Business and Finance

Asian stocks were mixed Wednesday as investors fearful of a debt implosion in Europe held onto hopes that the Federal Reserve will announce measures to jolt the U.S. economy.

Japan’s Nikkei 225 index was marginally higher at 8,721.98 after the Finance Ministry released trade data showing the country’s exports rose for the first time in six months. South Korea’s Kospi gained 0.4 percent to 1,845.09.

Hong Kong’s Hang Seng fell 0.8 percent to 18,866.30. Australia’s S&P/ASX 200, swinging between gains and losses, was less than 0.1 percent up at 4,041.30. Benchmarks in New Zealand and Taiwan were higher. Those in Singapore and Malaysia fell.

On Wall Street, stocks rose on hopes the U.S. central bank would announce steps to boost the flagging economy. Many analysts believe the Fed will announce a new stimulus plan at the end of a two-day policy meeting Wednesday.

The Dow Jones industrial average closed up 0.1 percent at 11,408.66. The Standard & Poor’s 500 index fell 0.2 percent to 1,202.09. The Nasdaq composite fell 0.9 percent to 2,590.24.

Meanwhile, debt-saddled Greece moved closer Tuesday to getting the vital bailout funds it needs to avoid a disastrous default on its debts after persuading international debt inspectors to return to Athens and resume reviewing its austerity program. Without the money, the country would default within weeks.

Greece has been depending on rescue loans from other eurozone countries and the IMF since May 2010, when its borrowing costs went through the roof following revelations Athens had been underreporting an alarmingly bloated budget deficit and public debt.

Greece is only one of several European countries that investors fear may be at risk of failing to pay their debts. On Monday night, the ratings agency Standard & Poor’s cut Italy’s credit rating by one notch. Italy has the second-biggest debt burden among countries that use the euro, after Greece.

If Greece or Italy were to default, European banks that have lent money to the countries could lose billions of dollars. That could hurt the European banking system and have repercussions for U.S. banks. Investors are concerned that a default in Europe could cause a lending crisis similar to what happened after the collapse of Lehman Brothers in 2008.

In energy trading, benchmark oil for October delivery was down 35 cents at $86.57 in electronic trading on the New York Mercantile Exchange. Crude rose $1.11 to settle at $86.92 on Tuesday.

In London, Brent crude for November delivery was up 9 cents at $110.63 on the ICE Futures exchange.

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Turbulent financial markets haven’t squelched generosity altogether in 2011, but they do have Americans thinking long and hard about the importance of their assets.

They are reconsidering financial gifts to family members, recalculating value of their property, and reassessing financial components of their wills and estate plans.

Uneasiness permeates just about everything to do with their money online cash advance.

“There’s a little less gifting taking place now because people are feeling less wealthy,” said Bernhard Aaen, a lawyer and accredited estate planner in Redlands, Calif. “I’ve lately had very wealthy people with modest lifestyles become very worried that they are going to outlive their money

Bank of America Corp. is selling half of its stake in China Construction Bank Corp. to raise cash and shore up its capital base.

The nation’s largest bank by assets said Monday that it will sell 13.1 billion shares in the Chinese bank for $8.3 billion to a group of investors it declined to name. The sale will generate a gain of $3.3 billion for Bank of America.

The news came four days after the bank got a $5 billion investment from Warren Buffett’s Berkshire Hathaway Inc., which provided a big boost to Bank of America’s battered stock. The billionaire made investments in other major companies such as Goldman Sachs Group Inc., helping restore confidence in them when they were out of favor.

After the sale, Bank of America will own about 5 percent of China Construction Bank. It currently owns about 10 percent.

The sale is the bank’s latest move to increase its capital base to comply with new international regulations created following the global meltdown. The rules require big financial institutions to hold more cash.

Finance Chief Bruce Thompson said the bank raised about $5.8 billion in August. That comes on top of cash and cash-equivalent securities of $402 billion at the end of second quarter.

The bank has faced many problems stemming from its 2008 purchase of the nation’s largest mortgage lender, Countrywide Financial Corp paperless payday loans., as well as other issues. Bank of America has lost $15.3 billion in the last four quarters. Its revenue fell 34 percent in the first half of 2011 compared with last year after new regulations cut into the fees it collects.

Settlement objection

Also Monday, the Federal Deposit Insurance Corp. objected to Bank of America Corp.’s proposed $8.5 billion mortgage-bond settlement with investors, joining investors and states that are challenging the agreement.

The FDIC owns securities covered by the settlement and says it doesn’t have enough information to evaluate the accord, according to a filing in federal court in Manhattan.

Bank of America has agreed to pay $8.5 billion to resolve claims from investors in Countrywide Financial mortgage bonds. The settlement was negotiated with a group of institutional investors and would apply to investors outside that group.

A New York state judge was scheduled to consider approving the settlement in November.

Bloomberg News contributed to this report

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Supporters of President Hugo Chavez shaved their heads in solidarity with their leader’s struggle against cancer on Sunday as hundreds prayed and sang at a televised event.

Barbers shaved off the hair of several men and at least one woman while the crowd swayed to a religious song. Chavez, bald from chemotherapy, smiled, clapped with the music and waved to the crowd.

Those attending included a group of six from the Dominican Republic who shaved their heads outside the Venezuelan Embassy in their country on Friday. Chavez greeted the Dominicans with hugs and stood arm-in-arm with them.

Pro-Chavez lawmaker Robert Serra said in a message on Twitter that “Venezuelan young people and priests cut their hair… in solidarity.”

Young men with close-cropped hair stood in the crowd as shouts of “Hallelujah!” and “Amen!” rose at the end of a song.

Leidy Jimenez, one of the Dominicans, told state television that their decision to shave their heads was “a gesture of love and of strength for the president.”

Chavez blew a kiss to the crowd, and listened as a priest, a minister and others spoke. “Long live Hugo Chavez!,” one Dominican man told the crowd.

Chavez praised the Christian group from the Dominican Republic in a newspaper column Saturday, saying “may God bless you.” The Dominicans arrived in Venezuela on Saturday night to meet with the president.

Chavez also said in his column that tests show his body has been responding well to chemotherapy. He said he was preparing for a “possible” new round of chemotherapy and that all of his hair had fallen out as a result of the treatment.

Chavez returned from his latest round of chemotherapy in Cuba on Aug. 14.

He underwent surgery in Cuba in June that removed a cancerous tumor from his pelvic region. He has not specified where the tumor was located. He has said the chemotherapy aims to ensure no malignant cells reappear.

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Stocks in the United States ended higher on Friday as the markets found their bearings, ending one of the most tumultuous weeks on Wall Street in years.

There was little sign of the volatility seen in the previous four days, and stocks wavered within a relatively tight range. But the indexes failed to fully recover from the week’s wild swings.

“We didn’t fall off a cliff,” said Bruce McCain, chief investment strategist of Key Private Bank. “We are in a market that is trying to bottom, after a gut-wrenching slide, and going into a weekend where people can take a look at it.”

The Standard & Poor’s 500-stock index was up 6.17 points, or 0.53 percent, at 1,178.81. It was 1.7 percent lower for the week. The Dow Jones industrial average was up 125.71 points, or 1.13 percent at 11,269.02 and the Nasdaq rose 0.61 percent to 2.507.98.

American stock markets were wildly volatile in the previous four trading sessions, with alternating days of collapsing and then sharply rising prices. There was a 4.4 percent decline on Wednesday and a 4.6 percent climb on Thursday. The mood has swung between speculation about worries over the economy and a renewed financial crisis, and confidence that banks are healthy and corporate profits strong.

“It seems like we have a continuing trend of lighter volume, with successively lower volume in the rise and the fall, which is typical of the market bottoming out,” said McCain.

Analysts and traders said the turmoil was driven by intensifying worries over European sovereign debt; the congressional impasse over the debt ceiling; and revisions to economic data, particularly with respect to gross domestic product, that raised concerns over another recession.

The Standard & Poor’s downgrade of the nation’s credit rating last week also weighed on the markets. But many said the selling was driven by emotion, and that the S&P move had been discounted or paled in comparison to other factors, especially the economy and developments in Europe.

Traders suggested a modest drop in claims for unemployment insurance in the United States and reassurances from French officials that their country’s banks were safe may have helped stocks on Thursday. And on Friday, when trading volume was 4.8 billion shares, investors sifted through new data on the economy, including insights into consumer behavior, a crucial element in trying to gauge the pace of the recovery.

The Commerce Department said retail sales rose 0.5 percent in July. Without the volatile automobile and gas components, sales increased 0.3 percent. The figures included several revisions, but they suggested there was some spending momentum in the second quarter and the beginning of the current quarter, at least.

But another piece of data that is indicative of where the market could swing was a survey by the University of Michigan that showed consumer sentiment dipped in August, registering 54.9 points on its index, which was lower than during the crisis of November 2008.

“Clearly, recent financial market turmoil has weighed heavily on sentiment, which was already under pressure from a dysfunctional political arena and the longer-term issue of an ailing labor market,” said Joshua Shapiro, the chief United States economist for MFR, in a research note.

At times, the VIX or “fear index,” a measure of volatility in the market, declined to its lowest point this week. The VIX was 36.87.

United States benchmark 10-year Treasury yields were lower, to 2.24 percent from 2.34 percent on Thursday.

“Going forward, the recent news in the stock market is not a good thing for consumer confidence and spending,” said Chris Christopher Jr., the senior principal economist for IHS Global Insight. “The swings in the equity markets are making consumers very nervous.”

But Christopher and other economists have noted that the recent declines in oil prices will offer some relief to Americans.

Industrial stocks led the way on the S&P 500, up almost 2 percent, with General Electric up more than 1 percent. Financial stocks pulled back by late afternoon, showing slight losses, but Bank of America was about 1 percent higher.

The gain in stocks came well after investors had digested the latest economic data. Timothy Hoyle, director of research for Haverford Investments, said that the markets took a step down in early trading when the consumer sentiment report was released, but that the figure was not unexpected considering recent bad economic data and some of the developments in financial markets.

Speaking about the market on Friday, he said: “Everyone is suffering from volatility fatigue.”

“We are stuck in a trading range until we have a credible backstop in Europe,” he said. “The market is extremely cheap but there is a lack of confidence in forward earnings estimates.”

American stocks picked up the pace from Europe, where markets got a lift from the imposition of temporary bans on negative bets against financial stocks in four countries. By the close of trading, the Euro Stoxx 50 index of euro zone blue chips was up more than 4 percent, and the FTSE 100 index in London was up 3.04 percent. The CAC 40 index in Paris was also up 4.02 percent, and the DAX in Frankfurt was up 3.45 percent. Asian stocks had a lackluster trading day.

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Several alleged victims of tabloid phone hacking in Britain will soon file lawsuits against a second newspaper group, Piers Morgan’s former employer Trinity Mirror PLC, their lawyer said Friday.

Mark Lewis said the claims would be filed in “a few weeks,” but would not disclose identities of his clients or say precisely when the papers would be presented at court.

Lewis represents the family of Milly Dowler, a 13-year-old girl abducted and murdered by a pedophile in 2002. The revelation a month ago that her voicemail messages had been accessed by the News of the World tabloid while she was still missing outraged British opinion, and triggered a crisis for Rupert Murdoch’s News Corp.

The phone hacking scandal centers on allegations that journalists eavesdropped on private phone messages, bribed police for information and hacked email accounts.

So far the crisis has centered on Murdoch’s media empire, leading him to shut down the News of the World and abandon a bid to take over British Sky Broadcasting. Several former executives of the newspaper have been arrested by police investigating the eavesdropping.

But there have also been allegations of hacking by other newspapers. This week Paul McCartney’s ex-wife, Heather Mills, claimed in a BBC interview that she was hacked by a Trinity Mirror journalist in 2001.

McCartney said Thursday that he planned to contact police over the claim.

“I will be talking to them about that,” McCartney told the U.S. television journalists by videolink from Cincinnati, Ohio.

The BBC did not identify the journalist cited by Mills, but said it was not CNN celebrity interviewer Piers Morgan, who was editor of the group’s flagship tabloid, the Daily Mirror, between 1995 and 2004.

Morgan has repeatedly denied ordering anyone to spy on voicemails or knowingly publishing stories obtained through hacking.

But in an article published by the Daily Mail in 2006, Morgan said that he had been played a tape of a message McCartney had left on Mills’ cell phone in the wake of one of their fights.

“It was heartbreaking,” Morgan wrote. “He sounded lonely, miserable and desperate, and even sang ‘We Can Work It Out’ into the answerphone.”

Questions over how Morgan came to hear the message have led several British lawmakers to call on him to return to the U.K. and explain himself.

Lawmaker John Whittingdale, chairman of a parliamentary committee that is investigating hacking by the News of the World, said Thursday that Morgan “absolutely should” come to Britain to answer questions.

Whittingdale said “there is evidence to suggest that other newspapers were involved in phone hacking” _ and that police should investigate.

Both Trinity Mirror and the publisher of Britain’s Daily Mail newspaper, eager to stop the scandal spreading to them, have announced reviews of editorial procedures in the wake of the revelations about the scale of wrongdoing at the News of the World.

Meanwhile, an activist who hit Murdoch with a shaving foam pie as the mogul testified to British lawmakers last month had his jail sentence reduced on appeal Friday.

Jonathan May-Bowles was sentenced Tuesday for assaulting the 80-year-old media tycoon as he gave evidence to the House of Commons Culture, Media and Sport Committee.

A judge rejected May-Bowles attempt to overturn the sentence, but reduced it Friday to four weeks.

A lawyer for May-Bowles, 26, argued that the attack was in the tradition of comics “from Laurel and Hardy and the Three Stooges to Monty Python.” Defense attorney Piers Marquis said the foam pie had been a “staple of slapstick comedy” for years.

But Judge Anthony Pitts said there had been nothing funny about the attack.

“It was intended, it seems to us, to cause fear and it must have caused fear,” the judge said.

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Frazier Moore and Noaki Schwartz in Los Angeles and David Stringer and Raphael G. Satter in London contributed to this report.

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Newspaper publisher McClatchy’s second-quarter earnings fell 32 percent as advertising declined.

The results released Thursday served as a reminder of the financial pressures facing the owner of The Sacramento Bee, The Miami Herald and 28 other daily newspapers. In recent years, advertisers have shifted away from print to the less expensive alternatives on the Internet.

McClatchy Co. CEO Gary Pruitt says he will keep cutting costs to offset another anticipated decline in ad revenue in the current quarter ending in late September.

In the quarter that ended in late June, McClatchy earned $4.9 million, or 6 cents per share. That was down from net income of $7.3 million, or 9 cents per share, at the same time last year.

Total revenue fell 8 percent from last year to $314 million.

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Stocks were trading mixed Tuesday morning as investors weighed the prospect that Italy, Europe’s third-largest economy, could be the next country to need help managing its debts.

The yields on the government bonds of Italy and Spain have shot up this week as investors lost confidence in the quality of their debt. Some of the concerns about Italy eased Tuesday after a successful auction of new government debt.

Meanwhile, international lenders have not yet confirmed terms for a Greek rescue package. That has reignited concerns that Greece might default on its debt, setting off a chain reaction of European defaults.

The Standard & Poor’s 500 index fell less than a point to 1,319 in early trading. The Dow Jones industrial average edged up 3 points to 12,508. The Nasdaq composite fell 6 points, or 0.2 percent, to 2,796.

Investors had assumed Italy would be able to manage its heavy debt load in part because of a high personal savings rate among its citizens. But after concerns arose last week that Italian and Spanish banks might not pass upcoming stress tests, stock in those countries’ largest banks fell sharply. Results of the tests are expected to be announced Friday guaranteed high risk personal loans.

At the center of the panic over European government debt is the fear that the European banking systems could be infected. That would affect a global network of financial institutions, potentially freezing up lending and affecting U.S. companies that do business internationally.

Investors are also worried about U.S. debt. The looming Aug. 2 deadline to resolve contentious budget negotiations and signs that the U.S. economy could be in for an extended downturn are also pushing stocks lower.

Alcoa Inc. edged up 0.4 percent after reporting its second-quarter earnings Monday night. The aluminum maker beat analyst expectations for its revenue, but fell short of expectations for net income.

Technology companies were among the weakest in the S&P 500. Microchip Technology Inc. fell 12 percent after the chip make said it expected lower quarterly revenue and income because of waning demand from car makers. That pushed the stocks of other chip makers lower too. Novellus Systems Inc. fell 7 percent, and Texas Instruments Inc. fell 3.9 percent.

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SAN FRANCISCO—Google Inc, frustrated by a string of failed attempts to crack social networking, is taking another stab at fending off Facebook and other hot social sites with a new service called Google Plus.

Google designed the service, unveiled Tuesday, to tie together all of its online properties, laying the foundation for a full-fledged social network. It is the company’s biggest foray into social networking since co-founder Larry Page took over as chief executive in April.

Page has made social networking a top priority at the world’s No 1 Internet search engine, whose position as the main gateway to online information could be at risk as people spend more time on sites like Facebook and Twitter.

To set its service apart from Facebook, which has more than 500 million users, Google is betting on what it says is a better approach to privacy, a hot-button issue that has burned Facebook, as well as Google, in the past.

Central to Google Plus are so-called “circles” of friends and acquaintances. Users can organize contacts into different customized circles — family members, co-workers or college friends, say — and share photos, videos or other information only within those smaller groups.

“In the online world there’s this ’share box’ and you type into it and you have no idea who is going to get that, or where it’s going to land, or how it’s going to embarrass you six months from now,” said Google Vice President of Product Management Bradley Horowitz.

“For us, privacy isn’t buried six panels deep,” he added.

Facebook, which has been criticized for confusing privacy controls, introduced a feature last year that lets users create smaller groups of friends. Google, without mentioning Facebook by name, said other social networking services’ attempts to create groups were “bolt-on” efforts that do not work as well.

Google Plus will be rolled out to a limited number of users in what the company is calling a field trial. Only those invited to join will initially be able to use the service. Google did not say when it would be more widely available.

Google’s stock has been pressured by concerns about rising spending within the company and increasing regulatory scrutiny — not to mention its struggles with social networking. The Federal Trade Commission, among others, is currently reviewing its business practices.

Its shares are down almost 20 per cent this year after underperforming the market in 2010.

To create Google Plus, the company went back to the drawing board in the wake of several notable failures, including Google Wave and Google Buzz, a microblogging service whose launch was marred by privacy snafus.

“We learned a lot in Buzz, and one of the things we learned is that there’s a real market opportunity for a product that addresses people’s concerns around privacy and how their information is shared,” said Horowitz.

Google, with $29 billion in revenue last year, drew more than 1 billion visitors worldwide to its websites in May, more than any other company, according to Web analytics firm comScore. But people are spending more time on Facebook: The average U.S. visitor spent 375 minutes on Facebook in May, compared with 231 minutes for Google.

Google Plus seems designed to make its online properties a pervasive part of the daily online experience, rather than being spots where Web surfers occasionally check in to search for a website or check email.

As with Facebook’s service, Google Plus has a central Web page that displays an ever-updating stream of the comments, photos and links being shared by friends and contacts.

A toolbar across the top of most of Google’s sites — such as its main search page, its Gmail site and its Maps site — allows users to access their personalized data feed. They can then contribute their own information to the stream.

Google Plus will also offer a special video chat feature, in which up to 10 people can jump on a conference call. And Google will automatically store photos taken on cell phones on its Internet servers, allowing a Google Plus user to access the photos from any computer and share them.

When asked if he expected people to switch from Facebook to Google Plus, Google Senior Vice President of Engineering Vic Gundotra said people may decide to use both.

“People today use multiple tools. I think what we’re offering here offers some very distinct advantages around some basic needs,” he said.

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Embattled Yemeni President Ali Abdullah Saleh flew to Saudi Arabia for urgent medical care after a rocket attack on his palace, raising the specter of a violent power grab in this impoverished country shaken by months of protests calling for his ouster.

The abrupt departure of Saleh and much of his family Saturday followed intense pressure to step down from his powerful Gulf neighbors and longtime ally Washington, which fear the chaos could plunge the country into anarchy and undermine the U.S.-backed campaign against al-Qaida’s most active branch. It was not immediately clear who was in charge.

Yemen’s unrest was inspired by the uprisings across the Arab world, which have already led to the downfall of governments in Egypt and Tunisia. It already has cost the government control of some remote provinces, and al-Qaida in the Arabian Peninsula and other Islamist extremists have exploited the turmoil to bolster their position in the Arab world’s poorest country.

“Saleh was an inconsistent partner in the war against al-Qaida,” said Rick Nelson, a counterterrorism expert at the Center for Strategic and International Studies in Washington. “But at least he was partner part of the time.”

Saleh, who is in his late 60s, had agreed to transfer power several times, only to step back at the last moment. Analysts said it appeared unlikely Saleh would return to Yemen: The Saudis have tried repeatedly to persuade him to step down and now he is in their care, large segments of the population oppose him, and a powerful tribal alliance took up arms against him.

A video posted on YouTube late Saturday showed hundreds of protesters in the Sanaa square where activists have camped out for months dancing and singing, some riding on each other’s shoulders. The video’s date could not be confirmed.

A Yemeni official, who spoke on condition of anonymity because he wasn’t authorized to release the information, said Saleh had left with most of his family. The official said he and others had only learned about Saleh’s plans after the president left.

A statement from the Saudi royal palace said a Saudi medical team traveled to Yemen to examine the president, then advised him to seek treatment in the kingdom. Saleh agreed and left Saturday night, the statement said.

Officials said Yemen’s constitution calls for the vice president to take over in the absence of the president. Several other senior regime leaders, including the prime minister, also were in Saudi Arabia after being wounded in Friday’s attack.

John Brennan, President Barack Obama’s national security adviser, spoke with the Yemeni vice president by telephone on Saturday, a White House official said, but offered no details. Brennan had traveled to Saudi Arabia and the United Arab Emirates to discuss the crisis during a three-day visit to the Gulf that ended Friday.

Other U.S. officials, speaking on condition of anonymity because of the sensitivity of the situation, said they could not confirm that power had been transferred to Vice President Abed-Rabbo Mansour Hadi.

Saleh also has been widely believed to be grooming his son, Ahmed, as a successor. Ahmed was believed to have stayed behind in an apparent bid to hold on to power, raising concern the country could be pitted into a violent power struggle as the sides jockey to fill the vacuum in the president’s absence.

The unrest in Yemen began in mid-February when protesters _ inspired by successful uprisings in Egypt and Tunisia _ took to the streets to demand that the autocratic leader of 33 years step down. But that generally peaceful movement gave way to vicious street fighting when tribal militias took up arms two weeks ago.

Saleh’s arrival in Saudi capped a flurry of conflicting reports about his whereabouts and condition that spread after Yemeni government officials and opposition tribal leaders said Saudi King Abdullah had mediated a cease-fire and invited Saleh to seek treatment in the neighboring kingdom. Past cease-fires have not held, but no fighting was reported in Sanaa on Saturday.

Saudi Arabia called “on all parties to exercise restraint and use reason” to keep the country from “sliding into more violence and fighting.”

Saleh’s departure likely means his rule is over, said Christopher Boucek, a Yemen expert with the Carnegie Endowment for International Peace.

“I’d hate to rule anything out for President Saleh,” Boucek said, noting that Saleh is a proven political survivor who has often beat overwhelming odds. “But I can’t see how he can come back and still be president.”

Although the U.S. long stood by Saleh, the Obama administration has been trying to negotiate a stable exit for him as the situation grew more unstable and government forces continued to crack down on dissent, with more than 150 protesters killed since the uprising began in mid-February faxless pay day loans.

Fighting between rebellious tribesmen and government forces has left more than 160 people dead over the last two weeks.

Violence reached a crescendo Friday when a rocket slammed into the mosque in the presidential compound during a prayer service, killing 11 bodyguards and seriously injuring five top officials who were worshipping along with Saleh.

The president delivered an audio address hours later, his voice labored, with only an old photo shown. His failure to appear in public despite repeated promises raised speculation that his injuries were more severe than acknowledged.

An activist and a witness, meanwhile, said military forces in the southern port city of Aden had withdrawn from checkpoints. Elsewhere in the south, armed gunmen stormed buildings in Taiz, prompting protesters to form committees to try to keep the peace.

Worried their peaceful movement was being co-opted, protesters in Taiz and the capital, Sanna, joined forces to issue a statement demanding the formation of a transitional council comprising civilians “whose hands are not stained with blood.”

Friday’s rocket attack was the first direct strike against Saleh in nearly four months of protests that had prompted a fierce crackdown by government forces.

Sheik Mohammed Nagi al-Shayef, a tribal ally, said he met the president Saturday evening at the Defense Ministry compound in the capital.

“He suffered burns, but they were not serious. He was burned on both hands, his face and head,” al-Shayef told The Associated Press. He said Saleh also was hit by jagged pieces of wood that splintered from the mosque pulpit. About 200 people were in the mosque when the rocket landed.

Through the pre-dawn hours Saturday, government and opposition forces exchanged rocket fire, damaging a contested police station. The rockets rained down on streets housing government buildings that had been taken over by tribesmen.

Since violence erupted in the capital on May 23, residents have been hiding in basements as the two sides fight for control of government ministries and hammer one another in artillery duels and gunbattles, rattling neighborhoods and sending smoke billowing into the air.

The temporary calm also spread to Taiz, where the Republican Guard brigade that had occupied the streets quietly left town and returned to base.

Taiz had been a focal point of anti-Saleh activism since the uprising began. The Republican Guard left Saturday without giving a reason after having violently cleared protest camps there last week.

The brigade issued no official statement as other military groups have done when defecting to the opposition. But its returning to base is significant because it led a fierce crackdown on protesters earlier this week that killed at least 25 people, sparking international condemnation.

Late Saturday, the tribal leader whose fighters have been battling Saleh’s forces in the capital accused them of not observing the Saudi-brokered cease-fire. Sheik Sadeq al-Ahmar, leader of the Hashid confederation, said Saleh’s forces were reinforcing their positions.

“We are respecting what we agreed upon under the guidance of the Saudi monarch to stop the bloodshed of innocents and bring safety for citizens based on our desire to bring security and quiet back to the capital, which is living through a terrible nightmare that Saleh’s regime has brought upon it,” al-Ahmar said in a statement.

Germany said Saturday it had closed its embassy in Yemen.

Inspired by uprisings in Egypt and Tunisia, protesters have been trying unsuccessfully since February to oust Saleh with a wave of peaceful protests that have brought out hundreds of thousands daily in cities across Yemen.

Now the crisis has transformed into a power struggle between two of Yemen’s most powerful families _ Saleh’s, which dominates the security forces, and the al-Ahmar clan, which leads Yemen’s strongest tribal confederation. The confederation groups around 10 northern tribes.

Al-Ahmar announced the Hashid’s support for the protest movement in March, and his fighters adhered to the movement’s nonviolence policy. But last week, Saleh’s forces moved against al-Ahmar’s fortress-like residence in Sanaa, and the tribe’s fighters rose up in fury.

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