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Stocks were mostly lower Wednesday on Wall Street following a bumpy start to the week.

The Dow Jones industrial average was down 45 points at 13,125 in the first two hours of trading, giving up an earlier gain of 20. The Standard & Poor’s 500 index was down three points to 1,402, and the Nasdaq composite was down less than a point at 3,073.

The declines were broad. Only three of the 10 industry groups in the S&P 500 index rose. Aluminum maker Alcoa led the Dow lower with a decline of 1.2 percent.

Hartford Financial jumped 4.3 percent after the company said it would get out of the annuity business and focus on property and casualty insurance, group benefits and mutual funds. Hedge fund manager John Paulson had urged Hartford to spin off businesses.

Green Mountain Coffee Roasters soared 8.3 percent. The company said it was expanding its partnership with Starbucks to sell Starbucks’ Vue coffee packs for use in Green Mountain’s Keurig single-cup machines. The news relieved investors concerned that Starbucks’ new single-cup Verismo coffee machine might be a competitive threat to Keurig.

FSI International, which makes equipment for producing microelectronics, jumped 10 percent after the company reported that orders skyrocketed in the latest quarter, helping the company beat analysts’ forecasts.

Baker Hughes fell 4 percent after the oil-field services company said its profit margin would fall below last quarter’s as companies shift from crude to natural gas exploration. Baker Hughes is facing shortages of raw materials used in its pressure pumping business, a decline in fleet usage and higher-than-expected personnel and logistics costs.

The yield on the 10-year Treasury note fell to 2.32 percent from 2.36 percent late Tuesday. The dollar fell against the euro. Gold and crude oil prices rose slightly.

Stocks closed lower on Tuesday for only the second time in two weeks after two reports suggested an economic slowdown in China. Supercharged economic growth in China over the past three years has helped sustain the global economic recovery. The Dow closed down nearly 69 points, its biggest loss in two weeks.

The Dow is still up 1.6 percent this month and 7.7 percent so far this year. Other indexes are up even more in the year to date: The S&P 500 is up 11.7 percent, the technology-focused Nasdaq composite 18.1 percent.

In a research report Wednesday, Goldman Sachs analysts urged investors to dump bonds and put money into stocks. The report argues that the weak economic growth in the United States and Europe is not universal, and that the 2010s could be the strongest period for world growth between 1980 and 2050.

It also argues that, while Japan’s two decades of economic stagnation in the 1990s and 2000s are a tempting comparison to what the U.S. and Europe face today, Japanese stocks were far more overvalued before Japan entered its decline.

“We think it’s time to say a `long goodbye’ to bonds, and embrace the `long good buy’ for equities as we expect them to embark on an upward trend over the next few years,” the report says.

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U.K. jobless claims rose more than economists forecast in February and a broader measure of unemployment remained at the highest rate in 16 years, underscoring the weakness of the labor market even as the economy shows some signs of recovery.

Unemployment-benefit claims climbed by 7,200 from January to 1.612 million, a 12th straight monthly increase, the Office for National Statistics said today in London. The median forecast of 28 economists in a Bloomberg News Survey was for a gain of 5,000. Unemployment (UKUEILOR) measured by International Labour Organization methods held at 8.4 percent in the three months through January, the highest since 1995.

The data may fuel arguments from opposition politicians that Prime Minister David Cameron is cutting government spending too fast to tackle the deficit and comes after the economy contracted in the fourth quarter. While some indicators signal the economy returned to growth this quarter, consumer confidence remains weak on concern that job cuts may continue.

The

It affects everything from mortgages to credit cards to student loans, and now some of the world’s biggest banks are at the center of a criminal investigation into whether they manipulated it for their own benefit.

The London Interbank Offered Rate, or Libor, is a measure of the cost of borrowing between banks that serves as a benchmark for over $350 trillion worth of financial products worldwide.

Higher Libor rates translate into higher borrowing costs for businesses and consumers, while lower rates could make lenders reluctant to lend since they can’t charge as much in interest. In addition to consumer loans, certain bonds and interest rate swaps also use it as a benchmark.

With all the different loans and investments tied to Libor, there are serious consequences if the process is tampered with.

"If you move it even a little bit, it can cause massive redistribution of resources because it’s so extensively used," said Rosa Abrantes-Metz, a professor at New York University’s Stern School of Business and a former economist with the Federal Trade Commission.

Last week, the Justice Department said in a letter to a federal judge that it was conducting a criminal investigation of alleged Libor manipulation. Officials in Switzerland, Canada and the United Kingdom are also looking into the issue, according to disclosures in several banks’ public filings.

In addition, a number of banks, including Bank of America (, Fortune 500), Citigroup (, Fortune 500), HSBC, JPMorgan (, Fortune 500) and Credit Suisse (), are defendants in a U.S. civil case brought by investors — ranging from mutual funds to individual traders to the city of Baltimore — who say they lost profits due to Libor distortion as far back as 2006.

Law enforcement officials and the banks targeted in the suit either declined to comment or did not respond to requests for comment.

How Libor works: Libor rates are set each business day through a process overseen by the British Bankers’ Association.

Between seven and 18 large banks are asked what interest rate they would have to pay to borrow money for a certain period of time and in a certain currency. In all, the process generates rates for 10 currencies across 15 different time periods, ranging from one day to one year.

The responses are collected by Thomson Reuters, which removes a certain percentage of the highest and lowest figures before calculating the averages and creating the Libor quotes.

BofA to slash mortgage balances

Banks trying to appear stronger and more creditworthy may have been tempted to submit lower numbers, particularly during the financial crisis.

In addition, if the banks coordinated their submissions, they could adjust trading positions tied to Libor in order to profit from their advanced knowledge of its movements.

"The banks involved in this were largely trusted by the public to be setting these rates in a fair way — it was supposed to be a transparent measure of the cost of borrowing," said Arun Subramanian, a lawyer representing plaintiffs involved in the civil litigation. "To the extent that the banks were colluding to manipulate these rates, everyone was harmed and the public trust was violated."

Key Wall Street reform rule under fire

No banks have been formally accused of wrongdoing in the United States.

However, Japanese regulators temporarily suspended some transactions by UBS () and Citi in December after it was revealed that traders at both banks attempted to influence yen Libor rates and the related Tokyo Interbank Offered Rate, or Tibor.

UBS also recently revealed in public documents that it was providing information to U.S. and Swiss officials investigating possible Libor manipulation in exchange for leniency and conditional immunity, depending on the jurisdiction.

There’s no telling how long all the various probes will take to resolve, but if the allegations are proven, liabilities could be in the billions, said Jonathan Macey, a professor at Yale Law School. There’s also the possibility of criminal charges should conspiracy among traders be established, as well as the potential for more lawsuits from private plaintiffs.

"It’s a very serious issue when you’re talking about banks manipulating these rates across the globe," Subramanian said. "I think the liability for the banks is going to be staggering." 

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Six world powers are urging Iran to answer questions meant to defuse concerns it seeks nuclear weapons, while stressing that diplomacy is the way forward.

The six also are asking Iran to open its Parchin military site to International Atomic Energy Agency perusal, amid signs that Tehran might be cleaning it of evidence of nuclear-arms related experiments.

The six _ the United States, Britain, France, Russia, China and Germany _ issued a joint statement Thursday at a 35-nation IAEA board meeting.

Concerns about Parchin are high. Diplomats who spoke to The Associated Press on Wednesday said satellite footage from the area appeared to show trucks and earth-moving vehicles at the miltiary facility, indicating an attempted cleanup of radioactive traces.

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Iraqi lawmakers are reconsidering buying pricey armored cars for themselves with government money, after bitter criticism from a largely poor and unprotected public.

The decision to spend $50 million on 350 armored cars was included in the $100 billion budget for 2012 that parliament approved late last week.

Since then, the subject of the cars has infuriated Iraqis who believe they have little say or influence in the government.

Some lawmakers agreed on Wednesday with a plea by parliament speaker, Osama al-Nujaifi, to give up the cars and instead spend the money on what he described as “more important” issues.

Violence has dropped dramatically across Iraq but deadly bombings and shootings are still common. Six people were killed Wednesday in bombings in two Iraqi cities.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

BAGHDAD (AP) _ Iraqi officials say a car bomb on a main street in a shopping area in southeastern Baghdad has killed four people.

Police officials say the explosion during rush hour Wednesday morning also wounded nine other passers-by and damaged storefronts. Hospital officials confirmed the casualties. All officials spoke on condition of anonymity because they were not authorized to release the information.

Violence has dropped dramatically across Iraq from just five years ago when the country teetered on the brink of civil war. But deadly bombs and shootings still happen nearly every day as militants try to undermine public confidence in Iraqi’s government and security officials.

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Nobel-prize winning economist Paul Krugman said Greece is

U.S. home resales rose to a 1-1/2 year high in January, pushing the supply of properties on the market to the lowest level in almost seven years in a hopeful sign for the housing sector.

The National Association of Realtors said on Wednesday existing home sales increased 4.3 percent to an annual rate of 4.57 million units last month, the fastest pace since May 2010.

It was the latest sign the housing market may be coming off the floor. While economists attributed some of the rise to unseasonably warm winter weather, they also said it signaled genuine improvement.

Sales were up across all four regions of the country, with the West recording the biggest gain — an 8.8 percent increase.

“At least some of the improvement in the last few months could have reflected milder winter weather, but for the most part, it seems that the housing sector may have turned the corner,” said Guy Berger, an economist at RBS in Stamford, Connecticut.

The tenor of the report was weakened somewhat by a sharp downward revision to December’s sales data to show only a 4.38 million unit sales rate rather than the previously reported 4.61 million unit pace.

A brightening economic outlook, marked by a strengthening labor market and buoyant factories, is giving the housing market some lift. Confidence among homebuilders is near five-year highs and they are breaking more ground on new housing projects.

Residential construction is expected to contribute to growth this year for the first time since 2005.

Robert Toll, executive chairman of luxury homebuilder Toll Brothers, welcomed that progress even as his company announced a surprise quarterly loss on Wednesday.

“Since the new home industry is coming off several years of historic low levels of production, we are encouraged by the recent improvement,” he said in a statement.

The data did little to lift sentiment in U.S. stock markets, which were down in early afternoon as investors fretted about a likely euro zone recession. Prices for U.S. government debt rose on concerns Greece might not be able to avert a messy default even with a fresh bailout no fax pay day loans.

INVENTORY DWINDLING

The U.S. housing market had been held back by an overhang of unsold homes, but steady sales gains are helping to whittle down supply.

The inventory of unsold homes on the market fell 0.4 percent to 2.31 million last month, the lowest since March 2005. That represented a 6.1 months’ supply at January’s sales pace, the lowest since April 2006 and down from 6.4 months in December.

However, inventories tend to fall in winter and the decline last month could also be reflecting delays in the process of bringing foreclosed properties to the market.

A supply of six months generally is considered ideal.

“We think the foreclosure process will accelerate, which will speed up the flow of distressed inventory. We expect supply to edge back to eight months this year,” said Michelle Meyer, a senior economist at Bank of America Merrill Lynch in New York.

That would increase the downward pressure on prices. The median home sales price fell 2 percent to $154,700 in January from a year ago.

Other data on Wednesday showed demand for home purchase loans fell last week, despite mortgage rates holding near historic lows.

The Federal Reserve, which has suggested a number of ways other policymakers could step in to help the beaten-up market, is considering purchasing more mortgage-backed securities to drive mortgages rates even lower.

But some economists are skeptical that would do much good.

“I don’t think the problem in the mortgage market is high interest rates or availability of liquidity. The problem is lack of jobs and very strict lending standards,” said Sung Won Sohn, an economics professor at California State University Channel Islands.

Distressed properties, foreclosures and short sales, which typically occur at deep discounts, accounted for 35 percent of overall sales last month, up from 32 percent in December.

A third of pending existing home sales contracts were canceled, the NAR said.

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Faced with growing competition from the likes of Chase, Bank of America and Wells Fargo, more than 100 community banks have joined forces to take on the megabanks.

Once rivals, these smaller financial institutions have banded together under a common brand called Kasasa. A total of 128 banks and credit unions across 35 states have joined this brand alliance to pool their advertising and marketing resources and offer more competitive products to their customers.

The banks’ customers still conduct business directly with their individual bank (and their account is still FDIC-insured through the bank), but they are also getting the added benefits of being part of the broader network. For example, customers of member banks are able to open free Kasasa-branded rewards checking accounts and Kasasa high-interest savings accounts.

Started in 2009, Kasasa is the brainchild of Gabe Krajicek, the CEO of BancVue, which serves as the parent company of the alliance. Once a bank joins Kasasa, the company trains the staff on setting up Kasasa-branded accounts and handles all of the marketing and promotion for the banks.

‘I dumped my bank!’

In exchange, the bank pays a series of fees, both upfront and ongoing. There’s a setup fee, a monthly software license fee and a success fee for each Kasasa-branded account that the bank opens. All of these costs depend on the size of the institution. Plus, the banks give a portion of their marketing and advertising budget to Kasasa.

For many of the banks that have joined Kasasa, the fees have been worth it.

Fighting a megabank invasion: As the megabanks kept opening branches in his area, David Krause, CEO of Pioneer Bank in St. James, Minn., reached out to his competitors to discuss banding together.

"I’ve been in banking for 25 years and viewed every other bank as a competitor," said Krause. "But over the past couple years, I’ve realized that other banks like us that serve their communities shouldn’t be the ones we’re competing with. We should really be highlighting our strengths and looking at megabanks as the competition."

A small community bank with six branches and only $223 million in deposits, his outfit was no match for banks like Bank of America, with nearly $1 trillion in deposits. Pioneer didn’t have the resources to market itself or offer products that could compete with the big banks in terms of online features, rates and incentives.

So last year, Krause held a meeting at a local hotel with a handful of other community bank presidents. And by the time the meeting was over, he had convinced two other banks to join Kasasa faxless cash advances.

Pioneer Bank currently offers three of Kasasa’s products and has more than 1,500 Kasasa account holders with deposits totaling more than $14 million. In the first 15 months that the bank has offered the accounts, checking and savings deposits have increased 25%, compared to an increase of only 5% for the 15 months prior to that.

Economies of scale: The more banks that sign on from a specific region, the more money Kasasa has to reach potential customers in that area.

By getting seven banks in Ohio to join forces, for example, Kasasa was able to become the official sponsor of the Cleveland Cavaliers this January — something one of the seven community banks would never have had the resources to do on its own, said Krajicek.

Are big banks really changing their ways?

Momentum has been picking up recently as more consumers seek alternatives to fee-heavy big banks. Last year, Kasasa nearly doubled the number of community banks and credit unions in its network. Nearly all of the new members joined in the last four months of 2011.

At the rate things are going, Krajicek expects to double its membership by the end of the year and hit 1,000 members in three to five years. It is currently in discussions with 49 additional institutions. By the end of the first quarter, it expects to have an advertising budget of about $13.5 million.

Jeff Elsea, CEO of the Bank of Weston in Missouri, is one of the network’s new recruits. After watching the number of community banks shrink from 10 to 3 as banks like Chase and Bank of America popped up in the area, he started reaching out to his rivals.

"[Megabanks] come in and put a branch here and there, and because of their marketing power they can run four-page ads all over the ‘Kansas City Star,’ they have billboards everywhere, and us little people can’t do that," said Elsea.

Funny money? 11 local currencies

Over the first two years of becoming part of Kasasa, the bank has generated $12 million in new deposits — about a 10% increase — which is a "big deal" for a bank with only about $100 million in total deposits, he said.

While some bankers were initially skeptical about teaming up with their rivals, he’s confident that they will soon be following his lead.

"They were curious as to why in the world I would be calling them up and getting them to meet up, and the first time we got together there was some skepticism, but once they see the results we’ve had, I think they’ll be coming back around," he said. 

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Kellogg is hoping Pringles will satisfy its craving for a salty snack.

The food giant is best known for its lineup of sweet breakfast items, including Frosted Flakes and Eggo frozen waffles. But on Wednesday, it became the world’s second-biggest savory snack maker behind PepsiCo Inc.’s Frito-Lay with a $2.7 billion deal to buy the potato snack brand from Procter & Gamble.

The addition of Pringles bolsters Kellogg Co.’s cupboard of salty snacks such as Cheez-It and Keebler’s Club crackers. It also positions the company to expand at a time when the appetite for on-the-go foods is growing worldwide, particularly in emerging markets like China.

“When you have people moving to the cities and becoming urbanized, they’re less likely to eat foods they grow themselves,” said Tom Graves, an analyst for Standard & Poor’s who follows Kellogg. “There’s a bigger opportunity to sell packaged foods.”

Kellogg, which gets most of its revenue from North America, is looking for Pringles to help it expand into a global snacking company. Pringles, known for its iconic tube packaging, is sold in more than 150 countries and gets two-thirds of its $1.5 billion in annual revenue from overseas.

P&G wanted to sell Pringles, the last of its food businesses, to focus on its core household and consumer goods products. Kellogg was able to swoop in to buy Pringles from P&G. after Diamond Foods Inc.’s proposed $1.5 billion acquisition of the brand fell through.

Kellogg expects to complete the Pringles acquisition over the summer, possibly on June 30.

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The Obama administration’s corporate tax reform plan will end “dozens and dozens” of tax breaks, U.S. Treasury Secretary Timothy Geithner said on Tuesday as he defended the White House’s election-year call for higher taxes on the wealthy.

Within days, the administration is set to unveil a blueprint for revamping the corporate tax system aimed at leveling the playing field for all companies, which pay wildly differing levels of taxes, while lowering the top corporate tax rate.

Companies are clamoring for a cut in the top 35 percent corporate tax rate but disagree about how to how eliminate special tax preferences that benefit selected industries.

Geithner spoke before the Senate Finance Committee a day after President Barack Obama unveiled a $3.8 trillion budget-and-tax proposal that called for aggressive government spending to boost the economy and higher taxes on the rich.

“We think they can handle it. We think they can afford it,” Geithner said.

The budget proposal is seen as a campaign document, with few elements expected to win approval this year in a divided U.S. Congress as elections approach in November.

Republicans criticized Obama’s budget, saying it chooses winners and losers and moves away from tax reform.

For example, Obama wants to end a manufacturing tax break for oil and gas companies, but expand it for high-tech companies. “Obviously not everyone is going to be playing by the same set of rules,” Republican Senator Jon Kyl of Arizona said.

Geithner said it was a “fair question.”

He said the Obama plan would “wipe out a very substantial, dozens and dozens of special tax preferences,” in the corporate code, but keep a “very limited” number targeting incentives for “creating and building stuff in the United States.”

Senators from both parties said Obama needs to use the bully pulpit to push major changes to the tax code.

The last time major rewrite of the U.S. tax code came in 1986 under the leadership of Republican President Ronald Reagan.

“The key in 1986 was of course the presidential bully pulpit and that the executive branch every single time out talked about how you had to fit the pieces together,” Democratic Senator Ron Wyden said.

Obama said earlier he was “hopeful” of a deal on extending a 2 percentage point cut in the payroll tax paid by workers, which will expire at the end of the month without a deal between sparring lawmakers.

FISCAL CLIFF

The payroll tax extension is the first among many deadlines approaching in coming months that could hamper the fragile economic recovery.

At the end of the year, individual tax cuts enacted under President George W. Bush are set to expire. In addition, $1.2 trillion in automatic budget cuts across all government programs are set to kick in as part of last summer’s deal to raise the debt ceiling.

“A perfect fiscal storm is waiting at the end of the year,” Senator Max Baucus, Democratic chairman of the Senate Finance Committee said.

Geithner agreed that the combination of the deficit reduction measures and higher taxes would hurt the economy.

But he said the administration is proposing to extend the bulk of the tax cuts so that only the wealthiest would be impacted. “The impact of that tax reform would be very, very modest,” he said.

Geithner rejected Republican suggestions that the administration should make drastic cuts to government spending even though the U.S. deficit has soared to $1.3 trillion and the federal debt has topped $15 trillion.

“That would damage economic growth,” Geithner said.

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