Financial life in a big town

Dubai’s Emirates airline was set to receive its fourth A380 superjumbo on Tuesday, winning a champagne bet for the head of manufacturer Airbus as it reached a key 2008 target with two days to spare.

The fourth out of 58 planes ordered by Emirates was due to be handed over to the airline at an Airbus plant in Hamburg, Germany, though the fifth plane due in 2009 is running a few weeks late, Emirates President Tim Clark told Reuters.

“It should have been by the end of March but it will now probably be mid-April,” Clark said in a telephone interview.

Airbus is battling to keep deliveries on track after two years of A380 delays caused by wiring installation problems, which plunged parent company EADS into turmoil in 2006.

Under pressure to meet targets that have slipped four times in three years, Airbus Chief Executive Tom Enders wagered a bottle of champagne with the press at a September news conference that Airbus would reach its target of 12 A380 deliveries in 2008.

EADS however said last month it expected to miss its 2009 target of 21 A380 deliveries by a “couple” of aircraft to allow more time for a transition to a more automated production line.

It has not yet given a target for 2010.

More than pride is at stake since airlines pay for the bulk of their planes on delivery and Airbus revenues, which were flat in 2007, are directly affected by the timing of such handovers payday cash loans.

The list price for the A380 is about $325 million, though aircraft are usually sold at discounts.

EADS shares were down 0.2 percent at 1310 GMT (8:10 a.m. EST) on Tuesday at 11.65 euros and have fallen 47 percent this year, lagging French stocks by 5 percent.

Airbus reported its second year of losses in 2007 on revenue which grew 0.1 percent to 25.216 billion euros.

The planemaker appears to have put the bulk of industrial problems behind it, but faces the risk of cancellations or order deferrals and growing uncertainty over the traffic predictions that spurred the creation of the world’s largest airliner.

International carriers saw a 13.5 percent fall in cargo traffic in November and a drop of 4.6 percent in passengers as business shrank across the industry, industry group IATA said on Tuesday.

The figures marked the sharpest declines since the months after the September 2001 attacks in the United States.

“The industry is now shrinking by all measures,” IATA said. 

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Congressional Democrats are seeking to expand funding for airport runways, housing projects and sewage-treatment plants though a new tax break for municipal bondholders.

The proposal is designed to make so-called private-activity bonds more attractive by exempting the interest on them from the alternative minimum tax. Richard Neal, chairman of the House Ways and Means subcommittee that drafts tax measures, wants to include the plan in economic recovery legislation that President-elect Barack Obama has made a top priority.

“I am hopeful that my bill, which will increase demand and lower costs for state and local governments, will be a central feature of our stimulus bill next month,” said Neal, a Massachusetts Democrat.

Neal’s proposal would reverse 23 years of policy. It aims to increase demand for private-activity bonds by mutual funds and individual investors who often avoid them because of the higher taxes and complicated paperwork under the alternative minimum tax.

Neal’s bill is one of at least three proposals favoring the municipal bond market gaining steam as Democrats seek ways to fulfill Obama’s promise to steer federal funding to infrastructure projects as part of a stimulus package worth as much as $850 billion over two years.

Senate Finance Committee Chairman Max Baucus, a Montana Democrat, earlier this month said he is drafting a measure worth at least $500 billion that, among other things, would allow governments to issue additional private-activity bonds, also known as AMT bonds because of their tax implications.

Hospitals, Colleges

Lawmakers also are considering proposals to exempt from the AMT other types of bonds, such as those issued by non-profit hospitals and colleges, and to allow banks to deduct more costs from purchasing and carrying tax-exempt bonds than they currently may write off.

“The idea is, how can we stimulate activity?” said Charles Samuels, a lawyer at Mintz Levin Cohn Ferris Glovsky & Popeo PC in Washington, who advises the National Association of Health and Educational Facilities Finance Authorities. He is lobbying to expand Neal’s proposal to also repeal the AMT on bonds issued by non-profit organizations.

While many of the ideas have been around for years, he said, the mix of the economic distress and changing political leadership is giving them new life.

“It’s taking an extreme situation to allow the political system to get unclogged,” he said.

Private-activity bonds are part of a subset of municipal bonds that are an exception to the securities’ general tax- exempt status due to the AMT.

Share of Market

AMT bonds made up 8.8 percent of the overall municipal bond market in 2007, with a sales volume of $38 billion, according to data compiled by Thomson Financial no teletrack payday loan.

The AMT was created in 1969 to prevent 155 wealthy Americans from avoiding any tax by claiming excessive deductions, credits, and exemptions. When deductions for items such as medical expenses and state and local taxes become too large relative to income, the AMT imposes a flat exemption. Amounts over the exemption are taxed at 26 percent or 28 percent, depending on income.

The AMT now affects about 4 million households a year. It is scheduled to affect 30.3 million households in 2009 unless Congress renews a measure to index the levy for inflation.

Taxpayers who may owe AMT must calculate their liabilities using both methods and pay the higher amount. Interest from most municipal bonds isn’t counted toward income under either method, with the exception of private-activity bonds and those issued by certain non-profit groups.

Middle Brackets

Investors who pay in the middle-income tax brackets of 25 percent might end up owing AMT if they have large amounts of interest from private-activity bonds; those who pay in the top tax bracket of 35 percent typically avoid AMT because they end up paying more under the regular system.

Repealing the AMT on individuals who buy the bonds would reduce borrowing costs, said Greg Principato, president of the Airports Council International-North America.

“Eliminating the AMT on airport bonds would provide significant savings, while also attracting more buyers” for the bonds, he said.

The largest AMT bond issued in 2007 was a $600 million student loan issue by Educational Funding of the South. Three other issues, all for airports in Miami, San Jose, California, and Washington, D.C., were between $530 million and $551 million.

Housing Bonds

Housing was the leading purpose for AMT financing in 2007, as it has been since the inception of AMT bonds in 1986. Minimum tax housing bonds rose 4 percent in 2007 to a record $21.7 billion.

This year’s credit crunch has made it more expensive for local authorities to borrow money for projects using AMT bonds.

Eleven governmental organizations such as the National League of Cities and U.S. Conference of Mayors, said in a letter to Neal this month that the premium AMT bonds pay over regular municipal bonds, usually about 25 basis points, has grown to as much as 100 basis points.

Yields in some cases are even higher than commercial bonds, an expense that has coincided with increased costs for completing infrastructure projects.

The groups urged Neal to expand his legislation to also repeal the AMT for corporations that buy the bonds.

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Wal-Mart agreed Tuesday to pay hundreds of millions of dollars to settle allegations that the company didn’t pay workers for overtime or let them take breaks.

Wal-Mart (WMT, Fortune 500), based in Bentonville, Ark., said it will pay plaintiffs in class actions and their lawyers between $352 million and $640 million. The move will settle 63 suits that were filed against the company in various state and federal courts over the past eight years.

The total amount to be paid will depend on the amount of claims that are submitted by class members, Wal-Mart said. As part of the settlement, Wal-Mart agreed to "use various electronic systems and other measures designed to maintain compliance with its wage and hour policies and applicable law."

The company said the cost of the settlement will reduce fourth-quarter profits by $250 million, or 6 cents a share.

The settlements are subject to court approval, but lawyers for the workers said they believed the agreement was fair payday loan.

"After many years of hard fought litigation, the parties have reached an agreement that values the work of Wal-Mart’s employees by providing both economic and injunctive relief," said Carolyn Burton of the Mills Law Firm, co-lead counsel in a group of 35 cases consolidated in Nevada and cases covering four other states, in a press release issued by Wal-Mart.

The company said in the press release, which was issued after the market closed Tuesday, that the claims made in the suits "are not representative of the company we are today."

Wal-Mart shares rose 33 cents in late trading to $55.63.

All news is bad news in real estate right now. Have you recently bought a house anyway? Send your story and photos to realstories@cnnmoney.com and you could be featured in an upcoming article.  

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Toyota Motor Corp forecast a first-ever annual operating loss, blaming a relentless sales slide and a crippling rise in the yen in what it said was an emergency unprecedented in its 70-year history.

Toyota, the world’s biggest automaker, had been expected to issue its second profit warning in less than seven weeks after domestic rival Honda Motor Co also cut its outlook again last week, but the downward revision was bigger than predicted.

“This is very, very, very bad,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments. “There’s a chance they could fall into the red in the next business year as well.

“This is also not just a problem for Toyota. What is good for Toyota is good for the Japanese economy.”

Automakers around the world face their toughest business environment in recent memory, caught in a sharp reversal of demand as the financial crisis spreads, squeezing credit and consumer sentiment.

Toyota cut its group operating forecast to a loss of 150 billion yen ($1.7 billion) for the year to end-March, after shocking financial markets last month by slashing its group operating profit forecast by 1 trillion yen to 600 billion yen.

It made a record profit of 2 health insurance plans.27 trillion yen last year.

Analyst forecasts on Reuters Estimates ranged from a loss of 150 billion yen to a profit of 800 billion yen for figures not updated since conditions deteriorated in the past month.

Toyota now expects group net profit of 50 billion yen instead of 550 billion yen.

Toyota shares closed down 0.2 percent ahead of the announcement in a firmer Tokyo market. Its Frankfurt-listed shares fell 2.4 percent in light trade.

For a Graphic on Toyota earnings, click:

https://customers.reuters.com/d/graphics/JP_TYTFY1208.gif

BIG STEP BACK

Like the rest of the industry, Toyota has idled factories, slowed assembly lines and delayed manufacturing projects, such as the start of a Mississippi plant under construction to build the Prius hybrid model, and said it would continue those moves until the tide turned.

“We are facing an unprecedented emergency,” President Katsuaki Watanabe told a year-end news conference. “This is a crisis unlike the crises of the past.” 

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OTTAWA–Prime Minister Stephen Harper and Ontario Premier Dalton McGuinty will toss billions in a lifeline to Canadian automakers following the announcement of the U.S auto rescue package.

Government officials were tight-lipped yesterday over details of the Canadian aid package to be unveiled in Toronto today but provincial officials confirmed it would be 20 per cent of the $17.4 billion (U.S.) total announced by U.S. President George W. Bush yesterday – which means the package would be worth about $3.5 billion (U.S), or $4.2 billion (Cdn.).

The U.S. aid package for the Detroit Three – Chrysler, Ford and General Motors – came a week after federal Industry Minister Tony Clement said there would be no bailout for their Canadian operations unless the Americans acted first.

"We’re seeing it as a positive step, a positive development. It certainly will be good for our domestic market and for the integrated markets between the U.S. and Canada," Clement spokesperson Darren Cunningham said of the U.S. package.

The U.S. bailout was pledged in exchange for concessions from the automakers and their workers – including wage and work rule concessions from the United Auto Workers union that would be competitive with foreign companies by the end of 2009.

"You’ll see similar things in a Canadian package," said Kory Teneckye, Harper’s director of communications, when asked if the Canadian bailout would include the kinds of concessions and controls the U.S. government is demanding.

Canadian Auto Workers president Ken Lewenza said he applauded the U.S. bailout but was critical of the wage and benefit concessions and hoped Harper and McGuinty would not take that route.

"I’m hopeful that they won’t do that, because that will just divide and conquer," he said.

In an interview with CTV scheduled to air tonight, Harper said the Canadian and American auto industries are so entwined that "we cannot have a solution unless we have an integrated approach and an integrated action with the United States administration."

Harper suggested the Canadian package would mirror much of the controls the U.S. is prescribing.

The Prime Minister said the Canadian government and the government of Ontario "have concluded we either do our share of the restructuring or we will have no share of that industry in Canada instant payday loan no telecheck."

"If the United States does all the restructuring themselves, the industry will move to the United States. That’s not acceptable to the government of Canada. So we will work with the Americans, make sure that we get our share of a restructured industry," he said.

"Obviously, as public money goes into that, there will be more public say about how that money is used, but we should be under no illusions: there is going to be significant restructuring. And the aim at the end of this is to make sure that, while those companies will be smaller, they will be viable and they will make money."

A senior Ontario government source who called the Bush announcement "good news" declined to comment on any conditions the Canadian manufacturers would have to accept in return for aid.

McGuinty has suggested the struggling auto companies might have to keep the bailout cash in separate accounts so its use can be tracked and audited to protect the investment by taxpayers.

That is the only way to ensure that the money is used for the purposes intended, said Charles Smedmor, a forensic accountant in Toronto.

Opposition parties have been critical that GM, Ford and Chrysler still have not revealed publicly how many plants might close, or how many jobs will be lost in Canada.

But McGuinty has acknowledged that there will be fewer jobs for Canadians at the Detroit Three despite the fact they will share billions in cash from taxpayers.

Federal Liberal industry critic MP Gerard Kennedy (Parkdale High Park) said he hopes the arrangement is transparent.

"What kind of arrangement is the Canadian government prepared to enter into, how is it going to protect Canadian jobs and the Canadian taxpayers in terms of the kinds of risks the money is being put into, and is there going to be any independent Canadian decision-making here or are we simply going to be following the Americans in every respect?" he asked.

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Tony Jabon had an e-mail in to his mortgage broker by 10 a.m.

Jabon, 35, an environmental consultant in Charlotte, N.C., had heard about the Federal Reserve’s decision to cut its key interest rate to nearly zero and wanted to refinance to something lower than 5.5 percent.

Within hours, he had locked in a rate of about 4.6 percent. He’ll save about $160 on his monthly payment. "Any time you can save a dollar," he said, "why not?"

Homeowners across the country did the same Wednesday. Mortgage brokers reported a surge of calls from borrowers seeking to take advantage of the Fed’s extraordinary decision. Some brokers were quoting mortgage rates of close to 4.5 percent for people with strong credit and hefty down payments.

The steep drop in interest rates has produced a jump in activity for many St. Louis mortgage lenders, said Neil Volkmann, the recently elected president of the Mortgage Bankers Association of St. Louis.

The trend has been developing for a couple of weeks now, said Volkmann, who is also senior vice president at First National Bank of St. Louis. The bank has seen more mortgage applications in the past two weeks than in all of November, Volkmann said.

"This time of year is not typically a purchase market," he said. "But with rates falling, it’s going to provide an excellent opportunity for home buyers sitting on the sidelines to find very competitively priced loans, as well as house prices, where the combo of those two have made a very affordable environment for people to buy homes."

Volkmann said this was also a good time for people to rebalance their debt structures by refinancing current

mortgages or selling their homes. He said this could be the start of stabilization in the real estate market.

The national average rate on 30-year fixed mortgages was 5.06 percent on Wednesday, according to financial publisher HSH Associates — the lowest since the 1960s and down from 5.3 percent Tuesday.

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"This is beautiful, oh my gosh!" said Patti Mazzara, a mortgage broker in the Minneapolis suburb of Edina, who was surprised when she looked up rates and found them well below 5 percent, down at least three-quarters of a percentage point from earlier in the week. "This is a whole new game now. Hopefully it’s going to give people some relief."

The Fed, aiming to free up lending and jolt the economy back to life, cut the federal funds rate Tuesday to a target range of zero to 0.25 percent from 1 percent and pledged to keep funneling money into the market for mortgage investments.

It was the best news in months for anyone looking to lock in a 30-year fixed-rate mortgage. But it was not expected to be a cure-all, and borrowers already in danger of foreclosure probably won’t be able to take advantage of it.

"It’s a call to action for homeowners looking to get out of adjustable-rate mortgages," said Greg McBride, senior financial analyst at Bankrate.com. "Unfortunately, it’s not an equal-opportunity party."

Even Wall Street, which pushed the Dow industrials up 360 points after the Fed’s announcement Tuesday, tempered its enthusiasm on Wednesday faxless pay day loans. The Dow finished down about 100 points.

An estimated 12 million Americans owe more on their home loans than their houses’ current value, unemployment is still rising quickly, and foreclosures are soaring.

For people whose home values have plunged, "I could have a 1 percent interest rate, but it wouldn’t help them," said Michael Maynard, a mortgage broker in Branford, Conn.

"People losing their homes aren’t losing their homes because they can’t get a 6 percent mortgage," Maynard said. "They’re not qualifying at all."

In Charlotte, Jabon’s mortgage broker, Will Mullinix, said that although rates that low are "pretty unprecedented," the best deals are available only to borrowers with pristine credit who are taking out loans for under 80 percent of their house’s current value.

"All the stars have to align," Mullinix said.

And economists expect falling rates to provide only a modest boost to home sales, especially as unemployment worsens amid what could be the longest economic downturn since the Great Depression.

"People tend to be more inclined to buy a house when they’re confident about their employment and income prospects," said Wachovia Corp. economist Mark Vitner.

Besides lowering the interest on fixed-rate mortgages, rates should come down on adjustable-rate home equity loans. Those are tied to the prime rate, and prime rates came down immediately after the Fed move Tuesday.

The Federal Reserve also plans to buy up mortgage debt and is considering buying long-term Treasury bonds that are closely tied to mortgage rates, so analysts expect rates to drop even further.

"We’re going to see just a massive refinancing boom," said Mark Zandi, chief economist at Moody’s Economy.com, who estimates that up to 10 million U.S. borrowers, or about one in five Americans with a mortgage, could wind up refinancing.

Senate Majority Leader Harry Reid, D-Nev., said Wednesday that some of the $700 billion financial bailout should be spent to aid borrowers in danger of losing their homes.

"We’ve given enough big checks to these banks. Let’s do something to help foreclosures," he said.

President-elect Barack Obama’s advisers were weighing an economic recovery plan that could cost as much as $1 trillion over two years. The figure is far bigger than the $600 billion that Obama’s team initially envisioned.

Mortgage applications rose about 3 percent last week but are still below highs for the year reached in early February, the last time rates were attractive enough to cause refinancings to surge.

For homeowners who haven’t been able to sell their houses, the lower rates represent an opportunity to at least save some money. And if they have enough equity in their homes, they can still pull out money to make improvements — albeit at a higher interest rate.

Lisa Wallwork, 37, and her husband, Shawn, are in the process of refinancing the mortgage on the house they’ve owned for five years in Tolland, Conn. They pulled it off the market in September after the house didn’t sell for more than a year.

"We wanted to move up to a bigger and better house," she said.

Instead, the couple are refinancing their $185,000 mortgage, pulling out equity to remodel their kitchen. And they still expect to save up to $300 a month in the process.

Christopher Boyce contributed to this report.

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OTTAWA–The forestry industry is asking the federal government for help to save jobs.

The president and CEO of the Forest Products Association of Canada says Ottawa doesn’t have to spend a lot of money to keep people employed in his industry.

But Avrim Lazar says the government needs to take bold action to maintain jobs in forestry, including tax cuts and ensuring liquidity.

"Government creates the business conditions," Lazar said Tuesday. "And if government gets it right, we in industry will be able to compete and keep the jobs in Canada."

The association has issued a five-point list of things it says are needed to keep the industry afloat during an economic downturn.

Lazar says Ottawa must ensure credit markets work and that the tax system encourages investment in lumber mills.

"Even if you have a sound business, a good strategic plan, good customers, if there’s no credit, you’re going to start gasping for air," said Lazar 500 fast cash payday loan. "This is true of not just the forestry industry but our suppliers, our customers and all of manufacturing."

Lazar is also calling for federal investments in research and market development, as well as green technology, and short-term help for workers facing layoffs.

Automakers have been calling for a rescue package to prevent a collapse of their industry.

A report prepared for the Ontario government warns Canada could lose more than 580,000 jobs within five years if General Motors, Ford and Chrysler were to go out of business.

However, those industries are teetering on the verge of collapse, unlike Canada’s $80-billion forestry industry.

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TEHRAN–Iran will propose OPEC cuts oil output by between 1.5 million and 2 million barrels per day (bpd) when the group meets in Algeria Wednesday, Iran’s oil minister was quoted as saying yesterday.

Ministers of the Organization of the Petroleum Exporting Countries are expected to announce an output cut at the Algeria talks to shore up prices that have plunged about $100 (U.S.) a barrel since a July peak. On Friday oil was trading around $46 a barrel.

"Iran’s proposal for this week’s OPEC meeting in Algeria will be a reduction of between 1.5 million and 2 million bpd," IRNA reported its oil minister, Gholamhossein Nozari, as saying.

OPEC deferred an output cut decision at a meeting in Cairo last month.

OPEC delegates said Saudi Arabia and its Gulf allies demanded tighter adherence to existing curbs, with some pointing at Iran easy payday loans.

OPEC’s recent output curbs amount to about 2 million bpd Iran, OPEC’s second-biggest producer, was to reduce its output by 199,000 bpd under the November move.

Nozari said OPEC needed to cut production by 1.5 million to 2 million bpd to prevent a drop in prices next year.

"The proposal for this level of output cut is in order to establish a balance in the market for oil supply and demand," he was quoted as saying. "Otherwise we will have oversupply in the first and second quarter of the coming year, which will go into stocks and will mean we are confronted with an additional oil price drop in the market next summer."

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A historic "open skies" pact between Canada and the European Union promises to offer Canadian air travellers more choice and lower prices, but industry observers warn that a slumping global economy will prevent airlines from taking full advantage of the new freedoms in the near term.

The agreement, the initial stage of which is expected to go into effect next year, would allow European airlines to fly to Canada from anywhere in the 27-member bloc while reciprocal rights would be granted to Canadian carriers.

The pact also envisions lowering barriers to foreign investment in Canadian airlines by raising foreign ownership limits to 49 per cent from 25 per cent.

"That’s something we’d like to move forward on, but it requires Parliament to approve it so I’ll be working with my colleagues in cabinet to approve it in the House," John Baird, the federal transport minister, said in an interview.

He said the combined measures – reducing restrictions on airlines flying between Canada and Europe and triggering foreign investment – should help to foster competition in the Canadian aviation market and stimulate economic growth through increased tourism and business connections.

Studies commissioned by the EU showed that nine million people travelled between Europe and Canada in 2007 and that an open skies agreement would generate an additional half a million passengers in its first year. After a few years, an estimated 3.5 million more passengers are expected to take to the skies between the two markets, according to the EU.

But while industry observers agreed that fewer restrictions should help to boost transatlantic flying, they warned that a bleak global economy means that most foreign carriers aren’t in a position to experiment with new routes to a relatively small market such as Canada’s.

"I just don’t think (Germany’s) Lufthansa is going to get all excited about flying from London, England, to Toronto," said Robert Kokonis, the president of AirTrav, an aviation consulting firm. "If anything, right now carriers are focused on their home markets classic car insurance."

As well, he added that Air Canada has historically had a tough time flying to European destinations outside of big centres such as London, Paris and Frankfurt.

Air Canada and Transat AT said in separate statements yesterday that they welcomed the liberalized agreement.

WestJet Airlines also praised the accord, but stressed that Ottawa must also address the issue of high industry fees and taxes to ensure a level playing field with other countries.

The accord is to be implemented in four phases, according to the EU. The first phase will give airlines "unlimited freedom" to fly between any point in Europe and any point in Canada, while doing away with restrictions on the number of flights operated by any airline and the fares that can be charged to passengers.

The second phase deals with foreign investment while the third begins once both sides enable investors to set up and control new domestic airlines in each others’ markets.

The final phase deals with the thorny issue of cabotage, which would allow foreign airlines to fly domestic routes in Canada.

Andrea Maresi, a spokesperson for the EU Transport Commission, said Ottawa has agreed to pursue cabotage rights, but cautioned that they likely won’t be implemented for some time because cabotage requires legislation permitting complete foreign ownership.

However, Baird said the federal government doesn’t intend to pursue either foreign ownership of domestic airlines or cabotage at this time.

"I think this was something that was important for the EU to lay out the architecture, but at this time we’re not moving forward."

AirTrav’s Kokonis said there is bound to be stiff opposition from Canadian carriers on the cabotage question, which would force Air Canada and WestJet to compete head-to-head with giants such as Air France-KLM on domestic routes.

"I’ll believe it when I see it," he said.

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The Toronto stock market held on to large gains late in the session today, led by solid advances in energy and financial stocks.

New York was also up sharply with investors feeling better after president-elect Barack Obama unveiled the largest U.S. public works plan since the 1950s.

Just before the close, Toronto's S&P/TSX composite index was up 500.6 points or 6.17 per cent to 8,617.63.

New York's Dow Jones industrial average moved up 327.59 points to 8,963.01.

The Canadian dollar climbed 1.17 cents to 79.85 cents US as traders looked ahead to an expected interest-rate cut of at least a half percentage point by the Bank of Canada tomorrow.

The TSX energy sector jumped almost eight per cent as the January crude contract on the New York Mercantile Exchange moved up $2.90 to US$43.71 a barrel.

Investors also took in news of a sharp retracement in the housing sector. Canada Mortgage and Housing Corp. reported that housing starts fell to 172,000 at a seasonally adjusted annual rate in November, down from 211,800 in October.

The data coincided with an RBC Economics report that Canada's housing sector is entering a cyclical downturn but the risk of a U.S.-style meltdown is remote.

The TSX Venture Exchange moved up 13.63 points to 697.94.

The Nasdaq composite index rose 50.08 points to 1,559.39. The S&P 500 improved 31.87 points to 907.94 after Obama's weekend announcement of his recovery plan.

That came on the heels of Friday's statistics showing 533,000 jobs were lost in the United States during November, while Canada shed 71,000.

"Over the last six weeks people really lost confidence," said Kate Warne, Canadian market specialist at Edward Jones in St. Louis.

She noted that Obama may not be able to push through as much spending as he would like, but the leadership he is showing is "giving investors a bit more confidence that actions will continue to be taken until the economy begins to improve."

Investors also appeared more comfortable that the U quick pay day loans.S. and Canadian governments are closer to doling out billions of dollars to the Detroit Three auto makers.

The TSX energy sector moved up almost eight per cent as oil prices bounced off multi-year lows after the president of the Organization of Petroleum Exporting Countries hinted at a "severe" production cut at OPEC's meeting Dec. 17. Light sweet crude rose $3.44 to US$44.25 a barrel on the New York Mercantile Exchange, after dropping almost $3 on Friday.

EnCana Corp. (TSX: ECA) shot up $4.79 to $55.65 on the TSX while Canadian Natural Resources (TSX: CNQ) gained $2.93 to $42.26.

Financials jumped 4.5 per cent as Royal Bank (TSX: RY) rose $1.94 to $38.34 and Bank of Montreal (TSX: BMO) advanced $1.52 to $36.42.

The base-metals sector jumped almost 10 per cent while beaten-down copper surged 11.5 cents to US$1.4885 a pound, sending Teck Cominco Ltd. (TSX: TCK.B) up 35 cents to $4.28 while FNX Mining Co. (TSX: FNX) added 42 cents or 19 per cent to $2.59.

Anvil Mining Ltd. (TSX: AVM) said it is putting the Dikulushi mine in the Democratic Republic of Congo on care and maintenance "until the price of copper recovers." Its shares added one cent to 91 cents.

Gold stocks ran up as bullion rose $24.70 to US$776.90 an ounce. Goldcorp Inc. (TSX: G) gained $2.30 to $30.15.

JLL Partners Inc. of New York has made a bid for the 71 per cent of Patheon Inc. (TSX: PTI) it does not already own, offering US$2 per share for the international drug manufacturer. Patheon shares rocketed 89 cents or 83 per cent to C$1.96.

On overseas stock markets, Hong Kong's Hang Seng index vaulted up 8.7 per cent to its highest close in seven weeks, while Japan's Nikkei average gained 5.2 per cent.

The FTSE 100 index is up 6.15 per cent in London, while the German DAX gained 8.7 per cent and the Paris CAC 40 was up 8.4 per cent.

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