Financial life in a big town

U.S. stocks rose Thursday in a thinly-traded session as investors focused on signs of strength in the economy before calling it a year.

The Dow Jones industrial average () rose 136 points, or 1.1%, to end at 12,287. The S&P 500 () added 13 points, or 1.1%, to 1,263. The Nasdaq () gained 24 points, or 0.9%, to 2,614.

Thursday’s rebound put the S&P 500 back on track for a modest 0.4% gain in 2011, after the broad market index fell sharply Wednesday. The Dow is currently up 6.1% for the year, while the Nasdaq is set for a 1.5% loss.

Stocks were supported by reports on housing, manufacturing and employment that raised hopes about the U.S. economy.

"Today’s last round of major U.S. reports before the weekend New Year’s celebration provided a decidedly positive spin to the outlook," wrote Michael Englund, chief economist at Action Economics, in a note to clients.

Traders said low volume, typical of the holiday week, has led to more pronounced swings, and some of the moves are coming from year-end portfolio rebalancing rather than convictions over the trajectory of the market or particular stocks.

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"We expect light trading through today and tomorrow, and any noise can create wild swings," said Doug Cote, chief market strategist at ING Investment Management.

Looking ahead, many investors expect stocks to move higher in the first few months of 2012.

The U.S. economy has shown signs of improvement recently, with economists forecasting a 3.3% increase in gross domestic product in the final three months of 2011. In addition, corporate profits are expected to rise in the fourth quarter, continuing an 11-month streak.

But the outlook for next year remains clouded by the debt crisis in Europe, which continues to weigh on demand for risk assets such as stocks.

On Thursday, an auction of Italian 10-year bonds, which have seen yields continue to flirt with the 7% danger zone, provided muted results. While yields were reported below prior levels, demand was short.

The euro fell to a 17-month low and analysts warn the currency could fall even further in 2012.

"Europe is a powder keg and could explode at any time, and likely will when we are the most complacent," said Keith Springer, president of Springer Financial Advisors in Sacramento cash advance america.

Economy: Jobless claims rose 15,000 to 381,000 in the latest week, according to the U.S. Labor Department. Analysts surveyed by Briefing.com had expected 368,000 claims.

But the figure remained below 400,000, giving investors hope that the labor market will strengthen in the new year.

The National Association of Realtors index of pending home sales, which measures signed sales contracts but not closed sales, rose 4% to a seasonally adjusted annual rate of 4.42 million in November from 4.25 million in October.

Economist had expected the a 0.6% increase in pending home sales.

The report boosted shares of homebuilders, including Pulte (, Fortune 500), Masco (, Fortune 500), Lennar () and DR Horton (, Fortune 500).

An index of manufacturing activity in the Chicago area eased slightly in December but held near a 7-month high, according to the Institute for Supply Management.

Companies: Amazon (, Fortune 500) eased after analysts at Goldman Sachs (, Fortune 500) suggested that the online retailer’s sales growth for the holiday period may fall short of expectations.

Shares of Yahoo (, Fortune 500) gained 2.7% after reports that China’s Alibaba Group has hired a lobbying firm to prepare a bid for Yahoo.

BP () edged higher despite reports that employees could face criminal charges in relation to last year’s Gulf of Mexico oil spill.

World markets: European stocks closed higher. Britain’s FTSE 100 () added 0.8%, the DAX () in Germany rose 0.9% and France’s CAC 40 () rose 1.1%.

Asian markets ended mixed. The Shanghai Composite () edged up 0.2%, the Hang Seng () in Hong Kong fell 0.7% and Japan’s Nikkei () lost 0.3%.

Betting on the dollar in 2012

Currencies and commodities: The dollar gained strength against the euro and the British pound but fell versus the Japanese yen.

Oil for February delivery rose 31 cents to $99.05 a barrel.

Gold futures for February delivery fell $23.20 to $1,540.90 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose, with the yield easing to 1.89% from late Wednesday.  

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Plastics maker Spartech Corp. cut its loss for the fourth quarter in half.

Clayton-based Spartech reported a loss of $27.7 million in the fourth quarter that ended Oct. 29, or 90 cents a share, compared to a loss of $55.7 million, or $1.81 a share a year ago.

Spartech produces plastic sheet, compounds and packaging products. Sales of higher margin products for transportation and construction customers helped Spartech’s sales increase 13 percent in the quarter, to $293.2 million, compared with $259.6 million a year ago.

For its 2011 fiscal year, Spartech posted a loss of $21.1 million, compared with a loss of $50.4 million in fiscal 2010.   

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Working almost to exhaustion and persuading countries one by one, European leaders agreed Friday to redefine their continent _ hoping that by joining their fiscal fortunes they might stop a crippling debt crisis, save the euro currency and prevent worldwide economic chaos.

Only one country said no: Britain. It will risk isolation while the rest of the continent plots its future.

The coalition came together in a marathon negotiating session among the 27 European Union heads of government _ hard bargaining that began with dinner Thursday evening and ended after 4 a.m., when red-eyed officials appeared before weary journalists to explain their proposed treaty.

It was a major step forward in the long, postwar march toward European integration. It was two decades ago, on Dec. 9 and 10, 1991, that European negotiators drafted a treaty in Maastricht, Netherlands, to unite their politics, create a central bank and, one day, invent a common currency.

The agreement _ with 23 countries in favor and three more saying they are open to the idea _ would force countries to submit their budgets for central review and limit the deficits they can run.

A crisis over sovereign debt that consumed Greece and spread to Ireland, Italy, Portugal and Spain threatened to explode into a worldwide financial crisis capable for forcing the global economy into recession.

“This is the breakthrough to the stability union,” German Chancellor Angela Merkel said. “We are using the crisis as an opportunity for a renewal.”

To prevent excessive deficits, countries in the treaty will have to submit their national budgets to the European Commission, the executive body of the EU, which will have the power to send them back for revision.

They must also bring their budgets close to balance. Except in special circumstances, the budget deficit of a country must not exceed 0.5 percent of gross domestic product, the amount of goods and services produced by its economy. An unspecified “automatic correction mechanism” would punish the rule-breakers.

Germany and France insist that fiscal union is the best way to regain market trust, badly shaken by the escalating financial crisis. Most economists think it will not be enough.

They say the euro countries need to have enough money on hand to guarantee everyone can pay their debts. Euro leaders put off until March a decision on whether to provide money on top of a euro500 billion, or $668 billion, bailout fund for euro countries.

European leaders did agree to add euro200 billion to the International Monetary Fund to help ailing countries.

Only 17 of the 27 European Union countries use the euro currency, and its stability has been threatened by the massive national debts of some of those 17. All but two of the non-euro countries _ Britain and Denmark _ are committed to adopting it eventually.

The countries that use the euro found they had friends among those that do not. At least six and as many as nine non-euro countries are willing to bind themselves to the euro countries in a pact aimed at having their economies converge.

Britain said no for two reasons: Prime Minister David Cameron’s Conservative Party includes a strong anti-EU element, and Cameron, despite trying deep into the night, failed to win an exemption from regulation for the British financial industry.

The other leaders would have none of it: Bankers and lack of regulation are viewed on the continent as a prime cause of the financial crisis.

“What was on offer is not in Britain’s interest, so I didn’t agree to it,” Cameron said. “We’re not in the euro, and I’m glad we’re not in the euro. We’re never going to join the euro, and we’re never going to give up this kind of sovereignty that these countries are having to give up.”

Britain, which prides itself on its fierce independence, joined the then-European Economic Community in 1973 _ only after French President Charles de Gaulle, who had vetoed the U.K.’s membership along with Germany’s leader, fell from power.

Since then, it has retained a frosty skepticism toward the ambitions of France and Germany to forge ever closer political and fiscal ties. It eschewed both the euro single currency and the Schengen open borders policy, fearful of losing power to determine its own fate.

French President Nicolas Sarkozy blamed the British leader for scuttling what could have been an EU-wide treaty. He said Cameron’s exemptions for British finance “seemed to us unacceptable.”

Some countries may face parliamentary opposition to the pact, which would allow for unprecedented oversight of national budgets.

Stocks and the euro climbed on the news of the treaty, even though it offers only a long-term solution and leaves many details to be worked out. Stocks rose 3.4 percent in Italy, 2.5 percent in France and almost 2 percent in Germany. In New York, the Dow Jones industrial average rose 1.5 percent and vaulted back over 12,000.

Borrowing costs for European countries fell, but only slightly, a sign of cautious confidence from the bond market. The yield on the benchmark Italian government bond fell to 6.33 percent, down about 0.05 percentage point. A yield above 7 percent is considered unsustainable.

One by one through the long night, the leaders of the 17 euro nations persuaded the non-euro nations to come along.

Hungary, the Czech Republic and Sweden said they would need to consult their parliaments. The six other EU countries that use currencies other than the euro _ Denmark, Poland, Bulgaria, Romania, Latvia, Lithuania _ agreed right away. The leaders want the treaty written by March.

The countries hope to help European nations tame their long-term debt. Such an agreement is considered necessary before the European Central Bank and other institutions commit more money to lower the borrowing costs of heavily indebted countries like Italy and Spain.

How exactly that will happen remains unclear. Financial markets around the world had hoped the ECB would buy massive amounts of national bonds, flooding the market with money and lowering borrowing costs. But ECB President Mario Draghi dashed those hopes Thursday and said there was no plan to buy more bonds.

On Friday, Draghi called the treaty agreement “a very good outcome for the euro area, very good.

“It is going to be the basis for much more disciplined economic policy for euro-area members,” he said. “And certainly it is going to be helpful in the present situation.”

A breakup of the euro would have disastrous consequences. It would almost certainly trigger a financial crisis while banks figured out who owned what and while countries leaving the union awkwardly transitioned back to their own sovereign currencies.

Such a disorderly exit could cause banks to become fearful and stop lending money to each other. In 2008, a credit crisis followed the bankruptcy of Lehman Brothers investment house and triggered a meltdown in the stock market.

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People are finally replacing the cars and trucks they held onto during the economic slump, giving a boost to sales at Chrysler, GM and Nissan in November.

Chrysler’s sales rose 45 percent from a year earlier, while GM’s climbed 7 percent and Nissan’s 19 percent. The three companies were among the first to report U.S. sales of new cars and trucks on Thursday.

Dealers say they’ve had strong floor traffic all month, with surprisingly high sales for a month that’s normally lackluster because of colder weather and holiday distractions. But this November, buyers went to showrooms because of good deals on leases, more confidence in the economy and a need to trade in older cars, says Ryan LaFontaine, a partner in a six-dealer chain in Michigan.

The activity underscores projections that Americans bought new cars at the fastest pace in more than two years as they replace aging vehicles. Analysts expect that the annual sales rate for November could range between 13.3 million and 14 million cars and trucks. That is far better than the rate of 12.6 million through the first 10 months of the year.

November sales also could approach the 14.1 million annual rate from August of 2009, when the government offered big rebates for drivers to trade in their gas-guzzling clunkers.

Sales at Chrysler Group LLC last month were led by the Jeep Compass small SUV, which had a nearly ten-fold increase in sales. Jeep brand sales rose 50 percent, while Chrysler brand sales nearly doubled on strong demand for its 200 and 300 sedans. But Chrysler also raised its incentives to nearly $3,300 per vehicle, up 6 percent from October.

At General Motors Co., buyers snapped up small cars and pickup trucks. Sales of the Chevrolet Cruze compact rose 54 percent, while the Silverado pickup, GM’s top-selling vehicle, saw sales jump 34 percent.

“We are seeing a broad spectrum of customers return to the market,” says Don Johnson, GM’s U.S. sales chief.

At Nissan, the tiny Versa led sales with a 38 percent increase, but SUV and truck sales also rose 32 percent.

People have been holding onto their vehicles in an unstable economy, and the rate of cars that are scrapped has surpassed sales for several years. The average age of a car on U.S. roads is a record 10.6 years, according to the Polk auto industry research firm.

The sales increases at the three car companies also reflect consumer confidence for November, which rose to the highest level since July, according to the Conference Board. October’s number was the lowest since the recession.

With the increased confidence, car buyers are releasing pent-up demand, said Larry Dominique, executive vice president of data for the TrueCar.com automotive website. “I think consumers are just starting to say `it’s time to start spending money again,’ ” he said.

TrueCar expects November sales to be nearly 12 percent higher than a year earlier, capping six months of sales gains compared with the same month in 2010. Last November, the annual sales rate was only 12.3 million as the auto industry was just starting to recover from the economic meltdown.

Sweet lease deals, helped by low interest rates and high used-car values that make leased vehicles worth more when they’re returned, also are fueling sales. GM, for instance, is offering a Cruze lease $169 per month for 39 months. According to TrueCar, the average industry spending on incentives such as leases and low-interest loans was $2,534 per vehicle in November, up 2.5 percent from October.

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Americans’ confidence in the economy in November bounced back to its highest level since July, the latest sign that they are beginning to feel more cheerful about spending during the holiday shopping season.

The Conference Board, a private research firm, says Tuesday that its Consumer Confidence Index rose 15 points to 56.0. That’s up from a revised 40.9 in October _ the lowest level since the recession _ and the biggest jump since the 59.2 reading in July. The November number is encouraging, but far below the reading of 90, which indicates an economy on solid footing.

The confidence numbers are widely watched by economists because consumer spending accounts for 70 percent of economic activity. The confidence of U.S. consumers slipped after the summer amid renewed fears about a second recession. But Americans, who have been grappling with high unemployment and a weak housing market, have shown that they are feeling much more comfortable spending. Over the past weekend, for instance, they spent more than they ever have before during Black Friday weekend, the traditional start of the holiday shopping season.

“Consumers appear to be entering the holiday season in better spirits, though overall readings remain historically weak,” said Lynn Franco, director of The Conference Board Consumer Research Center in a statement low fee cash advance.

Franco noted that consumers’ assessment of current conditions improved after six months of steady declines. Consumers’ anxiety regarding the short-term outlook for business conditions, jobs and income prospects eased considerably.

One barometer of the index, which measures how shoppers feel now, rose to 38.3 from 27.1. The other gauge, which measures how shoppers say they will feel over the next six months, rose to 67.8 from 50.0.

Consumers have several reasons to be more confident as there have been some signs of improvement in the economy. Earlier this month, for instance, the Labor Department reported that the job market improved modestly as unemployment rate nudged down to 9 percent in October from 9.1 percent in September. The month marked the 13th consecutive month of job gains.

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If Toronto fireman Alexander Gunn was alive today, he might well feel like the Warren Buffett of his times.

The semi-detached home he bought in Toronto’s Riverdale neighbourhood for $1,200 in 1906, sold in November for $825,000.

Conventional wisdom has it that buying a home is one of the smartest things we can do. If you have been lucky enough to live in the Greater Toronto Area, especially in the last 10 years when house prices have doubled, that would be true.

But over the long run, is home ownership such a great deal? To find out Moneyville took a close look at Gunn’s house over the last 105 years.

Here’s what we found: Adjusted for inflation, an investment in the stock market would have yielded a better return, including all the ups and downs — starting with the 1929 stock market crash that ushered in the Great Depression.

Toronto was still rebuilding from the Great Fire of 1904 when Alexander Gunn was promoted to district captain after years of climbing the ladder at the city’s No. 3 firehall at Yonge and Carlton Sts. With his new responsibilities came a pay hike, from $850 to $1,000 a year.

It was the nod he needed to buy his first home.

The three-storey house in what is now known as Riverdale was brand new, part of a development on what had been fields where locals grew food to sell at market. It promised good luck: A shamrock had been crafted into its soaring gable, most likely by Irish immigrants who helped build these turn-of-the-century subdivisions.

Each day on his way to work, Gunn would have headed down Broadview Ave. with its sweeping view of the downtown and watched the burned-out city being rebuilt.

He would have kept warm at night in front of the house’s wood-trimmed fireplace and watched through its lead-glass windows as thousands more homeowners flocked to the area after 1912 when Danforth Ave. was paved and, later, the Bloor Viaduct erected across the Don Valley.

Gunn paid just a little more than a year’s salary for the modest house on a 20 foot by 112.5 foot lot. Today, a buyer would pay a fortune, relatively speaking — about five times their annual income given that the average price of a GTA home in October was $465,000 and the average household income $82,000, according to the Canada Mortgage and Housing Corp.

Gunn and his family lived at 56 Simpson Ave. for more than four decades, through two World Wars, the Great Depression and the remarkable transformation of Toronto.

The house changed hands just four times before its most recent sale. And the average annual gain over the 105 years, adjusted for inflation, was just 3.9 per cent.

“If I had to give new homebuyers some advice, it’s that houses aren’t always the ultimate investment. You should never bet the farm on the house, so to speak,” says Francis Fong, an economist with TD Economics.

Fong and his colleague Sonya Gulati helped Moneyville adjust prices for inflation and compare the appreciation of the home against Toronto Stock Exchange returns.

The challenge was to compare apples to apples. We had the home’s sale price going back to 1906, but the Bank of Canada’s inflation records don’t begin until 1914. Toronto Stock Exchange records start in 1919.

So we opted to track gains from 1947 onward, seven years after Gunn’s death, when the house sold for $6,300. We found that in those 64 years, the house appreciated at an average annual rate of 2.3 per cent, adjusted for inflation. (Inflation averaged 3.9 per cent during the same period, largely because of spikes in the 1970s and early ’80s.)

The TSX, on the other hand, did marginally better — producing average returns of about 3 per cent.

But when the everday costs of a house were included, things likes taxes, maintenance and upkeep, 56 Simpson fared much worse

“A house is not a good investment. It is a roof over your head,” says James McKellar, director of the real estate and infrastructure program at York University’s Schulich School of Business.

These days, homeowners in hot markets like Toronto and Vancouver may feel they have hit the jackpot: Most Toronto homes have virtually doubled in price over the last decade and in Vancouver they have almost tripled.

But once you factor in the other costs — interest on the mortgage, new kitchens, bathrooms, furnaces and electrical updates, “you’re lucky to make anything,” says McKellar. Studies have shown that it’s $800 a month cheaper to rent a 1,000-square-foot home than to own it, he notes.

“By any empirical study, houses do not inflate. They are a cost. But we all have to live somewhere.

“Calling a house a good investment is a process of rationalization. The last thing you want to admit is that, ‘I bought the house because I fell in love with it.’”

Catharine Grossi is proud to admit that. She and her husband Paul bought 56 Simpson for $462,500 back in 2001 because they were keen to move back to the city from the suburbs.

“When I saw that so much of the original house was there, and it was updated . . . That was good for me. I loved it as soon as I saw it.”

She became fascinated by the home’s history — she spent a day at the City of Toronto archives — and details such as its original fireplace, century-old exposed brick, the shamrock.

The house proved to be the perfect place for Grossi’s two sons and daughter to drop their bags after university or stints abroad.

Grossi wasn’t thinking so much about the gains she’s made, but rather the life she’s lived at 56 Simpson when the house sold Nov. 4. She and Paul are downsizing into a home two doors from their daughter and her newborn twins.

Grossi asked just one thing when her realtor called to say there had been an offer at asking price: “Do they love the house?”

James McKellar gets that.

He has lost money in the housing market: About $25,000 in the wake of the oil patch bust in Calgary in 1983 and $35,000 on a Boston home during the ’90s recession.

He now owns a home in Moore Park.

“The big drawback of renting is that it doesn’t give you the emotional satisfaction of owning,” he says with just the slightest chuckle.

“At the end of the day, when you go home and make dinner and relax, the numbers really don’t matter.”

Also read:

How we paid off our mortgage in three years

Why I sold my house and rent instead

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The number of people applying for unemployment benefits fell last week to the lowest level since early April, a sign that layoffs are easing and hiring may pick up.

The Labor Department says weekly applications dropped by 5,000 to a seasonally adjusted 388,000. It was the fourth decline in five weeks.

The four-week average, a less volatile measure, dropped to 396,750. That’s the first time the average been below 400,000 in seven months.

Applications need to consistently drop below 375,000 to signal sustained job gains payday loan lenders. They haven’t been that low since February.

The total number of people receiving benefits also fell to the lowest level since Sept. 2008, when Lehman Brothers collapsed and the financial crisis intensified.

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German industrial equipment maker Siemens AG swung back to profit in its fiscal fourth quarter as sales increased in Asia.

The company said Thursday it made a net profit of euro1.23 billion ($1.66 billion) in the three months to end-September in contrast to the loss of euro396 million loss in the same quarter a year ago, when the company had a large one-time charge at its health care division.

The company increased its dividend but gave an outlook for only moderate sales growth and indicated it didn’t expect profits to rise next year.

Revenues rose 5 percent to euro20.35 billion, boosted by a 12 percent increase in Asia. The company said Thursday sales grew across all regions and experienced particularly strong growth in emerging markets.

Orders, however, fell 2 percent and the company forecast only “moderate” sales growth. It said its outlook for earnings in the coming year were “based on the high level we achieved in the prior year” and foresees earnings from continuing operations that are unchanged, excluding one-time gains from exiting its nuclear partnership with Areva.

Company CEO Peter Loescher said the company had performed well thanks to its balanced portfolio of businesses but warned that the economic environment ahead was uncertain.

“The macroeconomic environment continues to be volatile and difficult to assess,” he said.

He said he expected growth in Europe’s core markets but that turmoil from Europe’s debt crisis could hurt the business environment in southern Europe _ which remains only 5 percent of Siemens’ business.

The company raised its dividend to euro3.00 per share from euro2.70 per share last year.

Across Siemens divisions, its fossil-fuel power generation unit raised earnings by 10 percent to euro407 billion. Its power transmission equipment divisions, however, saw earnings slip 28 percent due to costs of hedging raw materials costs and the emergence of new competitors in low-cost countries.

Munich-based Siemens makes a wide range of heavy industrial goods, including trains and streetcars, power generating and transmission equipment, diagnostic machines for hospitals and factory automation and equipment.

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More than 2 million new U.S. patients will be eligible to receive a next-generation blood thinner drug called Xarelto, after the Food and Drug Administration approved the medication to treat a common heart problem that can lead to stroke.

Federal health officials approved the drug from Johnson & Johnson and Roche to prevent strokes in patients with atrial fibrillation, a condition that causes the heart’s upper chambers beat chaotically and ineffectively. The irregular heartbeats can cause blood clots which travel to the brain, blocking blood flow and occasionally causing a stroke.

“This approval gives doctors and patients another treatment option for a condition that must be managed carefully,” said Dr. Norman Stockbridge, director of FDA’s cardiovascular and renal products division.

The once-a-day pill was first approved in July to prevent strokes in patients receiving hip and knee replacements. Today’s approval expands the drug’s indication to the much larger group of roughly 2.2 million Americans with atrial fibrillation.

For more than half a century, atrial fibrillation patients have relied on the tough-to-use blood thinner warfarin, sold under the brand name Coumadin. Doctors often have trouble gauging the right dose of the drug for each patient. Too much warfarin can cause dangerous internal bleeding, and too little can result in strokes.

In a setback for the drugs’ developers, the FDA did not approve a manufacturer-requested claim that Xarelto was superior at preventing stroke and blood clots when compared with warfarin. Instead the FDA states that the companies’ 14,000-patient study showed Xarelto and warfarin were about the same in preventing stroke creditreport.

Also, the FDA added a boxed safety warning, the most serious kind, stating that patients should not stop taking Xarelto without notifying their doctors first. Discontinuing the drug can increase the risk of stroke.

Numerous drugmakers have been working to develop an updated alternative to warfarin, one of the most widely-used medications in the U.S. Last year U.S. pharmacies filled 32 million prescriptions for warfarin, according to data tracker IMS Health.

Last October, the FDA approved the first alternative to warfarin for atrial fibrillation _ Pradaxa, known chemically as dabigatran, made by the German company Boehringer Ingelheim. That drug’s label states that the daily pill “significantly reduced” stroke and blood clots in a study of 18,000 patients.

In September a panel of outside advisers to the FDA voted 9-2 to recommend approval for use in atrial fibrillation. The panel’s recommendation came despite questions from FDA scientists about the reliability of some data submitted on Xarelto.

Xarelto is the first in a new class of blood thinning drugs that work by blocking a clotting protein called factor Xa. Older blood thinners, including warfarin, work by preventing blood platelets from sticking together.

Known chemically as rivaroxaban, Xa was discovered by German drugmaker Bayer and co-developed with New Brunswick, N.J.-based J&J. J&J holds U.S. marketing rights to the drug while Bayer markets the drug in the rest of the world.

Eastman Kodak Co. warned Thursday that its survival over the next year hinges on its ability to sell its potentially lucrative digital-imaging patents or raise extra funds by selling debt.

Its cautionary statement in a securities filing came as the embattled photography pioneer posted a wider $222 million loss for the third quarter. Its cash reserves fell almost 10 percent in the quarter.

Revenue tumbled 17 percent in the July-September period, with surging sales of inkjet printers more than offset by slumping digital camera and film revenue.

Kodak trimmed its full-year outlook, warning that revenue could be 1.5 percent to 4 percent lower than expected and losses might drop to the low end of its previous forecast.

Its shares fell 10 cents, or 8.8 percent, to $1.10 in midday trading after sinking as low as $1.07 earlier in the day. It traded as low as 54 cents a share on Sept. 30.

In a filing with the Securities and Exchange Commission, Kodak said it is seeking to raise an additional $500 million in financing that could be used to support “ongoing operational needs.”

Kodak said its ability to continue operations within the next 12 months “is dependent upon the ability to monetize its digital imaging patent portfolio through a sale or licensing” or by issuing additional debt.

Shrinking cash reserves, which fell to $862 million in the quarter from $957 million in June, have intensified investor fears of a looming bankruptcy. The company set a year-end cash target of $1.3 billion to $1.4 billion that excludes any intellectual-property licensing deals, down from a previous forecast of $1.6 billion to $1.7 billion.

“The reports of Kodak’s death, where everybody was expecting Kodak to go bankrupt, are premature,” Ulysses Yannas, a broker with Buckman, Buckman & Reid in New York, had said before the regulatory filing. “They continue to lose a lot of money but they have the wherewithal to become profitable again.”

“You’ve got a challenge here,” countered Shannon Cross of Cross Research in Livingston, N.J. “Kodak’s at a point where one of two things have to happen _ either they have to raise more money or they have to complete the sale (of digital-imaging patents). Otherwise, they’re not going to be able to continue.”

Kodak typically generates the bulk of its cash during the run-up to the holiday season. But worries that it’s burning through cash escalated in late September when it drew $160 million from a revolving credit line and enlisted the help of restructuring firms. Kodak insisted it had no intention of filing for bankruptcy protection.

Its third quarterly loss in a row _ its ninth such loss in the last three years _ amounted to 83 cents per share in the quarter. That compares with a loss of $43 million, or 16 cents per share, a year earlier.

Analysts surveyed by FactSet expected a smaller loss of 42 cents a share for the latest quarter.

Revenue dipped to $1.46 billion from $1.76 billion a year ago, with shrinking film group sales falling 10 percent to $389 million. Consumer digital-imaging sales tumbled 38 percent to $408 million as Kodak shifts to pricier camera models to try to offset intense competition from smartphones and video cameras.

The company said it posted modest patent royalties in the quarter but didn’t specify how much. Its year-ago results were lifted by a $210 million licensing deal with an undisclosed digital-camera competitor.

Since 2005, Kodak has poured hundreds of millions of dollars into new lines of inkjet printers that are finally on the verge of turning a profit. Home photo printers, high-speed commercial inkjet presses, workflow software and packaging are viewed as Kodak’s new core.

Revenue from those businesses rose by a combined 13 percent in the quarter, fueled by 89 percent growth in packaging solutions and 44 percent growth in home printers and ink. Kodak said it expects the consumer printer to become profitable in the current quarter.

The four businesses remain a bright spot in the 131-year-old company’s long and painful drive to recast itself into a reliably profitable player in the turbulent digital-imaging arena. Kodak is hoping they will more than double in size by 2013, accounting for 25 percent _ or nearly $2 billion _ of all sales.

In the meantime, mining its inventions for revenue has become indispensable. Since July, Kodak has been hawking a portfolio of 1,100 digital-imaging patents that many analysts think could fetch $2 billion to $3 billion.

A sale represents a sharp tactical shift. Kodak picked up just $27 million in patent-licensing fees in the first half of 2011 after amassing nearly $2 billion in the previous three years.

Based in Rochester, N.Y., Kodak turned picture-taking into a hobby for the masses over a century ago. It developed the world’s first digital camera in 1975 but failed to capitalize quickly on its new-wave know-how in digital photography.

Its workforce has plunged to 18,800 from 70,000 in 2002.

Kodak now expects segment losses in 2011 to be closer to $300 million, which is within its previous forecast range of $100 million to $300 million in losses. It expects revenue to be $6.3 billion to $6.4 billion, down from a previous forecast of $6.4 billion to $6.7 billion

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