Business Blog Posts

* The U.S. Federal Open Market Committee begins its two-day meeting on interest-rate policy. The Fed, in a statement due around 2:15 p.m. EST on Wednesday, was widely expected to acknowledge improving economic conditions marked by signs of life among consumers and factories.

* At 7:45 a.m. EST, ICSC/Goldman Sachs will release chain store sales for the week ended January 22, versus the prior week. In the previous week, sales fell 0.1 percent.

* BlackRock Inc (BLK.N), the world's largest asset manager, is expected to report healthy gains in fourth quarter profit and revenue on Tuesday, aided in no small measure by the global stock market rally.

* Other major companies to report results on Tuesday include Yahoo (YHOO.O), Johnson & Johnson (JNJ.N), DuPont (DD.N), 3M Company (MMM.N) and Harley-Davidson (HOG.N).

* At 8:55 a.m. EST, Redbook releases its Retail Sales Index of department and chain store sales for January versus December. In the prior period, sales were down 0.6 percent.

* Britain is to give News Corp (NWSA.O) a final chance to avoid a prolonged and costly investigation into its proposed $12 billion buyout of BSkyB (BSY.L), in a move that is likely to draw criticism from rivals.

* At 9 a.m. EST Standard & Poor's is set to release its S&P Case/Shiller Home Price Index for November. Economists expect a drop of 0.8 percent versus a 1.0 percent fall in the previous month.

* A package of U.S. tax cuts should give a lift to a global economic recovery that had already begun to gain speed late last year, the IMF said as it revised its world growth forecast higher.

* At 10 a.m. EST, the Federal Housing Finance Agency issues Home Price Index for November. In October, the index rose 0.7 percent.

* Also at 10 a.m. EST the Conference Board releases January consumer confidence. Economists in a Reuters survey expect a reading of 54.3 compared with 52.5 in December.

* Resource-related stock will be in focus, with U.S. oil falling for a second straight session as an expected rise in U.S. stocks and a weak technical outlook weighed on prices.

* The FTSEurofirst 300 .FTEU3 index of top European shares was flat in morning trade after gaining earlier in the session, while Japan's Nikkei average .N225 ended 1.2 percent firmer.

* On Monday the Dow Jones industrial average .DJI ended up 108.68 points, or 0.92 percent, at 11,980.52. The Standard & Poor's 500 Index .SPX was up 7.49 points, or 0.58 percent, at 1,290.84. The Nasdaq Composite Index .IXIC was up 28.01 points, or 1.04 percent, at 2,717.55.

(Reporting by Atul Prakash; editing by Sophie Walker)

In an updated World Economic Outlook, the International Monetary Fund said the global economy would likely expand 4.4 percent this year, a touch higher than the 4.2 percent forecast in October. It expects growth of 4.5 percent in 2012.

But in an update to its Global Financial Stability Report, the Fund said the effective size of Europe's financial rescue fund needed to be increased and that its banks need rigorous stress-testing to help restore market confidence.

"Problems in Greece, and now Ireland, have reignited questions about sovereign debt sustainability and banking sector health in a broader set of euro-area countries and possibly beyond," it said as it released the reports in Johannesburg.

The worry is that the European Financial Stability Facility, which has a headline value of 440 billion euros but an effective lending capacity of around half that, could be wiped out if a larger European economy needs rescuing.

There have been EU discussions on beefing up the fund so it can lend the full amount, but there has been resistance from Germany, which says it must be part of a wider set of measures expected in March.

The IMF said Europe's banks needed further stress-testing to ensure they could withstand a shock. Non-viable banks should be closed, it said.

The link between weak balance sheets of European banks and governments was a primary reason why the International Monetary Fund said global financial stability was still at risk nearly four years after the financial crisis struck.

LIFT TO RECOVERY

The Fund forecast a lift to a global economic recovery which began to gain pace in 2010 from a package of U.S. tax cuts enacted late last year. It said a separate stimulus package in Japan would also help.

"More generally, signs are increasing that private consumption... is starting to gain a foothold in major advanced economies," it said.

Advanced economies have been a drag on global growth since the financial crisis erupted and the IMF said they still posed the biggest risk to recovery.

It revised up its 2011 growth projection for advanced economies to 2.5 percent, but warned the pace was not sufficient to make a dent in high unemployment. It said rich nations needed to keep loose monetary policies to bolster growth.

"As long as inflation expectations remain anchored and unemployment stays higher, this is the right policy from a domestic perspective," it said.

The Fund forecast U.S. growth at 3.0 percent this year, a sharp upward revision from its 2.3 percent October forecast for the world's largest economy.

The decline in trust in business in the United States stood in contrast to an overall worldwide increase, driven by surging confidence in rapidly developing economies including Brazil and India, the Edelman Trust Barometer found.

Just 46 percent of Americans said they trusted business, down from 54 percent in 2009, the study found, reversing a sharp bounce in confidence that came in the wake of a brutal financial crisis.

"The rebound last year was a little bit of euphoria, 'We've got through the worst of it,' and a little bit of a dead-cat bounce," said Matthew Harrington, chief executive of Edelman U.S., the public relations firm that performed the study, which was released on Tuesday.

"What we have got this year is more of the reality that this is going to be a long slog," Harrington said.

Worldwide, some 56 percent of respondents said they trusted business, up from 54 percent the pervious year. Respondents in Brazil, India and France drove the overall increase in confidence.

In Brazil, some 81 percent of respondents said they trusted business, up from 62 percent a year ago.

"It's a clear sense of optimism, and it's speaking to the fact that their economies are doing well, that businesses -- both home-grown as well as businesses from abroad -- are investing in their countries," Harrington said.

After briefly declining in 2009 during the recession, Brazil's economy snapped back in 2010, growing at a estimated 7.4 percent rate. By contrast, the U.S. economy is struggling with persistently high unemployment -- which has remained above 9 percent for 20 months -- and some analysts look for GDP to grow around 2.5 percent this year.

BANKS SLIDE, AUTOMAKERS SOAR

The public trust in banks plunged in the wake of a crisis that saw huge financial institutions including Bank of America and Citigroup Inc turn to Washington for financial support. Just 25 percent of Americans and 16 percent of Britons said they trusted banks to do the right thing.

In contrast, people in the United States, the United Kingdom, China and India said they trusted the auto sector, following the successful initial public offering of General Motors Co. That marked a sharp shift for an industry that in the United States had also been put on life support by the government during the downturn.

That change, Harrington said, reflected a belief among the public that automakers were starting to tackle their problems.

"If you look at the last year, the auto industry has been a bit of a phoenix rising from the ashes, not only in getting their financial house in order, but also innovating, placing some real bets and R&D dollars on hybrids, electric (vehicles)," Harrington said.

In addition to the GM IPO, the past year has seen automakers unveil energy-efficient electric vehicles including GM's Chevy Volt and Nissan Motor Co's Leaf, which use less fuel and emit less carbon dioxide than traditional cars.

Respondents expressed the most confidence in the tech industry, which was also the top ranked sector last year. The findings are based on a telephone survey of 5,075 college-educated, upper-income people, in 23 countries surveyed from October through January.

(Editing by Steve Orlofsky)

The euro could get a further boost if the U.S. Federal Reserve maintains a cautious view of the U.S. economic recovery after a two-day policy meeting Tuesday and Wednesday.

Markets are increasingly speculating that the European Central Bank will lift interest rates ahead of the Fed, after recent tough comments by ECB chief Jean Claude Trichet about the need to keep inflation in check.

Japan's Nikkei average .N225 rose for a second straight session, advancing 1.1 percent, lifted not only by gains in New York and London overnight but by local optimism ahead of major corporate earnings reports.

Exporters including Canon (7751.T) and Kyocera (6971.T) are due to report this week, which could set the tone for earnings season which will last until early February. Canon rose 1.6 percent Tuesday, while Kyocera added nearly 2 percent.

"This isn't going to be a regular earnings season," said Masayoshi Okamoto, head of dealing at Jujiya Securities.

"Stocks have risen a lot over the quarter and strong earnings are at least partly priced in by investors, so they will not only want to see the figures for the quarter but also how those firms can sustain growth in the long run."

The Bank of Japan, ending a two-day policy meeting, kept monetary policy extremely loose as expected, and reviewed its long-term forecasts.

The central bank upwardly revised its consumer price forecast for the fiscal year beginning in April, reflecting the impact of recent rises in commodity prices, and roughly maintained its economic growth forecasts.

The MSCI index of Asian stocks outside Japan .MIAJ00000PUS rose by 0.6 percent after recording its worst weekly performance in almost two months last week. It is down 1 percent for the month.

Shares of resource companies gained on a rise in industrial metals prices, with the MSCI ex-Japan materials index up 1.1 percent.

Worries about mounting inflationary pressures have spooked some investors into selling out of emerging Asian markets and taking profits after strong rallies in 2010, but rather than leaving the region completely investors are channeling money toward countries seen as better placed to deal with price pressures.

Indonesian bond yields have jumped and stocks have retreated as investors cut their holdings, worried that the country, one of the darlings of emerging market investors in recent years, does not have a tight grip on inflation.

Investors in major emerging markets are also closely watching India's battle against stubborn inflation, which has been aggravated by surging global commodities prices and domestic supply pressures. The central bank is expected to raise rates for the seventh time in a year at a meeting later Tuesday (0600 GMT).

EURO CLINGS TO GAINS

While TI said it is optimistic about growth prospects, analysts questioned whether its 2011 revenue growth would match an 8 percent increase in its research and development spending budget compared with 2010.

TI's shares had risen 46 percent since September as investors were anticipating stronger growth than TI delivered. The stock slid 2 percent in after-hours trade.

"Given the stock has had a big run in the last quarter or so, you don't seem to have the growth to support it," said Charter Equity Research analyst Ed Snyder, adding that the company's expenses were likely to jump this quarter.

Executives told investors on a conference call they would not increase R&D spending more than revenue. But they left analysts scratching their heads over the suggestion that this would mean 8 percent revenue growth for 2011.

Analysts are on average anticipating revenue increases less than 1 percent in 2011, according to Thomson Reuters I/B/E/S.

"The question now is when they're going to grow," said Gleacher & Co analyst Doug Freedman.

TI's fourth-quarter gross profit margin came to about 53 percent, while two analysts had expected closer to 54 percent.

TI said its profitability was pinched a bit in the fourth quarter as it ramped up production in new factories and weak demand for some chips held back output at older facilities.

But the company, whose chips are used in a products ranging from cellphones to cars, said an inventory correction that hurt sales of chips for TVs and computers had ended.

"The indications we've got from (TV) customers is they've cleaned up their inventory in the fourth quarter and we should expect a resumption of orders in the first quarter," TI's chief financial officer Kevin March told Reuters in an interview.

INVENTORY CORRECTION OVER

Electronics manufacturers had bought too many chips in early 2010 due to enthusiasm about the prospects for an economic recovery, only to curtail orders later in the year because consumer demand didn't show up and they had to clear out excess inventory.

Also on Monday, Volterra, which makes power-supply chips, said it too expects normal seasonal growth after an inventory correction in the communications, server and storage markets.

And European chipmaker STMicroelectronics posted earnings above expectations and said it expects its sales to grow faster than the overall market in 2011. 1]