Finance and Economic

A battle between Libyan troops and rebels spilled over the western border into Tunisia Friday, drawing a sharp rebuke of Moammar Gadhafi’s regime from the neighboring government.

Clashes along the Tunisian border have escalated since Thursday, posing a new challenge for Gadhafi within the western half of the country where he must consolidate his control to cling to power. Rebels captured most of the east early on in the uprising against Gadhafi that began in February.

On the other major front in western Libya, NATO foiled attempts by regime loyalists to close the only access route to the besieged rebel city of Misrata, intercepting boats that were laying anti-ship mines in the waters around the port. The port is the only lifeline for the city of 300,000, which has been under siege for two months.

The government offensive on the Tunisian border along with shelling that killed 15 in Misrata on Friday and the attempt to mine the Misrata port show the regime is redoubling efforts to crush stubborn pockets of resistance in the west.

In the capital Tripoli, residents reported rising tensions over fuel shortages, a result of international sanctions imposed on Gadhafi. Witnesses said there have been clashes between residents and troops, including with stones and tear gas, at gas stations in recent days, after security forces tried to cut into huge lines.

In another indication of shortages, the government sent text messages to mobile phones of armed supporters, urging them to stop firing in the air in order to save ammunition for “our crusader enemies,” said two city residents who spoke on condition of anonymity for fear of reprisals.

Gadhafi has clamped down hard on dissent in the capital. Shooting is heard frequently in Tripoli, some of the volleys fired in the air in pro-Gadhafi rallies. However, opposition figures say there have also been sneak nighttime shooting attacks on army checkpoints in the city.

The actions of the Libyan leader, increasingly isolated since the start of the crisis, drew new condemnations Friday.

The Tunisian Foreign Ministry summoned Libya’s ambassador to convey its “most vigorous protests” for the “serious violations” at the Dhuheiba border area Thursday and Friday, a ministry statement said.

Since early Friday, the Tunisian army had swept through the frontier town Dhuheiba searching for Gadhafi forces who fled to Tunisia following combat with rebels over control of the nearby border crossing. Tunisia’s state news agency, citing the Tunisia military, said battles at the border have left dozens dead However, the number could not be independently confirmed.

Town residents sent out distress calls after several shells fell, according to the Tunisian news agency TAP.

At one point Friday, 15 Libyan military vehicles, carrying troops armed with anti-aircraft guns and rocket launchers, were spotted in Dhuheiba. Town resident Mohamed Hedia said angry Dhuheiba civilians and the families of Libyan rebels who had been staying there set upon the Gadhafi troops, creating a “chaotic situation.” Tunisian forces fired warning shots, Hedia said. Another resident, Ismail al-Wafi, said Libyan troops fired indiscriminately, injuring three people.

The Tunisian army stopped “several members of Gadhafi’s brigades, regrouping them and leading them back to Libyan territory,” the Tunisian Defense Ministry said, according to TAP.

The Tunisian news agency, citing military officials, said dozens of Libyan troops and rebel fighters were killed in the two-day battle over the Dhuheiba crossing which ended with rebels regaining control Friday, after Libyan forces held it for a day. An Associated Press Television News crew spotted the bodies of two Libyan soldiers near the crossing.

The crossing is a strategic lifeline for Libya’s western Nafusa mountain area where members of the ethnic Berber minority _ who have complained of systematic discrimination by the regime _ have been fighting the Gadhafi’s forces for several weeks.

Thousands of residents of the mountain area have fled to Dhuheiba and other Tunisian border towns. TAP said thousands more Libyan refugees streamed into Tunisian overnight.

Near the coast of Misrata, meanwhile, NATO vessels intercepted several boats laying anti-shipping mines, said British Brig. Rob Weighill, director of NATO operations in Libya.

NATO said the sea mines were being laid one to two miles offshore by sinking the inflatable boats on which they were being carried. Three mines were found and disposed of. The alliance alerted Misrata authorities who temporarily closed the port, NATO said. Two aid ships put off their journeys.

Misrata has been under siege by Gadhafi loyalists for two months. Rebels have managed to expel regime forces from the center of the city, but the enclave is isolated and remains dependent for much of its food and other supplies on the sea link with the rebel capital of Benghazi.

It appeared to be the first time sea mines have been used in the Libyan conflict. Under international law, nations laying naval mines must alert shipping about their general locations to avoid accidents.

“It again shows his complete disregard for international law and his willingness to attack humanitarian delivery efforts,” said Weighill, adding that NATO crews disposed of the mines.

Gadhafi loyalists also pounded the city with shells, mortar and anti-aircraft guns from positions on the outskirts of Misrata. In all, 15 people were killed Friday, a majority fighters, but also a 9-year-old boy, said Ahmed Diab, emergency room doctor at the city’s Hikma hospital. He 80 people were wounded, the vast majority by artillery shells fired from the Misrata airport where Gadhafi forces have set up positions.

In one the strikes, Gadhafi forces fired with tanks and anti-aircraft guns on a group of 50 rebel fighters in the village of Zawiyat al-Mahjoub, on the outskirts of the city, said rebel fighter Abdullah Shiguman, 31.

Medics scrambled to evacuate six bodies and 10 wounded people to the hospital. Some of the wounded had lost limbs and huge chunks of flesh. One was a medic who had been shot in the back. Two of the dead were carried in bundled in blankets holding nothing more than body parts.

Rebel field commander Salahidin Badi said Gadhafi’s force had been firing mortars and rockets into the city all morning and that rebels had fired back with mortars. Badi said a shoe factory caught fire during the battle.

NATO has destroyed or damaged 600 targets since the alliance began bombing Gadhafi’s military installations last month, Weighill said. In addition, 19 NATO ships are patrolling the central Mediterranean.

Weighill said the targets hit since last month include 220 tanks and armored personnel carriers, 200 ammunition facilities and 70 surface-to-air missile systems.

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Aetna says its first-quarter profit rose 4 percent as claims left over from the previous quarter came in lower than the health insurer expected. But it says revenue and enrollment dropped.

The insurer also says it has agreed to buy Prodigy Health Group, a large administrator of self-funded health care plans, for about $600 million. New York-based Prodigy operates in 15 states.

The Hartford, Conn., insurer said Thursday its net income rose to $586 million, or $1.50 per share, in the three months that ended March 31 same day payday loans. That’s up from $562.6 million, or $1.28 per share, a year ago. Revenue fell 3 percent to $8.38 billion, and enrollment dropped 5 percent.

Analyst forecast lower behind 96 cents per share on $8.32 billion in revenue.

Aetna is the third largest commercial health insurer behind WellPoint and UnitedHealth.

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Confidence among U.S. consumers increased more than forecast in April, signaling the improving labor market is helping Americans weather rising fuel costs.

The Conference Board’s confidence index rose to 65.4 from a revised 63.8 reading in March, figures from the New York-based private research group showed today. The median forecast of economists surveyed by Bloomberg News called projected an advance to 64.5.

Six straight months of job growth along with joblessness at a two-year low in March are helping sustain consumer purchases, which account for about 70 percent of the economy. At the same time, bigger gains in sentiment may be difficult as households spend more for food and gasoline, which is at the highest level in almost three years.

“Confidence is picking up on the back of an improving labor market and rising stock prices, which are offsetting higher gasoline costs,” said Sal Guatieri, a senior economist at BMO Capital Markets Inc. in Toronto. “Consumers will have both the confidence and the income to keep spending.”

Stocks held earlier gains after the report on optimism over improving corporate earnings. The Standard & Poor’s 500 Index rose 0.4 percent to 1,340.8 at 10:17 a.m. in New York. Treasury securities rose, sending the yield on the benchmark 10-year note down to 3.34 percent from 3.37 percent late yesterday.

Home Prices

Another report today showed residential real estate prices dropped in February by the most in more than a year, a sign the housing market is struggling to stabilize.

The S&P/Case-Shiller index of property values in 20 cities fell 3.3 percent from February 2010, the biggest year-over-year decrease since November 2009.

Estimates for consumer confidence ranged from 57 to 68 in the Bloomberg survey of 69 economists. The measure averaged 97 during the expansion that ended in December 2007.

The group’s measure of present conditions increased to 39.6, the highest since November 2008, from 37.5 a month earlier. The gauge of expectations for the next six months rose to 82.6 from 81.3.

The share of consumers who said jobs are currently plentiful rose to 5.2 percent from 4.6 percent. Those who said jobs are hard to get decreased to 41.8 percent, the fewest since January 2009, from 44.4 percent.

Jobs Outlook

The outlook was less rosy. The percent of respondents expecting more jobs to become available in the next six months decreased to 17 cash advance today.5 from 19.6 the previous month. The share expecting incomes to rise over the next six months improved to 16.7 percent from 15.2 percent.

The report contained one positive bit of news for the housing market, which has lagged behind other parts of the economy since the recession ended in June 2009. The share of Americans planning to buy a house over the next six months increased to 5.5 percent, matching the record high reached in January 1978. Data go back to 1964.

Intentions to purchase automobiles and appliances also improved.

Fuel costs may be preventing bigger gains in confidence. The average price of regular fuel climbed to $3.87 a gallon yesterday, the highest level since August 2008, according to AAA, the nation’s biggest motoring organization.

Confidence ‘Fragile’

“The economic climate is still less than ideal, from a slow and uneven recovery to significantly rising commodity costs and fragile consumer confidence,” Jim Skinner, chief executive officer of McDonald’s Corp. (MCD), said on a conference call with analysts on April 21.

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The Dollar Index fell toward the lowest level in more than two years on speculation the Federal Reserve will reiterate this week its intention to keep interest rates near zero.

The euro rose for a fifth day against the greenback on prospects European Central Bank officials will signal that higher borrowing costs will be necessary to contain inflation. Australia’s dollar climbed to a record as rising gold prices boosted the outlook for the nation’s resource exports.

“What’s behind the dollar’s weakness is the difference in monetary policy in the U.S. from other major economies excluding Japan,” said Daisaku Ueno, president of Gaitame.com Research Institute Ltd. in Tokyo, a unit of Japan’s largest currency margin company. “The European Central Bank will raise interest rates several times this year.”

The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback versus the currencies of six major U.S. trading partners, declined to 73.978 as of 8:54 a.m. in Tokyo after touching 73.735 on April 21, the lowest since August 2008. The dollar was at 82.05 yen from 81.88 yen last week.

The euro climbed to $1.4587 from $1.4561 in New York last week. It reached $1.4649 on April 21, the highest since December 2009. The Australian dollar, known as the Aussie, reached $1.0776, the highest since it was freely floated in 1983.

Benchmark Rates

The Federal Open Market Committee announces its policy decision on April 27 and will hold the benchmark rate in a range of zero to 0.25 percent, according to all 80 economists surveyed by Bloomberg. Most of the 50 analysts in a Bloomberg survey last month said they expect the Fed will keep its bond portfolio stable for some time after its $600 billion purchase program ends in June.

ECB executive board member Jose Manuel Gonzalez-Paramo will speak in Spain tomorrow. ECB policy makers led by President Jean-Claude Trichet raised the key interest rate to 1.25 percent from a record low of 1 percent on April 7 and left the door open for further increases.

Gold, Australia’s third most-valuable raw material export, climbed 0.5 percent to $1,514.07 an ounce today, after earlier touching an all-time high of $1,520.00.

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If the U.S. dollar falls just a bit more, below about 95 cents Canadian, the door will be open to a further, significant strengthening of the Looney, according to a Royal Bank of Canada analyst.

That threshhold

The OECD is recommending that Japan as much as quadruple its sales tax rate to deal with a crushing deficit that’s bound to grow as it spends on reconstruction from last month’s earthquake and tsunami.

Economists in the group of the world’s wealthiest countries said in a report released Thursday that the country should boost the sales tax, now 5 percent, to as high as 20 percent while cutting corporate taxes.

OECD Secretary-General Angel Gurria says Japan has to perform a balancing act as it finances reconstruction following the March 11 disasters while sustaining its economic recovery and cutting debt.

The Organization for Economic Cooperation and Development also recommends education system changes, freer trade with other countries and other reforms.

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The government says Japanese exports in March fell 2.2 percent from a year earlier due to the fallout from last month’s massive earthquake and tsunami.

The finance ministry said Wednesday that the March figure marked the first year-on-year decline in 16 months. Exports shrank to 5.87 trillion yen ($71 billion), while imports rose 11.9 percent to 5.67 trillion yen last month.

The magnitude-9.0 earthquake and ensuing tsunami on March 11 destroyed many factories in northeastern Japan, crippling production and supply chains. The twin disasters have forced manufacturers including Toyota Motor Corp. and Sony Corp. to suspend their output due to parts shortages.

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Standard & Poor’s Ratings Service has lowered its long-term outlook for the United States’ sovereign debt to “Negative” from “Stable” due to risks from the country’s growing deficit.

But the agency also reaffirmed the investment-grade credit ratings on country’s long-term and short-term debt.

S&P says the U.S. has a high-income, diversified and flexible economy that has helped it to encourage growth while containing inflation. But the country’s ballooning deficit could offset those positives over the next two years.

The agency noted that the deficit grew to 11 percent of gross domestic income in 2009. That is much higher than the average of 2 percent to 5 percent in the previous six years.

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Regulators have shut down a total of six banks in Alabama, Georgia, Minnesota and Mississippi, boosting the number of U.S. bank failures this year to 34. There were 157 bank closures in 2010 amid the shattered economy and piles of bad loans.

The Federal Deposit Insurance Corp. seized Superior Bank, based in Birmingham, Ala., with $3 billion in assets; Birmingham-based Nexity Bank, with $793.7 million in assets; Bartow County Bank of Cartersville, Ga low fee payday advance., with $330.2 million in assets; and New Horizons Bank in East Ellijay, Ga., with $110.7 million in assets.

It also shut down Rosemount National Bank in Rosemount, Minn., with $37.6 million in assets, and Heritage Banking Group, based in Carthage, Miss., with $224 million in assets.

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Consumer-price pressures in South Korea will begin to ease in the second quarter while staying “strong” enough for the government to weigh steps to tame inflation, the nation’s finance minister said.

“Inflationary pressures will decline from the second quarter,” Finance Minister Yoon Jeung Hyun said in an interview yesterday in Washington, where Group of 20 finance chiefs and central bankers are meeting. Even so, the pressures “still will be strong, so the government is very cautiously monitoring” prices, he said in an interview.

Oil and food costs have pushed consumer inflation above the central bank’s 4 percent ceiling each month since the start of 2011, prompting it to raise rates by a quarter of a percentage point in January and again in March. The government has stepped up price controls by freezing power and gas charges and pressing a cut to gasoline costs and mobile fees after President Lee Myung Bak declared a “war” against inflation in January and said it should be capped at 3 percent.

“We will be doing everything we can” to lower the burden of inflation on consumers, Yoon said. “We’re looking at many options on the table,” he said, referring to the government’s non-monetary efforts to contain price pressures. These include reducing tariffs on imports to ease supply shortages and steps to identify monopolies in the domestic market, he said.

The won has appreciated the most against the dollar among Asian currencies this year. The currency reached a 31-month high of 1,082.10 on April 8. The strengthening of the currency “would have a stabilizing effect” on import costs while also having “some impact on the price competitiveness of exports,” Yoon said.

No Intervention

“The Korean government has no intention whatsoever to intervene in the exchange rate,” he said. “We fully respect the role and functioning of the market.”

The Bank of Korea projected on April 13 that consumer prices may increase 3.9 percent this year, faster than a December estimate of 3.5 percent. Gross domestic product is forecast to expand 4.5 percent following a 6.2 percent gain in 2010, the bank said after keeping interest rates unchanged at 3 percent on April 12.

Consumer prices climbed 4.7 percent from a year earlier in March, the biggest increase since October 2008. Bank of Korea Governor Kim Choong Soo said on April 12 that high inflation will likely persist in coming months and that he will take monetary policy action “neither too slowly nor too fast.”

‘Strong Reasons’

While there are “some strong reasons for interest rates to be hiked,” Yoon said, there also are “other serious barriers” that call for not raising borrowing costs. The central bank has the independence to decide what course to follow, he said.

The finance ministry last December projected 5 percent economic growth and 3 percent inflation for this year. The government is yet to decide on whether it will bring its own outlook for inflation and growth in line with this week’s revised projections from the central bank, Yoon said.

“Maybe during April or May our position will be announced,” he said. “At this moment, no change.”

The won rose 0.1 percent to 1,086.85 per dollar as the of 3 p.m. close of trading in Seoul on April 14, according to data compiled by Bloomberg, while the Kospi stock index rose 0.9 percent to a record 2,141.06.

The central bank also estimated the economy grew 1.5 percent during the first quarter and expanded 4.1 percent from a year earlier, bolstered by exports. Overseas shipments jumped 30 percent to record $48.6 billion in March, according to a government report on April 1.

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