winds. The high winds have also been associated with an unusually mild start to winter in the United States, which has saved the airlines money as well.

The planes typically land at Gander and Goose Bay in the Canadian province of Newfoundland and Labrador. But other fueling stops have been made in Iceland, Ireland, Nova Scotia, Albany, N.Y., and even Stewart International Airport, only 60 miles north of New York City.

Some larger planes have a longer range and are not having to make as many extra stops to refuel. But the 757, which holds about 169 passengers, is common on trans-Atlantic flights.

McCarthy said it has been used for years by both Continental and United, and was not something that was introduced on the routes as a result of the recent merger of the two carriers. 

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Nigerian President Goodluck Jonathan said executive-branch politicians will take a 25 percent pay cut amid labor union plans for a nationwide strike to protest scrapping of fuel subsidies that more than doubled gasoline prices.

The government will reduce overseas traveling and all ministries and departments must cut costs in 2012, Jonathan said, adding that he won

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MEMC Electronic Materials Inc. will slash 1,300 jobs — almost 20 percent of its workforce — and cut production as it copes with plunging prices for polysilicon, the key raw material in solar wafers and semiconductors.

The O’Fallon, Mo.-based company will eliminate 250 U.S. jobs by next spring, including 70 of 830 positions at the company’s corporate headquarters in O’Fallon, spokesman Bill Michalek said. MEMC will idle a polysilicon plant in Merano, Italy, and may close it permanently. It will reduce capacity at a plant in Portland that it acquired last year; and limit the ramp up of its newest silicon wafer plant in Kuching, Malaysia.

Officials said the actions were necessary to align the scope of operations with fast-changing markets that have been increasingly defined by a flood of Chinese-made polysilicon and a slowdown in solar and semiconductor demand.

“It is clear we must adjust our business model,” Ahmad Chatila, MEMC’s chief executive, said on a conference call with analysts and investors. “We believe these actions will strengthen MEMC in the near term and position us for more profitable growth in our core businesses.”

MEMC expects the restructuring to reduce annual operating expenses by more than 15 percent and boost cash flow by $200 million a year.

Theodore O’Neill, a New York-based alternative energy analyst at Wunderlich Securities, said the actions were necessary. But he’s not convinced it will insulate the company from the polysilicon prices that continue to spiral downward.

“The company is doing what I think they have to do,” he said. “My concern is they’re chasing a rabbit down a hole.” On Thursday, O’Neill cut his rating on MEMC shares to “sell” from “buy” and lowered his price target on the stock to $3 from $11.

The polysilicon boom has gone bust in only a few years as manufacturers around the globe simultaneously raced to add production capacity. The result: Prices that topped $400 a kilogram in 2008 have fallen below $40. They have plunged 45 percent just this year.

Meanwhile, the solar energy market in Europe has suffered as subsidies have begun to dry up. And demand for semiconductors has waned, too. Unlike in past years when consumers snapped up LED televisions and iPads, “we don’t have any hot consumer electronic that’s pulling massive amounts of polysilicon through the sales channel,” O’Neill said.

MEMC isn’t alone among polysilicon producers. “Other vendors in the solar supply chain will be forced to take similar action” in 2012, an analyst at Gilford Securities predicted in a research note on Thursday.

Last month, the International Trade Commission agreed to investigate a complaint by seven solar manufacturers that Chinese competitors were dumping products to injure competitors by driving down prices. MEMC was not among them, and is part of a coalition that believes the case could spark a trade dispute and raise prices for the entire industry.

Low-priced Chinese solar products were also cited by California-based Solyndra Inc. in its September bankruptcy. The case has been scrutinized by Republicans in Congress because the company received a half-billion-dollar federal loan guarantee from the Obama administration.

But just as falling prices have hurt solar wafer producers, they have benefited consumers and generated business for U.S. solar installers such as Clayton-based Microgrid Energy, which has seen its volume of solar work triple from last year.

“Probably once a month we see prices come down,” said Marc Lopata, Microgrid’s president.

Lopata said costs for installed solar energy systems have fallen by about 25 percent from a year ago to $6 a watt or less, depending on the size. And with rebates and tax incentives, consumers are getting about 60 percent back.

MEMC said it will combine its struggling solar materials unit, where 45 percent of jobs are being eliminated, with its SunEdison solar development unit under a single management team at the end of the month to squeeze out efficiencies. In some instances, SunEdison will buy solar wafers from other manufacturers rather than use those made in-house.

The company said it will take charges totaling as much as $1.38 billion in the fourth quarter. More than half of the amount is related to the restructuring plan announced Thursday, with the rest a product of likely goodwill impairments and deteriorating business conditions.

Weak solar and semiconductor markets also prompted MEMC to lower its fourth-quarter earnings forecast by 5 cents to 10 cents a share, excluding the charges. The company said revenue could be $239 million less than expected as some of its SunEdsion sales in Europe could get pushed back to 2012.

Shares of MEMC, which had lost nearly two thirds of their value over the past year, fell sharply in early trading Thursday on the New York Stock Exchange but closed down just a penny at $4.20.

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Egypt’s Muslim Brotherhood, emerging as the biggest winner in the first round of parliamentary elections, sought Saturday to reassure Egyptians that it would not sacrifice personal freedoms in promoting Islamic law.

The deputy head of the Brotherhood’s new political party, Essam el-Erian, told The Associated Press in a telephone interview that the group is not interested in imposing Islamic values on Egypt, home to a sizable Christian minority and others who object to being subject to strict Islamic codes.

“We represent a moderate and fair party,” el-Erian said of his Freedom and Justice Party. “We want to apply the basics of Shariah law in a fair way that respects human rights and personal rights,” he said, referring to Islamic law.

The comments were the clearest indication that the Brotherhood was distancing itself from the ultraconservative Islamist Nour Party, which appears to have won the second-largest share of votes in the election’s first phase.

The Nour Party espouses a strict interpretation of Islam similar to that of Saudi Arabia, where the sexes are segregated and women must be veiled and are barred from driving.

Egypt’s election commission has released few official results from the voting on Monday and Tuesday. But preliminary counts have been leaked by judges and individual political groups showing both parties could together control a majority of seats in the lower house of parliament if they did form an alliance.

The Brotherhood recently denied in a statement that it seeks to form an alliance with the Nour Party in parliament, calling it “premature and mere media speculation.”

On Saturday, el-Erian made it clear that the Brotherhood does not share Nour’s more hard-line aspirations to strictly enforce Islamic codes in Egyptians’ daily lives.

“We respect all people in their choice of religion and life,” he said.

Another major check on such an agenda is the council of generals who have run the country since President Hosni Mubarak’s ouster in February. The military council, accused by Egypt’s protest movement of stalling a transition to civilian and democratic rule, is seeking to limit the powers of the next parliament and maintain close oversight over the drafting of a new constitution.

Egypt already uses Shariah law as the basis for legislation, however Egyptian laws remain largely secular as Shariah does not cover all aspects of modern life.

On its English-language Twitter account, the Brotherhood said that its priorities were to fix Egypt’s economy and improve the lives of ordinary Egyptians, “not to change (the) face of Egypt into (an) Islamic state.”

El-Erian urged the Brotherhood’s political rivals to accept the election results.

“We all believe that our success as Egyptians toward democracy is a real success and we want everyone to accept this democratic system. This is the guarantee for stability,” he said.

For decades, Mubarak’s regime suppressed the Brotherhood, which was politically banned but managed to establish a vast network of activists and charities offering free food and medical services throughout the country’s impoverished neighborhoods and villages.

It is the best organized of Egypt’s post-Mubarak political forces.

The vote for parliament’s lower house is taking place over three stages, with 18 provinces in Egypt yet to vote.

Meanwhile, the swearing-in of a new temporary Cabinet was delayed on Saturday due to disagreements over key posts, including over who will lead the ministry in charge of internal security.

An official in the Interior Ministry said several high-ranking security officials have been named as possible replacements but that some have turned down the offer.

Protesters have also strongly objected to the nominations put forward by newly appointed Prime Minister Kamal el-Ganzouri, who served in the same position under ousted President Hosni Mubarak from 1996 to 1999.

The country’s ruling military general, Field Marshal Hussein Tantawi, appointed el-Ganzouri as a new interim prime minister last month after the previous premier’s government resigned in the wake of a police crackdown on protesters that killed over 40 people.

The interim Cabinet will serve until after the parliamentary elections finish in March. A new government is to be formed after the legislature is seated.

Activist Hussein Hammouda, a retired police brigadier, is among those opposed to the names being considered for the Interior Minister post and says someone from outside the police force should be chosen instead.

Protesters in Tahrir Square, the epicenter of Egypt’s protests, released a statement saying they would continue their sit-in while allowing traffic to resume normally in the area.

There were tens of thousands of protesters in the square in the days leading up to the elections, but numbers have dwindled to several hundred since then. Protesters demanding el-Ganzouri be replaced as prime minister said they will keep up another sit-in outside the Cabinet headquarters.

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The worst week for the stock market in two months ended with a whimper in thin trading Friday.

The Dow Jones industrial average lost 4.8 percent this week, while the broader Standard & Poor’s 500 index fell 4.7 percent. Both had their worst weeks since Sept. 23.

Major indexes wavered throughout Friday’s session, which was shortened because it’s the day after Thanksgiving. Worries about Europe’s debt crisis flared up again after Italy had to pay 7.8 percent to borrow for two years at a debt auction. It’s another sign that investors are increasingly hesitant to lend to European countries.

The euro slipped to $1.32, losing 2 percent this week against the dollar. The drop puts the euro at its lowest level since Oct. 4.

Higher interest rates on government debt of Italy, Spain and other European countries have rattled stock markets in recent weeks. When borrowing costs climb above the 7 percent threshold, it deepens investor fears about a government’s ability to manage its debts. Greece, Ireland and Portugal had to seek financial lifelines when their interest rates crossed the same mark.

The Dow fell 25.77 points, or 0.2 percent, to close at 11,231.78. Of the Dow’s 30 stocks, Chevron Corp. lost 1.6 percent Friday, the biggest drop. Travelers Cos. Inc. added 1.2 percent, the largest gain.

The S&P 500 lost 3.12 points, or 0.3 percent, to 1,158.67. The Nasdaq composite dropped 18.57, or 0.8 percent, to close at 2,441.51.

Trading volume was 1.6 billion, less than half the daily average.

Markets were battered this week as governments in Europe and the U.S. struggle to tackle their debts. The Dow lost 248 points on Monday as a Congressional committee failed to reach a deal to cut federal budget deficits. It plunged 236 points Wednesday after investors balked at buying German government debt.

Retailers traded mixed on the Friday after Thanksgiving, the traditional start of the holiday shopping season and usually the busiest day of the year for retailers. Amazon.com Inc. dropped 3.5 percent. Wal-Mart Stores Inc. inched up 0.4 percent.

A record number of people were expected to show up at stores this weekend to take advantage of deep discounts. The National Retail Federation estimates that 152 million people will go shopping over the three days starting on Friday. That would be an increase of 10 percent from last year.

AT&T’s stock dipped less than 1 percent. The company said Thursday that it is budgeting to pay $4 billion in break-up fees if its attempted $39 billion takeover of T-Mobile USA from Deutsche Telekom falls apart.

Four stocks fell for every three that rose on the New York Stock Exchange.

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