CAMP DAVID, Maryland (Reuters) – A growing chorus of world leaders on Friday pushed for a shift toward more pro-growth policies to help ease a European crisis that threatens to oust Greece from the euro zone and reverberate throughout the global economy.

Setting the tone for a weekend G8 summit, President Barack Obama aligned himself with the new French president’s drive for more economic stimulus in recession-plagued Europe, in a swipe at the tough austerity programs that have been spearheaded by German Chancellor Angela Merkel.

Obama’s stance reflects his worries that the euro zone contagion, which threatens the future of Europe’s 17-nation single currency, could hurt the fragile U.S. economic recovery and his own re-election chances in November.

The Camp David summit kicked off four days of intensive diplomacy – including a NATO meeting in Obama’s home town of Chicago – that will test leaders’ ability to quell unease over the threat of another financial meltdown as well as plans to wind down the unpopular war in Afghanistan.

After White House talks with French President Francois Hollande, Obama said the two agreed that tackling the euro-zone crisis was “an issue of extraordinary importance, not only to the people of Europe, but also to the world economy.”

“We’re looking forward to a fruitful discussion later this evening and tomorrow with the other G8 leaders about how we can manage a responsible approach to fiscal consolidation that is coupled with a strong growth agenda,” Obama said before flying to Camp David and greeting fellow leaders for an opening dinner.

Merkel, who has insisted on the need for tough fiscal discipline to bring down suffocating debt levels even as angry voters have toppled some euro zone governments, seemed certain to find herself increasingly alone.

As Obama welcomed his guests one-by-one outside a rustic lodge at the presidential retreat in Maryland, he asked Merkel: “How have you been?”

She shrugged and offered a strained smile. “Well, you have a few things on your mind,” he said in a brief exchange captured by a boom microphone.

Her predicament could be underscored in the summit’s final communique that, according to a draft shown to Reuters, will stress “our imperative to create growth and jobs.”

GREECE MUST “MAKE UP THEIR MINDS”

Reflecting growing frustration as Greece’s post-election turmoil shakes global markets, British Prime Minister David Cameron called on euro members for decisive action and said the Greeks must “make their minds up” whether to stay in the euro zone.

No major economic policy decisions are expected from the talks but Obama will urge the Europeans to work harder at forging a comprehensive approach to their debt troubles.

World stocks fell to levels below where they began the year, depressed by the prospect that a Greek euro exit would spread upheaval in the currency bloc and engulf much larger economies such as Spain’s.

The European Union’s trade commissioner said for the first time that European officials were working on contingency plans in case Greece bombs out of the euro zone.

While Obama and Hollande found common ground on economics, their meeting also showed differences over France’s commitment to the NATO military mission in Afghanistan, which will be the focus of the alliance’s summit in Chicago starting on Sunday.

Hollande, a socialist sworn in this week as president, told Obama he would stick by his campaign pledge to withdraw French combat troops from Afghanistan by year’s end, earlier than the alliance’s 2014 timetable. But Hollande said France would continue to support the NATO effort in a “different way.

U.S. officials hope to convince Hollande to rethink the French pullout plan.

GERMANY ‘QUITE ISOLATED’

But the two leaders, meeting for the first time since Hollande’s election victory earlier this month, were more in sync on the euro zone crisis.

Hollande said he spoke to Obama about the need to put a priority on growth, and that they also agreed it was important to find a way for Greece to stay in the euro zone.

Obama’s administration spent heavily to try to tackle the 2007-2009 U.S. recession, and has long urged Europeans to do more to boost growth. Hollande is seeking to take the edge off austerity with more job-creating infrastructure investments.

Like Cameron, Canadian Prime Minister Stephen Harper has been a frequent critic of euro zone G8 members’ handling of their debt woes. Italian premier Mario Monti was calling for growth measures even before Hollande did.

That could leave Merkel, who has used Germany’s status as Europe’s biggest economy to pressure others to keep a tight rein on debt, cutting a lonely figure at Camp David.

“Germany is absolutely quite isolated,” said Domenico Lombardi, a former International Monetary Fund official who now is a senior fellow at the Brookings Institution think tank.

Lombardi said that while Germany had the upper hand when controlling debt was the focus, “it is now clear that Greece has become a systemic crisis” and this must now become the center of the debate.

A SOFTER APPROACH

While Merkel wants Greece’s continued membership in the euro zone tied to Athens meeting tough austerity measures laid out in its bailout program, Hollande was seeking a softer approach.

Hollande also said he favors Europe recapitalizing Spain’s troubled banks, which would mark a significant shift toward Europe taking over wider responsibilities from individual nations.

Backing calls for a concerted effort to boost economic activity, Jose Manuel Barroso, president of the European Commission, said there was a need to promote growth while putting public finances in order and this should be center stage at the summit. He insisted, however, that “we want Greece to stay in the euro area.”

The G8 summit comes as Greeks are pulling cash from banks amid growing fears about its euro zone membership. Financial markets are deeply concerned about the future of the entire currency zone, with Spain’s banking sector also under pressure.

Nearly two thirds of Greeks voted on May 6 for parties of the radical left and far right which oppose the austere terms of an EU/IMF assistance program. Talks failed to avert a repeat election, which is now set for June 17.

The “balanced approach” that Obama is pushing for in the euro zone is similar to his domestic efforts combining short-term stimulus and longer-term cuts to try to heal the U.S. economy and stoke hiring that has not recovered from the financial crisis. But the U.S. economy continues to struggle, posing problems for Obama’s re-election.

Mitt Romney, the presumptive Republican nominee to face Obama in the November 6 election, has made reducing the U.S. debt load, which has escalated during Obama’s tenure, one of his key campaign messages.

Also on the G8 agenda will be the price of oil. Obama may secure support to essentially pre-authorize a release of strategic oil reserves later this summer, just as U.S. and European sanctions on Iran come into force — this despite Brent crude hitting a 2012 low on Friday.

While the secluded Camp David setting discouraged protests nearby, an estimated 2,500 people demonstrated peacefully in a downtown Chicago plaza under the watchful eye of police, chanting mostly about economic issues that have little to do with the coming NATO summit.

(Additional reporting by Alister Bull, Jeff Mason, Caren Bohan, Stella Dawson, Elizabeth Pineau, Gleb Bryanski, and John Irish; writing by Matt Spetalnick; Editing by Mary Milliken and Christopher Wilson)

Economy News Headlines – Yahoo! News

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Economy News Headlines – Yahoo! News

NEW YORK (AP) — A threat that’s been hanging over the economy is starting to look a lot less menacing.

Oil and gasoline prices are sinking, giving relief to businesses and consumers who a few weeks ago seemed about to face the highest fuel prices ever.

President Barack Obama‘s re-election prospects could also benefit, especially if prices keep falling as some analysts expect. A majority of Americans disapproved of Obama’s handling of gas prices in an AP-GfK poll early this month. But that was before the full effect of the recent drop had reached drivers.

The average U.S. retail gasoline price has dropped 21 cents a gallon to $ 3.73 since hitting a 2012 peak of $ 3.94 on April 6.

The economy could gain, too. Consumers who spend less on fuel have more to spend on other purchases, from autos and furniture to appliances and vacations, that could help drive economic output and job growth.

The price drop will likely boost consumer confidence. It also comes at a timely moment: Ahead of the Memorial Day weekend, a busy one for travel and entertainment spending.

“It’s extra money in the wallets of most American consumers, and that’s going to help,” said James Hamilton, an economist at the University of California, San Diego who studies oil prices.

Lower oil prices also mean cheaper diesel and jet fuel for shippers and airlines.

Crude oil, which is used to make gasoline, is at a seven-month low of $ 92.81 a barrel. It’s down nearly 13 percent since May 1. Behind the steady drop are larger fuel stockpiles, easing fears about Iran and expectations of lower demand as the global economy slows.

The average national gasoline price is expected to fall as low as $ 3.50 a gallon this summer. It could even dip near $ 3 in some states. The national average is being propped up by refinery problems in California that have lifted prices well above the national average there, according to Tom Kloza, chief oil analyst at the Oil Price Information Service.

A 50-cent drop in the gasoline price would save consumers roughly $ 70 billion over a year.

Earlier this year, oil and gasoline prices were jumping from already high levels. Global demand was rising. And production outages were reducing supplies. Tensions between Iran and the West over Iran’s nuclear ambitions raised fears that output from the world’s third-biggest exporter would plunge.

The price of U.S. benchmark oil rose to about $ 110 a barrel from $ 96 in the first three weeks of February. The price for international oil, used to make most of the gasoline in the United States, spiked even higher: to $ 126 per barrel from $ 110 over roughly the same period.

Gasoline prices in the U.S. appeared on track to soar past $ 4 a gallon nationwide. Confidence among U.S. consumers, already suffering from high unemployment and scant wage growth, would have likely worsened.

“People were prepared emotionally for $ 4.50 or $ 5 gasoline, so there’s a sense of relief,” Kloza says.

No one is yet overflowing with glee over current prices. So far this year, gasoline has averaged $ 3.67 a gallon nationwide. If sustained all year, that would be the highest annual average ever.

John Heimlich, chief economist at Airlines for America, a trade group, is among those who aren’t ready to cheer. Jet fuel prices dipped below $ 3 per gallon for the first time in months Tuesday, he said.

“I need more than one day below $ 3,” Heimlich said. “I need weeks and weeks and weeks.”

John Tillman, who runs Certified Carpet Care in Wesley Chapel, Fla., spends $ 4,000 a month on fuel for his vans that crisscross the state, visiting restaurants and other clients. He says gasoline prices are still way too high and he thinks the government should do more to protect small businesses from high fuel prices. But he’ll take any drop he can get.

“It’s helped some,” he said.

Hamilton and other economists say high unemployment and a weak job market are more important to the health of the U.S. economy than gasoline prices. Still, voters tend to blame presidents for high fuel prices, even if there’s little a president can do to influence them.

It’s less clear that voters give a president credit when gasoline prices fall.

Michael Dimock, associate director at the Pew Research Center, suspects that voters won’t exactly thank Obama for $ 3.75 a gallon gasoline. Still, it dulls a weapon that his presumptive Republican challenger, Mitt Romney, would like to use to unseat the president.

And Obama can look forward to further help this fall. After Labor Day, refiners can begin using cheaper ingredients to make gasoline because wintertime clean air rules are less stringent. That should push gasoline prices lower between Labor Day and Election Day, barring hurricanes that can disrupt supplies or other global events, says Kloza.

“History will be working on behalf of the Democrats,” he said.

___

Wiseman contributed from Washington. AP Staff writer Charles Babington contributed to this report from Washington.

Jonathan Fahey can be reached at http://twitter.com/JonathanFahey .

Economy News Headlines – Yahoo! News

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Business News Headlines – Yahoo! News

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Business News Headlines – Yahoo! News

NEW YORK (Reuters) – More volatility could be in store for stocks next week as investors grapple with less certainty about the economic outlook and a new blow to the financial sector after JPMorgan Chase‘s trading loss.

Europe is expected to keep investors jumpy as well, with inconclusive results from the recent Greek election and the country’s future appearing more worrisome.

The economic picture appears cloudy these days, with some data showing a more positive trend and other reports showing the opposite. An index of consumer sentiment rose to its highest in a more than four years, but last week’s jobs report showed another monthly decline in hiring.

Next week brings minutes from the last Federal Reserve meeting, which investors will look to for more guidance on whether the central bank plans to give additional help to the economy.

Stocks closed lower for a second straight week on Friday after a week of choppy trading. Strategists say that’s likely to be the case again in days to come.

“Expect more volatility. We’re still seeing this natural risk aversion. We expect any source of bad news to trigger a sell-off, but we’re still not in a red-alert area,” said Omar Aguilar, chief investment officer of equities for Charles Schwab in San Francisco.

“The good economy in the U.S. is leading the way, with the Federal Reserve being very accommodating.”

Citigroup’s chief U.S. equity strategist, Tobias Levkovich, said the market has likely begun a pullback, and that the Standard & Poor’s 500 index <.SPX> could fall 5 percent to 7 percent from its April 2nd intraday high of 1,422.

“We’re going to probably spend several months in kind of choppy trading,” he said.

News that JPMorgan Chase & Co , the largest U.S. bank by assets, lost billions of dollar on bad trades raised fresh worries that the financial sector was not on the mend. The KBW bank index <.BKX> fell 1.2 percent for the day.

There’s likely to be more focus on the company next week. After the close of trading, Fitch Ratings cut JPMorgan‘s credit rating one notch and cited the bank’s $ 2 billion trading loss, and Standard & Poor’s revised its outlook of JPMorgan to negative.

The S&P financial index <.GSPF> has lost ground since rallying 21.5 percent in the first quarter. The index is still up 13.6 percent since the start of the year.

MESSAGE FROM THE FED

Wall Street will scrutinize the minutes from the FOMC‘s late April meeting, which the Fed will release on Wednesday at around 2 p.m. Eastern time.

At that April 24-25 meeting, the FOMC repeated its expectation that interest rates would not rise until late 2014 at the earliest, and it took no action on monetary policy.

But Federal Reserve Chairman Ben Bernanke spurred stock market gains when he told reporters on April 25 that “we remain entirely prepared to take additional balance-sheet actions as necessary to achieve our objectives. Those tools remained very much on the table and we would not hesitate to use them, should the economy require that additional support.”

More focus may be on the Fed and economic data next week, with the first-quarter U.S. earnings period nearly done. Ninety percent of S&P 500 companies have already reported results.

Major retailers set to report earnings next week include Home Depot , a Dow component, and JC Penney Co. , both on Tuesday, followed by Limited Brands , parent of Victoria’s Secret, and discount chain Target Corp on Wednesday. Wal-Mart Stores, Inc , the world’s largest retailer and a Dow component, is set to report earnings on Thursday before the opening bell.

The week’s mostly closely watched economic indicators will include the U.S. Consumer Price Index and retail sales, both for April, on Tuesday, followed by April housing starts and April, industrial output and capacity utilization, all on Wednesday.

In Europe, problems with the Greek elections raised the risk of it exiting the euro zone.

“I think earnings and valuations are still very compelling. Unfortunately, what we’re looking at on earnings and valuations is going to be overshadowed by the fact that we’ve got these global issues we’re dealing with: Greece and France and their elections, and debt issues and the possible breakup of the euro,” said Evan Nowack, managing director at HighTower’s Leventhal Group in Bethesda, Maryland.

BEARISH PATTERN

Technical charts indicate bearishness ahead.

“My ‘bigger picture’ view is that in the near or intermediate term, further downside is favored,” said Chris Burba, short-term market technician at Standard & Poor’s in New York.

S&P 500 charts are showing a “head-and-shoulders top,” he said, noting that demand earlier this month was not strong enough to push the benchmark index above its April high.

He sees support just below 1,300, while resistance could come at 1,415 for the S&P 500.

“The outlook stays bearish unless you get above 1,415,” Burba said.

(Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: caroline.valetkevitch(at)thomsonreuters.com)

(Reporting by Caroline Valetkevitch; Editing by Jan Paschal)

Business News Headlines – Yahoo! News

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Economy News Headlines – Yahoo! News

TOKYO (Reuters) – Asian shares fell on Thursday, as a weak Chinese trade data stoked fears of a growth slowdown, further undermining risk appetites already reduced by worries about the health of Spanish banks and deepening political chaos in Greece.

MSCI’s broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS>, which has declined the past five days, slipped 0.1 percent to its lowest in nearly four months. Earlier, it briefly rose as much as 0.5 percent on strong Australian jobs data that was released before China‘s April trade figures.

China’s exports grew 4.9 percent in April from a year earlier, data showed on Thursday, weaker than a 8.5 percent increase forecast and down from March’s rise of 8.9 percent. Annual growth of 0.3 percent in imports last month also missed expectations for an 11 percent increase.

“Chinese trade data for April came in surprisingly weak, with both export and import growth disappointing …indicating weakening external demand and suggesting that strengthening of the yuan in the past few years has undermined China’s competitiveness,” said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong.

“The poor import number bodes ill for GDP growth. It should be a wake-up call for policymakers to do more to stimulate domestic demand” , he said, adding that weak exports “may convince policymakers to try and prevent any meaningful appreciation of onshore spot.”

The Australian dollar initially strengthened on strong jobs data, which scaled back expectations for further aggressive monetary easing. But with the currency sensitive to data from China, the biggest export market, the gains were pared by Beijing’s fresh trade numbers.

The Aussie last stood up 0.4 percent at $ 1.0079, slipping from an earlier high of $ 1.0120. On Wednesday, it touched $ 1.0021, its lowest since December 20.

Australian employment far outpaced expectations by adding 15,500 in April while the unemployment rate surprisingly dipped to 4.9 percent.

The Australian stock market <.AXJO> lost most of its gains to stand nearly flat after rising earlier on buoyancy in miners, which bounced back on upbeat comments from world No. 3 miner Rio Tinto Ltd .

Oil fell as weak Chinese trade data fuelled concerns about demand, sending U.S. crude down 0.4 percent at $ 96.38 a barrel and Brent down 0.5 percent at $ 112.66 a barrel.

Japan’s Nikkei share average <.N225> fell 0.2 percent. <.T>

Asian credit markets stayed subdued, with the spread on the iTraxx Asia ex-Japan investment-grade index nearly unchanged from overnight.

EUROPE VACUUM FEARED

Global shares slid for a sixth day while safe-haven U.S. and German government debt rose on Wednesday on fears a political vacuum in Greece could put the highly indebted country on course for insolvency and exiting from the euro.

The euro turned around also from an earlier weakness, rising 0.1 percent at $ 1.2940. But it hovered near $ 1.29115 hit on Wednesday, its lowest since January 23, indicating markets remain wary over developments in the euro zone, which have fallen short of convincing investors to be risk-positive.

Spain took over Bankia, the country’s fourth-biggest lender, on Wednesday, aiming to dispel concerns over the government’s ability to clean up a financial sector severely hit by a property market crash four years ago.

Spanish banks will likely be forced to further boost provisions against ailing loans, and uncertainty over the final tally of banking recapitalization pushed Spanish yields back above 6 percent on Wednesday.

Greek politicians will strive to form a government on Thursday to avoid a new election, after voters rejected a bailout deal in Sunday’s poll. But prospects looked dim, with seemingly little ground for compromise as parties for and against a bailout were split almost down the middle in the new parliament.

Greece appeared to have averted an imminent funding crisis, however, after the board of the European Financial Stability Facility agreed to a scheduled 5.2 billion euro ($ 6.72 billion) payment.

“However, it appears that political uncertainty is here to stay, and that, combined with weak economic prospects, should keep market concerns elevated. We remain EUR bears,” analysts at Barclays Capital said in a note.

Some analysts caution about a further, sharp acceleration in risk aversion.

“Equity vol indices already show that the market is hesitating to stay in a regime of deep stress,” said Sebastien Galy, a strategist at Societe Generale.

“VIX hesitates to move to the 20-30 regime of stress. The battle between better economic data and depressed investor sentiment is yet to reach its final conclusion. Greece only provides the headlines, the EFSF will pay its tranche,” he said.

The CBOE Volatility index <.VIX>, a key gauge of how investors perceive risk and measures expected volatility in the Standard & Poor’s 500 index <.SPX> over the next 30 days, rose 5.4 percent to 20.08 on Wednesday. Its rise reflects mounting risk aversion.

While markets broadly took a beating on renewed fears over the euro zone debt crisis, China could defy such bearish mood.

A steady dose of market reform announcements from Chinese authorities, abetted by a pick-up in IPOs and Europe’s growing unattractiveness as an investment destination suggest now is as good time as any to position for at least a short-term bounce in China stocks.

(Editing by Richard Borsuk)

Business News Headlines – Yahoo! News

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Economy News Headlines – Yahoo! News

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Business News Headlines – Yahoo! News