NEW YORK – Verizon Communications Inc. said Wednesday it reached a deal to sell scattered phone service areas outside its main Northeastern and Californian territories for $5.3 billion in stock.

The buyer is Frontier Communications Corp., based in Stamford, Conn. The company focuses on serving small towns and rural areas and will triple in size with the deal.

The deal continues Verizon’s strategy of focusing on its core areas, where it is upgrading its phone lines to fiber optics, enabling it offer TV service and faster Internet access. It sold off its phone lines in Maine, New Hampshire and Vermont for $2.3 billion last year to Fairpoint Communications Inc.

The agreement would give Frontier 4.8 million phone lines to residential and small business customers and 1 million broadband connections. Frontier currently has 2.3 million customers.

The sale includes all of Verizon’s phone lines in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia and Wisconsin as well as some assets in border areas of California.

Verizon shareholders will receive one share of Frontier stock for approximately every 4.2 shares of Verizon stock, depending on the price of Frontier shares at closing, which is expected within a year.

Frontier shares were up 39 cents, or 5.2 percent, at $7.96 in premarket trading Wednesday. Verizon shares gained 9 cents to $30.49.

Verizon is also extracting $3.3 billion from the units before selling them off, by having them pay cash to the parent company and letting them assume debt.

Frontier will issue so much stock to Verizon shareholders that they will end up owning 68 percent of the company.

“This is a truly transformational transaction for Frontier,” Maggie Wilderotter, Frontier’s chief executive, said in a statement. “With more than 7 million access lines in 27 states, we will be the largest provider of voice, broadband and video services focused on rural to smaller city markets in the United States.”

Frontier also said it is cutting its annual dividend to 75 cents from $1, freeing cash to invest in the acquired areas, including for broadband buildouts. The cut takes its dividend yield to 9.9 percent.

Analyst Christopher King at Stifel Nicolaus noted that buyers of Verizon phone lines have fared badly in the past — Fairpoint is struggling with its debt load, and the buyer of Verizon’s Hawaiian business is in bankruptcy. But Frontier will actually reduce its debt load relative to its earnings through the transaction, King said.

The roughly 11,000 workers that support the local landlines will move to Frontier with union contracts intact, Verizon said.

Verizon lines in Connecticut, Delaware, the District of Columbia, Florida, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, Texas and Virginia and most of California are not affected by the deal.

Charles Green describes injuries he suffered when shot with a stun gun in August. The FBI is investigating whether excessive force was used in the case.

A new study has found that the type of Taser stun gun used most by police officers can fire more electricity than the company says is possible, which the study’s authors say raises the risk of cardiac arrest as much as 50 percent in some people.

The study, led by a Montreal biomedical engineer and a U.S. defense contractor at the request of the Canadian Broadcasting Corp., concluded that even stun guns firing at expected electrical levels carry some risk of inducing a heart attack. The study said the results raise questions about quality control.

The researchers’ analysis contradicts Taser’s position that electric shocks from the weapons cannot kill. Taser International Inc., based in Scottsdale, called the study flawed.

The guns are used by more than 12,000 police agencies across the country. Many authorities credit the weapon with preventing deaths and injuries to officers and suspects.

But since 2001, there have been more than 380 deaths after police Taser strikes in the U.S. and 26 in Canada.

Medical examiners have ruled that a Taser was a cause, contributing factor or could not be ruled out in more than 30 of those deaths.

The study, which authors say tested more Tasers than any previous independent review, examined 44 stun guns being used today by seven undisclosed U.S. police agencies.

It found that four would not fire at all or fired improperly and that four others produced from 47 percent to 58 percent more power than the manufacturer specified.

Taser officials acknowledged the possibility of a higher-than-normal initial charge in weapons not first given a “spark test” to ensure they are in proper working condition. They insist this does not affect safety.

Treasury Secretary Henry Paulson speaks during a news conference at the Treasury Department in Washington, on Wednesday.

WASHINGTON – Treasury Secretary Henry Paulson called autos a “critical industry” Wednesday but said a $700 billion financial rescue program wasn’t designed for them. The White House was noncommital, but said it was open to new ideas.

Asked about Democratic a congressional leadership plan to rush financial aid to the industry, Paulson cautioned that “any solution has got to be leading to long-term viability” for auto companies.

He said Congress could try to make funding more available to the auto industry as part of a $25 billion loan program approved in September to develop fuel-efficient vehicles.

At the White House, press secretary Dana Perino said the administration is not responsible for the automakers’ woes but understands the importance of the industry. But officials there are reluctant to make any proposals for new aid, suggesting the car companies hold much of the responsibility for their own survival.

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid are pushing for something more sweeping to help the industry, which is suffering under the weight of poor sales, tight credit and a sputtering economy.

Pelosi said Tuesday she was confident that lawmakers meeting next week in a lameduck session would consider “emergency and limited financial assistance” for the auto industry under the $700 billion bailout measure that passed Congress in October. She urged the outgoing Bush administration to support a compromise.

“In order to prevent the failure of one or more of the major American automobile manufacturers … Congress and the Bush administration must take immediate action,” said Pelosi, D-Calif.

Reid, D-Nev., said that Democrats were “determined to pass legislation that will save the jobs of millions” as part of a postelection session. “This will only get done if President Bush and Senate Republicans work with us in a bipartisan fashion, and I am confident they will do what is right for our economy,” he said.

The Bush administration has concluded that the bailout bill that passed earlier does not allow loans to the auto industry.

White House spokeswoman Dana Perino said the companies had made business decisions “over the years that have led to this situation, but we have gone as far as we can with the authority Congress has given in order to help industries.” But she said the White House was open to helping the auto industry.

Lawmakers are expected to take up the issue when they return to the Capitol for a postelection session beginning next week.

Democratic leaders will need to convince some skeptical lawmakers who question whether a bailout would cause changes in the auto industry or simply lead to more handout requests from other industries.

“Once we cross the divide from financial institutions to individual corporations, truly, where would you draw the line?” asked Sen. Jeff Sessions, R-Ala.

Michigan Gov. Jennifer Granholm said Wednesday that the crisis in the auto industry is urgent, arguing that “the national economy rests on this.”

“This industry supports one in 10 jobs in the country,” Granholm said Wednesday on CBS’ “Early Show.” “If this industry is allowed to fail, there would be a ripple effect throughout the nation.”

She added: “This government decided that it was going to step in and throw $700 billion at the financial sector. We’re just asking for a fraction of that.”

Pelosi said any assistance to the industry should include limits on executive compensation, rigorous government review authority and other taxpayer protections.

Her request for legislation came less than a week after General Motors Corp. and Ford Motor Co. posted bleak third-quarter earnings reports. GM, the nation’s largest automaker, posted a $2.5 billion quarterly loss Friday and warned that it may run out of money by the end of the year without government aid.

“We’re in a situation where there’s a great unknown about what will happen,” said Sen. Debbie Stabenow, D-Mich. “And a great concern that at least one of the companies will find themselves in a situation where they cannot make it until January 20,” when President-elect Obama is inaugurated.

GM spokesman Greg Martin said the automaker was “ready to work with Congress and the administration to secure the immediate support we need to bridge the current economic crisis.”

Obama has urged the Bush administration to do more to help the industry and aides said he raised the issue with President Bush on Monday in an Oval Office meeting. Officials familiar with the conversation said the president replied he was open to the idea.

Congress approved legislation in late September to provide $25 billion in loans to domestic automakers and suppliers to upgrade factories to build more fuel-efficient vehicles. But the funding has stalled and supporters of the industry say it will not be sufficient to help the companies with their immediate financial problems.

Executives with GM, Ford and Chrysler LLC and the president of the United Auto Workers union pressed Pelosi and Reid to provide an immediate $25 billion loan to keep the companies operating and a separate $25 billion to help cover future health care obligations for retirees and their dependents.

Pelosi’s statement did not specify the size of the aid package. She has tasked Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, to draft legislation, and a companion effort is under way in the Senate.

Sen. Carl Levin, D-Mich., said lawmakers from his state are crafting legislation that would allow the auto industry to receive $25 billion in loans under the $700 billion bailout program.

Fannie Mae posts $29B loss in third quarter; Fed approves AMEX’s bank holding request

Struggling Circuit City files for bankruptcy

RICHMOND, Va. – Facing pressure from vendors and consumers who aren’t spending, Circuit City Stores Inc. filed for bankruptcy protection Monday as it heads into the busy holiday season with hopes that move will help it survive.

Under Chapter 11 protection, the nation’s second-biggest electronics retailer can keep operating while it develops a reorganization plan. Its Canadian operations also filed for similar protection.

The Associated Press

Fannie Mae posts $29B loss in third quarter

WASHINGTON – Fannie Mae on Monday posted a $29 billion loss in the third quarter as it took a massive tax-related charge, and said it may have to tap the government’s $100 billion lifeline in the coming months.

The mortgage finance company, seized by federal regulators more than two months ago, posted a loss of $13 per share for the July-September quarter, mainly due to a $21.4 billion noncash charge to reduce the value of tax assets.

The Associated Press

Fed approves AMEX’s bank holding request

The Federal Reserve has granted the request of credit card giant American Express Co. to become a bank holding company.

The Fed announced late Monday that it had approved the application for American Express and a related company, American Express Travel Related Services Co. Inc., to become bank holding companies.

The surprise announcement would give American Express access to low-cost financing from the Federal Reserve.

The Associated Press

Nancy Pelosi

WASHINGTON – Democratic aides say Speaker Nancy Pelosi intends to seek legislation to provide relief to the battered auto industry, and wants it done in a post-election session of Congress likely to convene in the next few days.

Pelosi is not expected to specify how large a bailout she wants. The aides who described her views Tuesday did so on condition of anonymity, saying they were not authorized to discuss it publicly.

The speaker’s decision comes a few days after General Motors warned it is rapidly running out of cash, and Ford announced its situation was only slightly better.

President Bush would have to agree to sign the legislation, which would be passed well before President-elect Obama takes office.

CHARLOTTE, N.C. – American International Group Inc. on Tuesday defended itself against a media report of a sales meeting held at a luxury resort in Phoenix last week, saying the event was an “essential training meeting.”

ABC News reported details of the event late Monday, the same day the U.S. government announced a restructuring of a bailout plan for the insurer, boosting aid to the company to around $150 billion – even after the company said months ago it would stop “all nonessential conferences, meetings and activities that do not clearly maximize value and service given the current conditions.”

“We reviewed this one. This one did not slip by,” AIG spokesman Nick Ashooh said Tuesday. “Some of the things we’ve done in the past certainly can be criticized, but this was a totally legitimate event that wasn’t even for AIG employees.”

Company officials said the meeting, held at the Pointe Hilton Squaw Peak Resort, was a sales training and education conference for about 150 independent financial advisers in its AIG Advisers Group.

“It is essential for AIG to conduct seminars of this kind to keep independent financial planners abreast of investment products and services including those offered by AIG,” AIG Chief Executive Edward Liddy said in a statement.

While some AIG employees were present, the cost was “minimal” to AIG, with more than 90 percent of the event paid for by attendees or by sponsors, Ashooh said.

“It’s the way we do business. We have to hold these events,” he said. “You have to hold them somewhere.”

Financial planners were responsible for generating almost $200 million in revenue this year for AIG as of Sept. 30, the company said.

In recent months, AIG has come under fire for picking up a $440,000 tab for a weeklong retreat at the posh St. Regis Resort in California for top-performing insurance agents, just days after the U.S. government stepped in to save the company with a $85 billion taxpayer-funded loan. AIG also spent $86,000 for a hunting trip in England as the faltering company reaped another $37.8 billion in taxpayer funded loans.

Lawmakers investigating AIG’s meltdown said they were enraged that executives of AIG’s main U.S. life insurance subsidiary spent $440,000 on the retreat, complete with spa treatments, banquets and golf outings.

Company officials said the activities had been planned months before the bailout. On Oct. 10, the company pledged to do everything possible to end such extravagances and has since agreed to freeze millions of dollars in compensation and bonuses for former executives.

The most recent event held in Phoenix, came as the government announced new financial assistance to AIG, including pouring $40 billion into the company in return for partial ownership.

Liddy said the company conducted a “top-to-bottom review of all expenses of the Phoenix meeting in advance and found that it was consistent with my Oct. 10 directive.”

The company has canceled more than 160 events since, AIG officials said.

“This conference was approved because it provides the kind of communication we must conduct with the people who sell our products if we are to be successful and repay the U.S. taxpayer,” Liddy said.

Preston Boles of Greenwood, Miss., shops with his sons Preston II, 3, and Matthew, 2, at JCPenney in CoolSprings Galleria in Franklin, Tenn., on Oct. 30. Some retailers have already marked Christmas items half off in a bid to attract holiday shoppers.

This holiday season, retailers are racing to coax skittish consumers into spending more for Christmas by marketing themselves as budget stores, analysts said.

JCPenney Co. last month began selling all of its holiday decorations and artificial Christmas trees at 50 percent off, even before customers threw away their jack-o’-lanterns.

And discount stores may be getting a boost of sorts from the economic downturn. Many shops say they’re selling more toys that appeal to cost-conscious consumers seeking bargains for their children this year.

“You’re looking at probably the biggest deal mindset in the history of America,” said Britt Beemer, chairman of Charleston, S.C.-based America’s Research Group. “Whoever has the biggest deal is going to win.”

That bargain-basement atmosphere comes as consumer confidence plunged to a 41-year low in October, according to New York-based The Conference Board, a pro-business trade group.

Add up all of America’s jitters about rising unemployment, the uncertain stock market and weaker home sales, and it’s no wonder that shoppers’ confidence has taken a big jolt. Meanwhile, the U.S. Commerce Department said last week that consumer spending fell by 0.3 percent in September after two previous months in which spending was essentially flat.

The national financial outlook is dimming just as the critical holiday shopping season looms, and stores from New York City to Lower Broadway in Nashville are bracing for what could be one of the most difficult yuletide seasons on record.

David Wyss, chief economist at Standard & Poor’s in New York, said he believes the national recession could turn out to be the longest-running one in the post-World War II era.

“Things are still looking soft and the light at the end of the tunnel is a long way off,” he said.

So, the question becomes: Will local consumers stash their credit cards and keep a tight grip on their wallets? Or can any retail strategy entice them to buy?

Shoppers cut back

Winners this holiday shopping season could be those stores that sell more practical gifts – or merchandise that’s perceived as such a big bargain that shoppers can’t say “no.”

Bargains abound, but not every consumer is buying just yet.

Even half-price glass ornaments and Disney snow globes at JCPenney’s in CoolSprings Galleria couldn’t entice podiatrist Preston Boles, 45, to buy last week. Instead, Boles said his family planned to revamp its old decorations and put up a 4-year-old artificial Christmas tree.

“We have to reuse the old,” Boles said, adding that heavy discounts in stores are a “reflection of the economy. It’s sad.”

Boles said he’ll still browse the big department stores – like Belk and Dillard’s – but this year, he said he’ll cut his holiday gift spending in half to $1,000 and shop at Wal-Mart and Target to save a few bucks.

In fact, 68 percent of shoppers surveyed said they plan to do more shopping at such stores this year compared with 2007, according to an October survey by New York-based GfK Roper Consulting.

“The No. 1 reason was that (consumers believed) things are cheaper there,” said Executive Editor Diane Crispell of GfK Roper Consulting. “People feel they can get the same goods at the lower price.”

Discounters can take risk

Crispell said that, in a challenging environment, “a little bit of risk is a smart approach” for discounters such as Aldi that are adding new products. Discounters know more consumers will enter their stores looking for deals, she added.

“If anybody can take a risk right now, it’s the discounters,” Crispell said.

Stores such as Dillard’s, Sears or JCPenney in the middle of the retail sales spectrum will probably market themselves as “value” retailers this Christmas, Crispell said.

“The real key word is ‘value.’ I don’t think you have to lower your prices to the floor to compete with Wal-Mart,” she said. “You just need to convince people the money they are spending with you is worth it.”

Consumers will tend to stay away from buying expensive items like flat-screen TVs or laptop computers and go for less-expensive gifts such as sweaters or warm-up suits, stock analyst Richard Jaffe of Stifel Nicolaus predicts.

“The economy is under a great deal of pressure,” Jaffe said. “From a psychological level, there is a lot of uncertainty and doubt about the economy … and that just heightens the consumer’s reluctance to spend.”

In this file photo, a Southwest Airlines plane takes off while another taxis on the runway at Los Angeles International Airport. Southwest executives are overseeing a technology makeover that will allow it to, among other things, work with partner airlines to sell tickets for international travel.

DALLAS – One of the knocks on Southwest Airlines — you’ll hear it from fans of other carriers — is that you can’t fly to London or Paris on one of its planes.

That won’t change right away, but Southwest is finally taking baby steps into international service.

This week, it announced a deal to sell travel to Mexico in 2010 with partner Volaris, a well-financed Mexican carrier that is just two years old. Southwest has already said it would team with WestJet to offer U.S.-Canada travel by late 2009.

Southwest executives are overseeing a technology makeover that will modernize its reservations system to handle more international travel. They are talking to other carriers about service to Hawaii and the Caribbean.

Competitors are paying close attention. Some may fear that Southwest Airlines Co. could emerge as a low-cost rival on their lucrative international routes, just as it pushed beyond Texas and grew into the nation’s largest carrier by number of domestic passengers.

Others are courting Southwest. Last month, the chief executive of AirTran Airways said he would like to talk to Southwest about selling seats on each other’s planes and sharing the revenue.

Such arrangements are called code-sharing, because one airline puts its name or code on a flight operated by the other.

Code-sharing is considered a low-risk way for airlines to expand their networks without the added cost of more planes and employees. It figures to be a particularly important strategy for Southwest, which is alone among the nation’s major carriers in not belonging to one of three big global alliances or teams of airlines.

Go-it-alone Southwest’s first foray into code-sharing was an afterthought — part of a move to expand at Chicago’s Midway Airport in 2004. Southwest acquired six gates that had been controlled by ATA Airlines in exchange for making a cash infusion into ATA and beginning a marketing joint venture.

Southwest said it took in $50 million in revenue from the code-sharing deal in 2005. An extra benefit — the best part of the deal for some travelers — was that Southwest customers could cash in frequent-flier points for free trips on ATA to Hawaii, which Southwest does not serve.

Soon Southwest was considering expanding the partnership to include selling seats on ATA flights to Canada, Mexico and the Caribbean. But ATA weakened and cut flights. It filed for bankruptcy and stopped flying in April. Undetered by ATA’s demise, Southwest’s interest in code-sharing possibilities grew.

The timing for such agreements is also important.

Since 2001, Southwest has enjoyed fortress-like strength in the troubled U.S. airline industry, earning consistent profits because it bet right on the direction of oil prices several years ago.

But the castle walls are showing cracks.

Last month, Southwest reported its first quarterly loss since early 1991. Its wildly successful fuel-hedging bets are winding down and losing value. Its once enormous financial advantage over other airlines is shrinking.

To avoid big losses or draconian spending cuts, Southwest must raise more money — and fast.

The airline aims to increase revenue by $1.5 billion, and international code-sharing could contribute “several hundred million dollars” a year toward that goal, said CEO Gary C. Kelly.

In July, Southwest announced that by the end of 2009 it would launch service between the U.S. and Canada with WestJet Airlines Ltd. Details such as destinations, fares and revenue forecasts have not been disclosed.

Southwest officials say they have been talking to nearly a dozen airlines about code-sharing to Hawaii, Mexico and the Caribbean by late 2009 — Europe and Asia would be farther down the road.

“We want to start off regionally. It’s simpler,” said Richard Sweet, who leads a group at Southwest that is studying code-sharing possibilities.

“WestJet comes pretty close to the profile of an ideal code-sharing partner,” Sweet said. He said both WestJet and Southwest are low-cost, efficient, and emphasize customer service.

Like Southwest, WestJet flies only Boeing 737 aircraft and its reservations system runs on the same technology from Sabre Airline Solutions, which Sweet said was a plus. And both have only one class of service — no separate first-class cabins.

Sweet said travelers will be able to buy WestJet tickets on southwest.com this year, even before the code-sharing deal starts.

Volaris differs from WestJet — and Southwest — in some ways, including its fleet, which consists entirely of Airbus jets. But it is also a low-cost carrier that hopes to capitalize on consolidation taking place in the Mexican airline industry.

Kelly said the deal opens up attractive Mexican destinations to Southwest customers. Volaris flies to 23 cities in Mexico, from border cities to beach resorts including Cancun and Puerto Vallarta.

With deals done for Canada and Mexico, Southwest will turn now to finding partners to serve Hawaii and the Caribbean.

Sweet and Kelly declined to discuss potential partners, but industry experts all have their own favorites.

At the top of the list for several was Hawaiian Airlines Inc., to replace service lost when ATA went under.

“Hawaiian would be the obvious choice for Southwest,” said Robert Mann, an independent airline consultant in Port Washington, N.Y. “In the absence of Aloha” — which failed this year — “it’s the dominant carrier in the islands.”

Mann said Southwest could team with AirTran or Spirit Airlines to sell seats to the Caribbean, although Spirit “is even more bare-bones of an operation than Southwest by a long stretch.”

Whoever it picks, Mann said, partners will insist that Southwest begin assigning passengers to seats to match the practice of other airlines. Southwest considered such a move last year but stuck with its open-seating plan in which those who check in first get the best seats.

George Hamlin, managing director of ACA Associates, an aviation consulting firm in Northern Virginia, said Alaska Airlines could open up flights to Hawaii and Mexico.

Some analysts said Southwest and WestJet could be the start of an alliance among low-cost carriers in the Western hemisphere, perhaps including a low-cost South American carrier such as Brazil’s Gol.

“It’s exciting that the LCC (low-cost carrier) sector finally is thinking about international service,” said William Swelbar, a former director at Hawaiian who now runs an airline data project at MIT. “WestJet is the first step. We’ll see fares to Canada come down … that’s always good for consumers.”

Kelly has said Southwest wants to sell seats to Europe after 2010. Analysts said Irish discount carrier Ryanair and its U.K. rival, EasyJet, are logical partners.

But not everyone thinks Southwest will find a partner to fly its budget-conscious customers across the Atlantic.

“The last thing an international carrier wants is low-fare trash in the back of the plane,” said Mike Boyd, an airline consultant in Colorado. “And Southwest doesn’t need Europe.”

Southwest officials are not ruling out doing some international flying with their own jets instead of relying on partners. But code-sharing is simpler — an important factor for Southwest, which likes simplicity, right down to offering only one kind of snack, peanuts.

“Partners provide branding and marketing on the other end,” Southwest’s Sweet said of code-sharing. “You learn about the market. It’s a lot easier.”

Oil prices fell to near a 20-month low of $60 a barrel Tuesday as hopes waned that a huge Chinese spending plan will do much to avert a prolonged slowdown in the global economy.

Light, sweet crude for December delivery was down $1.95 to $60.46 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. Earlier in the session, it fell as low as $59.32 before rebounding.

The contract overnight rose $1.37 to settle at $62.41.

In London, December Brent crude fell $1.84 to $57.21 a barrel on the ICE Futures exchange.

Oil closed at $60.77 on Nov. 6, the lowest closing price since March 2007, and has fallen about 59 percent since reaching a record $147.27 in mid-July.

Analyst Olivier Jakob of Petromatrix in Switzerland noted the high volatility accompanying falling prices.

While the Nymex contract is now trading near first-half 2007 prices, the difference then between daily highs and lows was around $1.50 a barrel, while now the average daily range is around $5.50 a barrel with recent daily peaks at $9.50, Jakob said.

Oil prices and stock markets jumped Monday after China said it planned to spend $586 billion in a bid to spur economic growth. But pessimism soon returned as investors focused again on a swooning U.S. economy, which faces its worst recession in decades.

Most Asian and European stock markets fell Tuesday, following the lead of the Dow Jones industrials average, which dropped 0.8 percent Monday and was down another 1.9 percent Tuesday. Japan’s benchmark Nikkei 225 index slid 3 percent Tuesday, Hong Kong’s Hang Seng index dropped 2.9 percent, while London’s FTSE and Germany’s DAX indexes were both down around 2.5 percent.

“The market is realizing that (Chinese) package can’t prevent us from sliding into the mess we’re heading toward,” said Toby Hassall, an analyst with Commodity Warrants Australia in Sydney. “The economic outlook is pretty bleak.”

Investors are grappling with how bad the recession in the U.S. could be, as government statistics and company results reflect an abrupt slowdown in consumer demand, bank lending and investment during the second half of the year.

Crude demand from the U.S., the world’s largest consumer of energy, is a key driver of oil prices.

“We saw extremely poor car sales and pretty shocking unemployment numbers from the U.S. last week,” Hassall said. “It wouldn’t surprise me if oil edged down toward $50.”

U.S. car sales fell to a 25-year low in October while the unemployment rate shot to a 14-year high of 6.5 percent last month.

Oil prices fell despite signs that OPEC members are going ahead with production cuts agreed to at an emergency meeting in Vienna, Austria, last month.

Saudi Arabia told refiners in Asia on Monday that it would reduce supplies in December by around 5 percent, said Sucden Research in London.

Many analysts are expecting another cut by the Organization of Petroleum Exporting Countries, which will hold an extraordinary meeting on Dec. 17 in Oran, Algeria.

The prime minister of Qatar said Tuesday that “fair” oil prices of between $70 to $90 per barrel would ensure that expensive oil exploration could continue, avoiding price spikes in the future.

Sheikh Hamad Bin Jassim Bin Jabr Al-Thani said that while oil prices below $70 a barrel would help consumers in the short term, it later could trigger price rallies.

Lower prices mean weaker investment and lower output from oil producers, which risks boosting oil prices once global economic growth picks up again.

Militants in Nigeria on Monday resumed attacks on the country’s oil installations. The military said it killed eight people while guarding a facility in the oil-rich south of the country.

The Movement for the Emancipation of the Niger Delta, the region’s main militant umbrella group, said it wasn’t involved in any fighting. The military didn’t say which militant faction the dead fighters represented.

Militants frequently attack oil facilities, seeking to hobble Africa’s biggest petroleum industry and force Nigeria’s federal government to send more oil funds to the southern states where the crude is pumped.

“The focus of the market has really been on the demand side,” Hassall said. “I’d be surprised if supply side issues in Nigeria could change the mood of the market.”

In other Nymex trading, heating oil futures fell 3.66 cents to $1.969 a gallon, while gasoline prices dropped 4.10 cents to $1.3269 a gallon. Natural gas for December delivery slid 10.3 cents to $7.145 per 1,000 cubic feet.

Associated Press writer Alex Kennedy in Singapore contributed to this report.

President Bush walks with President-elect Obama down the Colonnade to the Oval Office of the White House in Washington, on Monday.

WASHINGTON – President-elect Obama suggested to President Bush that the administration immediately provide extra help to struggling U.S. automakers, aides to the Democrat say, in their first face-to-face meeting since Election Day.

Obama’s aides said the president-elect brought up the issue with Bush during their two-hour White House talks on Monday, expressing his view that action is needed now, not just to help the U.S. companies but also the broader economy, because of their enormous reach. Obama raised the idea of an administration point person on autos with a portfolio aimed at improving the long-term health of the companies.

Bush repeated his position, recently stated by staff, that he is open to helping the automakers.

Also, amid discussions over whether new economic stimulus spending is needed, Obama focused on his desire for it while Bush stressed that his main priority for any postelection action out of Congress is approval of a long-stalled free trade agreement with Colombia, said people familiar with the conversation between the two men. The sources declined to be named publicly because of the private nature of the talks.

Reflecting the delicate dance of a meeting between outgoing and incoming presidents — one still in charge and one about to be — neither man made the kind of direct requests of nor dealmaking commitments to the other that could violate unspoken protocols covering the transfer of power in American history. However, each made sure the other knew what they want.

“In no way did the president suggest that there was a quid pro quo,” said White House press secretary Dana Perino. But, she added, “he did talk about the merits of free trade.”

The Illinois senator’s spokesman, Robert Gibbs, said only that the discussion involved “the broad health of the industry” and was not just limited to any one of the three largest car makers.

Perino said Bush described the meeting as “constructive, relaxed and friendly,” covering problems at home and abroad and his personally pledge for a smooth transition.

There clearly is momentum building for some new aid to automakers.

In September, Congress approved $25 billion in loans to automakers to help them retool plans to build more fuel-efficient vehicles, and thus become more solid and profitable competitors in the global marketplace. Though the administration is working to give automakers quick access to that money, it still would likely not come fast enough — or in big enough amounts — to satisfy the drowning companies.

Over the weekend, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid asked the administration to consider expanding the $700 billion bailout for financial firms to include car companies. The administration has concluded the law doesn’t allow automakers to be eligible under the main, stock-purchase part of the program.

“We don’t see anything in there that would give us the authority to help individual industries,” Perino said Tuesday. “We have gone as far as we can with the authority given us.”

At a news conference last Friday, Obama called automakers “the backbone of American manufacturing” and said he hoped the administration would “do everything it can to accelerate the retooling assistance.” Perino said Monday it was open to that, and would listen to lawmakers’ ideas for making more loans available or for clarifying the bailout law to make clear that other industries beyond banks qualify.

The debate comes as General Motors, Ford and Chrysler are burning through cash and bleeding jobs. Analysts are predicting that G.M., in particular, might not last the year without a government bailout.

Associated Press writers Nedra Pickler, Liz Sidoti and Deb Riechmann contributed to this story.

NEW YORK – Homebuilder Toll Brothers Inc. and coffee chain Starbucks Corp. helped send Wall Street sharply lower Tuesday after giving investors more evidence that the housing market and consumer spending are getting weaker. The Dow Jones industrial average sank more than 240 points.

With the government and bond markets closed for Veterans Day, no economic reports are scheduled. But corporate earnings reports were enough to show investors that the economy is still flagging, perhaps more than Wall Street has anticipated.

Starbucks reported lower sales across the coffee chain, leading to profits that fell below analysts’ expectations. The quarter’s results came at the end of a transition year for the coffee retailer, in which former Chief Executive Howard Schultz returned as CEO and chairman.

Meanwhile, Toll Brothers said fourth-quarter revenue fell 41 percent from the year-ago period. Chairman and Chief Executive Robert Toll said in a statement the company was “upended by the past month’s financial crisis,” and that the economic uncertainty made it difficult to predict what its profit would be next year.

And the nation’s automakers are growing source of anxiety for the market. General Motors Corp., whose shares plunged on Monday to their lowest point in 60 years, late Monday said it would cut 1,900 factory jobs on top of the 3,600 cuts announced Friday. Some industry analysts predict the automaker will collapse without a government bailout.

“We’re in a situation where we really don’t know how deep a recession we’re in,” said Jim Herrick, manager of equity trading at Baird & Co. “Until there’s some clarity on the econony and clarity with earnings, we’ll definitely be stuck in this trading range.”

In midmorning trading, the Dow Jones industrial average shed 245.16, or 2.76 percent, to 8,625.38.

Broader stock indicators also fell. The Standard & Poor’s 500 index fell 26.99, or 2.94 percent, to 892.22; and Nasdaq composite index dropped 41.71, or 2.32 percent, to 1579.31.

Starbucks shares fell 34 cents, or 3.3 percent, to $9.86 after the coffee seller released its earnings.

Toll Brothers fell 46 cents, or 2.4 percent, to $18.49.

GM shares fell 55 cents, or 17 percent, to $2.81.

Analysts say the market, while perhaps in the process of bottoming out after October’s huge losses, will keep seeing volatility for some time to come.

Investors are also waiting to find out if the government will send another round of stimulus checks to consumers, who have been curbing their spending — and not just discretionary spending — in the face of lost jobs, plunging home prices, and tight credit.

Third-quarter earnings declines from Vodafone Group PLC, the world’s biggest mobile phone company by sales, and InterContinental Hotels Group PLC, the owner of the Holiday Inn hotel chain, revealed sharp pullbacks in consumer spending. And more companies announced job cuts Tuesday, notably Altria Group and Swedish vehicle maker Volvo AB.

Meanwhile, the financial sector was under scrutiny again. Soon after ailing insurer American International Group Inc. got more money from the U.S. government, American Express Co. won approval late Monday from the Federal Reserve to become a commercial bank. That will allow the credit card giant to accept deposits and permanently access government financing that’s been used by other banks amid the credit crisis.

And Citigroup became the latest major bank, after similar actions by JPMorgan Chase & Co. and Bank of America Corp., to announce that it will try to keep borrowers at risk of foreclosure in their homes. The government is working on a plan to help around 3 million borrowers avoid foreclosure, too, but details have not been released yet.

Citigroup fell 41 cents, or 3.7 percent, to $10.79.

American Express fell $1.29, or 5.4 percent, to $22.70.

One bright spot for Americans has been a tumble in oil prices. Crude sank below $60 a barrel Tuesday for the first time in about 18 months as optimism waned that a huge economic stimulus plan in China will avert a prolonged slowdown in the global economy. Light, sweet crude for December delivery fell $3.22 at $59.19 a barrel on the New York Mercantile Exchange.

The dollar was mostly higher against other major currencies, while gold prices fell.

The Russell 2000 index of smaller companies fell 8.50, or 1.72 percent, to 484.60.

Overseas, Japan’s Nikkei closed down 3 percent and Hong Kong’s Hang Seng fell 4.77 percent. In European trading, Britian’s FTSE 100 was down 3.18 percent, Germany’s DAX gave up 4.48 percent, and France’s CAC-40 fell 4.37 percent.

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On the web

New York Stock Exchange: www.nyse.com

Nasdaq Stock Market: www.nasdaq.com

WASHINGTON – In the most sweeping effort so far to help troubled homeowners, the federal government and the mortgage industry on Tuesday will announce a plan to streamline the assistance process for hundreds of thousands of delinquent loans held by Fannie Mae and Freddie Mac.

The Federal Housing Finance Agency, which seized control of the two mortgage finance companies in September, scheduled a press conference for 2 p.m. EST. Scheduled to attend were officials from the Treasury Department, Wells Fargo & Co., the Department of Housing and Urban Development and Hope Now, an alliance of mortgage companies organized by the Bush administration last year.

An industry official who worked on the plan said the new approach will allow lenders to modify more delinquent loans by establishing broad criteria to speed up the process. The official spoke on condition of anonymity because details had not been announced.

The new initiative will likely have tremendous importance because Fannie Mae and Freddie Mac own or guarantee about half of U.S. home loans.

To qualify, borrowers would have to be at least three months behind on their home loans, and would need to have home loans worth at least 90 percent their house’s value. The interest rate or principal amount of the loan would be reduced so that borrowers would not pay more than 38 percent of their income on housing expenses, the industry official said.

The announcement comes as major banks are stepping up their efforts to curtail losses from souring mortgages. More than 4 million American homeowners with a mortgage were at least one payment behind on their loans at the end of June, and 500,000 had started the foreclosure process, according to the most recent data from the Mortgage Bankers Association.

Citigroup announced late Monday it is halting foreclosures for borrowers who live in their own homes, have decent incomes and stand a good chance of making lowered mortgage payments. The New York-based banking giant also said it is also working to expand the program to include mortgages for which the bank collects payments but does not own.

Additionally, over the next six months, Citi plans to reach out to 500,000 homeowners who are not currently behind on their mortgage payments, but who are on the verge of falling behind. This represents about one-third of all the mortgages that Citigroup owns, the bank said.

Citi plans to devote a team of 600 salespeople to assist the targeted borrowers by adjusting their rates, reducing principal or increasing the term of the loan.

Late last month, JPMorgan Chase & Co expanded its mortgage modification program to an estimated $70 billion in loans, which could aid as many as 400,000 customers. The New York-based bank has already modified about $40 billion in mortgages, helping 250,000 customers since early 2007.

Bank of America, meanwhile, has said that starting Dec. 1, it will modify an estimated 400,000 loans held by newly acquired Countrywide Financial Corp. as part of an $8.4 billion legal settlement reached with 11 states in early October.

AP Business Writer Sara Lepro contributed to this report.

WASHINGTON – American Express wants your deposits.

The Federal Reserve on Monday granted AmEx’s request to become a commercial bank, opening the door for the credit card giant to accept deposits and permanently access financing from the Fed.

The Fed said it had approved the application for American Express and a related company, American Express Travel Related Services Co. Inc., to become bank holding companies.

The approval represented the latest reshaping of the financial services industry, which is undergoing its worst credit crisis in decades.

In announcing the action, the Fed cited “emergency conditions.” AmEx filed its application with the Fed on Nov. 5.

The Fed’s approval for American Express was similar to the decision it made in September to transform the country’s two biggest investment banks, Goldman Sachs Group Inc. and Morgan Stanley, into bank holding companies.

That move bolstered the two institutions after the collapse of Lehman Brothers, which became the largest bankruptcy filing in U.S. history. The investment banks’ troubles stemmed from bad bets on the housing market, including mortgage-backed securities.

In the case of AmEx, with more consumers having trouble paying their bills, it’s seen the value of its primary assets decline. That’s made it harder for the company to borrow to pay for daily operations.

In a statement, AmEx said becoming a bank holding company will give it “maximum flexibility and stability in this challenging economic environment.” In exchange for Fed oversight, AmEx said it wants “greater access” to government-sponsored financial assistance programs.

The company revealed severe financial troubles late last month, when it laid off about 7,000 people, or 10 percent of its global work force, and said it did not expect to meet its targets until the economic climate improved.

The transformation of AmEx into a commercial bank opens it up to “an infusion of funds,” said Red Gillen, a credit card analyst with research and consulting firm Celent LLC. “You can’t let AmEx fail, is basically what the Fed is deciding.”

AmEx last month reported that its profit fell 24 percent in the third quarter as cardholders restrained their spending and had more trouble paying off debt.

In its quarterly filing with the Securities and Exchange Commission on Oct. 31, the company said it expected write-offs in its credit card portfolio to continue to increase in the fourth quarter and into next year.

The New York-based company has reported four straight quarters of profit declines as a rising number of consumers struggle in the face of the worsening economic downturn.

While Morgan Stanley and Goldman Sachs became bank holding companies in September, AmEx is the first card company to do so.

“It’s showing the trickle-down effect. This isn’t for mortgages; this is for cards,” Gillen said. “Credit cards were kind of the credit source of last resort. You could borrow against that as long as your credit wasn’t reduced. People have gone from mortgages to home equity loans to credit cards.”

Sung Won Sohn, an economist at the Smith School of Business at California State University, said that as a bank holding company, AmEx hopes to greatly expand its resources and avoid the fate of other companies that had to depend heavily on commercial loans to operate.

“As a bank holding company, they will have a lot more flexibility,” Sohn said.

Alitalia attendants, pilots to strike Nov. 25

ROME – Unions for Alitalia pilots and flight attendants have called a strike for Nov. 25.

The unions say it will be the first in a series of one-day strikes to protest a plan by Italian investors to rescue the ailing airline by laying off workers and cutting routes.

Alitalia’s bankruptcy administrator has warned against strikes, but the unions said in a statement Sunday that they also plan 14 days of walkouts between December and May.

The investors have made a binding offer to acquire Alitalia and hope a foreign airline will eventually come aboard as a partner. Some unions have agreed to the deal.

WASHINGTON – Airports across the country will have designated security lanes for families to move through preflight inspections at their own pace, just in time for the busy Thanksgiving travel season.

The Transportation Security Administration is expanding its family lanes to every security checkpoint in the country by November 20. The popular lanes, which have been tested at 48 airports, provide a space for families and passengers who don’t travel very often to move through security at their own pace.

People who carry prohibited items for medical needs — such as cough syrup, insulin, contact lens solution and breast milk or baby formula — will also be directed to the family lanes, the TSA said.

“Expanding these lanes to every airport and directing families and passengers with medically necessary liquids to them, increases passenger convenience and security,” TSA Administrator Kip Hawley said in a statement Monday.

In August 2006, the TSA changed its screening policies after officials foiled a plot to use liquid explosives to blow up commercial airlines headed toward the U.S. Intelligence officials remain concerned that terrorists could carry liquid explosives onto planes.

The government is testing equipment that scans liquids for explosives and hopes to lift the restriction in the future.

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On the web

TSA: www.tsa.gov