SINGAPORE (Reuters) � Asian stocks rose on Friday as stronger-than expected economic data from China and the United States boosted confidence in the global economic recovery.
U.S. Treasury prices slipped as investors turned to stocks and the dollar held steady after dropping to an eight-month low against a basket of currencies the previous day.
Chinese manufacturing gathered momentum last month, handily beating market forecasts and providing further evidence that the economy is pulling smoothly out of a second-quarter slowdown.
The MSCI index of Asia Pacific stocks outside Japan (.MIAPJ0000PUS) was up 0.36 percent compared with a rise of 0.24 before the release of China's Purchasing Managers Index. The index gained more than 17 percent in the last quarter.
"This looks like the real deal. It's not just inventory correction. We think that end demand is picking up in China and the economy has stabilized after the summer lull," said Frederick Neuman, co-head Asian economics, HSBC in Hong Kong.
Japan's Nikkei average rose 0.5 percent on Friday, helped by short-covering after sharp falls the previous day and after U.S. economic data provided a degree of optimism.
New U.S. claims for jobless benefits fell last week, a sign of an improving labor market, while Midwest business activity grew more than expected in September. Also, U.S. second-quarter growth was revised a touch higher on firmer consumer spending.
"Japanese stocks are recouping some ground as investors appear to be correcting extreme pessimism triggered yesterday by the yen's advance and worries about European finance problems," said Koichi Nosaka, a market analyst at Securities Japan, Inc.
India is scheduled to release its manufacturing survey data later on Friday.
The dollar held steady at 83.55 yen, backing away from the previous day's low at 83.16 yen and moving further off last month's 15-year low below 83 which had prompted Japanese authorities to intervene for the first time in six years.
The euro paused below a five-month high on the dollar on Friday while the Australian dollar jumped on optimism that the strong data from China augured well for the country's resource exports.
(Additional reporting by Charlotte Cooper and Aiko Hayashi in TOKYO)
SINGAPORE (Reuters) - Asian stocks rose on Friday as stronger-than expected economic data from China and the United States boosted confidence in the global economic recovery.
U.S. Treasury prices slipped as investors turned to stocks and the dollar held steady after dropping to an eight-month low against a basket of currencies the previous day.
Chinese manufacturing gathered momentum last month, handily beating market forecasts and providing further evidence that the economy is pulling smoothly out of a second-quarter slowdown.
The MSCI index of Asia Pacific stocks outside Japan .MIAPJ0000PUS was up 0.36 percent compared with a rise of 0.24 before the release of China's Purchasing Managers Index. The index gained more than 17 percent in the last quarter.
"This looks like the real deal. It's not just inventory correction. We think that end demand is picking up in China and the economy has stabilized after the summer lull," said Frederick Neuman, co-head Asian economics, HSBC in Hong Kong.
Japan's Nikkei average rose 0.5 percent on Friday, helped by short-covering after sharp falls the previous day and after U.S. economic data provided a degree of optimism.
New U.S. claims for jobless benefits fell last week, a sign of an improving labor market, while Midwest business activity grew more than expected in September. Also, U.S. second-quarter growth was revised a touch higher on firmer consumer spending.
"Japanese stocks are recouping some ground as investors appear to be correcting extreme pessimism triggered yesterday by the yen's advance and worries about European finance problems," said Koichi Nosaka, a market analyst at Securities Japan, Inc.
India is scheduled to release its manufacturing survey data later on Friday.
The dollar held steady at 83.55 yen, backing away from the previous day's low at 83.16 yen and moving further off last month's 15-year low below 83 which had prompted Japanese authorities to intervene for the first time in six years.
The euro paused below a five-month high on the dollar on Friday while the Australian dollar jumped on optimism that the strong data from China augured well for the country's resource exports.
NEW YORK (Reuters) - The economic recovery remains disappointingly slow with unemployment too high, two top Federal Reserve officials said on Thursday, as they discussed the role of the U.S. central bank in spurring a stronger economy.
Federal Reserve Chairman Ben Bernanke, in remarks at a town hall event held by the Fed, commented on the pain still felt by many Americans, but spoke only in generalities about the Fed's commitment to stimulate growth.
The president of the Cleveland Fed, Sandra Pianalto, said growth is currently too slow to significantly reduce the "stubbornly high" unemployment rate. She said she is currently assessing the effectiveness of the tools that the central bank could employ if the Fed were to decide the economic recovery needs an extra boost.
"Even though our economy is stabilized and growing, clearly it is still a very difficult time for many Americans," Bernanke said.
"The unemployment rate is still almost 10 percent, inflation is quite low, and the Federal Reserve has the responsibility ... to do our part to help the economy recover and make sure that jobs come back to the United States," he said.
Pianalto, who addressed an event in New York, in addition to highlighting the high unemployment rate, said inflation was "too low."
She said inflation is below the 2 percent level that she sees as consistent with the Fed's longer-term objective of price stability, and said it is likely to stay low through 2011.
Low inflation is considered a concern, because it could run the risk of tipping into deflation, a vicious cycle of downward prices and slowing economic activity.
Pianalto said the Fed has options if it decides a further boost to the economy is needed.
Pianalto, who is a voter on the Fed's policy-setting panel this year, said that because a stronger economy is a solution to the unemployment problem, policies should aim to support growth. But growth is currently too slow to make much progress in reducing the jobless rate, she said.
The Fed, which has kept interest rates near zero percent since December 2008. recently said it stands ready to help the recovery if necessary. It has promised to keep interest rates exceptionally low for an extended period and has pumped $1.7 trillion into the financial system through purchases of longer-term Treasury securities and mortgage-related debt.
With economic growth expected to be weak in the second half of 2010 and unemployment high, most analysts expect the Fed to start a new round of bond purchases, or quantitative easing, when it meets in early November.
Fed officials in recent days, however, have offered divided views over what should be the catalyst for the U.S. central bank to provide more support to the economy and over the likely impact more asset purchases could have.
Pianalto said she was currently assessing the effectiveness of the tools available to the Fed, which apart from buying more longer-term bonds include strengthening its commitment to easy policy in its policy statement and lowering the interest it pays on excess reserves.
"Because we have less experience in using these unconventional tools, we have to look at the cost and benefits ... at the effectiveness," she told the Women's Economic Round Table.
NEW YORK (Reuters) � The economic recovery remains disappointingly slow with unemployment too high, two top Federal Reserve officials said on Thursday, as they discussed the role of the U.S. central bank in spurring a stronger economy.
Federal Reserve Chairman Ben Bernanke, in remarks at a town hall event held by the Fed, commented on the pain still felt by many Americans, but spoke only in generalities about the Fed's commitment to stimulate growth.
The president of the Cleveland Fed, Sandra Pianalto, said growth is currently too slow to significantly reduce the "stubbornly high" unemployment rate. She said she is currently assessing the effectiveness of the tools that the central bank could employ if the Fed were to decide the economic recovery needs an extra boost.
"Even though our economy is stabilized and growing, clearly it is still a very difficult time for many Americans," Bernanke said.
"The unemployment rate is still almost 10 percent, inflation is quite low, and the Federal Reserve has the responsibility ... to do our part to help the economy recover and make sure that jobs come back to the United States," he said.
Pianalto, who addressed an event in New York, in addition to highlighting the high unemployment rate, said inflation was "too low."
She said inflation is below the 2 percent level that she sees as consistent with the Fed's longer-term objective of price stability, and said it is likely to stay low through 2011.
Low inflation is considered a concern, because it could run the risk of tipping into deflation, a vicious cycle of downward prices and slowing economic activity.
Pianalto said the Fed has options if it decides a further boost to the economy is needed.
Pianalto, who is a voter on the Fed's policy-setting panel this year, said that because a stronger economy is a solution to the unemployment problem, policies should aim to support growth. But growth is currently too slow to make much progress in reducing the jobless rate, she said.
The Fed, which has kept interest rates near zero percent since December 2008. recently said it stands ready to help the recovery if necessary. It has promised to keep interest rates exceptionally low for an extended period and has pumped $1.7 trillion into the financial system through purchases of longer-term Treasury securities and mortgage-related debt.
With economic growth expected to be weak in the second half of 2010 and unemployment high, most analysts expect the Fed to start a new round of bond purchases, or quantitative easing, when it meets in early November.
Fed officials in recent days, however, have offered divided views over what should be the catalyst for the U.S. central bank to provide more support to the economy and over the likely impact more asset purchases could have.
Pianalto said she was currently assessing the effectiveness of the tools available to the Fed, which apart from buying more longer-term bonds include strengthening its commitment to easy policy in its policy statement and lowering the interest it pays on excess reserves.
"Because we have less experience in using these unconventional tools, we have to look at the cost and benefits ... at the effectiveness," she told the Women's Economic Round Table.
"That's what I am in the process of doing with my staff. We are trying to get more information on the effectiveness of these tools."
Bernanke fielded questions by video from teachers in each of the Fed's 12 districts. While he did not go into detail about the outlook for the economy or Fed policy, his remarks conveyed concern for the sluggish pace of recovery and a sense the Fed should be active.
Bernanke said it was not uncommon for a recovery following a financial crisis to be slow. Consumers may pull back from spending as they cope with lost wealth or to reduce debt, but growth may come from business investments and exports, he said.
"The economy is moving, perhaps not as quickly as we would like, and we want to make sure that progress continues," he said.
(Additional reporting by Mark Felsenthal in Washington; Editing by Leslie Adler)
The national minimum wage has risen to �5.93 an hour from �5.80 and for the first time people aged 21 will benefit from the rate.
Previously the full rate applied to employees aged 22 and older.
There are also corresponding increases for younger workers, with 16 and 17-year-olds seeing a rise from �3.57 an hour to �3.64.
For 18 to 20-year-olds the rate is increasing from �4.83 to �4.92 an hour, the new rules state.
The government has also introduced a minimum wage for apprentices for the first time, of �2.50 an hour, for those under 19 years old.
Warning
However, the British Chambers of Commerce (BCC) has warned the government about further rises that could damage job creation.
It said next year's increase must be no more than 1.7%, as a larger rise would seriously impede retailers' ability to maintain and create jobs.
BCC director-general Stephen Robertson said the government must strike the right balance between higher wages and more jobs.
"Trading conditions are tough, higher costs, such as next April's National Insurance increase will pile on even more pressure," he said.
"Even a small increase in 2011's minimum wage could choke off retailers' vital potential to create new jobs."
The government is also cracking down on employers who flout the minimum wage laws. It said it would name and shame offenders, publicising breaches from 1 January 2011.
Employment Minister Edward Davey said firms had three months to put their house in order.
"Bad publicity can be a powerful weapon in the fight against employers who try to cheat their workers and competitors. Their reputation can be badly damaged if they are seen to be flouting the law," he said.
The national minimum wage was introduced in 1999, at a rate of �3.60 an hour.
New streamlined workplace equality rules are due to be implemented, after being approved by the government.
The Equality Act covers many workplace areas and draws nine separate pieces of legislation into a single Act.
Equalities Minister Theresa May says it will now be easier for firms to comply with anti-discrimination rules.
The Act also bans age discrimination by employers and includes provisions aimed at extending the rights of disabled people.
'Challenging times'
The new law restricts the circumstances in which employers can ask job applicants questions about disability or health prior to offering them a position, making it more difficult for disabled people to be unfairly screened out.
"In these challenging economic times it's more important than ever for employers to make the most of all the talent available," said Ms May.
There are also new powers for employment tribunals.
The Act will also stop employers using pay secrecy clauses to prevent employees discussing their own pay, which means men and women can compare pay.
But the Act will not make employers reveal how much they pay men compared with women, as had been planned by the Labour government.
'Sexual orientation'
"Everyone is protected by the new law," says the Equality and Human Rights Commission.
"It [the Act] covers age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion and belief, sex (meaning gender) and sexual orientation.
"Under the act people are not allowed to discriminate, harass or victimise another person because they belong to a group that the Act protects, they are thought to belong to one of those groups or are associated with someone who does."
During the summer there were some concerns expressed by shipping companies.
Some claimed the laws could force them to quit the UK because they would have to pay UK rates to foreign-based seafarers who do not have the burden of British living costs.
WASHINGTON/NEW YORK (Reuters) � A single trade by Waddell & Reed Financial Inc helped spark the cascade of market selling on May 6, said a source familiar with regulators' report on the so-called flash crash.
Waddell, which sold a large order of e-mini futures contracts during the plunge, will not be named in the report, according to the source, who requested anonymity because report has not been made public.
But the report will describe Waddell's trade as a single trade by an entity, the source said.
The May 6 crash sent the Dow Jones industrial average down some 700 points in a matter of minutes before sharply recovering -- an unprecedented breakdown that exposed deep flaws in the electronic marketplace now dominated by high-frequency trading.
Citing an internal exchange document, Reuters on May 14 reported that Waddell & Reed sold a large order of e-minis during the plunge -- identifying the firm that CFTC Chairman Gary Gensler had previously alluded to in congressional testimony.
The Securities and Exchange Commission and Commodity Futures Trading Commission had been expected to release the much anticipated report before October.
But the report must win approval from the majority of the 10 SEC and CFTC commissioners. It is not clear whether all commissioners have had a chance to review the report with two of the SEC commissioners traveling.
Also the CFTC must clear some procedural hurdles so that they are allowed to release information about an investigation.
Top Democratic lawmakers will ask the SEC and CFTC for a copy of the report so that Congress can publicize the findings, a second source familiar with the matter said.
Senate Banking Committee Chairman Christopher Dodd and House Financial Services Committee Chairman Barney Frank will send such letters to the SEC and the CFTC later on Thursday, the source said.
Computer maker Hewlett Packard (HP) has named Leo Apotheker, former boss of business software maker SAP, as its new chief executive and president.
He replaces Mark Hurd, who stepped down from his positions as president and CEO after an investigation into claims made against him by a former HP contractor.
HP has also named Ray Lane, of venture capital firm Kleiner Perkins Caufield & Byers, as non-executive chairman.
Both appointments will come into effect on 1 November, said HP.
Mr Apotheker had been with SAP since 1988 and had been their chief executive since April 2008.
He becomes the third new HP boss in a decade.
'Expertise'
"To stand out in the crowded market for computer hardware, HP needs a chief executive who can boost the company's offering of software and IT services - Leo Apotheker fits that bill," said Tim Weber, business editor of the BBC News website.
"However, he also has to extend HP's dominance in the markets for PCs and printers, and to succeed the company needs to cement its position in the consumer market.
"Leo's expertise is mainly an expert for enterprise computing."
Trading in HP shares was briefly halted after the stock market closed.
When after-the-bell trading resumed, HP's shares fell by $1.37, or 3.3%, to $40.70.
WASHINGTON/NEW YORK (Reuters) - A single trade by Waddell & Reed Financial Inc helped spark the cascade of market selling on May 6, said a source familiar with regulators' report on the so-called flash crash.
Waddell, which sold a large order of e-mini futures contracts during the plunge, will not be named in the report, according to the source, who requested anonymity because report has not been made public.
But the report will describe Waddell's trade as a single trade by an entity, the source said.
The May 6 crash sent the Dow Jones industrial average down some 700 points in a matter of minutes before sharply recovering -- an unprecedented breakdown that exposed deep flaws in the electronic marketplace now dominated by high-frequency trading.
Citing an internal exchange document, Reuters on May 14 reported that Waddell & Reed sold a large order of e-minis during the plunge -- identifying the firm that CFTC Chairman Gary Gensler had previously alluded to in congressional testimony.
The Securities and Exchange Commission and Commodity Futures Trading Commission had been expected to release the much anticipated report before October.
But the report must win approval from the majority of the 10 SEC and CFTC commissioners. It is not clear whether all commissioners have had a chance to review the report with two of the SEC commissioners traveling.
Also the CFTC must clear some procedural hurdles so that they are allowed to release information about an investigation.
Top Democratic lawmakers will ask the SEC and CFTC for a copy of the report so that Congress can publicize the findings, a second source familiar with the matter said.
Senate Banking Committee Chairman Christopher Dodd and House Financial Services Committee Chairman Barney Frank will send such letters to the SEC and the CFTC later on Thursday, the source said.
LOS ANGELES (Reuters) - Hewlett-Packard has appointed former SAP CEO Leo Apotheker its new CEO, putting a software industry veteran at the helm of the world's largest technology company.
Commentary:
SHAW WU, ANALYST, KAUFMAN BROS
"It's actually a really strong hire. And also the change of the non-executive chairman, because software is an area that we've always felt HP should have put more emphasis on. They've obviously made some acquisitions in software.
"Those new acquisitions are nice, but probably not going to move the needle that materially. They just added two executives with primarily software expertise. The CEO is not as known here in the States, but he's very well known in Europe.
"Leo might not have the big star power here in the States, but it's really the expertise that really matters.
"This will perhaps signal a change in the strategy where they emphasize software. And software is the highest margin business. And for a company of HP's size, it should be a lot bigger than what it is right now.
On the risk of HP executive departures: "That's always the risk."
"Many of those employees have had opportunities to go elsewhere and they haven't. Being executive VP at HP, running such a big unit, is almost like being a CEO already."
KIM CAUGHEY FORREST, SENIOR ANALYST, FORT PITT CAPITAL
"I am surprised this was their pick (that they went outside of company)."
"SAP is a very different sort of company than HP, and that is my biggest concern. The scope of SAP is very different, as are the customers. What does he know about hardware? That's the question."
KAUSHIK ROY, ANALYST, WEDBUSH SECURITIES
"It's good because they got somebody from outside, so he'll bring fresh perspective. But more importantly, he built SAP and SAP is a very R&D-oriented company.
"One thing which would be good for HP, and where HP has been lacking, is innovation. The innovation part of HP disappeared during the time of Mark Hurd. Mark Hurd brought operational excellence but what HP didn't have was R&D.
"He's an outsider which is also good I believe, because he can be an agent of change. Investors were focused on how do you bring back R&D, how do you bring back innovation, and this should be somewhat positive for HP stock."
The Irish Central Bank has said it will need to increase the amount of support to the country's banking sector.
The total amount has risen to 45bn euros (�39bn), or 32% of the country's gross domestic product (GDP).
The Bank said supporting Anglo Irish Bank alone would cost from 29.3bn euros to a "stress scenario" bail-out of up to 34bn euros (�29.2bn).
The finance minister, Brian Lenihan, says it is "manageable". Without the bank support, the deficit would be 12%.
In comparison, the UK's deficit - including the cost of its bank support - is just over 10% of GDP for this year.
Last month, the cost of the bail-out of Anglo Irish was estimated at between 22-25bn euros.
The Irish Republic says its latest announcement represents the final costs of repairing the country's banking system. It hopes this will reassure worried investors.
On the markets, the key interest rate on Irish 10-year bonds fell to 6.55% from this week's all time high of 6.91%, an indication that investors' fears had abated slightly.
Huge risk
The BBC's business editor, Robert Peston, said the equivalent of about a third of the Irish economy had gone into supporting the banks:
"If you added together all the capital provided to Ireland's banks by various arms of the state, taxpayer support to those banks in the form of capital injections is around 30% of GDP."
He said that would compare with around 6% of GDP in the UK for the equity injected into Royal Bank of Scotland, Lloyds and Northern Rock.
In an interview with BBC Radio 4's Today programme, Mr Lenihan said the support was vital as Anglo Irish was too big to fail.
"The bank had grown to half the size of our annual national wealth, so clearly the failure of a bank on that scale would do huge damage to the local economy here in Ireland," he said.
The central bank also said it would also increase support to Allied Irish Bank, which would need 3bn euros before the end of the year.
A mass issue of new shares would take the government's stake to 90%.
Shares in the AIB have fallen 30% in response to the latest announcements.
Further help - of 2.7bn euros - would also be given to the Irish Nationwide Building Society.
The Bank of Ireland was not deemed to need any extra support.
Spending deficit
The Irish Republic is viewed as one of the weakest economies in the eurozone, despite it taking tough action to regain control of its economy.
The extra support for the banking system has led Mr Lenihan to say he will cut another 3bn euros from spending in the budget later this year, a move designed to help shrink the deficit to 3% of GDP by 2014 to keep within eurozone rules.
The latest news was welcomed by some market analysts.
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Finance Minister Brian Lenihan said Anglo-Irish was a 'systemic threat'
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Padhraic Garvey, rate strategist at ING, said: "I think the market needs to know and here it is.
"It's a pretty astonishing deficit number. It's dominated of course by accounting practices because the Irish state is taking the pain upfront and funding it slowly over 10 years."
'Better health'
This week, mounting concern over the Irish economy sent its cost of borrowing on the open markets to a record level.
The latest GDP figures showed the Irish economy contracted by 1.2% for the second quarter. Greece's GDP dropped by 1.5% in the same period.
In an interview with the Financial Times, Mr Lenihan stressed that the country's financial health was better than other peripheral eurozone economies, saying it had borrowing already lined up to service debts and cover public services until the middle of 2011.
"We are not obliged to go to the markets. We are not under a clear and present constraint," he told the paper.
Mr Lenihan said the country would cancel its bond auctions in October and November and would not return to the bond markets until early in 2011.
The European Union's monetary commissioner, Olli Rehn, said he doubted that Ireland would need emergency aid from the fund established earlier this year by the EU and the International Monetary Fund to save Greece from bankruptcy.
There had been speculation that the Irish government would need such help - a suggestion rejected by the government.
BP may resume paying a dividend to shareholders in the new year, incoming chief executive Bob Dudley has said.
In an exclusive interview with the BBC, he said BP's board would meet to discuss restoring the dividend in the coming months.
BP stopped paying out money to shareholders following the oil disaster in the Gulf of Mexico.
Mr Dudley will formally take over from Tony Hayward as BP's chief executive on Friday.
"The board will get together and talk before the end of the year about restoring a dividend in some form in the first quarter," he told the BBC's business editor, Robert Peston.
"Its obviously for the board to decide, [but] from what I see happening in the performances of the businesses, i believe we will get there."
His plans for restoring the dividend will be encouraging news for shareholders.
Last year, BP paid out about �7bn in dividends, making it the single biggest dividend payer in the FTSE 100 list of leading companies.
Restoring reputations
Mr Dudley also pledged to make BP "a good compelling investment for shareholders".
Despite the damage to the company's reputation caused by the oil disaster, Mr Dudley said the company was fully committed to doing business in the US.
But he acknowledged that the accident had been "a wake up call" to the entire oil and gas industry, and BP would have to demonstrate it had "learned its lessons".
"If we meet our obligations, like we have been, then over time people will say - this was a good corporate citizen to respond to an accident that has been a wake up call to the entire oil and gas industry.
"If we share our learnings to ensure this doesn't happen again then maybe we can restore our reputation in the US," he said.
"The US uses a lot of energy, and we are the biggest energy producer in the US, so it's an important part of our portfolio globally."
Mr Dudley also defended outgoing chief executive Tony Hayward, who was widely criticised for his handling of the oil spill, saying he had done "a great job".
WASHINGTON (Reuters) � New U.S. claims for jobless benefits fell last week, pointing to a modest strengthening in the labor market, while second-quarter growth was revised a touch higher on firmer consumer spending.
The data on Thursday offered hope for a pick-up in economic activity in the third quarter.
"It's encouraging to see that jobless claims are trending lower now. And also it looks like the U.S. economy entered the third quarter with a little bit more momentum than previously expected," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Initial claims for state unemployment benefits fell 16,000 last week to 453,000, the Labor Department said, exceeding market expectations for a decline to 460,000.
Separately, gross domestic product growth -- which measures total goods and services output within U.S. borders -- was revised up to an annualized rate of 1.7 percent from 1.6 percent, the Commerce Department said in its final estimate.
That compared to financial markets' expectations for a 1.6 percent pace and represented a sharp slowdown from the first quarter's 3.7 percent growth rate.
U.S. stock index futures turned positive on the data, while Treasury debt prices pared gains. The U.S. dollar cut losses against major currencies.
Although the economy has now grown for four straight quarters, the recovery from the longest and deepest downturn since the Great Depression has lacked strength to chip away at a 9.6 percent unemployment rate.
The Federal Reserve last week signaled it was ready to inject more money into the economy to shore up the recovery and avert a damaging downward spiral in prices.
Growth in the second quarter was supported by consumer spending, which was revised up to a 2.2 percent growth rate, the largest increase in three years, from the previously reported 2.0 percent rise.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 1.9 percent rate in the January-March period.
Business inventories increased $68.8 billion rather than the $63.2 billion reported last month. The change in inventories contributed 0.82 percentage points to second-quarter GDP.
Excluding inventories, the economy expanded at a 0.9 percent pace instead of the 1.0 percent rate reported last month.
But a 33.5 percent jump in imports, which was previously reported as a 32.4 percent increase, kept growth on a weak trajectory. Analysts believe the surge in imports was likely the result of Chinese exporters rushing to push through goods before the expiration of value added tax rebates.
The growth in imports, which was the strongest in 26 years and eclipsed a 9.1 percent rise in exports, created a trade deficit that chopped 3.5 percentage points from GDP.
Analysts do not expect the robust import growth pace to continue, which means trade will be less of a drag on growth in the third quarter.
Business investment was revised a touch lower, to reflect weak spending on structures. Business spending increased at a rate of 17.2 percent, instead of the 17.6 percent reported last month. It was still the largest increase since the first quarter of 2006.
Spending on software and equipment was little changed at a 24.8 percent growth rate. Overall business spending increased at a 7.8 percent pace in the first quarter.
Spending on home building increased at a 25.7 percent rate, slightly down from the 27.2 percent pace reported last month.
The GDP report also showed after tax corporate profits rose 3.9 percent in the second quarter, revised up from 2.9 percent. Profits increased 5.8 percent in the first quarter.
(Reporting by Lucia Mutikani; Additional reporting by Glenn Somerville; Editing by Andrea Ricci)
FSA's Sheila Nicoll: "Good complaints handling standards should be the rule, not the exception"
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A new list of banks facing the highest number of complaints from UK customers is topped by Lloyds Banking Group.
The state-backed group, which includes a number of different brands, received more than 280,000 gripes in the first half of 2010, the City regulator said.
However, Lloyds said it received the most because it was the largest bank.
Santander was the worst of the major High Street banks at dealing with gripes within eight weeks, said the Financial Services Authority (FSA).
The watchdog is also proposing new rules to improve banks' complaints procedures.
Figures
In April, the FSA criticised the way banks dealt with customers' complaints.
It blamed a lack of interest by senior bank management, bonus schemes that inhibited staff from paying compensation, and poor decision making, but said that banks had agreed to make big improvements.
It prompted some banks to publish their complaints statistics over the summer, and these have fed into the list compiled and now published by the FSA.
Among the major banks, the list of banking complaints is topped by Lloyds, which received 288,717 complaints in the first six months of the year.
This is followed by Barclays, with 259,266, and Santander with 244,978.
Lloyds said that on average, the complaints came from less than 1% of their 30 million customers.
"Our relationship with our customers is at the heart of our business and we take all feedback very seriously. Like every organisation we know there are areas where we can improve and we are working with our customers to do just that," said a Lloyds spokeswoman.
"The vast majority are happy with the service we provide and this is reflected in the low number of complaints we receive relative to the high number of accounts our customers hold."
Among the data published by the FSA is the proportion of complaints dealt with within eight weeks.
Here, Lloyds fared much better, with a completion rate of 97% for Lloyds TSB customers. Barclays dealt with 91% of cases within this timeframe.
However, Santander only closed 46% of complaints within eight weeks.
Steve Williams, director of service quality and complaints at Santander, said: "We have introduced a number of initiatives to help improve service across the bank, including investing in 1,000 new jobs across our busiest branches and call centres, with the aim of reducing queuing at our busiest times and improving the quality of service that can be given to each customer.
"Improving service quality remains a priority for Santander."
Changes
The FSA, which has published the full list for the first time, has also proposed a series of changes to the way complaints are dealt with.
They include:
stopping banks sending letters which reject complaints but fail to explain that customers can challenge this and go to the Financial Ombudsman Service
stipulating that banks identify a senior manager responsible for complaints handling
putting in remedies for common complaints
raising the maximum compensation level that can be ordered by the ombudsman from �100,000 to �150,000.
"Good complaints handling standards should be the rule not the exception," said Sheila Nicoll, the FSA's director of conduct policy.
The banking industry trade body said that the latest data from the FSA could be confused with other figures published by the Financial Ombudsman, and could be taken out of context.
"The UK banking industry is committed to its customers and to resolving problems as quickly as possible, that is why a lot of complaints are resolved by close of business the next day," a spokesman for the British Bankers' Association said.
"It is extremely important to keep the figures published by the FSA in context: the larger the bank is the more complaints it is statistically likely to receive.
"With more than 140m bank accounts in the UK and billions of transactions a year there will inevitably be instances when things go wrong.
"The banking industry welcomes greater transparency but is concerned that the separate publication of complaints data by the Ombudsman and the regulator could lead to data overload. What should be a useful overall summary could become a complex and confusing exercise."
"We will also be responding in full to the FSA's consultation on changing the complaints handling regime. We agree on the need for a clear, transparent complaints process which sets out all the options for customers."
Have you complained to your bank this year? Were you happy with the way your complaint was managed, and the outcome? Send your comments using the form below:
WASHINGTON (Reuters) - New U.S. claims for jobless benefits fell last week, pointing to a modest strengthening in the labor market, while second-quarter growth was revised a touch higher on firmer consumer spending.
The data on Thursday offered hope for a pick-up in economic activity in the third quarter.
"It's encouraging to see that jobless claims are trending lower now. And also it looks like the U.S. economy entered the third quarter with a little bit more momentum than previously expected," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Initial claims for state unemployment benefits fell 16,000 last week to 453,000, the Labor Department said, exceeding market expectations for a decline to 460,000.
Separately, gross domestic product growth -- which measures total goods and services output within U.S. borders -- was revised up to an annualized rate of 1.7 percent from 1.6 percent, the Commerce Department said in its final estimate.
That compared to financial markets' expectations for a 1.6 percent pace and represented a sharp slowdown from the first quarter's 3.7 percent growth rate.
U.S. stock index futures turned positive on the data, while Treasury debt prices pared gains. The U.S. dollar cut losses against major currencies.
Although the economy has now grown for four straight quarters, the recovery from the longest and deepest downturn since the Great Depression has lacked strength to chip away at a 9.6 percent unemployment rate.
The Federal Reserve last week signaled it was ready to inject more money into the economy to shore up the recovery and avert a damaging downward spiral in prices.
Growth in the second quarter was supported by consumer spending, which was revised up to a 2.2 percent growth rate, the largest increase in three years, from the previously reported 2.0 percent rise.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 1.9 percent rate in the January-March period.
Business inventories increased $68.8 billion rather than the $63.2 billion reported last month. The change in inventories contributed 0.82 percentage points to second-quarter GDP.
Excluding inventories, the economy expanded at a 0.9 percent pace instead of the 1.0 percent rate reported last month.
But a 33.5 percent jump in imports, which was previously reported as a 32.4 percent increase, kept growth on a weak trajectory. Analysts believe the surge in imports was likely the result of Chinese exporters rushing to push through goods before the expiration of value added tax rebates.
The growth in imports, which was the strongest in 26 years and eclipsed a 9.1 percent rise in exports, created a trade deficit that chopped 3.5 percentage points from GDP.
Analysts do not expect the robust import growth pace to continue, which means trade will be less of a drag on growth in the third quarter.
NEW YORK (Reuters) � American International Group Inc and the U.S. government laid out a plan for the insurer to eventually repay taxpayers in full, just over two years after it was rescued from the brink of collapse.
The plan calls for AIG to repay and end a Federal Reserve Bank of New York credit facility, and convert into common stock the $49.1 billion of AIG preferred shares held by the Treasury Department. The steps are to be completed before the end of the first quarter of next year.
The deal, reached after AIG's board met with the government on Wednesday, shows the insurer is making significant progress in disentangling itself from the government after a $182.3 billion bailout.
The repayment plan comes at a crucial time for the government. The Troubled Asset Relief Program, set up amid the 2008 financial crisis to shore up the financial industry, expires on Sunday, and the nation goes to the polls for mid-term elections in November.
Under the plan, the Treasury will get about 1.66 billion common shares for its preferred shares, raising its stake in the insurer to 92.1 percent. The Treasury will sell its stake in AIG on the open market over time.
AIG will also issue up to 75 million warrants with a strike price of $45 per share to its existing common shareholders.
The exchange of the Treasury's preferred stock will not be executed until the Fed credit facility is repaid in full.
AIG owes about $20 billion under the facility. It expects the money to come from the initial public offering of its American International Assurance (AIA) unit and the sale of American Life Insurance Co (Alico) to MetLife Inc, and other assets.
The Fed also owns preferred interest worth about $26 billion in AIA and Alico. Under the plan, AIG would effectively transfer a part of that interest to the Treasury, and pay that down through future asset dispositions.
AIG shares were up 1.9 percent to $38.15 in premarket trading on Thursday.
(Reporting by Paritosh Bansal; Editing by Derek Caney and John Wallace)
NEW YORK (Reuters) - American International Group Inc and the U.S. government laid out a plan for the insurer to eventually repay taxpayers in full, just over two years after it was rescued from the brink of collapse.
The plan calls for AIG to repay and end a Federal Reserve Bank of New York credit facility, and convert into common stock the $49.1 billion of AIG preferred shares held by the Treasury Department. The steps are to be completed before the end of the first quarter of next year.
The deal, reached after AIG's board met with the government on Wednesday, shows the insurer is making significant progress in disentangling itself from the government after a $182.3 billion bailout.
The repayment plan comes at a crucial time for the government. The Troubled Asset Relief Program, set up amid the 2008 financial crisis to shore up the financial industry, expires on Sunday, and the nation goes to the polls for mid-term elections in November.
Under the plan, the Treasury will get about 1.66 billion common shares for its preferred shares, raising its stake in the insurer to 92.1 percent. The Treasury will sell its stake in AIG on the open market over time.
AIG will also issue up to 75 million warrants with a strike price of $45 per share to its existing common shareholders.
The exchange of the Treasury's preferred stock will not be executed until the Fed credit facility is repaid in full.
AIG owes about $20 billion under the facility. It expects the money to come from the initial public offering of its American International Assurance (AIA) unit and the sale of American Life Insurance Co (Alico) to MetLife Inc, and other assets.
The Fed also owns preferred interest worth about $26 billion in AIA and Alico. Under the plan, AIG would effectively transfer a part of that interest to the Treasury, and pay that down through future asset dispositions.
AIG shares were up 1.9 percent to $38.15 in premarket trading on Thursday.
(Reporting by Paritosh Bansal; Editing by Derek Caney and John Wallace)
WASHINGTON (Reuters) � U.S. economic growth was a touch higher in the second quarter than previously estimated due to upward revisions to consumer spending and business inventories, but a surge in imports kept the recovery on a weak path, a government report showed on Thursday.
Gross domestic product growth -- which measures total goods and services output within U.S. borders -- was revised up to an annualized rate of 1.7 percent from 1.6 percent, the Commerce Department said in its final estimate.
That compared to financial markets' expectations for a 1.6 percent pace and represented a sharp slowdown from the first quarter's 3.7 percent growth rate.
However, data so far suggest a modest pick-up in economic activity in the third quarter.
Although the economy has now grown for four straight quarters, the recovery from the longest and deepest downturn since the Great Depression has lacked strength to chip away at a 9.6 percent unemployment rate.
The Federal Reserve last week signaled it was ready to inject more money into the economy to shore up the recovery and avert a damaging downward spiral in prices.
Growth in the second quarter was supported by consumer spending, which was revised up to a 2.2 percent growth rate, the largest increase in three years, from the previously reported 2.0 percent rise. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 1.9 percent rate in the January-March period.
Business inventories increased $68.8 billion rather than the $63.2 billion reported last month. The change in inventories contributed 0.82 percentage points to second-quarter GDP.
Excluding inventories, the economy expanded at a 0.9 percent pace instead of the 1.0 percent rate reported last month.
But a 33.5 percent jump in imports, which was previously reported as a 32.4 percent increase, kept growth on a weak trajectory. Analysts believe the surge in imports was likely the result of Chinese exporters rushing to push through goods before the expiration of value added tax rebates.
The growth in imports, which was the strongest in 26 years and eclipsed a 9.1 percent rise in exports, created a trade deficit that chopped 3.5 percentage points from GDP.
Analysts do not expect the robust import growth pace to continue, which means trade will be less of a drag on growth in the third quarter.
Business investment was revised a touch lower, to reflect weak spending on structures. Business spending increased at a rate of 17.2 percent, instead of the 17.6 percent reported last month. It was still the largest increase since the first quarter of 2006.
Spending on software and equipment was little changed at a 24.8 percent growth rate. Overall business spending increased at a 7.8 percent pace in the first quarter.
Spending on home building increased at a 25.7 percent rate, slightly down from the 27.2 percent pace reported last month.
The GDP report also showed after tax corporate profits rose 3.9 percent in the second quarter, revised up from 2.9 percent. Profits increased 5.8 percent in the first quarter.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
CHARLOTTE/WASHINGTON (Reuters) - The U.S. government's $700 billion bailout of the financial system has become a form of long-standing aid for many of the nation's small and regional banks, even as the program officially expires on Sunday.
The banks are eager to repay the taxpayer money, but the meek economic recovery has gotten in the way.
Analysts and attorneys that work with banks on capital issues said the institutions are feeling pressure to replace the government aid, facing the prospect of skyrocketing dividend payments on funds from the Troubled Asset Relief Program, or TARP.
This pressure is likely to compel small and regional banks to raise capital or sell themselves to rivals in the coming years, according to analysts.
"Pay days for a lot of banks got pushed out," said Jeff Davis, bank analyst with Guggenheim Securities. "We all expected much of this to be repaid by 2011, but the economy's not growing like we all thought."
Bigger banks have recovered more quickly from the 2007-2009 financial crisis and have been able to get out from under TARP while many small banks continue to struggle with their exposure to the residential and commercial real estate markets.
Smaller institutions also have fewer ways to drag in profits than their larger competitors.
"They don't participate in the kinds of activities where the big banks have made big profits," said Simon Johnson, a professor at the MIT Sloan School of Management. "A lot of it is around trading, including in derivatives and the big banks have huge market share in that now."
DIVIDENDS TO PRESSURE REPAYMENTS
In October 2008, the Treasury Department created as part of TARP the Capital Purchase Program to dole out funding to banks large and small to shore up their balance sheets and prod them into lending.
It has disbursed $205 billion to 707 institutions in chunks as large as $25 billion and as small as $301,000. As of August 2010, $140 billion had been repaid with 80 institutions giving back all they received, according to the Treasury.
The largest banks, like Bank of America Corp and Goldman Sachs, have repaid the billions they received. It has been harder, however, for smaller institutions like Regions Financial Corp and SunTrust Banks Inc.
The two U.S. Southeastern banks combined have $8.5 billion in TARP investments that have yet to be repaid. Executives for both banks have said they wish to repay the money as soon as possible, and are working with regulators.
A delay for any bank will have consequences.
The dividend payments for TARP banks rise from 5 percent to 9 percent on the 5-year anniversary of their receipt of the initial preferred stock investment. Many banks, and regulators, are hoping to avoid that.
LONDON (Reuters) � Stock index futures pointed to a lower open on Wall Street on Thursday on global economic recovery worries, with futures for the S&P 500, Dow Jones and Nasdaq down 0.01 to 0.2 percent at 0901 GMT (5:01 a.m. EDT).
European shares fell for a fourth straight day on Thursday, with investors moving away from riskier assets on concerns about deeper fiscal cuts in Ireland and as Moody's downgraded Spain's government bond ratings.
At 0901 GMT (5:01 a.m. EDT), the FTSEurofirst 300 (.FTEU3) index of top European shares was down 0.4 percent at 1,060.82 points after hitting a three-week closing low on Wednesday.
Later in the session, investors will closely watch U.S. second quarter final GDP. Economists in a Reuters survey forecast a 1.6 percent annualized pace of growth, a repeat of the second estimate.
Also on the macro economic front is the latest U.S. weekly jobless claims and the September ISM New York report will also be released at 1230 GMT, with September's Chicago PMI data due at 1345 GMT.
In corporate news, Johnson & Johnson's (JNJ.N) massive recall of faulty medicines, including a quiet buyback of its Motrin painkiller, has angered U.S. lawmakers who will question the company's chief executive and a senior health regulator on Thursday.
McDonald's Corp (MCD.N) may cut health insurance for its nearly 30,000 hourly workers unless U.S. regulators waive a requirement of new health care legislation championed by President Barack Obama, The Wall Street Journal reported, citing a company memo.
Yahoo Inc (YHOO.O) is losing another three executives, including U.S. head Hilary Schneider, All Things Digital reported on Wednesday, citing sources close to the situation.
Car rental company Avis Budget Group Inc (CAR.N) said on Wednesday it would be willing to include a break-up fee in its offer for Dollar Thrifty Automotive Group (DTG.N) if rival Hertz Global Holdings (HTZ.N) walks away from its own takeover bid for Dollar Thrifty.
JPMorgan Chase and Co (JPM.N) said on Wednesday it is delaying current foreclosure proceedings, adding to worries U.S. mortgage servicers are struggling to deal with the millions of homeowners unable to pay their mortgages.
The U.S. Senate approved two of President Barack Obama's three nominees to the Federal Reserve on Wednesday, including San Francisco Federal Reserve Bank chief Janet Yellen to serve as vice chairman.
Elizabeth Warren, the Obama administration's new consumer financial czar, offered an olive branch to the largest U.S. banks on Wednesday, saying she wanted their help in developing a principles-based approach to rulemaking.
The euro extended its losses against the dollar and yen on Thursday after Ireland's central bank put the price of bailing out Anglo Irish Bank at 34 billion euros ($46 billion).
Wall Street took a breather from a month-long rally on Wednesday, with investors bracing for higher volatility going forward as the best quarter in a year nears its end. The Dow Jones industrial average (.DJI) shed 0.2 percent, the Standard & Poor's 500 Index (.SPX) dipped 0.3 percent and the Nasdaq Composite Index (.IXIC) fell 0.1 percent.
(Reporting by Joanne Frearson; Editing by Mike Nesbit)
LONDON (Reuters) - Stock index futures pointed to a lower open on Wall Street on Thursday on global economic recovery worries, with futures for the S&P 500, Dow Jones and Nasdaq down 0.01 to 0.2 percent at 0901 GMT (5:01 a.m. EDT).
European shares fell for a fourth straight day on Thursday, with investors moving away from riskier assets on concerns about deeper fiscal cuts in Ireland and as Moody's downgraded Spain's government bond ratings.
At 0901 GMT (5:01 a.m. EDT), the FTSEurofirst 300 .FTEU3 index of top European shares was down 0.4 percent at 1,060.82 points after hitting a three-week closing low on Wednesday.
Later in the session, investors will closely watch U.S. second quarter final GDP. Economists in a Reuters survey forecast a 1.6 percent annualized pace of growth, a repeat of the second estimate.
Also on the macro economic front is the latest U.S. weekly jobless claims and the September ISM New York report will also be released at 1230 GMT, with September's Chicago PMI data due at 1345 GMT.
In corporate news, Johnson & Johnson's (JNJ.N) massive recall of faulty medicines, including a quiet buyback of its Motrin painkiller, has angered U.S. lawmakers who will question the company's chief executive and a senior health regulator on Thursday.
McDonald's Corp (MCD.N) may cut health insurance for its nearly 30,000 hourly workers unless U.S. regulators waive a requirement of new health care legislation championed by President Barack Obama, The Wall Street Journal reported, citing a company memo.
Yahoo Inc (YHOO.O) is losing another three executives, including U.S. head Hilary Schneider, All Things Digital reported on Wednesday, citing sources close to the situation.
Car rental company Avis Budget Group Inc (CAR.N) said on Wednesday it would be willing to include a break-up fee in its offer for Dollar Thrifty Automotive Group (DTG.N) if rival Hertz Global Holdings (HTZ.N) walks away from its own takeover bid for Dollar Thrifty.
JPMorgan Chase and Co (JPM.N) said on Wednesday it is delaying current foreclosure proceedings, adding to worries U.S. mortgage servicers are struggling to deal with the millions of homeowners unable to pay their mortgages.
The U.S. Senate approved two of President Barack Obama's three nominees to the Federal Reserve on Wednesday, including San Francisco Federal Reserve Bank chief Janet Yellen to serve as vice chairman.
Elizabeth Warren, the Obama administration's new consumer financial czar, offered an olive branch to the largest U.S. banks on Wednesday, saying she wanted their help in developing a principles-based approach to rulemaking.
The euro extended its losses against the dollar and yen on Thursday after Ireland's central bank put the price of bailing out Anglo Irish Bank at 34 billion euros ($46 billion).
Wall Street took a breather from a month-long rally on Wednesday, with investors bracing for higher volatility going forward as the best quarter in a year nears its end. The Dow Jones industrial average .DJI shed 0.2 percent, the Standard & Poor's 500 Index .SPX dipped 0.3 percent and the Nasdaq Composite Index .IXIC fell 0.1 percent.
(Reporting by Joanne Frearson; Editing by Mike Nesbit)
TOKYO (Reuters) - American International Group (AIG.N) said Thursday it will sell its two Japanese life insurance units to Prudential Financial Inc (PRU.N) for $4.8 billion, marking another step in its efforts to repay U.S. taxpayers.
The sale of AIG Star Life Insurance Co Ltd and AIG Edison Life Insurance Company comprises $4.2 billion in cash and $0.6 billion in the assumption of third-party debt, AIG said in a statement.
The deal will make Prudential the biggest foreign life insurer in Japan and should give it enough scale to take on domestic firms that still dominate the world's second biggest life insurance market.
"The acquisitions of the two companies will strengthen Prudential's client base in Japan. This could be a threat to domestic life insurers and other foreign insurers here," said Kenji Kawada, a director at credit rating company Fitch Ratings.
The Japanese market is mature but still offers growth potential due to its demographic profile, analysts say.
Nearly a quarter of all Japanese are already over 65 and with a tsunami of baby boomers heading into retirement the ranks of retirees is swelling and with it demand for medical insurance and pension planning.
"There's this feeling that the Japanese market is completely dead and it certainly is very mature from a traditional life insurer perspective," said Makarim Salman, an insurance industry analyst at Macquarie Securities in Tokyo.
"But an aging population leads to potential growth in terms of medical and savings provisions and that's the angle I think they're approaching it from," added Salman.
AIG said it will retain and continue to grow its general insurance business in Japan.
AIG expects to take a non-cash pretax goodwill impairment charge of about $1.2 billion in the third quarter.
The sale marks progress for AIG in disentangling itself from the U.s. government, although it still has a long way to go before the taxpayers get paid back in full for their $182.3 billion rescue package.
TOKYO (Reuters) � American International Group (AIG.N) said Thursday it will sell its two Japanese life insurance units to Prudential Financial Inc (PRU.N) for $4.8 billion, marking another step in its efforts to repay U.S. taxpayers.
The sale of AIG Star Life Insurance Co Ltd and AIG Edison Life Insurance Company comprises $4.2 billion in cash and $0.6 billion in the assumption of third-party debt, AIG said in a statement.
The deal will make Prudential the biggest foreign life insurer in Japan and should give it enough scale to take on domestic firms that still dominate the world's second biggest life insurance market.
"The acquisitions of the two companies will strengthen Prudential's client base in Japan. This could be a threat to domestic life insurers and other foreign insurers here," said Kenji Kawada, a director at credit rating company Fitch Ratings.
The Japanese market is mature but still offers growth potential due to its demographic profile, analysts say.
Nearly a quarter of all Japanese are already over 65 and with a tsunami of baby boomers heading into retirement the ranks of retirees is swelling and with it demand for medical insurance and pension planning.
"There's this feeling that the Japanese market is completely dead and it certainly is very mature from a traditional life insurer perspective," said Makarim Salman, an insurance industry analyst at Macquarie Securities in Tokyo.
"But an aging population leads to potential growth in terms of medical and savings provisions and that's the angle I think they're approaching it from," added Salman.
AIG said it will retain and continue to grow its general insurance business in Japan.
AIG expects to take a non-cash pretax goodwill impairment charge of about $1.2 billion in the third quarter.
The sale marks progress for AIG in disentangling itself from the U.s. government, although it still has a long way to go before the taxpayers get paid back in full for their $182.3 billion rescue package.
(Reporting by Chikafumi Hodo, James Topham, Junko Fujita in Japan, Sakthi Prasad in Bangalore; Editing by Muralikumar Anantharaman and Nathan Layne)
WASHINGTON (Reuters) - Johnson & Johnson's massive recall of faulty medicines, including a quiet buyback of its Motrin painkiller, has angered U.S. lawmakers who will question the company's chief executive and a senior health regulator on Thursday.
J&J has recalled millions of bottles of potentially contaminated over-the-counter medicines such as Children's Tylenol and Benadryl, forcing one of its plants to shut down well into next year, and prompting a criminal probe and civil lawsuits.
The House of Representatives Oversight and Government Reform Committee called the hearing after a session in May that some members said just raised more questions.
"During the course of its investigation, the Committee has been concerned about the inconsistencies that it has uncovered," Democratic staffers on the panel said in a memo released ahead of the hearing.
J&J CEO William Weldon plans to say his company "let the public down," according to written testimony released on Wednesday.
He is announcing $100 million to improve facilities and operations and said at least one recalled product would be back on the market next week.
In April, J&J's McNeil consumer unit recalled 40 children's and infant products -- affecting 135 million bottles -- after Food and Drug Administration inspectors found filthy equipment and contaminated ingredients at a Pennsylvania factory.
Company and FDA officials say there have been no reported injuries from the recalled products.
Other witnesses at the hearing include FDA Deputy Commissioner Joshua Sharfstein and Colleen Goggins, the head of the McNeil unit, who is due to leave March 1.
Weldon has not announced any plans to retire but the recalls have tarnished J&J's reputation with consumers and marred his largely successful eight years at the helm.
MOTRIN RECALL
In probing the April recall of children's medicines, the committee discovered that J&J hired outside contractors in 2009 to buy packages of adult Motrin sold at convenience stores that had dissolving problems.
Lawmakers want to determine if the FDA knew about the stealth recall as J&J asserts. The FDA denies it approved the company's action.
FDA's Sharfstein plans to acknowledge that, overall, the recall was hampered by delays on all sides.
While FDA knew about some of McNeil's plans, the company "did not fully disclose the likely scale of the action or the way that the company was intending to proceed," according to Sharfstein's written testimony.
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Have you complained to your bank this year? Were you happy with the way your complaint was managed, and the outcome? Send your comments using the form below: