Finance and Economic

The U.S. Treasury again shied away from labeling China a currency manipulator on Tuesday, but it rapped the country for not moving quickly enough on exchange rate reforms.

Some U.S. politicians have argued that China has gained an unfair competitive edge in global markets by keeping the yuan artificially low to boost exports, and pressure has mounted in Congress for President Barack Obama to punish China.

But the administration prefers to tread softly and use diplomacy to effect change. The U.S. Treasury, in a semi-annual report, as usual said that statutes covering a designation of currency manipulator “have not been met with respect to China.”

It repeated its standard line that appreciation in the yuan has been too slow, calling it “insufficient.”

“Treasury will closely monitor the pace of appreciation and press for policy changes that yield greater exchange rate flexibility, a level playing field, and a sustained shift to domestic demand-led growth,” it said in the report to Congress on international economic and exchange rate policies.

The value of the yuan, which Beijing manages closely, has risen 4 percent against the dollar this year and 7.7 percent since China dropped a firm peg against the greenback in June 2010. The Peterson Institute for International Economics recently estimated the yuan was undervalued by 24 percent against the dollar, down from 28 percent earlier in the year. It attributed the change to both Beijing’s policy of gradual currency appreciation and higher Chinese inflation.

At the heart of the friction between the two countries is a U.S. trade deficit with China that swelled in 2010 to a record $273.1 billion from about $226.9 billion in 2009. The cumulative Jan-Oct deficit with China is on track to top that this year, running at around $245.5 billion.

The Senate this year for the first time passed a bill that would require the administration to slap penalties on Chinese imports if it fails to adopt market-based exchange rates. While the measure has made no progress in the lower chamber and is unlikely to become law, it shows the mounting U.S. frustration with its vital trade partner.

President Obama at the November APEC meetings, in his toughest words yet, told President Hu Jintao that China must play by global trade rules and act like “a grown-up.”

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But U.S. Treasury Secretary Timothy Geithner has said the law on the FX report, which requires the administration to determine whether U.S. trade partners are deliberately undervaluing their currencies, is a poor tool to push Beijing on the yuan.

Instead, the United States prefers to argue for change at its regular closed-door meetings with Chinese officials. It also uses international economic forums, such as the Group of 20 leading nations and the International Monetary Fund, to ramp up public pressure on Beijing to move more quickly to a more-flexible currency.

China is the biggest foreign holder of U.S. Treasuries, with about $1.1 trillion, a position that gives it leverage in international economic negotiations. Foreign exchange traders had not expected a change of U.S. tactics.

“It’s not very surprising. It’s sort of sliding it in under the radar. They’re (Treasury) really not in a position to make any major moves at this point,” said Sean Incremona, an economist at 4Cast in New York.

The Treasury Department has not labeled a country a currency manipulator since July 1994, when it cited China. A designation would require the United States to step up negotiations with Beijing on the yuan’s value.

The yuan slipped on Tuesday as strong dollar demand from corporations offset a record high mid-point fixed by the People’s Bank of China. The central bank set an all-time high dollar/yuan mid-point in an apparent move to let the yuan rise a little more at the end of 2011 so as to make the yuan’s full-year nominal appreciation look bigger, traders said.

Some U.S. manufacturers, which have been hit hardest by competition from China and other emerging economies, would still prefer the U.S. government to take a harder line.

“China’s currency is still enormously undervalued,” said Scott Paul, executive director of the Alliance for American Manufacturing, an industry lobby for hard-hit textile, steel and labor groups.

“I’m disappointed that President Obama has now formally refused six times to cite China for its currency manipulation, a practice which has contributed to the loss of hundreds of thousands of American manufacturing jobs.”

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NATO warplanes bombed three Libyan state TV satellite transmitters in Tripoli overnight, targeting facilities that have been used to incite violence and threaten civilians, the military alliance said Saturday.

A series of loud explosions echoed across the capital before dawn. There was no immediate comment from Libyan officials on what had been hit, but state TV was still on the air in Tripoli as of Saturday morning.

NATO said the airstrikes aimed to degrade Libyan leader Moammar Gadhafi’s “use of satellite television as a means to intimidate the Libyan people and incite acts of violence against them.”

“Striking specifically these critical satellite dishes will reduce the regime’s ability to oppress civilians while (preserving) television broadcast infrastructure that will be needed after the conflict,” the alliance said in a statement posted on its website.

It said Gadhafi’s inflammatory TV broadcasts were intended to mobilize his supporters.

In addition to the three TV transmitters, during the past 24 hours alliance aircraft targeted military vehicles, radars, ammunition dumps, anti-aircraft guns, and command centers near the front lines in the east and west, NATO said in a statement.

The attempt to silence the government’s TV broadcasts comes at a sensitive time for the rebels, who appeared to be in disarray after the mysterious death of their chief military commander. Abdel-Fattah Younis’ body was found Thursday, dumped outside the rebels’ de facto capital of Benghazi, along with the bodies of two colonels who were his top aides. They had been shot and their bodies burned.

NATO too has been increasingly embarrassed by the failure of its bombing campaign, now in its fifth month, to dislodge Gadhafi’s regime. With the fasting month of Ramadan due to start in August, there is growing realization within the alliance that the costly campaign will drag on into the autumn and possibly longer.

NATO had originally hoped that a series of quick, sharp strikes would quickly force Gadhafi to give up power. The alliance has carried out about 6,500 strike sorties and a total of 17,000 sorties since March.

Eight NATO members have been participating in air campaign in Libya: the U.S., Britain, France, Belgium, Canada, Norway, Denmark and Italy. They have carried out a total of more than 6,500 strike sorties.

But this coalition has been gradually fraying amid growing public opposition in Europe to the costs of the campaign _ estimated at more than a billion euros _ at a time of budget cuts and other austerity measures.

The United States was the first to limit its participation, deciding to only provide support to the European allies. Then Italy withdrew its only aircraft carrier and part of its air force contingent. Meanwhile, Norway has announced it will pull all of its F-16 warplanes out of the operation by Monday.

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Viva Del Taco?

On Sunday, the owner of the old Del Taco building in Midtown backed off plans to knock it down, saying he would explore a range of other alternatives before seeking a demolition permit from the city.

After weeks of silence on his plan to bulldoze the saucer-shaped landmark at South Grand and Forest Park boulevards near St. Louis University, developer Rick Yackey sent a statement to the Post-Dispatch pledging to hire an architect, talk with potential tenants and hold a community meeting to explore possible uses of the building.

“I am a developer, not a demolition man,” Yackey wrote, noting that he has performed more than 2 million square feet worth of historic rehabs in the city, been honored by the Landmarks Association of St. Louis and never once applied for a demolition permit.

Yet demolition was to be the fate of the Del Taco building, according to plans filed with the city last month. Yackey, who owns the structure and neighboring Council Plaza, indicated he would knock down the 1967-built former gas station and replace it with new buildings for retail tenants.

That news prompted a flurry of protests from fans of both the restaurant and the building’s funky midcentury architecture. Even as the Del Taco itself closed, thousands of people signed online petitions to save the structure. Supporters held rallies. Mayor Francis Slay weighed in, urging reuse. Eventually, aldermen changed the redevelopment plan to require review by the city’s Preservation Board before any demolition permit could be issued. That’s where things stand now.

Yackey said his goal is an “economically viable” project that fits in with the neighbors. Demolition was always a last resort, he said, but the existing structure, just 2,000 square feet under a vast cement canopy, has very little leasable space payday loan lenders.

“This isn’t about disliking the building,” he said. “It’s about things being functionally obsolete.”

But after the uproar, and after talking with Slay and Alderman Marlene Davis, Yackey decided to see whether he can keep the building. He has hired an architect to study adding on to the ground floor, and he’s talking with the owner of a neighboring property about swapping some land for more parking spaces.

That is great news both for the Del Taco building itself and for the broader cause of preservation in St. Louis, said Randy Vines, who helped organize rallies in support of the building. The outpouring of support shows that people care about distinctive buildings, even if they’re just a few decades old, he said. And the protesters tried hard to keep a positive tone.

“We’ve done our best to offer solutions,” Vines said. “Certainly this is a building that can be adapted to another use.”

Yackey said he’s talking with potential tenants already. He wouldn’t say who, but Kaldi’s Coffee and local pizza chain Pi confirmed last week that they’re interested. Yackey also plans to hold a “community meeting to explore reuse and redevelopment ideas.”

And, Yackey said, he won’t rush to knock the building down.

“I have not applied for and will not apply for a demolition permit until completing this investigative process,” Yackey wrote. He said he expects that will take two or three months.

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There will be no storybook ending for Borders. The 40-year-old book seller could start shuttering its 399 remaining stores as early as Friday.

The Ann Arbor, Mich.-based chain, which helped pioneer the big-box bookseller concept, is seeking court approval to sell off its assets after it failed to receive any bids that would keep it in business. The move adds Borders to the list of retailers that have failed to adapt to changing consumers’ shopping habits and survive the economic downturn, including Circuit City Stores Inc., Blockbuster and Linens `N Things.

On Thursday, Borders is expected to ask the U.S. Bankruptcy Court of the Southern District of New York at a scheduled hearing to allow it to be sold to liquidators led by Hilco Merchant Resources and Gordon Brothers Group. If the judge approves the move, liquidation sales could start as soon as Friday; the company could go out of business by the end of September.

Borders’ attempt to stay in business unraveled quickly last week, after a $215 million “white knight” bid by private-equity firm Najafi Cos. dissolved under objections from creditors and lenders. They argued the chain would be worth more if it liquidated immediately.

“We were all working hard toward a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, e-reader revolution, and turbulent economy, have brought us to where we are now,” said Borders Group President Mike Edwards in a statement.

Borders liquidation could have far-reaching effects, putting thousands of people out of work at a time of high unemployment, particularly in Michigan where Borders is based. The chain, which has been shrinking in recent years, currently has 10,700 employees.

“We’ll want to look closely from the jobs perspective of people in the state,” said Geralyn Lasher, spokeswoman for Gov. Rick Snyder, in a statement.

The loss of Borders stores will deal a blow to malls nationwide, according to real estate sources. Borders stores average about 25,000 square feet __ about half the size of a football field __ and a liquidation could leave large empty spaces across the country.

Borders’ move to close 228 stores while it reorganized in bankruptcy protection already increased the collective vacancy rate of shopping centers that contained a Borders to 9.3 percent from 4.2 percent, estimated Chris Macke, senior real estate strategist at CoStar Group, the nation’s largest provider of real estate data. Macke calculated the liquidation of the rest of the chain could increase the vacancy rate on that same basis to 18.8 percent.

Additionally, Simba Information senior trade analyst Michael Norris predicts the closing could cause sales of electronic books to fall. Borders, for one, entered the electronic book market with Canada’s Kobo Inc. last year. Owners of the Kobo e-reader will still be able use Kobo software to buy and read books. And Kobo officials said users of Borders e-book accounts, which began transitioning to Kobo in June, will be able to access their e-books uninterrupted.

“This industry is going to slowly figure out that a lot of e-book readers still use bookstores all the time to discover what’s new before heading home to buy it for their e-reading device,” he said.

Perhaps a Borders liquidation would hurt the consumer most. Tanya Ellis, 42, of Southfield, Mich., said the closings are “horrible.” She said she and a friend would stop at a nearby Starbucks, then visit the Borders store in Beverly Hills, Mich., and browse for about an hour.

“So where are we going to buy books from? I just got into reading books the last two or three years, and they just keep closing all these bookstores,” she said, adding that electronic readers aren’t an option for her. “It takes all the fun out of it.”

Justin Grant, 31, from Brooklyn, however, was less phased. Although he had just picked up a parenting book to read on his commute home Monday, he said he buys most of the 25 to 30 books he reads a year on Amazon.

“It’s much easier to get them through the mail and delivered to my desk at work,” he said.

It has been a long fall for Borders since Tom and Louis Borders opened their first store in 1971, selling used books in Ann Arbor. At its start, the brothers were mostly interested in offering other bookstores a system they developed for managing inventory.

But in 1973, the store moved to a larger location and shifted its focus to selling new books and expanding, helping pioneer the big-box bookstore concept along with Barnes & Noble Inc. At the time, Waldenbooks and B. Dalton mall chains, with small stores and 20,000 to 50,000 titles, were growing rapidly. The new superstores, by contrast, offered between 100,000 and 200,000 titles, as well as enticements to linger like comfortable chairs and attractive lighting.

Kmart Corp. saw the potential and acquired Borders in 1992, forming a book unit with Waldenbooks. It then spun the bookstores off as a separate company in 1995, the same year Amazon started selling books online.

Borders was slow to adapt to the changing industry and lost book, music and video sales to the Internet and other competition. Sales began to fall, leading to a revolving door of CEOs. By the time Borders’ current CEO, financier Bennett LeBow, came aboard in May 2010 after investing $25 million in the company, bankruptcy was already looking like a strong possibility.

Borders filed for bankruptcy protection in February after being hurt by tough competition from online booksellers and discounters. It hoped to successfully emerge from bankruptcy protection by the fall as a smaller and more profitable company, but pressure from creditors and lenders eventually led the chain to put itself up for sale and finally, seek approval to liquidate.

At its peak, in 2003, Borders operated 1,249 Borders and Waldenbooks, but by the time it filed for bankruptcy protection in February that had fallen to 642 stores and 19,500 employees. Since then, Borders has shuttered more stores and laid off thousands.

Borders says it expects to be able to pay vendors for all expenses incurred during the bankruptcy cases.

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Racing the debt clock, Congress is working on dual tracks while President Barack Obama appeals to the public in hopes of influencing a deal that talks have failed to produce so far.

“We have to ask everyone to play their part because we are all part of the same country,” Obama said Saturday, pushing a combination of spending cuts and tax increases that has met stiff resistance from Republicans. “We are all in this together.”

In his weekly radio and Internet address, Obama said the wealthiest must “pay their fair share.” He invoked budget deals negotiated by GOP President Ronald Reagan and Democratic House Speaker Tip O’Neill, and Democratic President Bill Clinton and Republican Speaker Newt Gingrich.

“You sent us to Washington to do the tough things, the right things,” he said. “Not just for some of us, but for all of us.”

As a critical Aug. 2 deadline approached, the chances that Obama would get $4 trillion or even $2 trillion in deficit reduction on terms he preferred were quickly fading as Congress moved to take control of the debate.

House Republicans prepared to vote this coming week on allowing an increase in the government’s borrowing limit through 2012 as long as Congress approved a balanced-budget constitutional amendment, which is highly unlikely.

In the Senate, the Republican and Democratic leaders worked on a bipartisan plan that would allow Obama to raise the debt limit without a prior vote by lawmakers. The talks focused on how to address long-term deficit reduction in the proposal in hopes of satisfying House Republicans.

In the Republicans’ address Saturday, Sen. Orrin Hatch of Utah argued for passage of a balanced-budget amendment. He blamed Democrats for failing to embrace adequate budget cuts and said “the solution to a spending crisis is not tax increases.”

An amendment that requires a balanced budget, he said, “would put us on a path to fiscal health and would prevent this White House or any future White House from forcing more debt on the American people faxless cash advance.”

The government said Friday it was using its last stopgap measure to avoid exceeding the current $14.3 trillion debt limit. Administration officials, economists and the financial markets have warned that missing the Aug. 2 deadline and precipitating a government default would send convulsions through an already weakened economy.

In a news conference Friday, the president argued that he had the public on his side as in calling for a large deficit reduction package that included spending cuts and increased tax revenues. But Republicans have flatly rejected any proposal from Obama that contains additional revenue from closing tax loopholes, restricting the value of deductions for the rich, increasing tax rates for hedge fund managers or ending oil and gas subsidies.

“This is not a matter of the American people knowing what the right thing to do is,” Obama said. “It’s a matter of Congress doing the right thing and reflecting the will of the American people.”

Obama had held five straight days of meeting with congressional leaders at the White House, but none of the three options he proposed _ deficit cuts of $4 trillion, $2 trillion or $1.5 trillion over 10 years _ were unlocking enough support to increase the debt ceiling by the $2.4 trillion Obama wants to make it last beyond the 2012 elections.

Essentially declaring those discussions over, Senate Republican leader Mitch McConnell said Friday: “”Now the debate will move from a room in the White House to the House and Senate floors.”

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Italian markets are buoyant on expectations that the Senate will approve a package of austerity measures that is key to shoring up confidence in the country’s financial future.

The benchmark FTSE MIB was up 0.5 percent, the only European index to trade higher Thursday morning.

Italy’s finance minister has vowed that the austerity measures, which aim to balance the budget by 2014, will get final approval by the lower house of parliament on Friday.

The government fast-tracked the approval _ from an original deadline of August _ to soothe jittery markets.

Italy will also hold its second bond sale this week, seeking to raise euro5 billion ($7 billion) in 5- to 15-year bonds from the markets. Italy easily raised euro6.75 billion in 12-month debt on Tuesday, though at higher rates.

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At the center of the down payment debate in Washington are rules about what constitutes a “qualifying residential mortgage,” or QRM.

Under the Dodd-Frank Wall Street Reform Act, a QRM would constitute a gold standard for home loans, and mortgages that meet it would be exempt from rules requiring the bank that generates a loan to keep at least 5 percent of the loan’s value on its books

Greece was pulled back from impending default Saturday, when eurozone finance ministers signed off on a vital loan installment. But the country’s international creditors are showing more concern over whether it can service its debt in the long run.

Athens will get a euro12 billion ($17.39 billion) tranche of its existing euro110 billion rescue package by July 15, in time to meet several bond repayment deadlines this month and next, the finance ministers of the 17 countries that share the euro said in a statement Saturday evening. The eurozone and the International Monetary Fund will also continue to prop up Greece’s struggling economy in the coming years, with a second package of aid loans to be finalized by September.

While the renewed commitments save Greece from immediate collapse, even its international creditors _ long the biggest optimists on the country’s prospects _ are warning that getting down a debt of 160 percent of economic output will be a difficult balancing act.

“The Greek government debt will remain for many years at a high level and, therefore, subject to possible adverse developments that cannot be predicted,” the European Commission, the EU’s executive and one of the three institutions in charge of Greece’s bailout, said in a report published Saturday.

Especially lower than expected economic growth “would put the debt trajectory on a clearly unsustainable upward path,” the commission said.

In an illustration showing several scenario’s for Greece’s debt load, growth of just 1 percentage point below expectations would leave Greece’s debt around 170 percent of gross domestic product past 2020, with the graph pointing firmly upward.

The report, the basis for the ministers’ decision to release the July aid installment and prepare a new bailout, is the most pessimistic assessment from the commission yet. Private analysts and economists have long questioned the sustainability of Greece’s debt. However, the European Union, the European Central Bank and the IMF have so far, at least publicly, upheld their belief that Greece’s situation is manageable.

The Commission still maintains that it is “not unrealistic to assume” that Greece can cut its deficits to the targets set out in its bailout program, and thereby slowly chip away at its debt. But the report puts a sizable question mark over the country’s ability _ and willingness _ to implement the reforms its creditors say are necessary to get the economy growing again.

“Solvency depends on the political and social conditions which allow or not the implementation of the required policies,” the report cautions.

The warning has a clear ring to it, following weeks of sometimes dramatic back and forth between Greek authorities and the country’s international creditors, which culminated earlier this week in the narrow passage of unpopular new austerity measures through parliament amid violent demonstrations in Athens.

“Given the length, magnitude and nature of required reforms, political and social consensus remains a prerequisite for success,” the Commission said in its report, repeating calls from European leaders on Greece’s opposition to start supporting the bailout program.

For the first time, the Commission’s report also contains a section on debt restructuring _ including a scenario for a 40 percent haircut, a forced reduction in the value of Greek bonds.

The EU has so far ruled out any haircuts on bonds, and in its report the Commission maintains that the negative consequences of a restructuring would outweigh any gains from debt restructuring.

A 40 percent haircut would devastate Greek banks, wiping out the capital cushions and triggering massive deposit flight, the Commission warns. Restructuring Greece’s debt also risks “creating a permanent shift in investor sentiment and lead to self-fulfilling prophecies for other vulnerable Member States,” _ shorthand for already bailed out Ireland and Portugal, as well as weak states like Spain or Italy.

The report highlights that Greece’s destiny will likely be decided by what happens within the country as well as by outside conditions it has little influence over, such as global economic growth that would provide it with a better market for exports.

Those factors are likely to overshadow any decisions on a second bailout package, which merely buys Greece more time, and the exact nature of private-sector involvement, the main open issue in the debates on a new bailout.

Eurozone finance ministries are currently trying to come up with a way of getting banks and other private creditors to contribute to a new aid program. Since a forced restructuring _ or any move that would trigger a negative reaction from rating agencies _ has been ruled out, banks will likely commit to reinvesting some of the money they get back when their existing Greek bonds expire in new debt at somewhat lower interest rates.

However, several analysts have already pointed out that such a scheme would be very costly for Greece and will not reduce its overall debt load.

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U2 and its frontman Bono, known for their global poverty-fighting efforts, were accused of dodging taxes in Ireland by activists who crashed their performance Friday at England’s Glastonbury festival.

The anti-capitalist group Art Uncut inflated a 20-foot (6-meter) balloon emblazoned with the message “U Pay Your Tax 2.” Security guards wrestled them to the ground before deflating the balloon and taking it away. About 30 people were involved in the angry clash.

Bono fan Gary Noble, 45, said he found the security reponse “all a bit shocking.”

“I love U2 but I think everyone should pay their taxes. The campaigners have a right to voice their opinion,” he said.

Art Uncut argues that while Bono campaigns against poverty in the developing world, his group has avoided paying Irish taxes at a time when his austerity-hit country desperately needs money.

Ireland, which has already accepted an international bailout, is suffering through deep spending cuts, tax hikes and rising unemployment as it tries to pull the debt-burdened economy back from brink of bankruptcy.

“Tax(es) nestling in the band’s bank account should be helping to keep open the hospitals, schools and libraries that are closing all over Ireland,” Art Uncut member Charlie Dewar said ahead of the protest.

U2, the country’s most successful band, was heavily criticized in 2006 for moving its corporate base from Ireland to the Netherlands, where royalties on music incur virtually no tax payday loans.

Bono, guitarist The Edge and U2’s other members _ bassist Adam Clayton and drummer Larry Mullen _ are among the country’s wealthiest residents. Forbes magazine has estimated the band earned $195 million last year, mostly through its hugely profitable “360 Degrees” world tour.

It’s not known how much personal income tax the band members pay in Ireland.

During the years when Ireland was a booming “Celtic Tiger” economy, the members of U2 invested in a wide range of Dublin properties, including a luxury riverside hotel and a planned Norman Foster-designed skyscraper on the River Liffey. Plans for the “U2 Tower” were shelved when property prices collapsed in 2008.

U2 is headlining the first night of the three-day Glastonbury festival, its first appearance at Britain’s most prestigious summer music event. The band was due to perform last year but had to pull out after Bono injured his back.

Some 170,000 people have descended on a farm in southwest England for the extravaganza, which includes sets by Morrissey, Mumford & Sons, Coldplay, Beyonce and scores of other acts.

Rubber boots are the fashion item of choice after heavy rain turned the 900-acre (364-hectare) site into a mudbath. More rain is forecast for later Friday.

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Stocks climbed for a third straight day on Monday, the longest stretch of gains the market has had in nearly a month.

Major indexes opened mixed but moved higher in midday trading, putting the market further away from its longest weekly losing streak since 2002. Last week stocks eked out tiny gains, giving the Dow Jones industrial average and the Standard & Poor’s 500 index their first rises after a six-week slump.

The downturn, which began in early May, brought the S&P 500 close to its average level over the prior 200 days. So long as the index doesn’t sink far below that level, many technical traders see it as a sign to start buying stocks again. The S&P is now 6 percent below the 2011 high it reached on April 29.

“In the short term, stocks have been oversold, and you’re going to get some sort of bounce, whether justified or not, just for technical reasons,” said Paul Simon, chief investment officer for Tactical Allocation Group, which has $1.5 billion in assets under advisement.

The S&P 500 index is up 7 points, 0.6 percent, at 1,278. The Dow Jones industrial average is up 71 points, or 0.6 percent, to 12,076. The Nasdaq is up 16, or 0.6 percent, to 2,632.

European leaders failed over the weekend to agree on releasing more financial aid to Greece, saying the country must first agree to more budget cuts. Greece’s recent efforts to slash spending have led to street protests and political turmoil in Athens. The Greek government faces a confidence vote on Tuesday.

Prime Minister George Papandreou’s newly-reshuffled government is expected to prevail in the vote, and officials say they expect Greece to get its next installment of emergency loans in July. If Greece were to default, it could trigger losses for the banks that hold Greek bonds and more turmoil in financial markets personal loans for people with bad credit.

Investors are also looking ahead to the Federal Reserve’s two-day policy meeting, which begins Tuesday, and the next round of corporate earnings reports that begin in July, said Oliver Pursche, president of Gary Goldberg Financial Services.

“There’s a little fatigue about hearing about the same problems, and there’s no shock factor anymore,” he said. “So now you’re going to start looking ahead. Earnings season is going to start in three weeks or so.”

Analysts expect operating earnings per share for companies in the S&P 500 index rose 14 percent in the second quarter. They also expect the Fed to keep interest rates at nearly zero, a record low.

Fertilizer producer Agrium Inc. raised its forecast for second-quarter earnings after record crop prices pushed up demand for its products. Its stock rose 2.8 percent.

Nabors Industries Ltd., a driller for oil and gas, warned that its pressure pumping and international businesses have been weaker than it expected. The stock lost 2.2 percent.

PNC Financial Services Group Inc. fell 1.9 percent after saying it would buy the U.S. retail operations of Royal Bank of Canada for $3.45 billion. The deal will make PNC the fifth biggest U.S. bank with 2,870 branches. The deal follows Capital One Financial Corp.’s $9 billion purchase last week of ING’s U.S. online bank.

Greece has been at the center of Europe’s debt worries, but other countries are also facing troubles. Moody’s warned that it may cut Italy’s credit rating because of its mounting debt and sluggish growth prospects.

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