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Perhaps Barack Obama’s trip to China this month was not such a flop after all.

Obama was criticized for kowtowing to the Chinese and apparently returning empty-handed, but movement from Beijing last week on Iran’s nuclear program and climate change suggests the U.S. president got further than it seemed at first.

Obama went to China with three major issues on the table — economic relations, climate change and denuclearization — and seems to have made progress on at least two of them.

But analysts said it was unclear exactly how much the U.S. leader had actually influenced the Chinese, or what the long-term impact would be of what was announced last week.

“The Chinese were pressed in a very focused fashion on both of those issues,” said Kenneth Lieberthal, director of the John L. Thornton China Center at the Brookings Institution in Washington.

“I think their position does reflect, in fact, the impact of the Obama visit and of American diplomacy,” he said.

China offered rare backing on Friday to a vote by the U.N. nuclear watchdog to rebuke Iran for building a uranium enrichment plant in secret, the first such vote against Tehran in almost four years.

China, like Russia, backed the measure, smoothing its 25-3 passage through the International Atomic Energy Agency and departing from an earlier pattern of blocking global attempts to isolate trading partner Iran.

Obama stressed in Beijing that Iran’s nuclear program could disrupt the Middle East and world energy supplies, experts and administration officials said.

The Washington Post reported that U.S. officials had argued that Israel saw Iran’s nuclear ambitions as an existential threat, and implied Israel could one day attack Iran to disrupt those ambitions. That argument helped bring the Chinese on board to take a firmer line on Tehran, it reported.

“Obama pressed very hard with the Chinese,” Lieberthal said. “And they went the right way today.”

On Thursday, Beijing said Premier Wen Jiabao would go to U.N.-led climate talks in Copenhagen next month and offered its first firm carbon intensity target, pledging to cut the amount of carbon dioxide produced for each yuan of national income by 40-45 percent by 2020, compared with 2005 levels.

‘THESE THINGS ARE INCREMENTAL’

Washington gave only a guarded welcome to China’s emissions announcement, saying the world would watch progress by the top greenhouse gas emitter. Observers said measuring and verifying implementation would be central going forward.

Bonnie Glaser, a China expert and senior fellow at the Center for Strategic and International Studies in Washington, said China’s 40-45 percent reduction target was disappointing, but it was a good sign that they made an announcement at all. 

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The stimulus cash that helped boost small business lending this year just ran out.

The Small Business Administration said Monday that it has run through all of the $375 million Congress allocated to temporarily waive fees and boost guarantees on loans backed by the SBA’s lending programs. Businesses still hoping for a slice of the pie can get in line, cross their fingers and wait.

The SBA backs loans made by banks to qualifying small businesses. If the business defaults, the government pays the bank back for the guaranteed potion of the loan. Typically, the SBA charges banks for this guarantee, but since February the agency has been using a pool of Recovery Act funds to eliminate those fees. The agency also temporarily increased its cap on the portion of a loan it will guarantee, raising it to 90%.

The move was a popular one with banks — though not popular enough to halt the freefall in small business lending. The stimulus incentives were in place for more than half of the SBA’s 2009 fiscal year (which ended Sept. 30), but the number of bank loans backed by the SBA still fell 36% compared to the previous year.

Still, SBA officials say the decline would have been even sharper without the incentives. Last week, the SBA backed more than $1 billion in small business loans. By comparison, the agency fielded $684.5 million in loans in all of January, the month before the stimulus measures kicked in.

The money running out wasn’t a surprise. The SBA knew its funding was getting low, and SBA chief Karen Mills put out a statement two weeks ago cautioning banks that the well would soon run dry. At the time, she forecast that the money would last into December. But last week, the SBA notified banks that Nov. 23 would be the "transition date" on which it would revert to its old fee and guarantee structure low rates payday advance.

The SBA would like to see Congress allocate money to extend the measures at least through February. "We are going to continue to work with Congress to appropriate funds to maintain the reduce fees and increased guarantee," said agency spokeswoman Hayley Matz.

Loan applications surged last week as lenders tried to push through as many as possible before the deadline. To allocate the last dollars left, the SBA on Monday launched a Recovery Loan Queue. Those left hanging — both business owners and the banks processing their loans — can check online to see where their application stands. Any applications that don’t make it through before the cash is exhausted will need to be resubmitted for a non-Recovery Act loan.

The SBA currently has 148 loans in queue, totaling $80.3 million.

Small business lending has plunged since the recession set in. At a Washington forum SBA Administrator Mills and Treasury Secretary Tim Geithner convened last week to discuss the problem, bankers emphasized the important of continuing the SBA’s enhanced loan guarantees.

David Rader, the head of SBA lending at Wells Fargo (WFC, Fortune 500), pushed for an extension into 2011. Wells Fargo was the top SBA lender last year.

"We absolutely have increased our lending opportunities with the stimulus programs. The fee waivers for customers, the increased guarantee, is absolutely saving cash for our borrowers — and cash is king," said Rader at the forum. "I think it is imperative for this body to continue the fee waiver and the 90% guarantee stimulus." 

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News Corporation, the media conglomerate controlled by Rupert Murdoch, has engaged in early-stage discussions with Microsoft about a pact to get paid by Microsoft to remove its news content from Google’s search engine and be available on Bing, according to a person briefed on the matter who spoke anonymously to discuss confidential negotiations.

Murdoch has been vocal of late about getting paid for the company’s content online. News Corporation owns many newspapers, including The Wall Street Journal, The New York Post, The Times and The Sun in Britain.

The Financial Times first reported on the discussions, which involve Microsoft possibly paying News Corporation to index its content on Microsoft’s search engine, Bing. The development has the potential for the newspaper industry to finally generate revenue from online news beyond advertising.

A spokesperson for Microsoft was not immediately available for comment. A News Corporation spokeswoman declined to comment.

Microsoft executives have been clear about their intentions to pursue bold measures – and tap into the company’s vast cash reserves – to disrupt Google’s dominant position in the search market.

In a recent interview, Steven Ballmer, the chief executive of Microsoft, noted that Google handled about six times as many search queries as Microsoft, while also producing more than six times as much revenue.

It’s unclear how a partnership with news organizations that fragmented search results and content on the Internet would be received. The notion of walled-off communities on the web falls into a thorny area of debate.

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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%. 

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Japan and Australia outlined competing visions for an East Asian trade bloc during a 16- nation summit in Thailand, offering plans that differ on what role the U.S. will play.

Australian Prime Minister Kevin Rudd discussed his idea for an “Asia-Pacific Community” that would include the U.S. and India. Japan’s Prime Minister Yukio Hatoyama, who took power last month, suggested an “East Asian Community” whose membership has yet to be determined, foreign ministry spokesman Kazuo Kodama said yesterday.

“Both Japan and Australia proposed bigger communities, which is a test for us,” Thai Prime Minister Abhisit Vejjajiva said yesterday in a weekly interview on a channel operated by state-controlled MCOT Pcl. The Association of Southeast Asian Nations “must be firmly integrated when we enter a bigger community.”

The proposals, which included few specifics, underscore different views within the region on U.S. power and economic dominance. The model of relying on Western demand for local goods and services “will no longer serve us as we move into the future,” said Abhisit, the meeting’s host.

“Japan wants to stay a major player and keep China from dominating,” said Carlyle A. Thayer, a politics professor at the University of New South Wales in Canberra. “Australia is worried about American staying power in the region.”

Asean countries account for about half of the world’s population and a quarter of global gross domestic product.

‘Closely Discuss’

Japan will “closely discuss and coordinate” with the U.S., Kodama said yesterday without elaborating. China is “positive and open” to the establishment of an “East Asian community,” Assistant Foreign Minister Hu Zhengyue said two days ago.

The U.S. signed a friendship accord with Asean in July to bolster ties with an area that contains sea lanes vital to world trade, as well as coal, oil and other commodities. The treaty is a prerequisite for joining the East Asia Summit, which consists of the 10-member Asean, China, Japan, South Korea, India, Australia and New Zealand, which also took place yesterday in Thailand.

Border Disputes

In a bilateral meeting on the sidelines of the summit, Indian Prime Minister Manmohan Singh and Chinese Premier Wen Jiabao vowed to improve relations and work on “issues” such as border disputes. The two countries need to build “better understanding and trust” to keep relations “robust and strong,” Singh said, according to a statement from India’s Ministry of External Affairs.

Asean also set up its first human rights commission at the weekend’s meeting, one without any authorization to discuss country-specific violations. Human rights groups have faulted Asean for its reluctance to criticize members such as Myanmar that are accused of silencing dissent.

Myanmar authorities may consider easing their stance on the detention of opposition leader Aung San Suu Kyi if she continues to have a “good attitude,” Kodama told reporters, citing comments by Myanmar Prime Minister Thein Sein.

Rice Reserves

China, Japan, South Korea and Asean said they will expedite the development of permanent emergency rice reserves to ensure food security in times of crisis and disasters, according to a joint statement. China pledged 300,000 tons of rice.

Australia and New Zealand’s free-trade agreement with a group of Southeast Asian nations will take effect next year, Australia said yesterday. The deal, originally signed in February at an earlier Asean meeting, is designed to eliminate or lower tariffs on products such as coffee, dairy, minerals, cars and vegetables in the next 12 years.

Southeast Asian countries are “on track” to eliminate tariffs on most goods traded within the region by the beginning of 2010, Asean said in a statement yesterday. The group aims to form a free-trade area by Jan. 1 that would remove tariffs on more than 87 percent of imports, part of its efforts to create an economic zone modeled after the EU, without a common currency, by 2015.

Regional Groups

The Japanese and Australian proposals would build on existing regional groupings. Those include the 10-member Asean, the 21-member Asia-Pacific Economic Cooperation bloc set to meet next month in Singapore and the 27-member Asean Regional Forum that U.S. Secretary of State Hillary Clinton attended in July.

Rudd’s Asia-Pacific Community would include the U.S., Japan, China, India, Indonesia and “the other states of our region,” he said in a speech last year. Its purpose would be to cooperate on economic, political and security matters and dispel notions that a conflict in Asia may be inevitable, he said at the time.

Hatoyama, who came to office Sept. 16, said in a speech at the United Nations a week later that he would strive to create an East Asian community similar to the European Union. The goal was seen as potentially excluding the U.S. after he published an opinion article in the New York Times in August arguing that “the era of U.S.-led globalism is coming to an end.”

Besides Thailand, which holds Asean’s rotating chairmanship, the group includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore and Vietnam. A wider East Asian free trade area may emerge before a new regional community is formed, Abhisit said yesterday.

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Homebuilders and real-estate agents were probably busier in September, and the index of leading indicators increased, adding to evidence the next U.S. expansion has begun, economists said before reports this week.

Construction started last month on 610,000 houses at an annual rate, the most since November, according to the median forecast of 53 economists surveyed by Bloomberg News before an Oct. 20 Commerce Department report. Sales of existing homes rose to a two-year high and the gauge of the economy’s future course advanced for a sixth month, other reports may show.

Housing is stabilizing as Americans take advantage of government programs, including credits for first-time buyers and efforts to lower borrowing costs, aimed at stemming the recession. Some Federal Reserve policy makers remain concerned the economy will relapse should the stimulus be removed too soon, signaling interest rates will remain low for months.

“The housing market is recovering from very depressed levels,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “We’re definitely emerging from recession, finding a bottom in some sectors, but the recovery is still uneven and it’s not particularly vigorous.”

Building permits, a sign of future activity, may have risen to a 590,000 pace, also the highest since November, the Commerce Department’s report on housing starts may show, according to the survey median.

In April, builders broke ground on new homes at a record- low 479,000 pace.

Leading Index

The index of leading economic indicators, due from the New York-based Conference Board on Oct. 22, may have risen 0.9 percent, according to the survey of economists. The gain was probably driven by the increase in building permits, a drop in claims for jobless benefits and an improvement in consumers’ outlooks, economists said.

A sixth consecutive gain in the leading index would mark the best performance since early 2004.

U.S. stocks have risen in recent weeks amid better-than- forecast earnings and signs the economy is improving. The Standard & Poor’s 500 Index closed at the highest level in a year on Oct. 15.

Google Inc., the world’s most popular Internet search engine, plans to resume hiring and acquisitions after the recovering economy helped third-quarter sales beat analysts’ estimates. Large customers stepped up spending on Google ads last quarter, a rebound from the first half of the year, Chief Financial Officer Patrick Pichette said.

‘Incredible Recession’

“We weathered what is an incredible recession,” Pichette said in an interview last week. “If you have all this behind you, the only outcome you should have as management is: ‘OK, let’s build now.’”

Fed policy makers at their September meeting decided to slow purchases of mortgage securities to avoid disrupting the housing market while extending the duration of the program by three months. In the minutes of the Sept. 22-23 meeting, which were released last week, they noted the housing market and retail sales got a boost from government incentives.

The Fed’s Beige Book report on regional economies, scheduled to be released on Oct. 21, will be used by policy makers to gauge the state of the housing market and the economy overall when they meet again in the first week of November.

An Oct. 23 report from the National Association of Realtors may show that sales of existing homes rose to a 5.35 million rate last month, according to the Bloomberg survey. That would be the highest level since August 2007.

Less Pessimistic

Tomorrow, a report may show builder confidence continued to climb this month. The National Association of Home Builders/Wells Fargo index probably rose to 20 from 19, economists surveyed said. It would be the seventh straight increase. While higher, readings less than 50 still signal that most respondents view conditions as poor.

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Morgan Stanley likely broke a string of three straight losses in the third quarter, while chief rival Goldman Sachs Group Inc extended its dominance.

The growing mismatch between the last two big names on Wall Street is illustrated by analysts’ forecasts: Goldman earnings are expected to more than double, while Morgan Stanley is seen just eking out a profit, lagging far behind its year-earlier results.

Analysts say the third quarter was a resilient one for the banks, with strong sales and trading results and gains in asset management.

“These are two companies that have two less major competitors than they did last year with the failure of Lehman Brothers and Bear Stearns,” said Bill Hackney, chief investment officer with Atlanta Capital Management. “We think the outlook for both of these companies is very strong.”

Goldman is expected to post earnings of $4.24 per share before one-time items, up from $1.81 a year earlier, according to analysts polled by Thomson Reuters I/B/E/S. Morgan Stanley is expected to report 29 cents a share, down from $1.32, hurt by debt-valuation adjustments.

Goldman, whose embarrassment of riches is setting it up for a possible bonus bonanza at year-end, earned $4.93 per share in the second quarter, while Morgan Stanley lost $1.10 per share.

Goldman plans to report third-quarter results on October 15; Morgan Stanley has not yet set a date bad credit pay day loans.

MORGAN REBOUND

If Morgan Stanley did manage to turn a profit in the third quarter, it was with a sigh of relief. The bank has suffered three straight quarterly losses and has been slow to join Wall Street’s rebound party after the near-collapse of the financial services industry a year ago.

Analysts remain concerned about the bank’s continued losses on real estate principal investments and the accounting ramifications of improvements in its debt prices.

In recent years banks recorded big gains on the declining market value of debt they issued, because they could buy back the debt cheaply. But as banks’ prospects have improved in the last few quarters, the value of their debt has jumped, forcing them to reverse earlier gains, weighing on earnings.

Morgan Stanley “will take some pain in terms of writing up their own debt yet again,” said Steve Stelmach, an analyst with FBR Capital Markets.

Goldman, though, looks to be well past the troubles that continue to plague its rivals.

BONUS BONANZA

“Goldman is in a very sweet spot and they should do very well,” said Marshall Front, chairman of Front Barnett Associates. 

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China Investment Corp, the $200 billion sovereign fund, is set to pour a total of $2 billion into three U.S. distressed asset-focused funds, including one managed by Goldman Sachs, sources said on Tuesday.

CIC plans to invest around $600-$700 million each in three distressed asset investment funds, another managed by U.S. investment firm Oaktree Capital, said the sources briefed on CIC’s plan.

The name of the third distressed asset fund was unknown but the sources noted that all three funds to be invested by CIC would focus on U.S. distressed assets ranging from real estate to infrastructure.

Officials at CIC, Goldman and Oaktree all declined to comment. The sources declined to be identified as the fund-raising process was confidential.

(Reporting by George Chen; Additional reporting by Michael Flaherty, Editing by Jacqueline Wong)

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It helped Elizabeth Poelker buy her house.

It probably helped Paul Medler sell his.

But is the $8,000 tax credit for first-time homebuyers really helping the economy all that much? Enough to warrant extending it for another year, at an estimated cost of $15 billion? Enough to maybe even expand it to $15,000 apiece, for everyone?

That’s a question Congress is wrestling with these days, as the program starts to near its Nov. 30 closing date, and the real estate industry ramps up a full-throated campaign to keep the credits flowing. It’s unclear at this point what will be decided.

Nearly everyone agrees that the credits have helped keep the housing market afloat during a tough time. After they were enacted as part of the $787 billion federal stimulus Congress passed in February, existing home sales rose for four straight months, before dipping in August. The rate of sales is up 12 percent since March, according to the National Association of Realtors.

About 1.4 million people have already claimed the credit on their taxes, according to the IRS, with probably more awaiting paperwork or delaying until they file in the spring.

And, along with low prices and historically low interest rates, real estate agents say the credits are sparking interest in home-buying.

"There’s no question it’s had a positive impact on our business," said Jim Dohr, president of Coldwell Banker Gundaker, which has 25 offices in the St. Louis region. That’s especially true at lower price points. Coldwell’s business is up 23 percent from last year on homes sold for less than $100,000 and 16 percent for homes sold for $150,000 or less.

"Much of the action in our business is at the lower end, and it’s really being fueled by the first-time tax credit," Dohr said.

What is less clear is how many of those sales would have happened anyway.

Prices and interest rates are low, after all. And people still need a place to live.

Out of a projected 1.8 million sales that will use the tax credit this year, economists estimate that between 350,000 and 400,000 would not have happened without it. And a recent survey commissioned by real estate tracking firm Zillow found that, if the credit is extended another year, it would be a major deciding factor for 18 percent of first-time homebuyers — spurring an additional 334,000 sales in all.

That’s nothing to sneeze at, said Zillow chief economist Stan Humphries. But at $15 billion, it works out to almost $45,000 for every sale generated.

"It’s an expensive program," he said. "For every five homes, four were going to get purchased anyway."

But there’s still that other one — people such as Poelker.

She’s 25 and works at an accounting firm. Her lease in Maryland Heights was coming up this summer, and she had grown tired of renting but didn’t think she could afford a down payment. When the tax credit passed, she started looking.

Soon, she found a nice townhouse in Manchester, put in an offer, and closed in June.

"It really helped me make it work," said Poelker, who noted that her brother and a friend had also used the tax credit to buy houses. "I probably would have purchased in the next couple of years, but it helped me do it sooner."

Still, that raises another question about the tax credit. Is it just borrowing sales from the future?

Skeptics point to Cash for Clunkers, the government-funded program to help spur auto sales. After a surge of car-buying in July and August, September is expected to be car dealers’ worst month of the year, according to a recent report from JD Power. The same thing, critics say, could easily happen whenever the homebuyer credit expires.

But supporters say that’s all the more reason to prolong it, at least for a few months. The economy is still shaky. Any housing recovery is fragile at best. Winter is typically a slow season in real estate. The timing, said Scott Dettmer, general manager of Dettmer Homes in Cottleville, is bad all around.

"You’re taking the single biggest impetus for home sales in at least three years, and you’re going to expire it at what is normally a bad time anyway?" he said. "I’d like to see it extended at least through the spring, to give a bridge over what are normally a tough few months."

At least 20 bills have been proposed in Congress to extend the plan, including one co-sponsored by Sen. Majority Leader Harry Reid that would push it into June. Another bill — to extend the credit and make it $15,000 for all homebuyers — reportedly has 15 co-sponsors.

But that measure was stripped from the stimulus bill in February, and there seems to be a limited appetite for it now, as Congress wrestles with health care reform and other pricey legislation. Many observers don’t expect a resolution until the Nov. 30 deadline draws nearer.

And that will probably keep Paul Medler waiting.

He sold his home in Kirkwood in June to a first-time buyer who used the tax credit. It probably helped make the deal happen, Medler said. Now he’s renting, and waiting to find a good deal to buy, but prices in the neighborhoods where he’s looking still seem too high for this market.

Medler’s hoping the credit either gets extended to everybody — so he can use it — or ends in November as planned.

"After this stops I feel like we might have another dive in housing prices," he said.

And, at least in his case, that would be a good thing.

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American International Group Inc’s shares fell 5.4 percent on Tuesday after speculation that the insurer was planning to sell shares, two portfolio managers said.

The source of the speculation was not clear, although earlier on Tuesday, an article by CNBC television host Jim Cramer published on TheStreet.com argued that AIG ought to sell shares.

AIG declined to comment.

The two portfolio managers who had heard the rumors declined to comment because they are not authorized to speak to the media.

AIG’s shares closed down 5.37 percent at $45.80.

(Reporting by Dan Wilchins)

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