Gym revokes woman’s membership over call

A Westwood woman learned there's a limit to how much free speech you can exercise at the gym, after Planet Fitness yanked her membership for yakking on a cell phone while working out.

Tina Santoro Asmar said she got the boot after answering an unexpected call from her doctor's office while training on the elliptical at the Planet Fitness in Dedham on Thursday.

That violated a rule restricting cell phone use to the lobby, but the 49-year-old owner of Santoro's Sicilian Trattoria in Dedham claims the gym's general manager violated the chain's "no gymtimidation" mantra with his "bizarrely angry" crackdown.

"He was enraged," Asmar said, adding she didn't want to leave the workout area because her iPad was plugged into the elliptical machine. "I said I'd be off in a minute. He said, 'I said now.' His demeanor was very threatening. I said, 'Oh, please, please step away from me,' and he continued to say, 'No, I need you to hang up that phone now or I'm going to cancel your membership.' "

But club co-owner Brian Kablik, a franchisee with eight Planet Fitness locations, said a regional manager witnessed the incident, and it was Asmar who was belligerent.

"This is a member that's had repeated issues and incidents with cell phone use," Kablik said. "I can assure you that our manager would not be treating a member poorly. Her reaction, when she was approached in a professional way, was extremely unprofessional and rude and dismissive."

Planet Fitness — a New Hampshire-based chain known for its "judgment-free zone" and "no lunk" policy against members grunting while lifting weights — has about 10 "no cell phone" signs posted throughout each of its 620 clubs to ensure a comfortable environment for members, Kablik said. The policy is aimed at preventing members from being interrupted by loud phone conversations, and it also eliminates concerns about video recording or photographs of people in their exercise outfits.

New York attorney Lori Pines, author of "The Little Book of Gym Etiquette: A Handbook for Dealing with Annoying People at the Gym," said she sides with Planet Fitness. While no one should be treated rudely, cell phone calls in the middle of gyms are problematic, she said.

"I sympathize with the gym here ... especially since she's been warned before, and it's a posted rule," Pines said. "She couldn't have been in a dire medical emergency, because she was in the middle of working out."

Asmar said she understands that cell phone use can be annoying in certain situations, but she felt mistreated by Planet Fitness.

"I'm not asking for my money back or anything, just an apology," she said.

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Budget cuts to hit military school districts first

FORT HOOD, Texas — Public schools everywhere will be affected by the government's automatic budget cuts, but few may feel the funding pinch faster than those on and around military bases.

School districts with military ties from coast-to-coast are bracing for increased class sizes and delayed building repairs. Others already have axed sports teams and even eliminated teaching positions, but still may have to tap savings just to make it through year's end.

But there's little hope for softening any future financial blows.

"Next year is scarier than this year," said Sharon Adams, chief financial officer for Muscogee County schools in Georgia. The district serves the U.S. Army's Fort Benning and could lose $300,000 in federal funding out of its $270 million in general funds before the end of the school — and more than four times that in 2013-2014.

The schools' losses will come from cuts to a federal program known as "Impact Aid" that supplements local property tax losses for districts that cover federal land, including military posts and Indian tribal areas. About 1,400 school districts serving roughly 11 million children nationwide — including nearly 376,500 students from military families — benefit from the aid, said Jocelyn Bissonnette, director of government affairs for the Washington-based National Association of Federally Impacted Schools.

Bissonnette said slightly more than 5 percent of funding would disappear from nearly all U.S. Department of Education programs under the automatic cuts. But while most of the reductions wouldn't take effect until next fall, Impact Aid could be immediately cut, with many districts failing to receive a scheduled payment in March.

In all, the U.S. Department of Education estimates districts receiving Impact Aid could see $60 million evaporate this school year.

"Classrooms will be fuller," said Sara Watson, principal of 810-student Meadows Elementary on Fort Hood, one of the world's largest military installations. Watson stressed that she doesn't yet know the full impact, but said an extra teacher for fifth and sixth grade science hired this year could be reassigned — which may mean squeezing kids into fewer classes.

Ninety-nine percent of parents at Meadows are in the military and a quarter of the teachers are married to active-duty personnel. But the campus is run by the school district in the surrounding community of Killeen, which has 52 campuses in all — including seven elementary and two middle schools on Fort Hood and about total 42,000 students.

As soldiers return from Iraq and Afghanistan, enrollment has swelled, increasing by 1,200 students annually in recent years — though next year likely will only see 500 additional students.

Overall, the district stands to lose at least $2.6 million in Impact Aid funding before the end of the school year under the automatic cuts. Superintendent Robert Mueller said the cuts amount to more than 50 teachers' salaries, roughly one per school, or five months' worth of district's electric bills — and may mean tapping into Killeen's cash reserves to cover expenses.

Other military districts have made pre-emptive cuts that now may not be enough.

In San Antonio, Randolph Field school district educates about 1,200 students from military families at the local Air Force base of the same name and draws 45 percent of its budget from Impact Aid. Officials this year eliminated high school math and science teaching positions and cut baseball, cross-country and swimming.

But even then, the district expected to get $5.3 million in Impact Aid. Randolph Field may now get about $1 million less — meaning it will have to use reserve funds to finish the year.

"If we get it, we'll end the year in the black," Lorrie Remick, the district's chief financial officer, said of the year's final Impact Aid payment. "If not, we'll have a deficit for the first time in our history."

In North Carolina, Cumberland County Schools superintendent Frank Till, whose district has a total budget of $450 million and includes Fort Bragg, said he may forfeit about $800,000 for the remainder of the fiscal year — but that his primary concern is what might happen next year, when the district could be out about $3.2 million.

"If October comes and they've not restored our money, we'll have to completely eliminate schools from service and certainly have to cut back on staffing," Till said. "We'll have to cut back services to some of our most disadvantaged kids."

He volunteered some advice to policymakers: "Go out to Camp David and don't come back until you have a plan."

Ronald Walker, superintendent of Geary County Schools USD 475 in Kansas, which serves Fort Riley, offered a harsher sentiment: "I think it's arrogant for leaders to turn their backs on our soldiers."

Walker anticipated an Impact Aid cut as the country flirted with the "fiscal cliff" in January, so delayed repairs on school roofs and air conditioning systems. But the coming funding reductions look worse than he prepared for — likely meaning living with longstanding school plumbing problems

"I'm just going to ignore them," Walker said, "and hope."

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Associated Press writers Michael Biesecker in Raleigh, North Carolina, and Russ Bynum in Savannah, Georgia, contributed to this report.

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Boehner: No reason to block Keystone XL pipeline

WASHINGTON — A new State Department report is the latest evidence that the long-delayed Keystone XL oil pipeline from Canada should be approved, supporters say.

The draft report, issued Friday, finds there would be no significant environmental impact to most resources along the proposed route from western Canada to refineries in Texas. The report also said other options to get the oil from Canada to Gulf Coast refineries are worse for climate change.

The new report "again makes clear there is no reason for this critical pipeline to be blocked one more day," said House Speaker John Boehner, R-Ohio. After four years of what he called "needless delays," Boehner said it is time for President Barack Obama "to stand up for middle-class jobs and energy security and approve the Keystone pipeline."

Environmentalists see the State Department report in a vastly different light.

They say it was inadequate and failed to account for climate risks posed by the pipeline. The report also is based on a false premise, opponents say — namely, that tar sands in western Canada will be developed for oil production regardless of whether the Keystone XL pipeline is approved.

"Americans are already suffering from the consequences of global warming, from more powerful storms like Hurricane Sandy to drought conditions currently devastating the Midwest and Southwest," said Daniel Gatti of the group Environment America. Production of oil from Canadian tar sands could add as much as 240 billion metric tons of global warming pollution to the atmosphere, Gatti said, a potential catastrophe that would hasten the arrival of the worst effects of global warming.

Gatti and other opponents said development of the vast tar sands is far from certain, despite assurances by the project's supporters.

"Tar sands can be stopped, and we are stopping it," Gatti said, citing a rally in Washington last month attended by an estimated 35,000 people. Project opponents also have blocked construction in Texas and Oklahoma and have been arrested outside the White House gate.

The pipeline plan has become a flashpoint in the U.S. debate over climate change. Republicans and business and labor groups have urged the Obama administration to approve the project as a source of jobs and a step toward North American energy independence. Environmental groups have been pressuring the president to reject the pipeline, saying it would carry "dirty oil" that contributes to global warming. They also worry about a spill.

The State Department review stopped short of recommending approval of the project, but it gave the Obama administration political cover if it chooses to endorse the pipeline in the face of opposition from many Democrats and environmental groups. State Department approval of the 1,700-mile pipeline is needed because it crosses a U.S. border.

The lengthy report says Canadian tar sands are likely to be developed, regardless of whether the U.S. approves the Keystone XL pipeline, which would carry oil through Montana, South Dakota, Kansas, Nebraska and Oklahoma.

The report acknowledges that development of tar sands in Alberta would create greenhouse gases but makes clear that other methods of transporting the oil — including rail, trucks and barges — also pose a risk to the environment.

The State Department analysis for the first time evaluated two options using rail: shipping the oil on trains to existing pipelines or to oil tankers. The report shows that those other methods would release more greenhouse gases that contribute to global warming than the pipeline. The Keystone XL pipeline, according to the report, would release annually the same amount of global warming pollution as 626,000 passenger cars.

A scenario that would move the oil on trains to mostly existing pipelines would release 8 percent more greenhouse gases such as carbon dioxide than Keystone XL. That scenario would not require State Department approval because any new pipelines would not cross the U.S border.

Another alternative that relies mostly on rail to move the oil to the Canadian west coast, where it would be loaded onto oil tankers to the U.S. Gulf Coast, would result in 17 percent more greenhouse gas emissions, the report said.

In both alternatives, the oil would be shipped in rail cars as bitumen, a thick, tar-like substance, rather than as a liquid.

The State Department was required to conduct a new environmental analysis after the pipeline's operator, Calgary-based TransCanada, changed the project's route though Nebraska. The Obama administration blocked the project last year because of concerns that the original route would have jeopardized environmentally sensitive land in the Sand Hills region.

The administration later approved a southern section of the pipeline, from Cushing, Okla., to the Texas coast, as part of what Obama has called an "all of the above" energy policy that embraces a wide range of sources, from oil and gas to renewables such as wind and solar.

The draft report issued Friday begins a 45-day comment period, after which the State Department will issue a final environmental report before Secretary of State John Kerry makes a recommendation about whether the pipeline is in the national interest.

Kerry has promised a "fair and transparent" review of the plan and said he hopes to decide on the project in the "near term." Most observers do not expect a decision until summer at the earliest.

Canadian Natural Resource Minister Joe Oliver said Friday that Canada will respect the U.S. review process and noted the importance of the pipeline to the Canadian economy.

Obama's initial rejection of the pipeline last year went over badly in Canada, which relies on the United States for 97 percent of its energy exports.

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Associated Press writers Rob Gillies in Toronto and Dina Cappiello in Washington contributed to this report.

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Follow Matthew Daly on Twitter: https://twitter.com/MatthewDalyWDC

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Apple shareholder drops lawsuit on preferred stock

SAN FRANCISCO — A disgruntled shareholder pressing Apple to create a new class of preferred stock has dropped a lawsuit that became a moot point after the iPhone and iPad maker changed the agenda at its annual meeting earlier this week.

Lawyers for hedge fund manager David Einhorn of Greenlight Capital notified U.S. District Judge Richard Sullivan in a letter sent Thursday that they no longer plan to pursue the lawsuit . Sullivan closed the case, which began three weeks ago in New York.

Einhorn had already achieved his goal last week when Sullivan issued a preliminary ruling blocking an Apple Inc. proposal that would have required shareholder approval before preferred stock could be issued. Apple withdrew the proposal from the agenda at its annual meeting held Wednesday.

Two shareholders who attended the annual meeting said they were disappointed that they weren't able to vote in favor of a proposal, which they described as an example of sound corporate governance.

Shareholders had reason to be even more discouraged Friday as Apple's stock touched a new 52-week low, deepening a roughly six-month slide that has wiped out nearly $260 billion of the company's market value.

In another setback Friday, a federal judge in San Jose erased nearly half of the $1 billion in damages that a jury had awarded Apple last year in a patent infringement case against rival smartphone and tablet computer maker Samsung Electronics Co. The ruling lowered Samsung's bill to $599 million.

Apple might be able to ease the pain of the recent 39 percent drop in its stock price by doling out some of its $137 billion cash hoard to shareholders instead of letting the money idle at a time when interest rates at near record lows.

Einhorn, whose fund owns 1.3 million Apple shares, filed his lawsuit to preserve Apple's ability to issue dividend-paying preferred stock without having to take the extra step of gaining shareholder approval. He is pushing Apple to issue preferred stock that would guarantee a 4 percent dividend.

Apple CEO Tim Cook dismissed Einhorn's lawsuit as a "silly sideshow" at an investment conference a few weeks ago and again Wednesday at the company's annual meeting. During a question-and-answer session with shareholders Wednesday, Cook said Apple's board is in "very, very active discussions" about what do with all its cash.

Apple, which is based in Cupertino, Calif., also has said it is considering whether to introduce another proposal that would require a shareholder vote on preferred stock. If another proposal is submitted, it probably wouldn't happen until Apple holds another annual meeting next year.

The company last year instituted a quarterly dividend of $2.65 per share on its common stock in a move that returns about $10 billion annually to shareholders. Apple's cash stash has grown by about $39 billion during the past year as customers bought its products in record numbers.

Despite Apple's success, investors are worried that the company's growth will soon taper off as it contends with fiercer competition in the smartphone and tablet computer market. The company also hasn't introduced a breakthrough product since the October 2011 death of Steve Jobs, Apple's charismatic co-founder and Cook's predecessor as CEO. It's most recent creation, the iPad, came out three years ago, raising concerns that Apple's well of innovation has run dry.

Cook sought to reassure shareholders that Wednesday's annual meeting, telling them that Apple is working on some "great stuff," including some products outside its core line-up of iPods, iPhones, iPads and Mac computers.

That vague promise hasn't excited Wall Street.

Apple's slumping stock fell to a new 52-week low of $429.98 on Friday before rebounding slightly to close at $430.47, down $10.93, or 2.5 percent. The shares hit a record high of $705.07 in September when the iPhone 5 went on sale.

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Consequence to cuts no one thought would happen

WASHINGTON — It's not the first time that government economic engineering has produced a time bomb with a short fuse.

Back in 2011, few lawmakers thought deep and indiscriminate spending cuts, totaling about $85 billion and now starting to kick in, were a smart idea.

The cuts are a reality largely because President Barack Obama and House Speaker John Boehner failed to find a way to stop them.

History shows a long trail of unintended consequences from government actions — or inaction.

President Franklin Roosevelt won re-election in 1936 and believed the Great Depression was winding down.

Roosevelt and Congress thought it was time to cut free-flowing government spending and raise taxes. The Federal Reserve tightened its financial reins. But the fragile economy couldn't withstand the blows and the Depression roared back.

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Odds against him, Obama still betting on big deal

WASHINGTON — A fiscal deadline all but blown, President Barack Obama says he once again wants to seek a big fiscal deal that would raise taxes and trim billions from expensive and ever growing entitlement programs. But with automatic federal spending cuts ready to start taking their toll, the path toward that grand bargain Obama campaigned on last year has significantly narrowed.

The president has summoned the top bipartisan congressional leadership to the White House, a meeting designed to give all sides a chance to stake out their fiscal positions with a new threat of a government shutdown less than four weeks away. There were no expectations of a breakthrough.

"I'm happy to discuss other ideas to keep our commitment to reducing Washington spending at today's meeting," Senate Minority Leader Mitch McConnell, R-Ky., said in a statement Friday morning. "But there will be no last-minute, back-room deal and absolutely no agreement to increase taxes."

For Obama, Friday's session would be his first opportunity to spell out his 10-year, $1.5 trillion deficit reduction plan in a face-to-face meeting with congressional allies and adversaries.

His chances are squeezed by anti-tax conservatives, by liberals unwilling to cut into Medicare and Social Security, and by a Republican leadership that has dug in against any new revenue after ceding to Obama's demands two months ago for a higher tax rate for top income earners.

On Thursday, two ill-fated proposals aimed at blunting the blame over the cuts — one Democratic and the other Republican — failed to overcome procedural hurdles in the Senate. Obama placed the responsibility on Republicans.

"They voted to let the entire burden of deficit reduction fall squarely on the middle class," he said.

The White House is still betting that once the public begins to experience the effects of the $85 billion in across-the-board cuts the pain will be unbearable enough to force lawmakers to reconsider and negotiate. But the consequences of the cuts —the so called sequester — will likely be a slow boil. Obama this week said the effect "is not a cliff, but it is a tumble downward."

Indeed, much of the impact won't be felt for weeks or more than a month; others, like possible teacher layoffs, wouldn't take place until the new school year in the fall.

And yet, the next likely showdown — the expiration of a six-month spending bill on March 27, with its built-in threat of a government shutdown — will loom before that, meaning that the leverage the White House would hope to have won't materialize until late.

Polls also show that the public is not as engaged in this showdown as it has been in past fiscal confrontations and an NBC-Wall Street Journal Post survey indicates that Obama has lost some ground with the public in his handling of the economy.

Still, White House officials also say they believe Republicans will once again give way to additional tax revenue in part to avoid drastic cuts and in part to win reductions in Medicare and Social Security spending from Obama that they have been unable to get from Democrats before.

"I am prepared to make some tough decisions, some of which will garner some significant frustration on the part of members of my party, but I think it's the right thing to do," Obama told top business executives this week.

Given Washington's entrenched partisanship, Obama's effort could be dismissed as either another failed attempt at negotiations or as simply an effort to lay blame on Republicans for blocking compromise.

The odds aren't with the president.

Many conservatives are willing to accept the automatic cuts as the only way to reduce government spending, even though the budget knife cuts into cherished defense programs. Likewise, many liberals are beginning to embrace the cuts as a way to protect revered big benefit programs that have long been identified with the Democratic Party.

Moreover, many programs for low-income Americans are protected from the immediate cuts while the Pentagon — whose budget has long been a target of the left — faces across the board cuts of 8 percent and up to 13 percent in some of its accounts.

More than 20 Democrats in Congress, including veteran Rep. Ed Markey, a candidates for the Senate from Massachusetts, have signed a letter pledging not to cut Medicare, Medicaid or Social Security benefits in efforts to reduce the deficit.

Obama's plan calls for $580 billion in new revenue over 10 years by limiting the value of itemized deductions and certain tax exclusions to no more than 28 percent. That means taxpayers with a tax rate greater than 28 percent would face a tax increase.

While Obama also regularly talks about closing loopholes to gain more revenue, his tax plan would close many corporate loopholes to lower corporate tax rates, not to generate more revenue. He aims to drop corporate tax rates from 35 percent to 28 percent for most corporations and down to 25 percent for manufacturers.

In exchange for new tax revenue and a tax overhaul, Obama has offered to reduce spending in health care programs such as Medicare by $400 billion over 10 years, change an inflation formula for government benefits that would result in lower cost-of-living adjustments for Social Security and other programs, and reduce other spending for total reductions of $900 billion over 10 years.

Those cuts, together with about $2.5 trillion in deficit reduction already achieved over the last two years through spending cuts and a year-end tax increase on taxpayers making more than $400,000 would achieve a $4 trillion deficit reduction target.

Republicans though are unimpressed, and House Speaker John Boehner rejected it when Obama first offered it in December.

"Last year we proposed generating new revenue through tax reform," Boehner said Thursday. "We did that as an alternative to the president's demand for higher tax rates. Ultimately, the president got his revenues and he got it his way through higher rates. Given those facts, the revenue issue is now closed."

At the other end of the spectrum, liberals are seeking to silence White House talk about cutting entitlements.

"They're almost on a daily basis talking about (reducing) Social Security benefits," said Adam Green, founder of the liberal Progressive Change Campaign Committee. "There's no rational or political reason to do so, except some ill-conceived idea that Americans would value a grand bargain, even one that robs their grandparents of thousands of dollars."

Follow Jim Kuhnhenn on Twitter: http://twitter.com/jkuhnhenn

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Russian banker in fraud case granted London asylum

MOSCOW — A Russian banker accused of fraud says he has been granted political asylum in Britain.

Former Bank of Moscow head Andrei Borodin told Russian media Friday he argued that he risked politically motivated persecution from Prime Minister Dmitry Medvedev if he returned to Russia.

There was no immediate word from Britain, where the Home Office does not comment on individual asylum cases.

Borodin fled to London last year to avoid charges stemming from the Bank of Moscow's $14 billion bailout after state-run VTB's takeover. British authorities denied him and his deputy political asylum in May but he filed an appeal.

In August, Interpol issued a Red Notice, the equivalent of an international arrest warrant, for Borodin at Russia's request. Russian authorities said Friday they would continue to seek Borodin's extradition.

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McDonald's getting rid of items from menu

NEW YORK — McDonald's is getting rid of its Chicken Selects and Fruit & Walnut Salad, as well as considering the removal of Angus burgers.

The world's biggest hamburger chain also says in an emailed statement that it is "evaluating options as it relates to the Angus Third Pounders, and their role on the national McDonald's menu."

The changeup comes as the Oak Brook, Ill.-based company continues tweaking its menu, with plans to step up the number of limited-time offers in the year ahead. Most recently, the chain introduced its "Fish McBites."

McDonald's Corp. says the Selects chicken fingers were introduced in 2004. The Fruit & Walnut Salad was introduced in 2005 and the Angus Third Pounders in 2009.

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Top bourbon maker Beam dips into white whiskey

CLERMONT, Ky. — The world's top bourbon producer is dipping into moonshining's colorful past to create its own white whiskey.

Beam Inc.'s newest spirit is called Jacob's Ghost in honor of Jacob Beam, founding distiller of its flagship Jim Beam brand. Jacob's Ghost resembles the concoction that flowed from the pioneer's still in the 1790s or from a moonshiner's still today.

But this is no run-of-the-mill, backwoods hooch.

Jacob's Ghost is an 80-proof whiskey aged at least one year in a charred, white oak barrel.

The aging adds flavors from the wood that's missing in unaged whiskies and moonshines.

Beam, based in Deerfield, Ill., is tapping into a white whiskey category that amounts to a drop in the bucket compared to bourbon. But white whiskey is finding a niche, thanks to craft distillers.

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Boeing cuts back on contract workers at SC plant

CHARLESTON, S.C. — Boeing is trimming the number of temporary contract workers employed at its South Carolina assembly plant.

The company says the reductions have been planned for some time and have nothing to do with battery problems in its 787 jetliners.

Spokeswoman Candy Eslinger says the North Charleston plant employs more than 6,100 workers including regular employees and contract workers. Eslinger says it is standard practice in the industry to use contract workers when production at a plant is being ramped up.

She says no regular Boring employees are affected. Contract employees have had the chance to apply for permanent Boeing jobs in recent months. The company did not provide a specific figure of how many contract workers are affected.

The reductions were first reported by The Wall Street Journal.

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China says US-based hackers target its websites

BEIJING — China's military said Thursday that overseas computer hackers targeted two of its websites an average of 144,000 times per month last year, with almost two-thirds of the attacks originating in the United States.

The claim from Defense Ministry spokesman Geng Yansheng follows accusations last week by American cybersecurity company Mandiant that Chinese military-backed cyberspies infiltrated overseas networks and stole massive amounts of data from U.S. companies and other entities. China denied the allegations, and its military said it has never supported any hacking activity.

Geng told reporters at a monthly news conference that an average of 62.9 percent of the attacks on the Defense Ministry's official website and that of its newspaper, the People's Liberation Army Daily, came from the U.S.

"Like other countries, China faces a serious threat from hacking and is one of the primary victims of hacking in the world," Geng said. "Numbers of attacks have been on the rise in recent years."

Geng attacked the Mandiant report, which blamed hacking on the People's Liberation Army's Shanghai-based Unit 61398, as "unprofessional and not in accordance with the facts." He also criticized the U.S. military's cyber command for impeding international efforts at controlling hacking.

The Mandiant report was widely praised by cybersecurity professionals interviewed by The Associated Press, who said it provided the most detailed picture yet of China's state-sponsored hacking efforts.

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Smart 'stickers' let you find things by phone

BARCELONA, Spain — Jimmy Buchheim is behaving oddly.

On the floor of the world's largest cellphone trade show in Barcelona, Spain, he's looking at the screen of his iPod Touch, taking a few steps, and then looking again. Now and then he backtracks or turns, and looks again. Slowly, he confines his movements to a smaller and smaller area. Then he drops to his knees, and checks the screen again. He scrabbles forward.

"There we are!" he says.

Buchheim has found his keys, which had been hidden behind a wastebasket by a skeptical reporter. On the key ring is a small disc, slightly bigger than a quarter. That's what Buchheim was homing in on, with his iPod. It allowed him to find his keys, hidden out of sight in an apartment-sized booth.

Buchheim's Davie, Fla.-based company, Stick-N-Find Technologies, wants to give people a way to find things, whether it's keys, wallets, TV remotes, or cat collars.

There's no real trick to sending out a radio signal and having a phone pick it up. That's been done before. What makes the Stick-N-Find practical is a new radio technology known as Bluetooth Low Energy, which drastically reduces the battery power needed to send out a signal. That means the disc can be small, light enough for its sticky back to adhere to a lot of surfaces, and be powered by a watch-type battery that lasts up to two years without recharging. The signal can be picked as far as 300 feet away, but that's under ideal circumstances. On the floor of the wireless show, with a multitude of Wi-Fi transmitters jamming the airwaves, the range was roughly 20 feet.

One downside to Bluetooth Low Energy: It doesn't come cheap. Stick-N-Find charges $50 for two "stickers" from its first production run, which starts shipping next week. It gave early backers a better deal — 4 discs for $65 — on crowdfunding site Indiegogo, where it had sought to raise $70,000 from donors and ended up getting $931,970 by the time the campaign ended last month.

Another downside is that few devices can pick up the signals. The latest two iPhones can do it, as can the latest iPod Touches and iPads. The latest high-end Samsung smartphones work, too. Bluetooth Low Energy is expected to become a standard feature in phones, but it's not yet.

Whatever device you use, it won't tell you exactly where your sticker is located. All it can tell is how far away it is. That means finding something is a process of walking around and checking whether you're getting "hotter" or "colder." Of course, often you don't really need to know where your wallet is: knowing that it's within 8 feet and therefore somewhere in the car with you is assurance enough. Buchheim says the company has plans to add direction-finding features.

Users can also set up a virtual "leash" between a sticker and a Bluetooth device. Depending on the settings, when the two devices move a certain distance away from each other, the sticker starts beeping or the device's screen shows an alert. That way, you could use sticker in your wallet, linked to your phone, to let you know if you're leaving either one behind.

Buchheim sees this as just the start for what Bluetooth Low Energy can do. Stick-N-Find is working with a museum that's interested in putting stickers on its exhibits, so they can issue tablets or other devices to visitors that can sense the proximity of exhibits, and say "Hello, this is the statue of so-and-so," Buchheim says.

It could even end up as a technology for the blind — one that tells them where their belongings are, he says.

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Follow Peter Svensson on Twitter at http://www.twitter.com/petersvensson .

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Bailed-out RBS posts $9 billion annual loss

LONDON — Part-nationalized Royal Bank of Scotland said Thursday it ended 2012 with massive losses after it set aside more cash to compensate customers who were mis-sold financial products and to pay fines related to a rate-rigging scandal.

The bank, which is 82 percent owned by British taxpayers, said its fourth quarter losses increased 44 percent from a year earlier, to 2.60 billion pounds. That led to a full-year loss of 5.97 billion pounds ($9 billion), up from a shortfall of 2 billion pounds in 2011.

It set aside 1.8 billion pounds to compensate customers who were mis-sold insurance and interest-rate hedging contracts. It also paid a 381 million pound fine for its role in rigging the London Interbank Offered Rate, which is used to price mortgages and credit cards around the world.

Chief Executive Stephen Hester focused on the progress RBS has made in its restructuring process — even as he acknowledged that it would take time to rebuild public trust dented by what he described as a "chastening year."

"Along with the rest of the banking industry we faced significant reputational challenges as we worked with regulators to put right past mistakes," he said in a letter to shareholders. "We are determined to overcome the cultural and reputational baggage of pre-crisis times with the same focus we have applied to the financial cleanup from that era."

The bank cut down on bonus payments to staff, which amounted to 679 million pounds in 2012, from 789 million the year before.

Hester said the effort to restructure the bank, which was bailed out by the government in 2008, was entering the final phase, and that it would return to private ownership in the next few years. That time frame is important, because it would make it possible to relieve the taxpayer of its burden before the next parliamentary election, set for 2015. He also announced that it was time to begin preparing for the partial sale of its U.S.-based Citizens Bank, which will probably take place in about two years.

RBS suggested that when investors take into account the one-time costs — such as paying the LIBOR fine — the bank is in much better shape than it might look. Operating profit, a measure of earnings before tax and one-time charges, rose to 3.46 billion pounds last year from 1.82 billion pounds.

"I think we are coming really closer to the point where we are a normal company again," Hester told the BBC.

Various factors are slowing the bank's rebuilding effort — the poor state of the economy in Britain and the United States, "reputational" damage from the rate-rigging and payment protection insurance scandals, and the technical glitches of last year that caused problems for customers using online banking and debit cards, Hester said.

One of the biggest hits came from the LIBOR scandal, in which employees at RBS and other banks tried to manipulate the rate that affects trillions of dollars in global financial contracts. That prompted anger among British lawmakers, who insisted on sweeping changes to oversight of the banking industry and called for tightening laws to make it easier to prosecute rate-fixing offenses.

Analysts such as Ian Gordon of Investec summed up his view in a note to investors with the headline "Where do we go from here?" — suggesting that despite Hester's optimism that the worst was behind them, uncertainty remains.

"RBS is capable of recovering over time ... ," he said. "There is, however, a fair amount of hope built in there!"

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AOL taps Lyne to serve as CEO of its Brand Group

NEW YORK — AOL has hired one of its board members, former Martha Stewart Living CEO Susan Lyne, to run the AOL portfolio of brands.

The Internet company said Thursday that as CEO of its Brand Group, Lyne will be responsible for increasing traffic across its properties, bringing top talent on board and maximizing partnerships with advertisers and publishers.

Lyne takes over at the Brand Group from chief operating officer Arthur Minson, who was overseeing the company's three divisions. He will stay on during a transition period.

AOL says Lyne's experience as CEO and chairman of the retail shopping site Gilt, as well as her time as president and CEO of Martha Stewart Living Omnimedia, should help her at AOL. She also served as president of ABC Entertainment.

AOL says Lyne currently serves as Gilt's vice chairman and will continue in that position.

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Weekly US unemployment aid claims drop to 344K

WASHINGTON — The number of Americans seeking unemployment aid fell 22,000 last week to a seasonally adjusted 344,000, evidence that the job market may be picking up.

The four-week average of applications dropped 6,750 to 355,000, the Labor Department said Thursday. That was the first drop in three weeks.

Weekly applications are a proxy for layoffs. When they decline, it suggests companies are cutting fewer workers and may be more willing to hire.

Economists were mildly encouraged by the decline. It "suggests further healing in the labor markets," Sal Guatieri, an economist at BMO Capital Markets, said in a note to clients.

Applications have fallen steadily in recent weeks. The four-week average has declined almost 11 percent since November. At the same time, employers have added an average of 200,000 jobs per month from November through January. That's up from about 150,000 in the previous three months.

In January, the economy added 157,000 jobs. The unemployment rate ticked up to 7.9 percent from 7.8 percent in December. Economists think the rate will slowly decline if hiring continues at last year's monthly pace of 180,000. The unemployment rate fell 0.7 percentage point in 2012.

The drop in applications suggests companies will add more jobs this month than in January, economists said.

The hiring occurred even as growth stumbled in the final three months of the year. The economy barely expanded, growing only 0.1 percent at an annual rate, in the October-December quarter. That's a sharp slowdown from the third quarter, when the economy grew 3.1 percent.

Still, the outlook for the U.S. economy brightened this week after reports showed that Americans are more confident and are buying more new homes. Home prices are also rising steadily, and banks are lending more. Such improvements suggest that the economy is resilient enough to withstand automatic spending cuts that are scheduled to kick in Friday.

The spending cuts could slow economic growth and cost 700,000 jobs, according to the Congressional Budget Office. They could also reduce unemployment benefit checks for those out of work for more than six months by about 11 percent, according to the National Employment Law Project. Benefits average about $320 per week nationwide.

Growth will likely pick up a bit in the January-March quarter to an annual rate of about 1.5 percent, analysts forecast. That's better than the fourth quarter but below last year's expansion of 2.2 percent.

Meanwhile, a total of nearly 5.8 million people received unemployment aid in the week ended Feb. 9, the latest data available. That's up about 180,000 from the previous week. That figure has fallen from nearly 7.5 million a year ago, partly because some of aid recipients have gotten jobs, while others have used up all the benefits available.

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CommonWealth REIT moving forward with offering

NEWTON — CommonWealth REIT said Wednesday that it is moving forward with its planned stock offering and debt repurchase, one day after a pair of shareholders said the stock was undervalued and that they're willing to buy the rest of the company.

Its shares tumbled more than 5 percent in premarket trading after hitting a 52-week high on Tuesday.

The Newton, Mass.-based real estate investment trust invests in office and industrial buildings and in leased industrial land in the United States.

On Monday, CommonWealth announced that it started a tender offer to buy up to $450 million of some senior notes due in 2014, 2015 and 2016. It also announced a public offering of up to approximately 31.1 million shares, with the proceeds being used to buy back the notes.

The next day, Corvex Management LP and Related Fund Management LLC said that they feel CommonWealth REIT's portfolio of real estate assets is undervalued. Corvex and Related own a combined stake of about 9.8 percent of CommonWealth's stock.

Corvex and Related said that if they didn't receive a response, they would look to have CommonWealth's board removed and would want to replace them with five independent trustees.

The companies also said that they would be ready to buy all of CommonWealth's outstanding stock at a "significant premium" to its current market value.

But CommonWealth REIT said Wednesday that it decided to move forward with the planned stock offering and debt repurchase after its board considered Corvex and Related Fund's position.

Its shares tumbled $1.26, or 5.2 percent, to $23.14 in premarket trading Wednesday after briefly hitting a 52-week high of $24.55 on Tuesday.

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Budweiser maker AB InBev reports lower 4Q profit

AMSTERDAM — Anheuser-Busch InBev NV, the world's largest brewer, says its profits fell 4.9 percent in the fourth quarter, due to changes in financing costs.

Net profit was $1.76 billion (€1.35 billion), down from $1.85 billion in the same period a year ago, as exchange rate-linked losses in the fourth quarter of 2012 and gains on derivatives in the fourth quarter of 2011 caused a combined $400 million downward swing.

Revenues rose 8.8 percent to $10.3 billion, due to price hikes, and operating profit rose 10.7 percent, thanks to cost-cutting, the company said.

The Leuven, Belgium-based maker of Budweiser, Bud Light, Stella Artois and Beck's said it expects weak first quarter volumes in the United States, its most profitable market, as consumers there have less disposable income and weather is worse than a year ago.

But the company said that volumes had grown in the U.S. in 2012 for the first time since 2008 and "market share is showing signs of stabilizing."

InBev also expects "softness" in Brazil, where it has a 68.5 percent market share with brands Skol, Brahma and Antarctica, due to an early carnival and wet weather.

Volumes in China, the company's third-largest market, grew 1.9 percent and gained market share in the fourth quarter, with Budweiser the best-selling "premium" beer in the country. InBev expects better growth in China this year.

More than half of Budweiser sales now take place outside the U.S., the company said.

InBev didn't outline whether it expects to increase profits in 2013, saying only it expects its revenue per gallon sold to increase faster than the rate of inflation, and costs to rise "in the mid-single digits."

Shares fell 1.3 percent to €68.85 in early trading in Brussels.

AB InBev has been attempting since June to take over the half of Corona maker Grupo Modelo it doesn't already own for $20.1 billion, but the deal was challenged by the U.S. Department of Justice over concerns it would make the company too dominant in the U.S.

In response, InBev announced a side-deal this month to sell the rights to market Corona in the U.S. to smaller competitor Constellation Brands, hoping that would appease regulators. For now the deal "remains subject to the existing challenge," InBev said Wednesday.

The company's U.S. subsidiary, Anheuser-Busch of St. Louis, Missouri, is facing a lawsuit from consumers who on Tuesday accused it of watering down its beers, including Budweiser and Michelob, so that they carry a lower alcohol percentage than their label suggests.

"Our beers are in full compliance with all alcohol labeling laws. We proudly adhere to the highest standards in brewing our beers, which have made them the best-selling in the U.S. and the world," said Peter Kraemer, vice president of brewing and supply, in a statement.

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Dubai adds tallest hotel to superlative list

DUBAI, United Arab Emirates — Superlative-hungry Dubai is adding another to its list: A 72-story hotel billed as the world's tallest.

The JW Marriott's Marquis Dubai formally opened Tuesday after gaining the title of tallest hotel from Guinness World Records.

At 1,099 feet, the hotel would tower over skylines in most cities. But in Dubai, it sits in the shadow of its more than twice-as-high neighbor, the Burj Khalif, the world's tallest skyscraper at 2,717 feet.

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BP executive resumes testimony at Gulf spill trial

NEW ORLEANS — A ranking BP executive says the drilling rig that the company leased from Transocean Ltd. had a good safety record before a well blowout in the Gulf of Mexico triggered an explosion that killed 11 workers.

A Transocean attorney questioned Lamar McKay on Wednesday during his second day on the witness stand in a trial designed to identify the causes of the 2010 blowout and assign percentages of fault to the companies involved.

McKay was president of BP America at the time of the Deepwater Horizon disaster. He said he personally did not know of any reason to be critical of Transocean or its crew members on the rig.

McKay also said BP has accepted "part of the responsibility" for causing the blowout of its Macondo well.

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Target's adjusted 4Q profit beats Street view

MINNEAPOLIS — Target's Neiman Marcus collaboration did not turn out to be a holiday gift to the retailer.

The No. 2 discount chain reported fiscal fourth-quarter net income dipped 2 percent as it dealt with intense competition during the crucial holiday season. Still, the company's forecast for 2013 indicated it may beat many analysts' expectations.

"We're pleased with Target's fourth quarter performance, particularly in the face of a highly promotional retail environment and continued consumer uncertainty," Chairman, President and CEO Gregg Steinhafel said in a statement.

But investors were disappointed in the results, sending shares down almost 2 percent in morning trading.

The big-box retailer, known for its cheap but trendy merchandise, had high hopes for the collection of gifts made in partnership with luxury department store Neiman Marcus. The pair of retailers rolled the line of gifts from 24 designers, including Oscar de la Renta and Diane von Furstenberg, on Dec. 1. But just weeks later Target was offering big discounts — up to 75 percent off — to clear the shelves of unsold merchandise.

Also, during the critical shopping months of November and December Target embraced a number of different strategies, like matching the price of online competitors such as Amazon.com, Walmart.com, Bestbuy.com and Toysrus.com. It was an attempt to combat "showrooming," in which people use smartphones while they're in stores to look for cheaper prices online.

But the initiatives did not spur customers to buy more during the holiday shopping period, which is critical for retailers, as it can make up as much as 40 percent of their annual revenue.

The number of transactions fell 1 percent during the quarter, although the amount spent per transaction rose 1.4 percent.

The company said its gross margin — the percentage of each dollar in revenue made that a company actually keeps — declined during the quarter due to holiday markdowns.

Edward Jones analyst Brian Yarbrough said the Neiman Marcus collection was small, so it didn't have a huge impact on results. The bigger problem was overall seasonal merchandise that didn't sell during a slow December.

"I think that was the biggest issue in this quarter was leftover seasonal inventory that didn't sell, so they cleared it out in January," he said. But overall it was a decent report, he added.

"Results were in-line, and forward guidance was pretty solid," he said.

For the three months ended Feb. 2, Target earned $961 million, or $1.47 per share, for the period ended Feb. 2. That's down from $981 million, or $1.45 per share, a year earlier.

Removing costs including interest expense related to the company's U.S. credit card segment and a provision for income taxes, earnings were $1.65 per share. That tops the forecast of analysts polled by FactSet for earnings of $1.47 per share.

Target had forecast adjusted earnings between $1.64 and $1.74 per share.

Revenue climbed 7 percent to $22.73 billion from $21.29 billion. This met Wall Street's expectations.

During the quarter, revenue at stores open at least a year edged up 0.4 percent. This figure is a key indicator of a retailer's health because it excludes results from stores recently opened or closed.

For the full year, the Minneapolis company earned $3 billion, or $4.52 per share. A year earlier it earned $2.93 billion, or $4.28 per share. Adjusted earnings were $4.76 per share.

Annual revenue increased 5 percent to $71.96 billion from $68.47 billion.

Target Corp.'s outlook for 2013 was brighter. The chain foresees first quarter adjusted earnings of $1.10 to $1.20 per share. Analysts predict earnings of $1.05 per share.

The chain's fiscal 2013 outlook is for adjusted earnings between $4.85 and $5.05 per share. Wall Street expects earnings of $4.87 per share.

Target has 1,778 stores across the U.S. Its stock fell $1.21, or 1.9 percent, to $62.84 in morning trading.

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Kerry pushes trans-Atlantic free trade in Germany

BERLIN — U.S. Secretary of State John Kerry pushed Tuesday for a free-trade agreement between the United States and Europe, saying it is a priority for President Barack Obama's second term that would help create jobs and growth on both sides of the Atlantic.

The proposal has been garnering support on both continents, with Obama saying earlier this month that the U.S. believes "trade that is free and fair across the Atlantic supports millions of good-paying American jobs."

Speaking after talks Tuesday with Chancellor Angela Merkel and Foreign Minister Guido Westerwelle, Kerry said such an agreement would be a boon to the U.S. and Europe.

"We think this is something that can help lift the economy of Europe, strengthen our economy, create jobs for Americans, for Germans for all Europeans, and create one of the largest allied markets in the world," he told reporters alongside Merkel. "It will help raise standards, it will help break down barriers, and we believe it is good for all of us."

Germany, Europe's largest economy, has strongly supported the idea and Westerwelle said that he hoped the groundwork could be done quicikly to begin negotiations with the U.S. on the agreement by the summer.

"We see here a window of opportunity," Westerwelle said after his one-on-one meeting with Kerry. "It's a window of opportunity that we need to seize in the interest of growth, and jobs for Germany, the United States and Europe."

Still, negotiations may not be easy or short, with agriculture likely to be one tricky area.

Kerry's swing through Berlin was his second stop on a nine-country dash through Europe and the Middle East, Kerry's first trip as secretary of state. He started his trip in Britain and heads next to France.

___

Geir Moulson contributed to this story.

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Macy's profit beats Wall Street expectations

NEW YORK — Macy's reported a fourth-quarter profit that beat Wall Street expectations as its strategy of tailoring merchandise to local markets paid off during the holiday season.

The department store chain, which also operates Bloomingdale's stores, also said Tuesday that it expects that same strategy to help increase revenue at stores open at least a year by 3.5 percent in fiscal 2013. That's on top of the increase of 3.7 percent for 2012. The measure is a key indicator of health because it strips out the impact of newly opened and closed locations.

Shares of Macy's rose 4.6 percent at $40.30 in premarket trading.

"Going into 2013, our team is moving ahead with new plans and actions to sharpen our approach to localized merchandise assortments and marketing," CEO Terry Lundgren said in a statement.

Like many retailers, Macy's had a slow start to the fourth quarter because of the lingering effects of Superstorm Sandy and ongoing economic uncertainty. But sales bounced back in January. Gross margin, or revenue after the cost of sales, slipped to 40.6 percent during the quarter, from 41 percent a year earlier, suggesting the company may have had to discount more heavily to sell items.

Competitor J.C. Penney reports its results Wednesday. The company, which ditched hundreds of sales in favor of "everyday pricing" last year, has been suffering as shoppers flee to competitors. Penney is expected to report its fourth straight quarter of big losses and sales drops.

The two companies are also locked in a lawsuit that alleges Penney violated Macy's exclusive deal with home diva Martha Stewart.

For the period ended Feb. 2, Macy's Inc. says it earned $730 million, or $1.83 per share. That compares with $745 million, or $1.74 per share, a year earlier, when the company had more shares outstanding.

Not including one-items such as expenses associated with the early retirement of debt, it earned $2.05 per share. Revenue was $9.35 billion, up from $8.72 billion a year ago.

Analysts expected a profit of $1.99 per share on revenue of $9.35 billion.

For the year, the company earned $3.24 per share on revenue of $27.69 billion. In 2013, the company expects earnings per share of $3.90 to $3.95.

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US home prices post healthy gain in December

WASHINGTON — U.S. home prices rose at a healthy pace in December compared with a year ago, driven higher by rising sales and a smaller supply of available homes.

The Standard & Poor's/Case-Shiller 20-city home price index, released Tuesday, rose 6.8 percent in December compared with the same month a year ago. That's up from a 5.5 percent annual gain in November.

Nationwide, the report showed that prices rose 7.3 percent in 2012. That is similar to other home price measures that show a healthy gain last year.

Prices also rose in December compared with a year ago in 19 of the 20 cities tracked by the index. New York was the only metro area to show a decrease.

Steady price increases should help fuel the housing recovery. They encourage more people to buy before prices rise further. Higher prices also build homeowners' wealth, which can spur more spending and economic growth.

Purchases of previously occupied homes rose last year to their highest level in five years. The National Association of Realtors forecasts that sales will rise 9 percent this year. Independent economists have similar forecasts.

At the same time, the number of available homes for sale fell last month to the lowest level in 13 years.

In December, the 20-city index ticked up 0.2 percent from the previous month, reversing November's small decline.

The S&P/Case-Shiller index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The November figures are the latest available.

Despite the increases, prices nationwide are still about 30 percent below the peak they reached at the height of the housing bubble in the summer of 2006. They are now at the same level as in the fall of 2003.

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Italian election inconclusive; global markets drop

ROME — Italy emerged from elections Tuesday with no clear winner, driving markets around the world markedly lower as investors worried that one of Europe's biggest economies would be unable to build a governing coalition that can stay the course on unpopular austerity measures.

A day after polling ended, a few seats in Parliament based on Italians' voting abroad still remained to be decided, but their numbers won't ease the gridlock. European leaders pleaded with politicians in Italy to quickly form a government to continue to enact reforms to lower Italy's critically high debt and spare Europe another spike in its four-year financial crisis.

If Italian parties fail to form a governing coalition, new elections would be required, causing more uncertainty and a leadership vacuum.

"What is now decisive for Italy — but, because Italy is such an important country for Europe, also for the whole of Europe — is that a stable government that is capable of acting can be formed as quickly as possible," German Foreign Minister Guido Westerwelle told reporters in Berlin.

The results of the election are a rejection of the tough austerity approach of the previous technocratic government led by Mario Monti. A center-left coalition led by Pier Luigi Bersani appears to have won a narrow victory in the lower house of parliament, while the Senate looks split with no party in control.

Italy's FTSE MIB index was trading 3.8 percent lower at 15,721, having earlier been nearly 5 percent down at one point Tuesday. Some of its banking stocks were briefly suspended after precipitous falls at the bell.

The interest rate on the country's benchmark 10-year bond — an important gauge of investor sentiment — rose by 0.33 percentage points to 4.77 percent. Investors sought protection in the bonds of more stable and prosperous economies, such as German government bonds.

Whether Tuesday's negative market reaction extends further into the week may hinge on how quickly a solution is reached in Italy. Despite the uncertainty, Italy's Treasury managed to sell €8.75 billion ($11.75 billion) of short-term debt though at a higher cost.

Silvio Berlusconi, the former Italian premier whose center-right coalition did better than expected, insisted that a government can be formed and called on Italians to ignore the "crazy markets." Berlusconi is a key player as his coalition is now the second-biggest bloc in the upper chamber.

"Markets go their own way. They are independent and also a little crazy," he said, adding that a government can be cobbled together if rival politicians are willing to "make some sacrifices."

Stinging from a loss of some 4 million votes compared to the last election in 2008, Bersani hasn't yet identified potential coalition partners. But top officials in his Democratic Left (PD) party were quick to rule out any deal with Berlusconi.

"As far as I go, absolutely not," Stefano Fassina, a PD official said of a possible Bersani-Berlusconi alliance.

A big surprise in the election was the strong showing by comic-turned-political leader Beppe Grillo, whose 5 Star Movement capitalized on a wave of voter disgust with the ruling political class. Grillo's bloc of seats in Parliament could prove crucial in making any coalition government viable.

But Grillo, swarmed by reporters outside his villa in Genoa, said his forces would seek to thwart any Bersani-Berlusconi deal. Raising the specter of early elections, he predicted any such coalition will "last seven, eight months. The economy won't let them escape."

Investors around the world appeared skeptical over the prospects of a deal.

"Clearly markets are taking fright from the messy and chaotic Italian election result," said Louise Cooper, financial analyst at CooperCity.

In Europe, Germany's DAX was down 1.5 percent at 7,656 while the CAC-40 in France fell 1.7 percent to 3,657. The FTSE 100 index of leading British shares was 1.1 percent lower at 6,287.

Italy is hugely important for the future of the euro, and its apparent stability over the past six months has been one of the reasons that concerns over the currency have eased. Of the 17 European Union countries that use the euro, Italy has the second-highest debt burden as a proportion of its gross domestic product, at 127 percent. Only Greece's is higher. Italy has to spend around €80 billion a year just to service its debt.

The worry across in financial markets is that Italy's appetite for reform may wane and its debt situation may deteriorate. Though Italy's annual borrowing — its budget deficit — is relatively small compared with other euro countries at 3 percent of its annual gross domestic product, its overall debt stands at a colossal €2 trillion.

The Monti government enacted wide-ranging reforms to the budget and the economy. Though its borrowing rates have fallen in financial markets, the cost to Italians has been high, with the country mired in recession and unemployment on the rise.

Monti was a big loser in the election and Berlusconi ruled out an alliance with his successor, whom he blamed for driving Italy deeper into recession.

On Tuesday, Monti huddled with his ministers for the economy and European affairs, as well as Italy's central bank governor over the market developments, his office said.

Last July, concerns over the country's ability to pay down its debt — despite the Monti reforms — and the stability of the wider eurozone sent the interest rate on its 10-year bonds back up to a near-unsustainable 6.36 percent. This prompted European Central Bank chief Mario Draghi to offer to buy up unlimited quantities of short-term debt in countries struggling with high borrowing costs.

In Spain, another country struggling with austerity, ministers expressed concern over the Italian election results but were confident they won't upset plans to lift Europe out of the crisis.

Foreign Minister Jose Manuel Garcia-Margallo said the result was "a jump to nowhere with positive consequences for nobody."

The EU's economic and monetary affairs commissioner, Olli Rehn, told reporters in Copenhagen Tuesday that it was important "Italy pursues reform for the sake of sustainable growth and job creation."

The euro was hit hard late Monday on the initial fallout of the election results, nearly dropping below $1.30 for the first time since early 2013. However, it recovered Tuesday, trading 0.2 percent higher at $1.3107.

And U.S. stocks opened rebounded, a day after the main U.S. indexes had their worst session since last November. The Dow Jones industrial average was 0.6 percent higher at 13,866 while the broader S&P 500 index rose 0.4 percent to 1,494.

Earlier in Asia, Japan's Nikkei slid 2.3 percent to 11,398.81 as the yen appreciated to the potential detriment of the country's exporters. The dollar was 0.4 percent lower at $92.23 yen. Hong Kong's Hang Seng dropped 1.3 percent to 22,519.69 while South Korea's Kospi fell 0.5 percent to 2,000.01.

Oil prices steadied, with the benchmark New York rate 64 cents lower at $92.47 a barrel.

____

Pylas reported from London.

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US 4Q bank earnings up 37 pct.; highest in 6 years

WASHINGTON — Profits of U.S. banks jumped almost 37 percent from October through December, reaching the highest level in six years as banks continued to step up lending.

The figures are fresh evidence of the banking industry's sustained recovery more than four years after the financial crisis.

The Federal Deposit Insurance Corp. reported Tuesday that banks earned $34.7 billion in the quarter, the highest since the fourth quarter of 2006.

The agency also says banks posted reduced losses on loans in the fourth quarter and set aside almost 25 percent less to cover potential losses than in the final quarter of 2011.

Loans increased 1.7 percent in the fourth quarter. The number of banks on the FDIC's "problem" list fell to 651 from 694.

For all of 2012, bank earnings rose 19.3 pct. to $141.3 billion, the second-highest annual level ever.

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High-stakes trial begins for 2010 Gulf oil spill

NEW ORLEANS — A high-stakes trial started Monday to assign blame and help figure out exactly how much more BP and other companies should pay for the nation's worst offshore oil spill.

U.S. District Judge Carl Barbier said he would hear opening statements Monday and the first witness would take the stand Tuesday. Unless a settlement is reached, the judge, not a jury, ultimately will decide months from now how much more money BP PLC and its partners on the ill-fated drilling project owe for their roles in the 2010 environmental catastrophe in the Gulf of Mexico.

BP has said it already has racked up more than $24 billion in spill-related expenses and has estimated it will pay a total of $42 billion to fully resolve its liability for the disaster that killed 11 workers and spewed millions of gallons of oil.

But the trial attorneys for the federal government, Gulf states and private plaintiffs hope to convince the judge that the company is liable for much more.

With billions of dollars on the line, the companies and their courtroom adversaries have spared no expense in preparing for a trial that could last several months. Hundreds of attorneys have worked on the case, generating roughly 90 million pages of documents, logging nearly 9,000 docket entries and taking more than 300 depositions of witnesses who could testify at trial.

"In terms of sheer dollar amounts and public attention, this is one of the most complex and massive disputes ever faced by the courts," said Fordham University law professor Howard Erichson, an expert in complex litigation.

Barbier has promised he won't let the case drag on for years as has the litigation over the 1989 Exxon Valdez spill, which still hasn't been completely resolved. He encouraged settlement talks that already have resolved billions of dollars in spill-related claims.

"Judge Barbier has managed the case actively and moved it along toward trial pretty quickly," Erichson said.

In December, Barbier gave final approval to a settlement between BP and Plaintiffs' Steering Committee lawyers representing Gulf Coast businesses and residents who claim the spill cost them money. BP estimates it will pay roughly $8.5 billion to resolve tens of thousands of these claims, but the deal doesn't have a cap.

BP resolved a Justice Department criminal probe by agreeing to plead guilty to manslaughter and other charges and pay $4 billion in criminal penalties. Deepwater Horizon rig owner Transocean Ltd. reached a separate settlement with the federal government, pleading guilty to a misdemeanor charge and agreeing to pay $1.4 billion in criminal and civil penalties.

But there's plenty left for the lawyers to argue about at trial, given that the federal government and Gulf states haven't resolved civil claims against the company that could be worth more than $20 billion.

The Justice Department and private plaintiffs' attorneys have said they would prove BP acted with gross negligence before the blowout of its Macondo well on April 20, 2010.

BP's civil penalties would soar if Barbier agrees with that claim.

BP, meanwhile, argues the federal government's estimate of how much oil spewed from the well — more than 200 million gallons — is inflated by at least 20 percent. Clean Water Act penalties are based on how many barrels of oil spilled.

Barbier plans to hold the trial in at least two phases and may issue partial rulings at the end of each. The first phase, which could last three months, is designed to determine what caused the blowout and assign percentages of blame to the companies involved. The second phase will address efforts to stop the flow of oil from the well and aims to determine how much crude spilled into the Gulf.

The trial originally was scheduled to start a year ago, but Barbier postponed it to allow BP to wrap up its settlement with the Plaintiffs' Steering Committee.

Barbier, 68, was nominated by President Bill Clinton and has served on the court since 1998. He had a private law practice, primarily representing small businesses and other plaintiffs in civil cases, and served as president of the New Orleans Bar Association before he joined the bench.

Dane Ciolino, a Loyola University law professor who has represented criminal defendants in Barbier's court, described him as a "no-nonsense" but even-tempered judge.

"He's very good at getting down to the pertinent issues," Ciolino said. "Some judges could be described as impatient, short or gruff. He is none of that."

Despite the bitter disputes at the root of the case, Barbier has maintained a collegial atmosphere at his monthly status conferences with the lawyers, cracking an occasional joke or good-naturedly ribbing attorneys over their college football allegiances.

Cordial with each other in the courtroom, the competing attorneys have saved their harshest rhetoric for court filings or news releases. Despite its settlement with BP last year, the Plaintiffs' Steering Committee attorneys won't be allies at trial with the London-based oil giant. And they still haven't resolved civil claims against Transocean or cement contractor Halliburton.

"These three companies' reckless, greed-driven conduct killed 11 good men, polluted the Gulf for years and left the region's economy in shambles. Any statement to the contrary is self-serving nonsense," Steve Herman, a lead plaintiffs' attorney, said in a recent statement.

A series of government investigations has exhaustively documented the mistakes that led to the blowout, spreading the blame among the companies. Alabama Attorney General Luther Strange said witnesses scheduled to testify at trial will reveal new information about the cause of the disaster.

"I think you're going to learn a lot, particularly about the culture that existed at BP and their priorities," Strange said.

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Daytona's preliminary TV rating up from last year

DAYTONA BEACH, Fla. — With Danica Patrick starting from the pole, the Daytona 500's preliminary television ratings are much higher than last year's.

Sunday afternoon's race earned a 10.0 overnight rating and 22 share on Fox. That's up 30 percent from 2012, when rain pushed the event to a Monday night. The network said Monday it was the highest overnight rating since 2006.

Jimmie Johnson won the race while Patrick was eighth, the best finish by a woman at the Daytona 500.

Ratings represent the percentage of all homes with televisions tuned to a program. Shares represent the percentage of all homes with TVs in use at the time. Overnight ratings measure the country's largest markets.

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Markets buoyant on Italian election polls

LONDON — Markets roared ahead Monday as the momentum that has marked 2013 reestablished itself amid early indications that the center-left will be able to form a government in Italy.

Early polls out of Italy show that the center-left coalition, led by Pier Luigi Bersani, has claimed the most votes in the election.

If the polls are correct, then Bersani should be in a position to form a government, possibly in conjunction with Mario Monti, the former technocratic premier who has been widely credited in the markets for dousing the country's debt crisis in the past year.

Andrew Wilkinson, chief economic strategist at Miller Tabak & Co., said that prospect was "probably the most market-friendly outcome."

Italian stocks, already sharply higher, pushed further ahead, to trade 3.9 percent higher, while the yield on the country's ten-year bond dropped 0.25 percentage points to 4.15 percent. That is around 3 percentage points down from a about a year ago, when concerns about the country's debt were at their height.

The advance wasn't just confined to Italy. Germany's DAX was up 2.4 percent at 7,843 while the CAC-40 in France was 1.8 percent higher at 3,773. The FTSE 100 index of leading British shares rose 0.6 percent to 6,376 despite last Friday's downgrade of the country's credit rating by Moody's.

The euro was buoyant too, trading 0.6 percent higher at $1.3296.

Italy's stability is hugely important for the future of the euro currency. Of the 17 European Union countries that use the euro, it has the second-highest debt burden as a proportion of its annual gross domestic product. Only Greece's is higher.

Considered to be too big to bail out, its future in the single currency bloc, at least as far as markets are concerned, is to enact economic reforms and tight budgetary controls. Monti's government was supported in the markets even though he personally saw his popularity falter amid recession and rising unemployment.

A convincing victory by conservative candidate Nicos Anastasiades in Cyprus' presidential election also helped ease concerns that the country might not clinch a bailout deal with international creditors.

U.S. stocks also opened solidly, with the Dow Jones industrial average up 0.3 percent at 14,037 soon after the open and the broader S&P 500 index up 0.4 percent to 1,522.

It's a particularly busy week on the U.S. economic news front, with investors awaiting a raft of data as well as remarks from Federal Reserve chairman Ben Bernanke. Last week, the minutes from the Fed's last policy meeting showed concern over the central bank's monetary stimulus, stoking jitters in the markets. Meanwhile, lawmakers in Congress are also grappling over the budget again.

Monday's rebound started in Asia, with Japanese stocks surging on reports the prime minister's pick for central bank governor will be a strong advocate of loose monetary policy aimed at reviving the moribund economy.

The Nikkei 225 surged 2.4 percent to end at 11,662.52 while the yen dropped further against the dollar after local news outlets reported that Prime Minister Shinzo Abe was preparing to nominate Haruhiko Kuroda as the next governor of the Bank of Japan.

Kuroda is an Oxford-educated former vice-minister of finance who is currently president of the Asian Development Bank. The 67-year-old is seen as someone who backs Abe's plan to jumpstart the world's third-largest economy by fighting deflation through monetary easing and hefty government spending.

"The market has become very excited over this news as he will be a market friendly choice," said Chris Weston of IG Markets.

Since the Asian session, the yen has recovered and the dollar was trading 0.6 percent lower at 93.77 yen. Earlier it had risen to 94.76 yen and near two and a half year highs.

Over the past few weeks the yen has fallen by around 20 percent and that's helped the Nikkei gain around 30 percent.

Elsewhere in Asia, Hong Kong's Hang Seng rose 0.2 percent to close at 22,820.08 while South Korea's Kospi ended 0.5 percent lower at 2,009.52.

In mainland China, the Shanghai Composite Index climbed 0.5 percent to close at 2,325.82 and the smaller Shenzhen Composite Index ended 0.8 percent higher at 955.79.

Oil prices tracked equities higher with the benchmark New York rate up $1.14 at $94.27 a barrel.

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Warren addresses New England business group

BOSTON — U.S. Sen. Elizabeth Warren says she does not know at this point what can be done to prevent what she calls a "mindless across the board approach" to cutting federal spending.

The Massachusetts Democrat was asked during a breakfast meeting of business leaders in Boston on Monday about the $85 billion in automatic spending cuts scheduled to take effect Friday unless a compromise is reached in Washington.

Warren told the New England Council she believes President Barack Obama has offered a "balanced" plan that calls for revenue increases along with targeted cuts. But she said she did not know at this point whether a deal could be struck with reluctant Republicans in Congress.

Massachusetts would stand to lose millions in funding for education, medical research, defense-related work and other programs.

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Horse meat found in Ikea's Swedish meatballs

STOCKHOLM — Swedish furniture giant Ikea was drawn into Europe's widening food labeling scandal Monday as authorities said they had detected horse meat in frozen meatballs labeled as beef and pork and sold in 13 countries across the continent.

The Czech State Veterinary Administration said that horse meat was found in one-kilogram (2.2 pound) packs of frozen meatballs made in Sweden and shipped to the Czech Republic for sale in Ikea stores there. A total of 760 kilograms (1,675 pounds) of the meatballs were stopped from reaching the shelves.

Ikea spokeswoman Ylva Magnusson said meatballs from the same batch had gone out to Slovakia, Hungary, France, Britain, Portugal, the Netherlands, Belgium, Spain, Italy, Greece, Cyprus and Ireland. Magnusson said meatballs from that batch were taken off the shelves in Ikea stores in all those countries. Other shipments of meatballs were not affected, including to the U.S., even though they all come from the same Swedish supplier, Magnusson said.

"Our global recommendation is to not recall or stop selling meatballs," she said.

However, the company's Swedish branch announced on its Facebook page that it won't sell or serve any meatballs at its stores in Sweden out of concern for "potential worries among our customers."

Magnusson said Ikea saw no reason to extend that guidance globally. She said Ikea was conducting its own tests of the affected batch "to validate" the Czech results. She also said that two weeks ago Ikea tested a range of frozen food products, including meatballs, and found no traces of horse meat.

"But, of course, we take the tests that Czech authorities have done very seriously," Magnusson said. "We don't tolerate any other ingredients than those on the label."

European authorities have said the horse meat found in lasagna and other prepared dishes is a case of fraudulent labeling but does not pose a health risk.

Ikea's trademark blue-and-yellow stores typically feature a restaurant that serves traditional Swedish food, including meatballs served with boiled or mashed potatoes, gravy and lingonberry jam. Meatballs — "Kottbullar" in Swedish — are also available in the frozen foods section.

Magnusson said all of the meatballs are supplied by Gunnar Dafgard AB, a family-owned frozen foods company in southwestern Sweden. Calls to the company were not immediately returned, but it posted a brief statement on its website saying "the batch in question has been blocked and we are investigating the situation."

Sweden's food safety authority said it wasn't taking any action but was waiting for Czech authorities to specify the quantity of horsemeat detected.

"If it's less than 1 percent it could mean that they handled horsemeat at the same facility. If it's more, we assess that it's been mixed into the product," said Karin Cerenius of Sweden's National Food Agency.

European Union officials were meeting Monday to discuss tougher food labeling rules after the discovery of horse meat in a range of frozen supermarket meals such as burgers and lasagna that were supposed to contain beef or pork.

The Czech authority also announced Monday that it found horse meat in beef burgers imported from Poland during random tests of food products.

Spanish authorities, meanwhile, announced that traces of horse meat were found in a beef cannelloni product by one of the brands of Nestle, a Switzerland-based food giant.

In a statement on its website, Nestle Spain said that after carrying out tests on meat supplied to its factories in Spain it was withdrawing six "La Cocinera" products and one "Buitoni" product from store shelves.

It said it was taking the action after the traces of horse meat were found in beef bought from a supplier in central Spain. Nestle said it was taking legal action against the company, adding that the products would be replaced by ones with 100 percent beef.

Some EU member states are pressing for tougher labeling rules to regain consumer confidence.

The 27-nation bloc must agree on binding origin disclosures for food product ingredients, starting with a better labeling of meat products, German Agriculture Minister Ilse Aigner said.

"Consumers have every right to the greatest-possible transparency," she insisted.

Austria backs the German initiative; but others like Ireland say existing rules are sufficient although Europe-wide controls must be strengthened to address the problem of fraudulent labeling.

The scandal has created a split between nations like Britain which see further rules as a protectionist hindrance of free trade under the bloc's single market, and those calling for tougher regulation.

Processed food products — a business segment with traditionally low margins that often leads producers to hunt for the cheapest suppliers — often contain ingredients from multiple suppliers in different countries, who themselves at times subcontract production to others, making it hard to monitor every link in the production chain.

Standardized DNA checks with meat suppliers and more stringent labeling rules will add costs that producers will most likely hand down to consumers, making food more expensive.

The scandal began in Ireland in mid-January when the country announced the results of its first-ever DNA tests on beef products. It tested frozen beef burgers taken from store shelves and found that more than a third of brands at five supermarkets contained at least a trace of horse. The sample of one brand sold by British supermarket kingpin Tesco was more than a quarter horse.

Such discoveries have spread like wildfire across Europe as governments, supermarkets, meat traders and processors began their own DNA testing of products labeled beef and have been forced to withdraw tens of millions of products from store shelves.

More than a dozen nations have detected horse flesh in processed products such as factory-made burger patties, lasagnas, meat pies and meat-filled pastas. The investigations have been complicated by elaborate supply chains involving multiple cross-border middlemen.

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Associated Press writers Juergen Baetz in Brussels, Karel Janicek in Prague and Ciaran Giles in Madrid contributed to this report.

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