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The euro zone economy jumped out of recession in the third quarter, data showed on Friday, but with slightly less spring than expected after the area’s top three economies fell short of market forecasts.

Gross domestic product in the 16 countries using the euro rose 0.4 percent quarter-on-quarter after five consecutive quarters of shrinking output, but was 4.1 percent lower year-on-year.

Economists polled by Reuters had on average forecast quarterly growth of 0.5 percent and a 3.9 percent annual decline.

Germany, France and Italy all reported a third-quarter increase in economic output, but the German 0.7 percent quarterly growth was below expectations of 0.8 percent, the French 0.3 percent increase only half of what was expected and the Italian 0 faxless payday loans.6 percent fell short of the 0.7 percent consensus.

The growth ends the deepest economic downturn in Europe since World War Two, brought on by a global financial crisis, but economists say recovery is likely to remain fragile.

The European Commission forecast on November 3 that fourth-quarter growth would slow to 0.2 percent quarter-on-quarter in the last three months of 2009 and then to 0.1 percent in the first two quarters of 2010.

Growth is seen accelerating steadily from the third quarter of 2010 to reach 0.5 percent in the second quarter of 2011.

(Reporting by Jan Strupczewski, editing by Dale Hudson)

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A senior Citigroup Inc executive said the bank is comfortable with its valuation for an asset that one accounting expert expects to be written down.

Citigroup has a roughly $38 billion deferred tax asset, which essentially represents expected cash flow from future tax benefits. Accounting expert Robert Willens said on a conference call late last month that he expects the bank to write the asset down by about $10 billion in the fourth quarter. That would represent about 7 percent of the bank’s net worth as measured by the reported value of the company’s shareholder equity.

Any writedowns would sting Citigroup, which has taken $45 billion of government help in three separate rescue efforts. Taxpayers now hold about a third of the bank.

Speaking at a conference on Wednesday, Citigroup Vice Chairman Ned Kelly said the bank stands by its deferred tax asset valuation.

“We are comfortable with the valuation,” Kelly said, adding that the bank looks at its deferred tax asset at the end of each quarter quick cash advance. About $16 billion of the deferred tax asset must be realized by around 2016, and the rest has a much longer time frame, Kelly added.

Kelly was chief financial officer at Citigroup but stepped down over the summer soon after he was quoted in The Wall Street Journal describing the Federal Deposit Insurance Corp as the bank’s “tertiary regulator.” The newspaper article described how the FDIC was pushing for new leadership at the bank.

On Wednesday, in response to a question about whether U.S. regulators would be as harsh to banks receiving government aid as European regulators have been, Kelly pointed to Citigroup’s successful efforts to reduce its assets and said the bank is working well with the government.

“I think we have a very constructive relationship with all of (our regulators),” Kelly said.

(Reporting by Dan Wilchins; editing by John Wallace)

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American Express Co said credit card spending increased in October from September in another sign that the worst of the financial crisis may have passed for the largest U.S. credit-card company, sending its shares up 1.5 percent to a 14-month high.

American Express card spending, adjusted for foreign exchange factors, was down just 1 percent in October compared with a year earlier, Chief Executive Kenneth Chenault said on Tuesday.

That showed improvement from a decline of a bit more than 5 percent in September and almost 10 percent in August.

“The trends in spending are encouraging, and there are signs that the recession may be approaching an end,” Chenault said at a financial services conference organized by Bank of America Merrill Lynch.

Spending volume rose in October to the highest level since last December. “We view this performance as positive,” Chenault said.

Chief Financial Officer Dan Henry in October said spending volumes had been stable since May and forecast spending could decline in the low single digits or be flat in the fourth quarter compared with a year earlier.

Total card spending fell 11 percent in the third quarter from a year earlier but showed an improvement against a 16 percent contraction in the second quarter low fee payday loans.

American Express was the fastest growing credit card company between 2003 and 2007 as it relaxed lending standards. But it paid a heavy price in the financial meltdown, and bad loans rose to record highs.

The company cut 11,000 jobs and reduced spending to save $2.5 billion, part of which it will invest now to grow. It also converted itself into a bank holding company to get access to government bailout funds, which it has repaid.

Analysts have said American Express, which relies on affluent and corporate customers more than its peers, is recovering faster from the recession as economic jitters ease.

American Express shares were up 59 cents, or 1.5 percent, to $39.64 in afternoon trading on the New York Stock Exchange, a 14-month high. The shares have more than doubled in price this year.

(Reporting by Juan Lagorio, Editing by Gerald E. McCormick and John Wallace)

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Despite much hope that Americans are finally thawing out of their year-long self-imposed shopping freeze, store sales last month were good in pockets — but not great, as many analysts were hoping.

With this latest disappointment behind them, the concern now for merchants is when, or will, consumers get their shoppping bags out in earnest for the start of the 2009 holiday shopping period.

The holiday shopping frenzy unofficially kicks off in just a few weeks on Black Friday, or the day after Thanksgiving.

The fourth quarter, which includes the November-December gift-buying months, is typically the most critical annual sales period for sellers. Those two months can account for 50% or more of retailers’ sales and profits for the year.

"For well over a year, consumers have been in shellshock. They are now starting to come out of the bunker, but they still are wearing their body armor and shopping smartly," said Craig Johnson, president of retail consulting group Customer Growth Partners.

While consumers are still very price-focused, he said better-than-expected sales results from some high-end sellers shows more people are becoming comfortable spending a little bit more money again.

"This trend bodes well for the holiday season," said Johnson.

Big hope, some disappointment

As leading chain stores trotted out their October same-store sales Thursday, it was obvious that shoppers did remain very budget conscious, and are still favoring bargain and bulk sellers over clothing, department stores and other merchants.

Same-store sales, or sales at stores open at least a year, are considered to be a key measure of a retailer’s performance.

While cooler October weather likely helped lift sales of winter clothing, many retailers posted better sales numbers because of significantly easier comparisons from a year ago, said sales tracker Thomson Reuters’ retail analyst Jharonne Martis.

Thomson Reuters, which tracks monthly same-store sales for 30 chains such as Target, Gap and J.C. Penney, said overall October sales for the group rose 1.8% compared to a 4.1% decline last October. Analysts had expected a gain for the group.

Last month’s shopping patterns favored Costco (COST, Fortune 500), the No. 1 warehouse club operator, which reported a 5% same-store sales gain, beating analysts’ estimates for a 4.7% increase.

However, Costco said the company’s sales also benefited from a weak dollar that boosted its overseas sales.

Discounter Target (TGT, Fortune 500) reported a 0.1% sales decline in October, better than a 4.8% drop a year ago. Wal-Mart (WMT, Fortune 500), the world’s largest retailer, which has benefited from the recession as consumers flock to its low prices, no longer reports monthly sales numbers.

However, the retailer is expected to provide details about its monthly sales when Wal-Mart reports its quarterly results next week.

Mid-price department store chain J.C. Penney (JCP, Fortune 500) reported a 4.5% drop in its same-store sales, which was slightly better than its own forecast for a 5% to 8% decrease in the month.

Gap Inc (GPS, Fortune 500)., the No. 1 clothing seller, reported a better-than-expected 4% sales gain in the month.

The high-end space saw a little bit of relief as well. Department store chain Nordstrom posted a 6.5% sales gain while sales at Saks (SKS) rose 0.7% for the month.

Elsewhere, merchants took a beating. Comparable sales at teen clothing chain Abercrombie & Fitch tumbled 15% in October. Limited Brands (LTD, Fortune 500), parent of Victoria’s Secret and Bath & Body Works chains logged a 4% decline in its sales versus analysts’ expectations for a 2.7% decline.

And department store operator Macy’s said its monthly sales slipped 0.8%.

On the fence

Some industry watchers, however, aren’t convinced yet of a full-bodied return to spending.

"Yes, there is clear momentum building in as we go into the holiday season," said Ken Perkins, president of sales tracking firm Retail Metrics. "Consumers are looking at better housing data and other economic reports, and are more comfortable making discretionary purchases when when unemployment is rising."

Still, Perkins said he’s skeptical about the strength of this recent uptick in spending.

"Retailers are up against their easiest year-over-year comparisons in a decade," he said. "And the comparisons get even easier over the holiday months."

"So this improvement in the monthly sales could be more of an optical illusion rather than a real improvement in spending," he said.

The National Retail Federation, the industry’s largest trade group expects 2009 holiday sales to decline 1%, improving from last year’s 3.4% decline.

Johnson expects holiday sales to grow about 2.4% while Perkins’ forecast is for a gain of between 1 to 2%. 

Source

Thomson Reuters Corp’s quarterly revenue fell but profit beat Wall Street estimates, helped by foreign currency rates and cost cuts, and the company affirmed its 2009 outlook.

The news and financial data publisher reported on Thursday that revenue in its markets division, which serves the financial industry, fell 4 percent to $1.86 billion in the third quarter.

Revenue from ongoing businesses, excluding the impact of foreign exchange rates, fell 2 percent to $3.21 billion. That compared to the average analyst forecast of $3.23 billion.

“Financial firms are watching costs and being very careful on spending money, so a lot of discretionary expenses regarding services are being cut back,” said Benchmark Co analyst Edward Atorino.

The company, formed last year by the merger of Thomson Corp and Reuters Group Plc, said underlying operating profit rose 3 percent to $711 million, from $690 million a year earlier.

Adjusted earnings per share fell to 43 cents from 47 cents, due to higher integration spending, but this beat the average analyst forecast of 40 cents per share, according to Thomson Reuters I/B/E/S.

“While the weak year-to-date net sales experienced in recent quarters are now flowing through into revenues, we expect this dip to be shallow and limited to the next few quarters,” Chief Executive Thomas Glocer said in a statement.

He also said, “Our Tax and Accounting and Healthcare and Science businesses continued to perform very strongly, and sales of subscription products in our Markets and Legal units improved in Q3 over what we expect were their bottom in Q2 advanced payday loan.”

Thomson Reuters affirmed its previous guidance, saying it expects revenue to grow in 2009 and underlying operating profit margin and free cash flow to be comparable to 2008.

The company expected the impact of weaker subscription sales in its markets and legal businesses in 2009 to continue to drag on revenue in the first half of 2010. But it said growth in other units, a focus on costs and benefits of the merger are expected to reduce the impact on operating profit.

PROFIT MARGIN UP

Thomson Reuters expects at least $1 billion in annual savings by the end of the year.

Underlying operating profit margin rose to 22.1 percent in the third quarter from 20.7 percent a year earlier.

In the professional division, which includes products for lawyers, accountants and healthcare professionals, revenue rose 2 percent before currency adjustments to $1.36 billion. Higher sales in tax and accounting, and healthcare and sciences offset a 1 percent decline in legal business revenue.

In the markets division, revenue from the media unit fell 10 percent before currency adjustments, amid consolidation among traditional media outlets such as newspapers. 

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Toyota Motor withdrew from Formula One on Wednesday, leaving Japan without a team in motorsport’s premier series.

Company president Akio Toyoda apologized for the team’s failure to record a single race victory since joining F1 in 2002 despite an estimated annual budget of around $300 million.

“This was a difficult but ultimately unavoidable decision,” he told a news conference in Tokyo. “Since last year with the worsening economic climate, we have been struggling with the question of whether to continue in F1.

“We are pulling out of Formula One completely. I offer my deepest apologies to Toyota’s many fans for not being able to achieve the results we had targeted.”

The decision by the world’s largest carmaker to pull out of Formula One comes as the auto industry starts to stabilize following a sales crunch in the wake of the financial crisis.

Cologne-based Toyota’s departure as a team and engine supplier deals another major blow to the sport after Japan’s number two carmaker Honda quit the series last December.

It leaves Japan without a team in F1 and continues the drain of Japanese companies from motorsport, which has seen Subaru and Suzuki withdraw from the world rallying championship.

LEGAL RAMIFICATIONS?

Bike maker Kawasaki also scrapped its MotoGP team in the grip of a severe market downturn.

Japanese tiremaker Bridgestone announced on Monday they would not renew their supply contract with Formula One after the 2010 season.

In July, Toyota’s Fuji International Speedway circuit surrendered hosting rights for the Japanese Grand Prix in 2010 and beyond to reduce costs amid the global economic downturn.

The pull-out of Japanese companies from F1 began with Honda-backed Super Aguri, who left for financial reasons early last year.

Toyota’s exit leaves just three manufacturers in Formula One — Ferrari (FIAT), Mercedes and Renault.

It also opens the door for BMW-Sauber’s new Swiss owners to take their place as the 13th team on the grid.

Toyota signed the concorde agreement earlier this year committing themselves to F1 until at least 2012, so a pullout could also have legal ramifications. 

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The yen rose to two-week highs while the U.S. dollar clung to gains on Monday as jittery investors cut back long positions in growth-linked currencies.

Traders said the drop in high-yielders like the Australian and New Zealand dollars is partly due to a correction after the rally in the past few months. Also, weighing on sentiment was news that CIT Group filed for bankruptcy.

The yen rose to as high as 89.17 per dollar in early Asian trade, from around 90.00 per dollar late on Friday when it gained over 1.5 percent. It was also firmer against the euro and the Aussie.

The euro inched up to $1.4715, from $1.4708 late on Friday when it lost over 0.8 percent. The Aussie, having lost nearly 2 percent on Friday, fell to a near one-month low of $0.8900 before recovering to $0.8970.

The U.S. dollar, which tends to gain when doubts about a global recovery emerge, traded above the 76 mark against a basket of currencies.

“It has been a pretty violent move and I think it is partly to do with positioning,” said Jonathan Cavenagh, currency strategist at Westpac. “The economic data has not been all that bad, so I think it should be a good opportunity to rebuild long positions in commodity currencies.”

Such long positions would have been very profitable over recent months and investors could be seeking to lock in gains for year-end and bonus season.

There was also upbeat news from Chinese manufacturing data at the weekend. China’s PMI rose to an 18-month high of 55.2 in October, indicating an acceleration in output and boding well for growth-linked currencies.

Latest data from the Commodity Futures Trading Commission showed speculators trimming long positions in the euro, the Aussie and the Kiwi bad credit payday loans. The value of the dollar’s net short position fell to $15.61 billion in the week ending October 27 from $18.65 billion net the prior week.

Traders said the mood was likely to remain cautious ahead of big event risks in the week ahead, which include central bank meetings in Australia, Europe and the U.S. and the all important U.S. non-farm payroll data on Friday.

The Federal Reserve’s rate setting committee, which meets on Tuesday and Wednesday, is expected to keep rates unchanged but there is speculation that it might change its language. That could see markets pricing in a rate hike in the United States sooner than expected.

“We see the Fed reiterating that ‘economic conditions are likely to warrant exceptionally low levels of the fed funds rates for an extended period’,” said David Watt, senior currency strategist at RBC Capital.

In the UK, the focus is on whether the Bank of England will increase its asset-purchase program to give a boost to its economy.

In contrast, the Reserve Bank of Australia is expected to raise rates by a quarter of a percentage point, with Governor Glenn Stevens and the monetary policy Statement later in the week to provide perspective.

The European Central Bank is also expected to hold rates steady, but it could provide some details on the schedule of open market operations for 2010.

(Editing by Wayne Cole)

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