Fed holds rates at record lows to foster recovery

WASHINGTON (AP) — The Federal Reserve on Tuesday repeated its pledge to hold interest rates at record lows to foster the U.S. economic recovery and ease high unemployment.

But the Fed's assessment of the economy was a bit more upbeat. It said the job market is stabilizing. That was an improvement from its January statement, when it said the deterioration in the labor market was abating.

It also said business spending on equipment and software has risen significantly, also an upgrade from its last assessment. Still, the Fed cautioned that spending by consumers could be dampened by high unemployment, sluggish wage growth, lower wealth and tight credit. And it noted weakness in the commercial real-estate and home-building markets.

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Housing construction drops 5.9 pct in February

WASHINGTON (AP) — Housing construction fell in February as winter blizzards held down activity in the Northeast and South. The decline highlighted the challenges facing builders as they struggle to emerge from the worst housing slump in decades.

The Commerce Department said Tuesday that construction of new homes and apartments fell 5.9 percent in February to a seasonally adjusted annual rate of 575,000 units, slightly higher than the 570,000 that economists were expecting. January activity was revised up to a pace of 622,000 units, the strongest showing in 14 months.

Economists characterized the February dip as weather-related although they said any housing rebound this year is likely to be modest at best, given a variety of headwinds from record home foreclosures to high unemployment.

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Stocks rise after Fed pledges to keep rates low

NEW YORK (AP) — The Federal Reserve's mildly upbeat take on the economy and its plans to hold interest rates low gave stocks a lift.

The Dow Jones industrial average rose almost 44 points to 10,685.98 for its sixth straight gain. Broader indexes also posted moderate advances. Prices for Treasurys rose as the Fed said again that it expects to keep interest rates low for "an extended period."

The stock market has been recording modest gains for more than a month. Major stock indexes stand at or near their best levels in more than a year. Investors are looking for signs that the recovery is strong enough to justify the steep rebound in stocks in the past 12 months.

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Greece gets some relief on credit rating

BRUSSELS (AP) — Greece won some respite from financial market pressure Tuesday as ratings agency Standard & Poor's took the country off credit watch for a possible downgrade — a day after eurozone governments laid out a vague blueprint for possible loans to help the indebted country.

S&P's announcement that it was no longer considering a downgrade of Greece's credit rating after it made bigger budget cuts is the strongest sign yet that markets may see less chance of the country failing to repay its debts.

A Greek default would be a serious blow for Europe's currency union, showing that eurozone countries are unable or unwilling to lend their own money to one of their members.

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Honda to recall 410,000 vehicles for brake problem

DETROIT (AP) — Honda Motor Co. will recall more than 410,000 Odyssey minivans and Element small trucks in the U.S. because of braking system problems that could make it tougher to stop the vehicle if not repaired.

The recall includes 344,000 Odysseys and 68,000 Elements from the 2007 and 2008 model years.

Honda said in a statement that over time, brake pedals can feel "soft" and must be pressed closer to the floor to stop the vehicles. Left unrepaired, the problem could cause loss of braking power and possibly a crash, Honda spokesman Chris Martin said.

The National Highway Traffic Safety Administration has reported three crashes due to the problem with minor injuries and no deaths, Martin said. Honda notified NHTSA of the recall on Monday, he said.

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PepsiCo cuts sugary drinks from schools worldwide

NEW YORK (AP) — PepsiCo plans to remove sugary drinks from schools worldwide, following the success of programs in the U.S. aimed at cutting down on childhood obesity.

The company said Tuesday it will remove full-calorie, sweetened drinks from schools in more than 200 countries by 2012, marking the first such move by a major soft drink producer.

Both PepsiCo Inc., the world's second-biggest soft drink maker, and No. 1 player Coca-Cola Co. adopted guidelines to stop selling sugary drinks in U.S. schools in 2006.

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GE executive sees dividend increase in 2011

HARTFORD, Conn. (AP) — General Electric Co. says it will increase its dividend in 2011, two years after the industrial and commercial conglomerate reduced it to save money as its financial arm struggled in the recession.

The company also sees potential for retiring its preferred stock and opportunities for stock buybacks.

GE, one of the original members of the Dow Jones Industrial Average in 1896, cut its quarterly dividend in 2009 to 10 cents per share from 31 cents. It has remained at 10 cents per share since then.

The dividend cut, GE's first since the Great Depression, was intended to save $9 billion a year. GE's finance arm, GE Capital, had been the largest profit driver at the company but as the financial crisis intensified, it posted mounting losses on growing loan defaults.

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Oil settles near $82 as Fed keeps rates low

NEW YORK (AP) — Oil prices climbed back near $82 on Tuesday as the Federal Reserve said again that it will hold interest rates at record lows as the U.S. economy continues to recover.

Benchmark crude for April delivery rose $1.90 to settle at $81.70 on the New York Mercantile Exchange.

The stock market inched higher, reassured by the Fed's steady-as-she-goes approach and its view that the economy appeared to be stabilizing, although it was not fully recovered.

Earlier in the day, the Commerce Department said that construction of new homes and apartments fell 5.9 percent in February to a seasonally adjusted annual rate of 575,000 units.

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US warns EU derivatives ban won't work

BRUSSELS (AP) — Europe's threat to ban the sort of financial derivatives trading that some blame for worsening Greece's debt crisis wouldn't work, a senior U.S. official told EU lawmakers Tuesday.

German, French and Greek leaders have called on the EU's executive to crack down on so-called naked credit default swaps, where an investor can profit by taking out insurance on a product he doesn't own. Their call is a swipe at traders taking bets on a falling euro and a Greek default.

Greece's prime minister George Papandreou has blamed financial markets for intensifying his country's debt crisis by hiking borrowing costs. He described the swaps as buying insurance on a neighbor's house and then burning it down to collect.

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Jackson estate in record deal worth up to $250 mln

LOS ANGELES (AP) — Even in death, Michael Jackson is breaking new records.

The King of Pop's estate has signed the biggest recording deal in history: a $200 million guaranteed contract with Sony Music Entertainment for 10 projects over seven years, according to a person familiar with the deal.

The record-breaking contract through 2017 could be worth up to $250 million if certain conditions are met. One of the albums will be of never-before-released Jackson recordings that will come out in November, the person said.

By The Associated Press

The Dow rose 43.83, or 0.4 percent, to 10,685.98. It's up 1.3 percent in that time.

The Standard & Poor's 500 index rose 8.95, or 0.8 percent, to 1,159.46, while the Nasdaq composite index rose 15.80, or 0.7 percent, to 2,378.01.

Benchmark crude for April delivery rose $1.90 to settle at $81.70 on the New York Mercantile Exchange.

In other Nymex trading in April contracts, heating oil rose 5.67 cents to settle at $2.1143 a gallon, and gasoline added 5.22 cents to close at $2.275 a gallon. Natural gas fell 4.4 cents to settle at $4.347 per 1,000 cubic feet. Earlier, it hit a 52-week low of $4.323.

In London, Brent crude rose $1.13 to settle at $79.02 on the ICE futures exchange.

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