Markets sluggish despite seeming US budget deal

LONDON — Financial markets were sluggish Wednesday as an apparent budget deal in the U.S. Congress failed to divert attention from investors' primary focus — whether the Federal Reserve will reduce its stimulus next week.

As the Fed's policy meeting nears, investors appear to be holding off big trading decisions. That has left markets drifting, even though Congress looks set to agree on a modest U.S. budget agreement that restores about $63 billion in across-the-board automatic spending cuts.

Though a budget deal — for which a vote is expected this week — would help prevent another partial shutdown of the U.S. government, it doesn't prevent another standoff among lawmakers over the debt ceiling, which has to be raised by early February if the U.S. is to avoid defaulting on its debt.

At the margins, analysts said, the budget deal may make it easier for the Fed to start reducing its stimulus. After all, uncertainty over the U.S. fiscal position was one reason the Fed confounded expectations in September by not starting to "taper" the stimulus program.

Following a run of solid economic data, particularly with regard to the labor market, expectations have grown that the Fed will decide to start reducing its $85 billion worth of financial asset purchases at its meeting next week.

"Should the fiscal deal be approved, it will undoubtedly be welcomed by the Fed, which can respond by implementing the beginning of a taper," said Neil MacKinnon, global macro strategist at VTB Capital.

Since the stimulus has helped buoy stocks over the past few years, its potential reduction has jolted markets periodically in recent months. However, any tapering is expected to be accompanied by a renewed commitment by the Fed to keep interest rates low. That, analysts say, helps explain why investors have held their nerve in recent weeks and why the immediate response to the budget deal has been muted.

In Europe, the FTSE 100 index of leading British shares fell 0.2 percent to close at 6,507.72 while Germany's DAX fell 0.4 percent to 9,077.11. The CAC-40 in France lost 0.1 percent to 4,086.86.

On Wall Street, the Dow Jones industrial average fell 0.5 percent to 15,891.72 while the broader S&P 500 index fell 0.7 percent to 1,790.46.

In currency markets, the euro was up 0.2 percent at $1.3793 and the dollar 0.5 percent lower at 102.35 yen.

Earlier in Asia, the mood was a bit more downbeat. Japan's Nikkei 225 closed down 0.6 percent at 15,515.06. Hong Kong's Hang Seng tumbled 1.7 percent to 23,338.24 and China's Shanghai Composite shed 1.5 percent to 2,204.17.

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State’s Obamacare website down for ‘scheduled maintenance’

The state health insurance website will be down for "scheduled maintenance" for 15 hours beginning today at 2 p.m. — just two weeks before many policyholders must choose new health plans.

The site, mahealthconnector.org, will be unavailable until tomorrow morning at 5 a.m., due to what Health Connector spokesman Jason Lefferts said was fixes and improvements to the site.

"We're just doing some maintenance and upgrades that are going to take a little bit longer than the usual time period," Lefferts said. "Usually we take it down overnight, in this case it is going to take a little bit longer."

Lefferts said he did not know what the upgrades were, or why the fixes would take longer than usual.

DEVELOPING...

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Delta CEO: Fliers will pay for higher security fee

MINNEAPOLIS — The CEO of Delta Air Lines says a bigger security fee being considered in Congress will be paid by travelers, not by the airlines themselves.

CEO Richard Anderson calls the fee a tax, and says it means fares are going up. He says the increase will not be absorbed by Delta.

Congress is debating a budget that would add $5 to each nonstop, round-trip ticket. The money is for a Transportation Security Administration fee, which already stands at $5 per ticket.

Airlines have long complained that sales taxes, security fees, and airport taxes drive up the cost of their tickets unfairly.

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Autohome ADRs surge in trading debut

Shares of Chinese automotive information provider Autohome are surging in their trading debut.

The American depositary shares are up $11.60, or 68 percent, to $28.60 in morning trading after climbing as high as $31.37 shortly after they hit the market.

Late Tuesday, the company priced its initial public offering of 7.8 million American depositary shares at $17 each, above their projected range, for total proceeds of $132.9 million.

The offering's underwriters also have a 30-day option to buy up to 1.2 additional American depositary shares at the IPO price for additional proceeds of $19.9 million.

Autohome provides online information, listings and reviews for Chinese automotive consumers through a pair of websites. The shares are trading on the New York Stock Exchange under the ticker symbol "ATHM."

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Health care signups pick up pace in November

WASHINGTON — Playing catch-up with a long way to go, President Barack Obama's new health insurance markets last month picked up the dismal pace of signups, the administration reported Wednesday.

Enrollment statistics from the Health and Human Services Department showed that 364,682 people have signed up for private coverage as of Nov. 30 under the federal health law. Although that's more than three times the October total, it's less than one-third of the 1.2 million people officials had originally projected would enroll nationwide by the end of November.

Crunch time is now for Obama's health care law, as consumers face a Dec. 23 enrollment deadline if they want to have coverage on Jan. 1. Yet HealthCare.gov, the revamped federal website serving 36 states, continues to have issues. Just Tuesday there was an extended maintenance outage. And some states running their own websites are also having problems.

That's created stress and uncertainty not only for the uninsured but also for consumers seeking to avoid an interruption in coverage in January. Those trying to preserve coverage include some or many of the more than 4 million people whose individual plans were canceled because they didn't measure up under the law, as well as hundreds of thousands in federal and state programs for people with serious health problems, from cancer to heart disease to AIDS.

Health and Human Services Secretary Kathleen Sebelius told the House Energy and Commerce on Wednesday that the signup trend is turning positive.

"I don't think there is any question that the flawed launch of the website put a damper on people's enthusiasm," Sebelius said. "Having said that, we are seeing very, very positive trends. We are seeing lots of people re-engage."

Another 1.9 million people have made it through the enrollment process, but have not yet picked a plan, she said. Consumers must pay their premiums by Dec. 31 for coverage to take effect at the beginning of the year.

Lawmakers have questions about how and why HealthCare.gov did not work as advertised, whether the federal website meets government security standards and how much all the repairs are costing.

In a blog post early Wednesday, Sebelius said that she has asked the department's inspector general to investigate how HealthCare.gov went off track. She wants an independent review of the contracting process, management, performance and payment issues that may have contributed to the flawed launch.

The administration report found a total of 137,204 people enrolled in the states served by the federal website by the end of November, up from 26,794 in October.

The 14 states running their own websites enrolled 227,478 people, up from 79,391 in October.

California, which is running its own program, led the nation, with more than 107,000 signups. Oregon, also running its own market, had the lowest total, with just 44 people enrolled. Florida was the leader among states with federally run markets, with nearly 18,000 signups.

Nationally, an additional 803,077 people have been determined to be eligible for Medicaid, the safety-net program shaping up as the health overhaul's early success story. That's about double the number for October. Nonetheless, state Medicaid directors are reporting accuracy problems with information on prospective enrollees that the federal government is sending them.

Although Republicans have called for Sebelius to resign, and some Democrats have urged Obama to fire those responsible, the White House has given no indication that a house-cleaning is coming. The secretary's request for an inspector general probe indicates that she realizes she has some explaining to do.

"I believe strongly in the need for accountability, and in the importance of being good stewards of taxpayer dollars," Sebelius said in her announcement. Sebelius told the committee the administration has spent $677 million on technology through the end of October.

In addition to the inspector general review, Sebelius said she has ordered the hiring of a new "chief risk officer" at the Medicare agency, which also oversees the new programs created to expand health insurance coverage under Obama's law. That official will focus on making sure technology programs work as advertised.

Sebelius also said she's ordered a retraining of her department on best practices for outside contracting.

The site went live Oct. 1 and immediately turned into an impenetrable maze for most consumers. A two-month program of fixes directed by White House troubleshooter Jeffrey Zients stabilized the site and made it more workable, resolving hundreds of software glitches and adding more hardware to handle high demand from consumers.

Zients also found that the technical problems were compounded by inadequate oversight and coordination among teams working for the government and its contractors. That raises questions about how Sebelius and her subordinates have managed the complex program. Through the summer and into the fall, the secretary had repeatedly assured Congress and the public that the insurance markets would open for business on schedule Oct. 1.

With his poll ratings in a dive, Obama not only accepted the blame for website woes, but personally apologized for the canceled individual insurance policies. The cancellations issue is highly sensitive politically because it contradicts Obama's promise that if you like your coverage you would be able to keep it.

The president sought to calm the backlash by allowing states and insurers to extend existing plans for another year. Thirty-eight have done so, according to analysis by the consulting firm Avalere Health. But it's unclear to what extent insurers have taken advantage of the leeway granted by state regulators.

The administration had set a goal of signing up 7 million people by the end of open enrollment season March 31. HHS health reform director Mike Hash says they're still "on track" to meet it. Uninsured people who procrastinate beyond that date will face tax penalties when they file their returns for the 2014 tax year.

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House Republicans signal support for budget deal

WASHINGTON — House Republicans signaled support Wednesday for a budget deal worked out a day earlier, a plan narrowly drawn but promoted as a way to stabilize Congress' erratic fiscal efforts, avert another government shutdown and mute some of the partisan rancor that has damaged Americans' attitudes about their lawmakers.

"There's a lot to like about it," said one GOP congressman, John Fleming of Louisiana, as he emerged from a closed-door caucus meeting.

In support from the rank and file that is welcome news to House GOP leaders, Rep. Jeff Miller, R-Fla., said most Republicans would back the deal worked out by Budget Committee Chairman Paul Ryan, R-Wis., and Democratic Sen. Patty Murray and applauded by the White House.

The House plans to vote by week's end before it adjourns for the year on Friday.

Still, there was some grumbling from both liberals and conservatives since the plan wouldn't solve long-term tax and spending issues, and ignores expiring unemployment benefits.

Sen. Rand Paul, R-Ky., a potential 2016 presidential candidate, announced his opposition, saying that "undoing tens of billions of this modest spending restraint is shameful and must be opposed."

But House Speaker John Boehner, R-Ohio, dismissed criticism from groups such as Heritage Action, which raise money as they criticize Republicans for being insufficiently conservative.

"They're using our members and they're using to American people to further their own goals," Boehner said Wednesday. "This is ridiculous."

But many House Democrats were less than enthusiastic, too.

"Stay tuned," said Minority Leader Nancy Pelosi, D-Calif., when asked about whether Democrats would support the bill.

The agreement, among other things, seeks to restore $63 billion in automatic spending cuts affecting programs ranging from parks to the Pentagon. The deal to ease those cuts for two years is aimed less at chipping away at the nation's $17 trillion national debt than it is at trying to help a dysfunctional Capitol stop lurching from crisis to crisis. It would set the stage for action in January on a $1 trillion-plus spending bill for the budget year that began in October.

The measure unveiled by Ryan and Murray blends $85 billion in spending cuts and revenue from new and extended fees — but no taxes or cuts to Medicare beneficiaries — to replace a significant amount of the mandated cuts to agency budgets over the coming two years.

The package would raise the Transportation Security Administration fee on a typical nonstop, round-trip airline ticket from $5 to $10; require newly hired federal workers to contribute 1.3 percentage points more of their salaries toward their pensions; and trim cost-of-living adjustments to the pensions of military retirees under the age of 62. Hospitals and other health care providers would have to absorb two additional years of a 2-percentage-point cut in their Medicare reimbursements.

House Majority Leader Eric Cantor, R-Va., said the measure will serve as a vehicle to delay a 24 percent cut in Medicare reimbursements to physicians that would otherwise take effect Jan. 1 The idea is to buy negotiators more time to try to permanently fix the problem, which dates to miscalculations enacted in a 1997 budget law.

The plan doesn't attempt to resuscitate earlier attempts at an accommodation that would have traded tax hikes for structural curbs to ever-growing benefit programs like Medicare and Social Security. But it would at least bring some stability on the budget to an institution — Congress — whose approval ratings are in the gutter.

"Our deal puts jobs and economic growth first by rolling back ... harmful cuts to education, medical research, infrastructure investments and defense jobs for the next two years," Murray said.

The measure won an immediate endorsement from President Barack Obama, who called it a step in the right direction.

The budget deal was one of a few major measures left on Congress' to-do list near the end of a bruising year that has produced a partial government shutdown, a flirtation with a first-ever federal default and gridlock on Obama's agenda.

In a blow to Democrats, the agreement omits an extension of benefits for workers unemployed longer than 26 weeks. The program expires Dec. 28, when payments will be cut off for an estimated 1.3 million individuals. Senate Majority Leader Harry Reid, D-Nev., has agreed to stage a test vote on the measure this year, but it's not clear whether he'll get enough GOP support to advance it.

Aides predicted bipartisan approval in both houses in the next several days, despite grumbling from liberals over the omission of the unemployment extension and pressure from tea party-aligned groups that are pushing Republican conservatives to oppose the deal.

The agreement would increase the cap on so-called discretionary spending from the $967 billion mandated by Washington's failure to follow up a 2011 budget agreement with additional deficit cuts. The cap would rise to $1.012 trillion for the ongoing 2014 budget year and up to $1.014 trillion for 2015.

The relief to the Pentagon is relatively modest since the agency started out facing a cut of $20 billion below the harsh cuts it faced in 2013; the agreement replaces those cuts but doesn't bring the military's budget much above 2013 levels.

"While modest in scale, this agreement represents a positive step forward by replacing one-time spending cuts with permanent reforms to mandatory spending programs that will produce real, lasting savings," Boehner said.

Even before the deal was announced, conservative organizations were attacking the proposal as a betrayal of a 2011 agreement that reduced government spending and is counted as among the main accomplishments of tea party-aligned Republicans who came to power earlier the same year in the House.

Sen. Marco Rubio, R-Fla., issued a statement opposing the measure and Senate Minority Leader Mitch McConnell, R-Ky., was seen as likely to oppose it as well. But key Democrats lined up behind Obama, especially after Ryan eased demands on making federal workers contribute more to their pensions.

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Associated Press writers Henry C. Jackson, Alan Fram and Donna Cassata contributed to this report.

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Restructuring improves Polish airline's finances

WARSAW, Poland — Poland's debt-ridden LOT airline said Wednesday it has improved its finances through cost cuts and a reorganization of its business.

LOT said it will close the year with a loss of some 20 million zlotys ($5 million), or about 110 million zlotys less than had been assumed in a restructuring plan implemented this year.

Spokeswoman Barbara Pijanowska-Kuras said that was achieved by saving money on fuel, cutting administration and personnel costs and renegotiating deals with suppliers. LOT introduced new, flexible tariffs and widened its ticket distribution network.

It also offered chartered Boeing 787 flights to various popular spa resorts and leased one of its five 787s to Finnish airlines until Jan. 10. LOT was Europe's first carrier to have the 787, but suffered losses when the planes were grounded globally for security reasons.

LOT signed a compensation deal with Boeing on Monday, but did not disclose the details. Pijanowska-Kuras said the financial effects of the deal will be seen in 2014, which will be the "key" year for the company's restructuring program.

The European Commission is reviewing LOT's restructuring plan to decide whether to allow some 400 million zlotys ($ 95 million) in government aid that the airline received in 2012.

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FDA targets antibiotics in meat

WASHINGTON — Ciiting a potential threat to public health, the Food and Drug Administration moved Wednesday toward phasing out the use of some antibiotics in animals processed for meat.

Many cattle, hog and poultry producers give their animals antibiotics regularly to ensure that the animals are healthy and to facilitate the production process. Now, the agency has announced that it will ask pharmaceutical companies to voluntarily stop labeling drugs important for treating human infection as acceptable for those uses in animal production.

If the companies sign on, use of those antibiotics to promote growth in animals would be illegal and prescriptions would be required to use the drugs for animal illnesses.

The FDA is hoping to limit antibiotic resistant diseases in humans by decreasing the use of the drugs in animals. Exposure to antibiotics leads germs that survive stronger, so that they could withstand the drug the next time it is used.

Antibiotic resistance is a growing problem, and in September the Centers for Disease Control and Prevention released sobering estimates that more than 23,000 people a year are dying from drug-resistant infections.

The biggest risk is from germs spread in hospitals, and It's not clear how much of the problem is related to the use of drugs in meat. But consumers have become increasingly concerned about the issue, and FDA has been debating how to address it for several years.

"We need to be selective about the drugs we use in animals and when we use them," said William Flynn of FDA's Center for Veterinary Medicine. "Antimicrobial resistance may not be completely preventable, but we need to do what we can to slow it down."

The new guidance will give the companies three years to comply.

Michael Taylor, FDA's deputy commissioner of foods, said he believes asking industry to make the changes is the fastest way to help phase the drugs out. If the FDA made the process mandatory, he said, the agency would have had to move forward with a complex regulatory process that could take years.

"We have high confidence based on dialogue with industry that this initiative will succeed," Taylor said.

Some advocates pushing to rid the animal food supply of antibiotics said the FDA did not go far enough. Democratic Rep. Louise Slaughter of New York, a microbiologist, said the FDA should have made the action mandatory. The guidance "falls woefully short of what is needed to address a public health crisis," she said.

Others said it was progress.

"We commend FDA for taking the first steps since 1977 to broadly reduce antibiotic overuse in livestock," said Laura Rogers of The Pew Charitable Trusts' human health and industrial farming campaign. "There is more work to do, but this is a promising start, especially after decades of inaction."

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Follow Mary Clare Jalonick on Twitter: http://twitter.com/mcjalonick

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Witness on day of 2008 arrest: 'Madoff Implodes'

NEW YORK — New York financier Bernard Madoff's former right-hand man summed up his boss' arrest exactly five years ago with two words: "Madoff Implodes."

The words were in Frank DiPascali's diary entry for Dec. 11, 2008. The diary was shown to jurors Wednesday on the five-year anniversary of Madoff's fall. The jurors are hearing evidence in the trial of five of Madoff's former employees.

DiPascali says Madoff called him that morning to say the FBI was in the Manhattan office of Madoff's brother. DiPascali says he asked Madoff "why are you calling me?" and threw the phone across the room.

DiPascali later pleaded guilty and cooperated with the government. He said he faces 125 years in prison if he does not tell the truth.

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Canada's postal service to phase out home delivery

TORONTO — Canada's postal service said Wednesday it will phase out home delivery within urban centers within the next five years as it begins to post significant financial losses due to growing use of digital communication.

Canada Post, a government corporation, said it will replace foot delivery with community mail boxes. About a third of Canadian homes still receive mail to their door.

A Conference Board of Canada study estimated savings of US$542 million (CA$576 million) a year by eliminating door-to-door delivery to urban homes.

It also plans to eliminate 6,000 to 8,000 jobs during the next five years, mainly through attrition. The postal service expects nearly 15,000 employees to retire or leave the company in the next five years. Canada Post employed 68,000 at the end of the 2012 fiscal year.

The company's core mail operations have been losing hundreds of millions of dollars per quarter for several quarters in a row.

Canada Post said if left unchecked, continued losses would soon jeopardize its financial self-sufficiency and become a significant burden on taxpayers and customers.

"What Canadians expect from their postal system is changing dramatically. That requires an equally dramatic change in the size, structure and direction of Canada Post," it said in a report. "Future success will require a leaner workforce, more competitive wages and benefits and greater flexibility."

Last month, Canada Post announced that it would ask the Canadian government for financial relief next year to help support a restructuring of its business model and pension plan framework to assure long-term financial sustainability.

The postal service has faced intense competition from couriers, as well as technology that has led to a growing popularity of consumers paying their bills and communicating online.

Transport Minister Lisa Raitt, the minister responsible for the corporation, said Canadians are sending less mail than ever, leaving Canada Post with some tough financial decisions in order to combat a steep decline in revenues.

In the third quarter, Canada Post reported an improved, but still big, pre-tax loss of US$102 million (CA$109 million) for the period ended Sept. 28. The pre-tax loss in the comparable period a year ago was US$136 million (CA$145 million).

Canada Post said the roll out of a new five-point action plan will return Canada Post to "financial sustainability" by 2019.

A think-tank commissioned by Canada Post earlier this year warned that the postal service was on track to lose $1 billion annually by the end of this decade.

In addition to service changes, the post is increasing the price of stamps.

The U.S. Postal Service has also struggled in the past few years. It has waited for years for legislators to pass a bill to fix its ailing finances. In fiscal 2013, it had a $5 billion loss, ending in the red for the seventh year.

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