WASHINGTON (MarketWatch) -- Senators return to Washington on Monday and resume debate on a health-care overhaul, with Democrats aiming to pass a bill by Christmas but facing tough fights on issues ranging from abortion to the strength of a government-run health plan.

Senate Majority Leader Harry Reid needs 60 votes to pass his bill, which seeks to extend insurance coverage to 94% of Americans and set up a public health insurance option. But Republicans and Democrats alike are expected to offer a slew of amendments on the 10-year bill, slowing its passage through the chamber.

The Senate reconvenes at 2 p.m. Eastern.

News Hub: Afghanistan Tops Obama's Policy Agenda

Iran plans to create 10 more uranium facilities and health-care debate moves to the Senate floor, but President Barack Obama's biggest challenge this week will be delivering his Afghanistan strategy speech Tuesday.

Sen. Bernard Sanders, a Vermont independent who votes with the Democrats, said Sunday he's got about 10 amendments and that he wants a strong "public option" in the bill. As currently written, the bill would allow states to opt out of the government-run health plan. Sen. John Rockefeller, D-W.Va., also says he will probably offer an amendment strengthening the plan.

Abortion is another issue that could hold the bill's passage up. Sen. Orrin Hatch, R-Utah, is expected to offer an amendment that would put tough restrictions on abortion in the bill. The House's health-care overhaul bill passed on Nov auto loans. 7 only after anti-abortion lawmakers won passage of an amendment that would bar abortion coverage in the public plan. Read more MarketWatch health-care reform coverage.

Reid must also assuage concerns about the bill's cost. On Sunday, Sen. Evan Bayh, D-Ind., said he'd like to see an enforcement mechanism included in the bill to make sure it won't increase the federal deficit. The Congressional Budget Office says that the $848 billion bill will cut the deficit by $130 billion over 10 years.

"I think we need to have an enforcement mechanism in there, as best we can, to ensure that future Congresses will have the backbone to put some of these efficiencies into place," Bayh said on "Fox News Sunday." See earlier story about health-care.

Senators voted 60-39 on Nov. 21 to allow debate on the bill, a close vote that underscored Democrats' need for as much support as possible. To pass the bill, Reid will need the support of all the Senate's 58 Democrats and its two independents. Congressional Republicans have been nearly unanimous in opposition to the bill, saying it amounts to a government take-over of health care.

"There's no way to fix this bill," said Sen. Jon Kyl, R-Ariz., on Sunday. He said Republicans would like to "start over" on the measure.

Senators return to debate health-care overhaul

NANJING, China (Reuters) – The euro zone does not risk the sort of debt problems plaguing Dubai, senior European Union officials said on Sunday.

Dubai was forced to seek a debt standstill last week, rocking global markets and reviving concerns about the fiscal health of some euro zone members, notably Greece.

Luxembourg Prime Minister Jean-Claude Juncker, who chairs the Eurogroup of euro zone finance ministers, said he saw no risk of such a default in the euro area.

European Central Bank Governor Jean-Claude Trichet "entirely" confirmed what Juncker said guaranteed online payday loans.

The two were speaking at a news conference after a day of talks with Premier Wen Jiabao and other senior Chinese officials.

(Reporting by Simon Rabinovitch and Chris Buckley; Writing by Alan Wheatley; Editing by Mike Nesbit)

Euro zone sees no default spillover from Dubai woes

Hot News: China to keep macroeconomic policy stance in 2010 with flexibility

WASHINGTON (Reuters) – Federal Reserve Chairman Ben Bernanke said on Friday congressional proposals to audit the Fed and strip it of regulatory powers as part of post-crisis reforms could damage prospects for economic and financial health in the future.

"These measures are very much out of step with the global consensus on the appropriate role of central banks, and they would seriously impair the prospects for economic and financial stability in the United States," Bernanke wrote in a column posted on the Washington Post&&9;s website.

The rare newspaper column by a Fed chairman comes shortly before Bernanke testifies before a Senate panel on his renomination to serve a second four-year term at the helm of the central bank and answers a series of steps on Capitol Hill that could diminish the central bank&&9;s role.

Lawmakers are angry with the Fed over its emergency bailouts of major financial firms and its failure to prevent the contagion of mortgage delinquencies that crashed the financial system. A proposal to audit the Fed&&9;s monetary policy deliberations won a committee vote recently over the objections of House Financial Services Committee Chairman Barney Frank.

Frank&&9;s Senate counterpart, Banking Committee Chairman Christopher Dodd, is himself the author of a proposal to consign the Fed solely to making decisions about setting benchmark interest rates.

Bernanke, in his column, conceded the Fed had missed some of the riskiest behavior in the lead up to the crisis. But he said the Fed had helped avoid an even more damaging economic meltdown and has stepped up its policing of the financial system.

"The Fed played a major part in arresting the crisis, and we should be seeking to preserve, not degrade, the institution&&9;s ability to foster financial stability and to promote economic recovery without inflation," he said no fax pay day loans.

Bernanke acknowledged that lawmakers are responding to public anger over the government&&9;s response to the turmoil.

"The Federal Reserve, like other regulators around the world, did not do all that it could have to constrain excessive risk-taking in the financial sector in the period leading up to the crisis," he said.

However, the central bank has moved "aggressively" to fix the problems, Bernanke said. The Fed&&9;s knowledge of complex financial institutions is invaluable in supervising them, he said.

The Fed&&9;s ability to slash interest rates to combat a recession without fueling inflation depends on its political independence he said. Allowing audits of its monetary policy -- as proposed legislation would do -- would increase the perceived influence of Congress on interest rate decisions, he said.

That, in turn "would undermine the confidence the public and the markets have in the Fed to act in the long-term economic interest of the nation," Bernanke wrote.

Frank has said the audit provision is likely to be revisited as legislation winds through both houses of Congress.

Dodd has said his proposal is a starting point for debate.

(Reporting by Mark Felsenthal; Editing Bernard Orr)

Audit would hurt economic prospects: Bernanke

Porsche&S217;s $17.2 billion of debt will be mostly eliminated after the sports-car maker completes its merger with Volkswagen, Martin Winterkorn, chief executive of both companies, said Friday.

&S220;By the time the merger is done, the level of more or less zero will certainly be reached,&S221; Mr. Winterkorn said.

Volkswagen and Porsche agreed in August to merge, ending a four-year feud for control. The accord was reached when debt at Porsche tripled to more than 10 billion euros in six months after the company&S217;s failed takeover of VW fast cash loans.

Deliveries by VW this year will &S220;slightly exceed&S221; the record level of 6.23 million vehicles for 2008, Mr. Winterkorn said in Stuttgart, Germany. Porsche will sell more than 76,000 cars in the current fiscal year, he said.

VW Merger Will Cut Porsche Debt

The dollar slid to a 15-month low against the euro Wednesday as investors fled the safe haven currency on upbeat economic reports.

On Wall Street, shares were slightly higher after the Federal Reserve indicated that interest rates would remain at super-low levels for a while yet and that it was not overly concerned by dollar&S217;s decline.

The euro climbed to $1.5077 in New York trading from $1.4975 late Tuesday, having earlier risen to $1.5096, its highest level since August 2008. The dollar fell to 87.56 Japanese yen from 88.56 yen, after earlier falling to 87.36 yen, its weakest level since January and close to 14-year lows.

The renewed slump in the dollar was driven largely by the publication Tuesday of the minutes to the Fed&S217;s last rate-setting meeting in November.

The Fed said at the time that it planned to keep interest rates at &S220;exceptionally low levels&S221; for an &S220;extended period&S221; &<51;currently the Fed funds rate stands at a range between zero and 0.25 percent -- and that the fall in the dollar had been &S220;orderly.&S221;

Currency traders seized on the reference to the dollar as the Fed is usually wary of talking about changes in currency values.

Stuart Bennett, senior foreign exchange strategist at Calyon Credit Agricole, said there was now a chance that the euro&S217;s breakthrough opened the way for a &S220;rapid&S221; move higher, especially if stocks remain well-bid &<51; for much of the past year, the dollar has moved in opposite direction to stocks.

As the dollar weakened, gold prices hit another record. Crude oil increased $1 to $77.02 a barrel.

On Wall Street, the Dow Jones industrial average rose 15 points, or 0.15 percent. The broader Standard &&8; Poor&S217;s 500-stock index rose 3.13 points, and the Nasdaq rose 5.78 points. Trading volume was thin ahead of the Thanksgiving holiday, which can exacerbate swings in the market low fee payday loans.

At an economic report, the government said new claims for unemployment insurance fell by 35,000 last week to 466,000. That was the fewest claims since September last year, and better than the 500,000 that economists had expected.

The drop in claims suggested that the job market was healing, but concern remains that the improvement will be temporary as the weak economy continues to push unemployment higher. The jobless rate hit 10.2 percent in October and many analysts believe it will keep rising before starting to improve next summer.

In other economic reports, new home sales rose 6.2 percent to an annual rate of 430,000. That was above what economists surveyed by Thomson Reuters had expected.

Separately, the government reported consumer spending rose a brisk 0.7 percent last month, following a 0.6 percent drop in September. It was the best showing since August, when the government&S217;s now-defunct Cash for Clunkers programs enticed people to buy cars.

Not all the day&S217;s news was upbeat. Orders for expensive manufactured goods dropped 0.6 percent last month, the first drop since August. Economists had expected orders would grow.

Doug Roberts, chief investment strategist at Channel Capital Research in Shrewsbury, N.J., said investors were still worried about the sustainability of a recovery but are afraid of missing more of the market&S217;s eight-month rally.

&S220;People may not believe in this market but they&S217;re reluctantly being pulled into it with each of these reports,&S221; Mr. Roberts said.

Overseas, Japan&S217;s Nikkei stock average rose 0.4 percent. In afternoon trading, Britain&S217;s FTSE 100 rose 0.8 percent, Germany&S217;s DAX index rose 0.6 percent, and France&S217;s CAC-40 rose 0.7 percent.

Dollar Continues Its Slide; Markets Rise

NEW YORK (Reuters) – U.S. stock index futures were little changed on Tuesday, ahead of data on third-quarter GDP and consumer confidence and following a strong advance in Monday&&9;s session.

The preliminary estimate on gross domestic product growth, November consumer sentiment data as well as the September Case/Shiller housing price index could provide insight into how firmly a recovery has taken hold.

"The data is going to be the market driver today, and after the rally we had yesterday, investors are waiting to see what the data comes in at before they jump in one way or the other," said Peter Cardillo, chief market economist at Avalon Partners in New York.

"The market&&9;s momentum is still to the upside, so if the data is better than expected, we could see another strong rally."

Hewlett-Packard Co (HPQ.N) reported a quarterly profit that matched its preliminary results late Monday, and said that while the economy remained challenging, it saw signs of a recovery.

H.J. Heinz Co (HNZ.N) posted a drop in second-quarter earnings on Tuesday, but lifted its full-year profit view.

Analog Devices Inc (ADI.N) and Brocade Communications Systems Inc (BRCD.O) both reported quarterly results that beat expectations late Monday quick cash. Analog Devices also forecast higher profit margins.

Investors have been closely watching the technology sector, which is generally considered one of the first to recover from recession.

S&P 500 futures rose 2.3 points and were modestly above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures were up 2 points, while Nasdaq 100 futures added 0.25 points.

In overseas markets, Hong Kong and China stocks fell, with the Shanghai composite index (.SSEC) off 3.5 percent, dragged down by banks. European stocks were little changed, though financials were pressured.

Kenneth Feinberg, the Obama administration&&9;s pay czar, is being pressed by federal officials to relax executive compensation restrictions at American International Group Inc (AIG.N) for 2010, the Wall Street Journal reported, citing sources.

U.S. stocks snapped a three-day losing streak on Monday, as stronger-than-expected home sales data fueled optimism while a weaker dollar boosted commodity-linked stocks.

Futures flat ahead of data, after HP results

Bear Stearns and Lehman Brothers paid their executives largely in stock, and that stock lost most or all of its value when those companies collapsed.

Many people on Wall Street say these examples help make the case that pay incentives were not what caused executives at these fallen firms to take excessive risks.

But three professors at Harvard are disputing that logic in a new study, saying it is an urban myth that executives at Bear and Lehman were wiped out along with their companies.

Though the chiefs at both investment banks lost more than $900 million in their stock holdings, the professors argue that it is important to also consider all the riches the bankers took off the table in the years preceding the crisis.

At Lehman, the top five executives received cash bonuses and proceeds from stock sales totaling $1 billion between 2000 and 2008, and at Bear, the top five received more than $1.4 billion, according to the study, which was released on Sunday night on the Web site of the Program on Corporate Governance at Harvard Law School.

The payouts came in the form of cash bonuses as well as thousands of shares of stock that the executives sold as the share prices of their companies soared. Most of the executives sold far more shares during that period than the number they held when their companies hit bottom.

&S220;There&S217;s no question they would have done massively better had their firms not collapsed,&S221; said Lucian Bebchuk, one of the study&S217;s authors. &S220;But the wealth of those top executives was hardly wiped out. The idea that they were devastated financially has kind of colored the picture people have about what payoffs they were facing.&S221;

Many of the solutions that policy makers and regulators are considering for Wall Street pay are tactics that were already in place at Lehman and Bear. Both firms required executives to wait several years before selling their stock. Both firms paid heavily in stock.

Critics of compensation reform have pointed to these two firms as examples of why change in pay practices may not make a difference and have said the focus should be on things like risk management and regulatory oversight.

However, the Harvard study says the executives may have had reason to focus on the short-term prices they could attain with stock selling.

Mr. Bebchuk has been advising the Treasury Department on compensation at bailed-out companies. He advocates locking up stock compensation for longer periods as well as pay clawback provisions for years later.

James E. Cayne, the former Bear chief executive, stands out for selling fewer shares over the years than he held at the firm&S217;s demise. Mr. Cayne sold 2,720,845 shares for $289 million over eight years, beginning in 2000. He was still holding 5,685,591 shares at the start of 2008 payday loan.

The other Bear executives sold nearly five times as many shares in the years leading up to the firm&S217;s collapse as they held in 2008, and at Lehman, the executives sold about 1.3 times the shares they owned at the end.

The study does not take into account that the executives might have sold shares in part to pay hefty tax bills. Shares of stock are not taxed until they transfer in ownership to executives, which was a period of multiple years at both investment banks. At that time, some executives sold the number of shares needed to pay the tax bill on the shares they still held.

Some compensation experts said over the weekend that the study did not seem to prove that compensation caused the crisis and that it instead just pointed out that the bankers were wealthy.

&S220;I don&S217;t think anybody would question that they were well compensated,&S221; said Ren&>33; Stulz, a professor at Ohio State University who has studied bank compensation. &S220;It&S217;s certainly true that the incentive effects are different if you&S217;re already very wealthy, but that does not mean that the incentive effects are not there.&S221;

Executives at companies that were bailed out by the government have in many cases had their stock holdings recover in value in the last year, and that might have been the case at Bear or Lehman if they had received the same treatment.

Shortly after Bear collapsed, Richard S. Fuld Jr., the chief executive at Lehman, called Peter J. Solomon, an investment banker who used to work at Lehman.

&S220;He reiterated the fact that when firms like Bear Stearns fold and if Lehman Brothers got into trouble, the executives own so much stock that they were losing a lot,&S221; Mr. Solomon recalled over the weekend.

But Mr. Solomon, who has been critical of pay levels and of the fact that investment banks are publicly traded, said the executives who presided over Wall Street&S217;s collapse have suffered, despite the money they retained.

&S220;There&S217;s not one person involved in the demise of Lehman Brothers, Bear or even the troubles that have fallen on Citigroup who thinks they&S217;re living happily ever after,&S221; Mr. Solomon said, &S220;because their reputations have been tarnished, and what do you have at the end of the day but your reputation?&S221;

Through intermediaries, several of the executives examined in the study declined to comment. The other authors of the study were Alma Cohen, a professor visiting Harvard from Tel Aviv University, and Holger Spamann, a lecturer at Harvard.

Executives Kept Wealth as Firms Failed, Study Says

WASHINGTON (MarketWatch) -- After several months of improvement in housing, manufacturing and sales, the U.S. economic recovery appeared to sputter in October, leading investors and analysts to re-evaluate whether their forecasts were too rosy.

The economic data to be released in the holiday-shortened week ahead could provide a few more "what-were-we-thinking?" moments. All in all, though, the data shouldn't kill hopes for modest growth while we wait for the private sector to start hiring again.

Last week, a "reality check" rippled through the markets following weak data on housing starts and industrial production, said Nigel Gault and Brian Bethune, U.S. economists for IHS Global Insight. They expect further "mixed and somewhat ambiguous" reports in the coming week, but, on whole, they say "the evidence is still positive and continues to point to a nascent recovery" that will need "strong policy support" for some time.

MarketWatch consensus See economic calendar date report forecast previous Nov. 23 Existing-home sales 5.74 million 5.57 million Nov. 24 GDP revision 2.8%  3.5% Nov. 24 Consumer confidence 45.5 47.7 Nov. 25 Jobless claims 495,000 505,000 Nov. 25 Durable goods orders 0.5% 1.4% Nov. 25 Durables ex-transportation 0.4% 1.2% Nov. 25 Personal income 0.1% 0.0% Nov. 25 Consumer spending 0.6% -0.5% Nov. 25 New home sales 390,000 402,000 Nov. 25 Consumer sentiment 67.0 66.0 Housing

Even four years after the peak, the state of the housing market remains central to the medium-term outlook.

Construction, sales and prices picked up over recent months after hitting generational lows, boosted in part by federal policies and in part by improvement in some of the fundamentals. But the weakening in the October data ahead of the anticipated expiration of the federal home-buying subsidy has put the strength of those fundamentals to the test.

The home-buyer tax credit, of course, has now been extended and even expanded. But buyers and builders didn't know that in October.

Last week, we found out that builders cut back on permits and starts on single-family homes in October, in anticipation that the tax credit would expire on Nov. 30.

This week, we'll get October data on sales of new and existing homes.

Economists surveyed by MarketWatch expect sales of existing homes to rise about 3% to a seasonally adjusted annual rate of 5.74 million. It would be the highest sales rate since June 2007. And it would reflect some sales of buyers rushing to get in ahead of the Nov. 30 deadline. Existing-home sales are recorded at closing.

By contrast, sales of new homes are recorded when the contract is signed, which is at least a month and often much more before the sale closes. To close on a sale before Nov. 30, a buyer would have had to sign contract in September or early October at the latest.

In part because the deadline would have passed for most buyers in October, sales of new homes are projected to have declined about 3% to a seasonally adjusted annual rate of 390,000, the survey says easy payday loans. Sales of new homes have underperformed compared with existing homes, probably because buyers can get a better deal on a foreclosed home or on a home owned by someone who needs to sell, fast.

Federal policies are clearly supporting the market, but there is uncertainty about how strong it would be without the support. Economists for Barclays Capital say that sales of existing homes would have risen 10% without the tax credit, instead of the 24% that has been recorded with it.

Although home prices have fallen and mortgage rates are very low, the housing market faces considerable problems. Foreclosures continue to rise and vacancy rates are at record levels, which mean prices could fall another 5% to 10% by the middle of 2010, according to Jan Hatzius, chief economist for Goldman Sachs.

If prices, sales and construction do sag, banks are likely keep credit extremely tight, which in turn could weigh on the pace of recovery, Hatzius said.

GDP revisions

The other big story for the week could be the revision to third-quarter growth figures. Last month, the Commerce Department said real gross domestic product grew at a 3.5% annualized rate, the first gain in a year. On Tuesday, that figure is likely to be revised to about 2.8%.

The revision comes from more complete data. In the first go-around, the government statisticians must estimate many of the key inputs for September, including foreign trade, inventories and construction spending. Now that those data have been released, it's clear the first estimates were too big.

The largest source of revisions will come from nonresidential construction spending and net exports. Spending on nonresidential structures was weaker than first thought, while imports were stronger than believed, suggesting that more of the gains from increased sales in the third quarter accrued to foreign producers, rather than domestic companies. Inventories will be revised lower.

"Despite the likely downward revision, we still believe that the third quarter will prove to be the first quarter of recovery and that it demonstrates a decisive turn in the economy," wrote economists for Barclays Capital.

Economists see the economy growing at a pace just above its long-term trend. They expect GDP to grow 2.5% in the fourth quarter, 3% in the first quarter of 2010 and 3.5% in the second quarter. That's a far cry from the 6% growth seen in typical V-shaped recoveries, but it's better than a poke in the eye with a sharp stick.

Of course, those are just forecasts. No one really knows for sure how the economy will do over the next 12 to 18 months.

Economic Preview: Do weaker data show recovery is stalling?

BARCELONA/SAN FRANCISCO (Reuters) – Chip stocks fell on Thursday after Bank of America Merrill Lynch downgraded the sector on a possible inventory correction, although two of Europe&&9;s top chipmakers were upbeat about recovery prospects.

BofA Merrill Lynch lowered its 2010 growth forecast for the global semiconductor industry and downgraded 10 chipmakers, including Intel Corp (INTC.O), turning more cautious on the group on expectations of a modest overshoot in global supply chain inventories.

"While we believe the correction will likely prove short and shallow, we think any hint of a correction in the supply chain could punish (semiconductor) stocks," BofA Merrill wrote in a note to clients.

The downgrade came two weeks after Morgan Stanley analyst Mark Lipacis noted that the good news for many semiconductor stocks had already been "baked in" and PC component suppliers would have a difficult time beating expectations.

Auriga analyst Daniel Berenbaum said notions of a strong rebound for the industry next year may not be realistic.

"Things wound up better this year than some of our worst fears, but I think demand has been pulled forward," he said. "I&&9;m concerned that everybody expects a corporate PC refresh in 2010 -- maybe it&&9;ll happen, maybe it won&&9;t happen, but I do believe it&&9;s already built into stocks."

Shares of chipmakers fell across the board on Thursday. Bellwether Intel dropped 4.5 percent, smaller rival Advanced Micro Devices Inc (AMD.N) 2.7 percent and Infineon Technologies AG (IFXGn.DE) fell 7 percent. The DJ STOXX European Technology Index (.SX8P) shed 2.9 percent and the Philadelphia semiconductor index (.SOXX) fell 3.5 percent.

German chip group Infineon was bullish on its fiscal 2010 outlook, saying sales could grow by more than 10 percent if the world economy continued to grow at its present pace. But analysts weren&&9;t convinced.

Traders saw as negative remarks by Infineon Chief Executive Peter Bauer that the company would need to boost profit margins well above 10 percent as it seeks to generate sustainable earnings amid the current recovery quick cash.

"Despite Infineon beating consensus estimates, we expected better numbers for the fourth quarter, as well as a more optimistic outlook for the running quarter, following bullish statements from competitors," Sal Oppenheim analyst Juergen Wagner wrote, keeping a "reduce" rating on the stock.

Dutch chip equipment maker ASML Holding NV (ASML.AS) -- whose order book is viewed as a barometer for major chipmakers such as Intel or Taiwan Semiconductor Manufacturing Co Ltd (2330.TW) -- also said that it still expects order intake in October-December to be at least on the same level as in the previous quarter.

But shares in ASML closed down 6.14 percent after BofA Merrill Lynch downgraded the stock to "neutral" from "buy."

Around the globe, chipmakers are recovering from a prolonged downturn. Samsung Electronics Co Ltd (005930.KS), the world&&9;s top maker of memory chips and LCD screens, in late October posted its best quarterly net profit and forecast a strong 2010 due to global turnaround in the sector.

Earlier this week, research firm Gartner raised its forecasts for the chip market in 2009, saying it now sees it falling 11.4 percent to &&6;226 billion, compared with a previous forecast for a 17 percent fall.

Next year Gartner sees the market growing 13 percent.

Taiwan&&9;s TSMC, the world&&9;s top contract chip maker, also posted its biggest quarterly net profit in a year last month and was bullish about future capital spending, aiming to invest &&6;2.5 billion on upgrading its technology.

(Additional reporting by Tenzin Pema, S. John Tilak in Bangalore; Nicola Leske in Barcelona and Hakan Ersen and Tyler Sitte in Frankfurt; Editing by David Cowell and Gerald E. McCormick)

Chip stocks fall on downgrade, CEOs talk recovery

Hot News: U.S. Q3 seen revised down on widening trade deficit

Most U.S. stocks ended the week with losses, but the Dow Jones Industrial Average notched a small rise for the period thanks to gains on Friday in health care stocks and consumer-related shares. Tech shares were the biggest losers on the week.

The Dow fell 14.28 points or 0.1% on Friday to close at 10,318.16. For the week the index rose 0.5%. The Nasdaq Composite fell 10.78 points or 0.5% to close at 2,146.04 on Friday for a weekly loss of 1%. The broader Standard & Poor's 500 Index dropped 3.52 points or 0.3% to close at 1,091.38. For the week the benchmark index fell 0.2%.

Stay tuned to MarketWatch over the weekend for the latest on the health care reform bill and all the rest of the news you need. Our weekend features include a look at the market for initial public offerings and an examination of how discount airlines are ramping up their Web sites to attack the bigger carriers on a new front.

Please take a few minutes to view our weekly look ahead videos.

U.S. Week Ahead: Housing Data, Holiday Sales

Europe's Week Ahead: LSE, Remy Cointreau Report

Asia's Week Ahead: GDP, Auto Makers In Focus

-- Christopher Noble, assistant managing editor

Visit to the East

President Barack Obama appears to have come away with few tangible gains on the economic and trade front during his first state visit to China, although his message on Internet freedom and human rights are likely to resonate on Chinese Web sites in coming months, analysts say. Some China-watchers cautioned it was too early to say if Obama's trip to the country will make less of an impression than Bill Clinton's 1999 visit. Read more about Obama's trip East.

Debt for sale

Companies are bombarding the bond market with debt sales this month, pushing issuance above $40 billion, as they take advantage of low rates to build acquisition war chests, prepare to buy back stock and build up cash to finance growth. Lockheed Martin Corp. , Cisco Systems Inc. , Waste Management Inc. and Kellogg Co. are among the corporations that have collectively sold $42 billion in debt this month, including $24 billion last week. Read more about the latest moves in the corporate-bond market.

Buying a home on deadline

House shopping usually slows down in the winter, as people put their home searches on hold to trim the tree, buy presents to put under it and avoid the chilly weather. This winter, however, might be different, thanks to the extended -- and expanded -- first-time home-buyer tax credit. Here are five tips on tapping the new tax credit.

Lower profit at Home Depot

Home Depot Inc. reported that its fiscal third-quarter profit fell a less-than-expected 8.9%, after the home-improvement retailer controlled expenses. The company also raised its full-year outlook, even though its implied fourth-quarter forecast fell short of Wall Street expectations. Read more about Home Depot's results.

More losses for GM

Fresh out of bankruptcy, General Motors Co payday loan lenders. reported a third-quarter loss of $1.15 billion this week, as government stimulus programs helped the automaker increase its sales and reduce inventory. Further, the company said it would begin paying down its debt to the U.S. and Canadian governments in December, ahead of schedule, thanks to improving global economic conditions and stabilizing industry sales. Read more about GM's results.

Nestlé takes aim at Starbucks

An instant-coffee war is brewing. A month after Starbucks' Via Ready Brew invaded Nestlé's jealously guarded turf, the giant Swiss food maker has mounted a spirited counteroffensive, passing out free samples of its Nescafé Taster's Choice instant coffee across several key U.S. cities. It's hard to fathom the marketing muscle Nestlé and Starbucks are throwing behind their rival instant brews. But the stakes are enormous. Read more about the instant-coffee market.

Google and Microsoft software battle

Google Inc. and Microsoft Corp. kicked their battle for personal computing supremacy into a higher gear, with Microsoft bragging about strong sales of its latest operating system and Google promoting its contrasting approach to PC operating systems. Read MarketWatch's story about Google and Microsoft's operating system battle.

God Save the Queen

This week, Britain's Labour government detailed a legislative agenda that includes measures to cap bankers' pay and to attack the budget deficit as the nation prepares for an election that must take place by June. Opposition leaders branded the Queen's Speech, written by the government and delivered by Queen Elizabeth II in the House of Lords, as pre-election grandstanding. The Queen's Speech is the central part of the official state opening of Parliament, which marks the beginning of a new, annual parliamentary session. Read more about the Queen's Speech.

Citi makes a move from Claren Road

Citigroup Inc. recently redeemed its investment with Claren Road Asset Management after helping launch the hedge-fund firm in 2005, according to two people familiar with the matter. Citi redeemed all of its investment, roughly $250 million, the people said on condition of anonymity. The decision to withdraw wasn't driven by Claren Road's performance, which has been solid through the financial crisis. Claren Road told one person that Citigroup pulled its investment as part of a broader decision to redeem holdings from outside hedge funds. Read more about Claren Road.

Reform is from Venus

Two women have emerged as leading thinkers and doers in the post-financial crisis world. Sheila Bari of the Federal Deposit Insurance Corporation and Elizabeth Warren who leads Congress's oversight for the $700 billion bank bailout package have been leading the charge for meaningful reform in the face of resistance from the old boy network.

Top Ten: MarketWatch's top stories of the week, Nov. 16-20

Hot News: Casual Male Retail Group posts smaller 3Q loss

WASHINGTON &<51; Flights over much of the eastern United States were delayed Thursday by a pre-dawn failure in a fairly new communications system, which led to the shutdown of a computer that accepts flight plans from the airlines and feeds them to air traffic controllers.

It was the fourth major systemwide disruption attributed to the communications system, which the Federal Aviation Administration began putting into service earlier in this decade as a way to cut costs and assure reliability.

But when it failed, at about 5 a.m. Eastern time on Thursday, the airlines had to send flight plans by fax, and the controllers typed them into their computers, sort of a hunt-and-peck exercise that was so cumbersome that many planes were delayed more than an hour. But there was no risk to planes in flight, according to the F.A.A.

By mid-morning the system was working again, but the backlog caused widespread airport delays.

The crucial computer that was knocked out, the National Airspace Data Interchange Network, situated in Atlanta and with a backup in Salt Lake City, had also failed in August 2008, with a similar result, but for a different reason.

Flight plans typically consist of hundreds of alpha-numeric characters giving the flight number, type of equipment, takeoff location and various intermediate points, with altitudes. When the first failure happened at about 5 a.m. &<51; a router, according to the F.A.A. &<51; it knocked out not only the computer that handles flight plans, but one that sorts through &S220;notices to airmen,&S221; or F.A.A. alerts about short-lived problems like equipment failures or runway closings, and delivers them to pilots.

By early afternoon, the F.A.A.&S217;s online status board was showing the problem limited to the Northeast. The computer that handles the flight plans was repaired by around 9 a low interest payday loans.m., but by then a huge backlog developed.

&S220;It may take many hours for the system to catch up,&S221; the National Air Traffic Controllers Association said in a statement, adding, &S220;Airport efficiency is being cut by at least half in places like New York - J.F.K.&S221;

Airlines reported problems in other areas as well. Around the country, planeloads of passengers heard pilots blame the air traffic system as they sat on the tarmac.

AirTran Airways, based in Orlando, Fla., quickly announced that passengers with tickets for Thursday could rebook without charge, as is commonly done in storms.

The aviation agency&S217;s data processing system has a variety of problems. While it was hailed as a marvel when it was introduced decades ago, much of it is written in obsolete computer language and the agency has been slow to provide updates. And with a requirement for up-to-the-minute, round-the-clock performance, parts of the system have crashed while technicians tried to install upgrades, like uninterruptible power supplies, or software fixes.

Each failure causes frustration. At LaGuardia Airport in New York on Thursday morning, Gilbert Valdez, a teacher a the University of Tricosi in Chicago, who flies in four or five times a year, showed up early for his 2 p.m. flight home because he had heard about the disruption.

&S220;It&S217;s kind of nerve wracking because I don&S217;t want to be stranded at LaGuardia,&S221; Mr. Valdez said. &S220;I just want to get home.&S221;

Micheline Maynard contributed reporting from Detroit, and Brian Knowlton from Washington.

Backlog of Flight Delays After Computer Problems

ST. LOUIS (Reuters) – A senior U.S. Federal Reserve official said on Wednesday the central bank may start tightening financial conditions by adjusting its extensive purchase programs, rather than by raising interest rates.

"The market&&9;s focus on interest rates is disappointing, given quantitative easing," Bullard said, according to excerpts of remarks prepared for delivery to a group of bankers. "Markets should be focusing on quantitative monetary policy rather than interest rate policy," he said.

"The main challenge for monetary policy going forward will be how to adjust the asset purchase program without generating inflation while interest rates are near zero," Bullard said business card.

Medium-term inflation hinges on what the Fed will do with this program, he said.

The Fed has committed to buy up to &&6;1.725 trillion in mortgage-related securities by the end of March.

Inflation is still low, but commodity prices are volatile and uncertainty over inflation is elevated compared with the fall of 2008, Bullard said.

The expansion of the Fed&&9;s balance sheet has helped restore financial health after the crisis, but it creates an inflation risk, he said.

(Reporting by Mark Felsenthal, Editing by Chizu Nomiyama)

Fed's Bullard: Shrinking reserves key to exit

SAN DIEGO (MarketWatch) -- The Federal Housing Administration is considering a variety of changes -- including requiring larger down payments for FHA-insured mortgages, demanding higher credit scores of FHA borrowers and upping FHA mortgage premiums -- to manage risk as it deals with losses in its capital reserve fund, FHA Commissioner David H. Stevens said Saturday.

"Nothing is off the table," Stevens said at the National Association of Realtors' annual conference, being held in San Diego this weekend. "I will consider everything, and I've already made several risk changes to manage the portfolio."

Yet while there is concern about the FHA's finances, its situation doesn't resemble the losses seen in the subprime mortgage market, he said.

A report released in the past week showed that the FHA has sustained significant losses from loans made before this year, as the country's foreclosure problem deepened. Its capital reserves have fallen below the threshold mandated by Congress.

By law, FHA must have two reserve accounts, Stevens explained to the Realtor audience. One is to hold funds to pay all forecasted losses, he said.

Then, "there's a secondary account, it's an excess valve that is used to pay unforecasted losses," he said. The creation of the secondary account is why FHA is "still standing while many others did not survive this tumultuous time," he said.

That secondary account is also the cause of concern.

The independent study projected that the secondary account was 0.53% of the total insurance in force this year -- below the 2% statutory threshold, according to a news release from the U.S. Department of Housing and Urban Development. That said, by combining both accounts, FHA holds $31 billion in reserves, or more than 4.5% of total insurance in force.

The study concluded that under most economic scenarios, the FHA's reserves would remain above zero. Still, some have compared FHA's troubles to those that brought down the subprime market -- a comparison Stevens says isn't fair.

Stevens said quality of FHA loans is much better than risky subprime products that became popular during the real-estate boom.

FHA-backed mortgages are for principal residences, borrowers have to fully document their income, and nearly all of them are 30-year fully amortizing fixed-rate mortgages, he said. That contrasts with poor performing subprime and Alt-a loans that required little if any income documentation and often involved low teaser rates that skyrocketed when the introductory period was over, he said payday loans with no fax.

And recently, the overall credit quality of FHA borrowers has crept up: The average borrower's FICO score today is 693, compared with 633 two years ago.

Taking action

Even though FHA is considering a variety of ways to address the reserve situation, Stevens also said it's important not to jump to conclusions and "overcorrect."

"I am modeling everything right now and looking at impacts. If you are concerned about defaults in the FHA portfolio, there are only a few primary areas that you can look at. One is the [mortgage insurance] premium, second is the qualifying guidelines -- the credit score and the down payment," he said in an interview following his speech.

"But we're doing it all with an eye on our No. 1 priority, which is to get the housing market back on track ... getting stability back in the housing system is the most important thing," he said.

Those in the real-estate industry are concerned about any action that would reduce available mortgage money. If down payment requirements for FHA rise, for example, that will take some prospective buyers out of the market and slow a recovery, said Helen Hanna Casey, president of Howard Hanna Real Estate Services, during an earlier panel on Saturday.

FHA popularity

To give an idea of FHA's recent popularity, half of the FHA's current portfolio was originated this year, Stevens said.

In the second quarter, nearly 50% of all first-time buyers in the market used a loan insured by the FHA. FHA-insured loans typically require a 3.5% down payment, which can be helpful for those buying their first home.

FHA backed about $360 billion in mortgages in 2009 and forecasts it will back $400 billion next year, Stevens said.

But FHA won't play this large of a role in the lending market forever. And it shouldn't, Stevens said.

"We are a counter-cyclical provider of capital to the housing finance system, and for it to be this large is concerning to everyone in the administration. We're filling the role and will continue to fill the role, but ultimately have to be concerned about private capital returning to the system," Stevens said.

FHA considering changes in wake of reserve losses

TOKYO/AMSTERDAM (Reuters) – Japan&&9;s Canon (7751.T) plans to buy Dutch copier and printer maker Oce (OCEN.AS) for 730 million euros (&&6;1.09 billion), challenging rivals Ricoh (7752.T) and Xerox (XRX.N) in a hunt for growth during the sector downturn.

Copier and digital camera maker Canon and Oce said in a joint statement Monday that Canon intends to offer 8.60 euros per share, or 730 million euros, for Oce&&9;s outstanding shares. The offer represents a premium of 70 percent to Oce&&9;s Friday close.

Canon&&9;s offer follows little over a year after Japan&&9;s Ricoh, the world&&9;s largest copier maker, bought U.S. office equipment distributor Ikon Office Solutions, a deal which hit Canon&&9;s U.S. operations hard as Canon machines had represented 60 percent of the products Ikon handled before the acquisition.

Canon, Oce and rivals have suffered from the economic slump, which forced companies to cut spending, including costs on copying and printing.

Oce, which was loss-making in the past two quarters, has been cutting costs and jobs and has not paid a final 2008 dividend, while Canon and Ricoh reported sharp falls in their quarterly profit last month.

"The deterioration of the economic market circumstances has influenced the performance of the industry but it was not the initiator for the strategic review process which, after thorough and careful evaluation, led to this proposal of joining forces with Canon," Oce CEO Rokus van Iperen told reporters.

Canon and Oce products are mutually supplementary, with the Japanese company having strength in regular office machines and mid- to lower-end production printers, while Oce excels in high-end production printers and advertisement-use large-sized printers, the Tokyo-based company said.

Production printers, or digital commercial printers, are used to print such documents as product manuals and direct mail quickly and in large volume, and are a fast-growing segment of the global printer market.

Oce shares were up 68.5 percent at 8.53 euros by 1119 GMT, after earlier reaching their highest level since June last year.

Including debt and other obligations, the deal values Oce -- which competes with Xerox (XRX payday loans.N) and Konica Minolta Holdings (4902.T) -- at about 1.5 billion euros (&&6;2.2 billion), Van Iperen said.

HP, KYOCERA POSSIBLE COUNTERBIDDERS

Analysts said the deal was good for Oce shareholders, as it solved most or all of the problems the company faced due to the drop in demand. They were divided about a possible rival offer.

SNS Securities said in a note Hewlett-Packard (HPQ.N) and Kyocera (6971.T) had sufficient financing options for a counter bid, while Ricoh and Konica Minolta currently had high debt levels and relatively low earnings generation.

Petercam analyst Eric de Graaf, however, said it was unlikely that another bidder would emerge because of the bid price and commitment of some shareholders and Oce&&9;s boards.

Preference share holders Ducatus, ASR and ING -- which together hold 19 percent of Oce&&9;s share capital -- agreed to sell their interests to Canon, while Oce shareholder Bestinver Gestion S.A. has agreed to tender its 9.5 percent stake.

Oce&&9;s management and supervisory boards support and will recommend the intended offer, Oce and Canon said.

Canon, the world&&9;s largest digital camera maker, is Japan&&9;s 6th-most valuable company with market capitalization totaling &&6;50 billion. Its printers and copiers accounted for 65 percent of total revenues in 2008.

Analysts said the deal is positive for Canon, while potentially negative for rival Japanese copier and printer maker Konica Minolta, which is in a business alliance with Oce.

"Konica Minolta procures high-end production printing machines from Oce, while Oce procures lower-end machines from Konica Minolta," Mizuho Securities analyst Ryosuke Katsura said.

"(The) chances are Canon machines will replace Konica Minolta gear in this relationship," he said.

Shares in Canon closed down 1.5 percent at 3,370 yen ahead of the announcement, underperforming the benchmark Nikkei average (.N225), which gained 0.2 percent.

(&&6;1=89.60 Yen)

(&&6;1=.6685 euros)

(Editing by Joseph Radford, Mike Nesbit and Simon Jessop)

Canon seeks printer power with $1.1 billion Oce bid

US President Barack Obama (C) stands with other APEC leaders for group photo following their evening dinner in Singapore, 14 Nov 2009Pacific Rim leaders have ended their annual APEC gathering with a vow to seek a sustained economic recovery and reject protectionism.The leaders of 21 Pacific Rim economies gathered around the conference table in Singapore.But the big news came outside their formal sessions - in closed door meetings and one-on-one talks.U.S. President Barack Obama focused on the sidelines, engaging in almost non-stop personal diplomacy.

Obama Discusses Climate ChangeHe began early Sunday, with an unexpected meeting on climate change called by the leaders of Mexico and Australia.Over breakfast, the prime minister of Denmark urged the group to back a different approach to save the upcoming international climate conference in Copenhagen.Severe drought is one of the expected consequence in Africa of climate changeWith negotiations on a new global climate agreement in trouble, there was consensus behind an alternative: adopt a political framework in Copenhagen and fill in the details later.

Obama Discusses Nuclear IssuesThere was also an effort to push forward talks on arms control, with President Obama and Russian President Dmitri Medvedev meeting to talk about a successor to the soon-to-expire 1991 Strategic Arms Reduction Treaty.Mr. Obama said he still believes they can get an agreement by the end of the year. The president said, "I am confident if we work hard, and with a sense of urgency about it that we should be able to get that done and I very much feel as if both sides are trying to work through some difficult technical issues but are doing so in good faith easy payday loans."

Russian President Dmitri MedvedevThey also talked about Iran's nuclear program.  President Obama urged Iran once again agree to a deal to ship its uranium out of the country for processing. "We are now running out of time with respect to that approach. And so I discussed with President Medvedev the fact that we have to continue to maintain urgency," said Mr. Obama.

President Medvedev said he still hopes to convince Iran to accept the nuclear deal. The Russian leader said, "We are prepared to work further and I hope that our joint work will yield positive results."

Obama Discusses BurmaBurma's detained opposition leader Aung San Suu Kyi (r) walks with US Assistant Secretary of State Kurt Campbell after their meeting at the Inya Lake Hotel, in Rangoon, Burma, 04 Nov 2009A short time later, Mr. Obama became the first American president to meet with all 10 members of the Association of Southeast Asia nations - including Burma.He called for political reform in Burma and the release of democracy advocate Aug San Suu Kyi, saying, "I reaffirmed the policy I put forward yesterday in Tokyo with regard to Burma."Mr. Obama's last meeting before leaving Singapore was with Indonesian President Susilo Bambang Yudhoyono. President Obama spent a good bit of his childhood in Indonesia, and has referred to himself as America's first Pacific president.In 2011, he will host the annual meeting of Pacific Rim leaders.   And the president announced in Singapore that he plans to host the gathering in his native state, Hawaii.

Obama Holds Key Talks on Sidelines of APEC

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