Business and Finance

Stocks soared in morning trading Wednesday after major central banks acted together to support the global financial system by cutting short-term borrowing rates.

The Dow Jones industrial average jumped more than 400 points in early trading Wednesday, and was up 392 hour after the opening bell.

Markets in Europe also surged. Germany’s DAX index jumped 4.9 percent. The euro and commodities prices rose sharply. U.S. Treasury prices fell as demand weakened for ultra-safe assets.

The central banks of Europe, the U.S., Britain, Canada, Japan and Switzerland eased banks’ access to dollars by reducing their borrowing rates. They were responding to fears that a European country will default, touching off a credit crunch similar to what followed the 2008 collapse of Lehman Brothers.

Borrowing rates for European nations have skyrocketed on concerns that the European debt crisis has engulfed nations such as Italy which are too big to bail out. Borrowing rates for Italy, Spain and others have soared.

Banks need dollars to fund their daily operations. Their access dried up as U.S. money market funds reduced their lending to European banks.

The central banks’ action takes some pressure off the financial system, which has signaled in recent days that banks are losing faith in their trading partners. Banks need to trust each other to maintain healthy flows of credit and keep the system working.

The Dow Jones industrial average leaped 392 points, or 3.4 percent, to 11,948 at 10:20 a.m. Over the past three days the Dow has gained back all of the 564-point loss it had over Thanksgiving week.

The Standard & Poor’s 500 index jumped 39, or 3.2 percent, to 1,234. The Nasdaq composite index gained 78, or 3.1 percent, to 2,594.

The move by central banks does not address the fundamental problem posed by heavily indebted European nations. European finance ministers in Brussels have been meeting since Tuesday but have failed to deliver a clearer sense of how the currency union will proceed.

Investor sentiment was also lifted by China’s move to reduce bank reserve levels Wednesday to release money for lending and help shore up slowing growth. Higher growth in China could be crucial for a global economy that’s suffering in the wake of European debt crisis.

Beijing announced that the amount of money China’s commercial lenders must hold in reserve will be cut by 0.5 percent of their deposits, effective Dec. 5. It was the first easing of monetary policy in three years and analysts are expecting more.

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Chicago was shaped in part by commodities exchanges where contracts representing corn, wheat and hogs have changed hands for more than a century.

But two prominent exchanges are threatening to leave the state if Illinois doesn’t change the way it taxes their trading.

State lawmakers are expected to convene Tuesday and to discuss a deal that would appease the CME Group Inc. and CBOE Holdings Inc., while meeting demands made by another Illinois mainstay, Sears.

Those who back the tax breaks say they’ll help keep jobs in a state whose unemployment rate hangs just above 10 percent payday advance lender.

Opponents say the state simply can’t afford to make such deals and question whether the companies would make good on their threats or whether they’re simply exploiting the state’s weak bargaining position.

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Spain’s next prime minister is a lusterless career politician who thrives on ambiguity _ rarely revealing what he thinks.

With results Sunday night showing that his conservative Popular Party crushed the ruling Socialist party and won a big parliamentary majority, Mariano Rajoy may finally be forced to show his hand.

Rajoy inherits a devastating economic downturn that has caused unemployment to swell to more than 21 percent, and comes as similar financial crises in fellow EU nations like Greece and Italy threaten to combine with Spain’s woes and drag down the global economy.

As Rajoy, 56, begins forming the next government Monday, all eyes will be on whether the gray-bearded, bespectacled leader will finally unveil a clear political vision or continue to dodge efforts to pin him down.

Many see him as a the perfect caricature of his native region _ Galicia. The people of the misty and rainy northwestern region are legendary for pokerfaced obscurity. According to a Spanish saying, when you meet a Galician on the stairs you can never tell if he’s going up or down.

“He is a Galician. They say things but you have to read between the lines,” said Rodrigo Herrero, 48, a villa caretaker.

“He’s not spontaneous or extroverted like other politicians,” added Herrero. “He lacks that friendliness and touch of charm.”

Others says there is a hidden side.

“He’s a master because he achieves his aims without apparently doing anything,” Xavier Pomes, a Catalan politician and friend of Rajoy, told El Pais, Spain’s leading newspaper.

“He’s sensible, frank. Some see him as indolent and indecisive but in reality he’s reflexive,” said Pomes.

But true to his cagey character, Rajoy has so far made little known of his plans. And with bond interest rates soaring and stock markets jittery, he is not likely to have any more time to dawdle or fudge.

In a lengthy interview in El Pais on Thursday, Rajoy said that barring pensions, “cuts will have to be made wherever they can.” But the paper pointed out that he “maintained his ambiguity on what sacrifices Spaniards will face.”

Eurasia Group analyst Antonio Barroso expects Rajoy to initially go for a “shock and awe strategy” with “quick policy changes in an effort to impress markets and his European partners, and boost Spanish credibility.”

That would also dispel questions about his own credibility.

Rajoy, a property registrar by training, held four ministerial portfolios _ among them education and interior _ in the governments of Jose Maria Aznar between 1996 and 2004. But being hand-picked as party leader in 2003 by Aznar set Rajoy up for years to accusations that he was never actually elected by those in his party, a smear that weakened his attempts to shake himself free of Aznar’s shadow.

Sunday’s ballot was third-time lucky for Rajoy. He lost general elections in 2004 and 2008 against Jose Luis Rodriguez Zapatero, who is now deeply unpopular and did not seek re-election this time. In many ways, it’s a tribute to his dogged determination to survive.

In 2004, Rajoy was also strongly tipped to win. But he lost amid voter outrage over the Madrid terror bombings by Islamic militants three days before the election. The massacre killed 191 people direct payday lenders. Rajoy and his party had initially blamed Basque separatists and continued to do so even as evidence of Islamic involvement emerged.

The party was devastated by the defeat and Rajoy had to battle to keep it unified amid divisions between moderate and more conservative factions. The 2008 loss, although not as severe, exacerbated his tenuous position, thrusting even normally friendly rightist media against him.

But Rajoy fought on, skillfully remaining silent while his party and the media were ablaze with the succession debate. His efforts bore fruit at a party congress in June when his candidacy as leader _ albeit the only one presented _ was backed by 84 percent of delegates.

A cycling and sports enthusiast, Rajoy has freely acknowledged he reads little and prefers light sports dailies to mainstream newspapers or literature. However, sensing he may soon be representing Spain on the international stage, he is now studying English, a language none of his predecessors has ever managed to command.

At 24, he suffered a serious car accident that left his face badly scarred, reportedly the reason he grew the beard.

Stiff in manner, Rajoy has never topped popularity polls and is not known for imagination or charm. In a recent TV debate with his Socialist opponent Alfredo Perez Rubalcaba, Rajoy almost never took his eyes off prepared notes. Nevertheless he scraped through the near two-hour clash, skirting questions and shedding no light on his program.

No one can deny Sunday’s victory came easy, with his opponents in the governing Socialist party crippled by their inability to cope with the economic crisis.

Over the past two years, Rajoy used the crisis to perfection in weekly parliamentary debates, hammering away relentlessly at the Zapatero government’s perceived incompetence.

But careful not to scare potential voters, Rajoy remained virtually mute on what he would do differently besides pledging to make things easier for small and medium-sized businesses _ which provide 80 percent of employment in Spain _ and indicating he will carry out the labor market and social welfare system reforms he deems necessary.

Outside the economy, he has traditionally been a close ally of the Catholic Church on moral and social issues and has repeatedly said he will revise Spain’s abortion law. His party has also appealed the country’s gay marriage law before the Constitutional Court. Both bills were considered key achievements of the Zapatero governments.

In the past, he has demanded strict law-and-order measures to control immigration and education reforms to improve one of Europe’s worst dropout rates.

A lover of Cuban cigars, Rajoy has also suggested he may ease Spain’s anti-smoking ban in the workplace.

On foreign policy, he is likely to try to win back the special friend status Aznar held with U.S. while taking a less open approach than Zapatero to some of the more radically left-leaning governments of Latin America such as Cuba and Venezuela.

____

Jorge Sainz contributed to this report.

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The latest evidence that the economy is making steady gains emerged Friday from a gauge of future economic activity, which rose in October at the fastest pace in eight months.

A string of better-than-expected economic reports this month has led some analysts to revise up their forecasts for growth. Still, they caution that their brighter outlook remains under threat from Europe’s financial crisis.

“Things are looking better than we thought they would _ not great, but better,” said David Wyss, former chief economist at Standard & Poor’s.

The most recent sign was Friday’s report by the Conference Board that its index of leading economic indicators surged 0.9 percent last month. It was the index’s best showing since February. And it was far faster than the increases of 0.1 percent September and 0.3 percent in August.

The index is designed to predict economic activity. The October figure marked the sixth straight increase.

The jump reflected gains in nine of the index’s 10 components. Leading the way: a surge in permits for home construction; a narrower gap between short- and long-term interest rates that suggested less concern about inflation; a recovery in stock prices; and growth in the U.S. money supply.

A longer average workweek and fewer applications for unemployment benefits also contributed to the rise in the index.

All told, the components of the index signaled that the economy is steadily, if still slowly, strengthening.

On Thursday, the government reported further improvement in the number of people seeking unemployment benefits for the first time. The number fell to 388,000, the fewest since April.

In October, the economy added a net total of 80,000 jobs. It was the 13th straight month of gains. Still, the additional jobs were fewer than the roughly 125,000 that are needed each month just to keep up with population growth.

Many economists said the October gain in the leading indicators offered further assurance that the economy is in no imminent danger of slipping back into a recession, so long as Europe doesn’t fall into a severe downturn.

“This was a very positive reading for the leading indicators,” said Mark Zandi, chief economist at Moody’s Analytics. “The economy seems to be holding its own.”

Steven Wood, chief economist at Insight Economics, said the string of positive readings suggests “the economy should continue to experience at least moderate growth over the next six to nine months.”

In the first six months of the year, the economy grew at an annual rate of just 0.9 percent. Growth expanded to a 2.5 percent rate in the July-September quarter.

Before this month, many economists had estimated that growth in the current October-December quarter would roughly match the 2.5 percent pace of the July-September period. But in recent days, based on the healthier economic news, some analysts have boosted their forecasts.

This week, the government said retail sales in October and factory production were picking up. U.S. builders started slightly fewer homes in October. But building permits, a gauge of future construction, surged nearly 11 percent. That gain was led by a 30 percent increase in apartment permits, to their highest level in three years.

Wyss said he expected the annual growth rate in the current quarter to amount to about 3 percent, up from his earlier expectation of 2.5 percent. Economists at JPMorgan Chase & Co. are also expecting a 3 percent growth rate for the October-December period.

Wyss said one reason for his increased optimism is that he thinks a modest rebound in consumer spending will trigger companies to restock depleted shelves.

Even so, an economy growing at a 3 percent rate would still fall shy of the 4 percent to 5 percent pace that economists say is needed to significantly reduce the unemployment rate, which remains stuck at 9 percent.

And without stronger job gains, analysts say consumer spending, which accounts for about 70 percent of economic activity, will remain constrained.

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House Speaker John Boehner publicly blessed a Republican deficit-reduction plan Tuesday that would raise $300 billion in additional tax revenue while overhauling the IRS code, bucking opposition by some GOP presidential hopefuls and colleagues wary of violating a longstanding point of party orthodoxy.

Boehner, the top Republican in Congress, spoke as time grew perilously short for agreement by the deficit-fighting “supercommittee.” The panel has until a week from Wednesday to vote on any compromise, but several officials said that in reality, perhaps as little as 48 or 72 hours are available to the six Republicans and six Democrats.

While Boehner’s voice is important, his endorsement does not mean all Republicans will follow him or that a deal is in sight. Republicans have been unified for two decades in opposition to higher taxes, while Democrats on the supercommittee insist on additional revenue before they will agree to cuts in benefit programs like Medicare as part of a compromise.

The speaker said that the plan, outlined a week ago to Democrats on the committee, was “a fair offer.” Adding tax reform would generate economic growth, he said, speaking as the supercommittee groped uncertainly for a compromise to reduce red ink by $1.2 trillion or more over a decade.

Any deal must be certified by the nonpartisan Congressional Budget Office as meeting the $1.2 trillion target, circulated to lawmakers and then posted publicly before the committee takes formal action. Failure to act would trigger $1.2 trillion in automatic deficit cuts in 2013 that both sides say they want to avoid.

The full committee hasn’t met in several days, but various subgroups have been in near constant contact.

More than deficit reduction is at stake, one year into an era of divided government.

Democrats are hoping to add elements of President Barack Obama’s jobs legislation to any deficit-cutting deal, including extensions of a Social Security payroll tax cut and unemployment benefits that are due to expire at the end of the year. A comprehensive rewrite of farm programs may hang in the balance, too, and lawmakers also must pass legislation to assure sufficient funds to reimburse doctors who treat Medicare patients.

As the pace of private talks intensifies, the two sides vie publicly for the high ground in public opinion.

“I am still hopeful that a few Republicans will put their country first and come to us with a credible offer with real revenue,” Sen. Patty Murray, D-Wash., co-chair of the supercommittee, told reporters as she emerged from a late-afternoon meeting.

Earlier, the Republican Senate leader, Mitch McConnell of Kentucky, said GOP members on the committee outlined a proposal several days ago and have yet to receive a response from Democrats. “It’s been a long week, waiting for a counter-proposal,” he said.

The twin issues of taxes and benefit programs have long been stumbling blocks in budget negotiations.

In negotiations last summer, according to numerous officials, President Barack Obama and Boehner were considering sizeable cuts to benefit programs as well as an overhaul of the tax code that would have raised as much as $800 billion in additional revenue _ money that Republicans said at the time would have come from economic growth pay day loan lenders. The talks ultimately failed.

In his comments Tuesday, Boehner cited the importance of tax overhaul in the proposal that Sen. Pat Toomey, R-Pa., made to supercommittee Democrats last week.

“It’s important for us to, in my opinion, reform the tax code. And we’ve got the highest business tax rate in the world. We’ve got a personal tax system that’s so complicated it costs Americans about $500 billion a year to comply with the current tax code,” he said.

Boehner asserted that the changes would “make America more competitive and produce more economic growth. And so I do believe that reforming the code is a step in the right direction. The details of how we get there, frankly, I think are yet to be worked out.”

Republican officials have said the offer made by Toomey envisions an overhaul that would drop the top tax rate on personal income to 28 percent from the current 35 and shave or eliminate some itemized deductions that are commonly used. The top corporate rate would also fall.

The result would be an estimated $250 billion in additional revenue over a decade, they estimate.

Despite Boehner’s comments _ and Toomey’s credentials as an opponent of tax increases _ GOP presidential contenders Newt Gingrich and Rick Perry said they were prepared to oppose a plan along the lines of the one under consideration. Another candidate, Mitt Romney, brushed aside a question on the subject.

Supercommittee Republicans also support a proposal that would replace the current measurement of inflation used to adjust income tax brackets and cost-of-living increases with another, less generous one. They estimate it would result in an estimated $50 billion in higher tax revenue and reduce spending by roughly three times that amount.

Obama backed a similar plan last summer in his talks with Boehner. More recently, Democrats on the supercommittee included it in an offer, although liberals made clear their unhappiness and it was subsequently jettisoned.

Both Boehner and Rep. Jeb Hensarling of Texas, the GOP co-chair of the supercommittee, explained the Republican proposal to members of the rank-and-file at a closed door meeting.

According to numerous officials who attended, Hensarling displayed charts that sought to place the offer in the context of other scenarios that might occur if there is no agreement. Among them are increases in tax rates that would occur beginning on Jan. 1, 2013, if all of the cuts enacted when President George W. Bush was in office expire as currently scheduled.

“They haven’t thrown me out, so I guess I got a good reception,” Hensarling later said of his reception.

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Financial markets pounded Italy on Wednesday as investors hoped that Premier Silvio Berlusconi would not linger in office and delay reforms. Italy’s president responded by declaring there was no doubt that Berlusconi would leave soon, appearing to soothe investors.

In another chaotic day driven by the European debt crisis, the Dow Jones industrial average dropped nearly 240 points in New York morning trading after Italy’s borrowing costs soared to a new record high. Traders were troubled by signs that Europe’s unending debt crisis was enveloping Italy _ the eurozone’s third-largest economy, a nation too big for Europe to bail out.

And across the Ionian Sea, Greek lawmakers labored for a third day but finally came up with a deal to create an interim government to pass the country’s new debt deal. Outgoing Greek Prime Minister George Papandreou, who was expected to formally resign with hours, wished the next prime minister well but gave no indication of who it would be.

Berlusconi has pledged to resign after the Italian parliament passes the financial reforms that European officials have been demanding for months. The process can take up to two weeks, but President Giorgio Napolitano said that would be accelerated to days, allowing him to quickly begin talks on forming a new government or calling new elections.

“Fears are totally unfounded that Italy may experience a long period of inactivity,” Napolitano said, adding that “emergency measures” could be adopted at any time.

Italy’s key borrowing rate spiked to a high of 7.40 percent on Wednesday, up 0.82 percentage points from the previous day, as markets expressed concern about how swift and complete Italy’s political transition would be. That’s over the level that eventually forced other eurozone countries like Greece and Portugal to seek bailouts.

They settled down to 7.26 percent after Napolitano’s remarks.

“Berlusconi is the supreme political maneuverer. And no one will believe he has resigned until, yes, he has done so. Simple as that,” said Jan Randolph, head of sovereign risk analysis at IHS Global Insight.

No one is suggesting that Italy is headed for an immediate bailout. Randolph said it will take a while for the higher borrowing rate to cause problems for Italy’s “mountain of debt.”

“With a catastrophic scenario _ and it seems we are facing now a catastrophic scenario _ maybe Berlusconi can be pushed to support a new government. Or maybe his party will crumble,” said Roberto D’Alimonte, a political analyst at Rome’s LUISS University.

Noted economist Nouriel Roubini, who has lived in Italy, expressed a similar view on Twitter: “Yields at 7%: markets are telling Berlusconi to leave NOW. They don’t buy his scheme of pretending to leave in 2 weeks after budget is passed.”

D’Alimonte said investors are hoping for a technocratic government, led by former EU competition commissioner Mario Monti, who now runs the prestigious Bocconi University. Berlusconi and his allies claim such a solution would be undemocratic, however, because the conservatives won the last election.

With debts of around euro1.9 trillion ($2.6 trillion), Italy is considered too big for Europe to bail out. Higher borrowing rates will make it more difficult and expensive for Italy to roll over its debts. It has over euro300 billion ($412 billion) to raise in 2012 alone.

The European Central Bank has been buying up Italian bonds to keep yields at reasonable rates _ but Randolph said that is just throwing good money after bad.

“You can bring yields down, but they can’t keep them down unless the borrowing government takes concrete steps to improve creditworthiness,” Randolph said. “Seven percent is not sustainable over several years.”

Italy needs to pass the additional austerity measures and structural reforms pledged by Berlusconi to world leaders at an economic summit last week.

Any delays in the financial reforms or in establishing a new, stable Italian government spook the markets, which are already unnerved since some investors in Greece are going to lose 50 percent of their holdings. Investors fear a so-called “haircut” could also affect those owning Italian bonds if Italy doesn’t get its act together.

“Markets attack weak animals like lions,” said political analyst Franco Pavoncello, president of Rome’s John Cabot University. “Italy is perceived as being extremely weak politically, which is too bad because economically it is not too weak.”

In the meantime, Berlusconi is not yet out _ and there is considerable uncertainty of what kind of government will follow.

While Berlusconi is not running for office again, he told the La Stampa daily he would remain active as the founder of his political party and would help out in any political campaigns.

Berlusconi wants new elections soon with his hand-picked successor, former justice minister Angelino Alfano, as a candidate. The 75-year-old leader tapped Alfano to head his People of Liberties Party a few months ago. At 41, Alfano represents a new generation of center-right politicians after 17 years of Berlusconi leadership.

But D’Alimonte said Berlusconi would still be pulling the strings.

“He will be the major protagonist of the next election. He will push Mr. Alfano as the candidate, but he will direct the orchestra. Alfano will be the first violin,” D’Alimonte said.

The rising bond yields underline the quandary European officials find themselves in as they try to come up with an effective backstop for indebted countries, one with enough financial muscle to support the eurozone’s No. 3 economy. European governments decided last month to increase the effective power of their euro440 billion ($600 billion) rescue fund, the European Financial Stability Facility, which is considered too small to bail out Italy.

European finance ministers are still working on the complex details of how to increase the fund’s effective lending power to over euro1 trillion ($1.36 trillion) by having it partially insure government debt or by attracting outside investors. There are doubts among outside economists about whether either method will work.

The European Central Bank thus remains the only available outside firewall available against Italy’s rising yields. It has been buying government bonds in the secondary market, which drives down borrowing costs for Italy.

But the bank has warned the program is only temporary. New ECB president Mario Draghi _ himself an Italian _ said last week it was “pointless” for European governments to expect outside help to drive down interest rates and the only solution was for them to reform their own finances.

Some analysts have speculated the ECB may be deliberately limiting its bond purchases to keep the pressure on Italy’s reluctant government to push ahead with economic reforms

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Heralding a splash of good news on jobs, President Barack Obama on Wednesday praised a series of companies that have promised to hire 25,000 veterans or military spouses within two years, calling it a sign of patriotism and business savvy. He pushed his economic agenda anew to a military audience, this time with first lady Michelle Obama at his side.

“We ask you to fight, to sacrifice, to risk your lives for your country,” Obama told an audience of thousands of people at Joint Base Langley-Eustis. “The last thing you should have to do is fight for a job when you come home. Not here. Not in the United States of America.”

In this military setting, Obama’s pitch for his jobs bill was far less partisan than it has been across his bus tour of North Carolina and Virginia. He didn’t target at length the Republican lawmakers who have voted against his plan, promising more broadly to keep pushing Congress to pass a bill that’s now been broken into pieces.

The president’s day-long swing through Virginia does, however, have deep political undertones. Obama won the traditionally Republican-leaning state in 2008, but his poll numbers here are down, and some of the state’s high-profile Democrats are staying away from the president’s events.

The final day of Obama’s bus tour had a different feel primarily because the Obamas were together as the president campaigned for his ideas and, in turn, for his re-election. The president and Mrs. Obama made a surprise stop at a roadside pumpkin patch, scooping up some orange and white pumpkins, apples and peanuts.

Then they stopped for lunch at Anna’s Pizza and Italian Kitchen, having a meal with four veterans from different parts of the nation who had attended the earlier event at the base.

In their comments, Obama and the first lady both sought to assure veterans and their families that the country was behind them and that employers are, too. The American Logistics Association, which includes major companies like Tyson Foods Inc. and Coca-Cola Co., is pledging to hire 25,000 people by the end of 2013.

Michelle Obama called it the largest coordinated effort by the private sector to hire veterans that the nation has seen in years.

Mrs. Obama is leading a national campaign to rally the country around its veterans.

The president said that every company should want to hire veterans because of their leadership experience, mastery of cutting-edge technology and other skills. Obama is asking Congress to approve separate tax credits worth thousands of dollars for businesses that hire veterans who’ve been out of work for at least six months, including those with disabilities free 3-in-1 credit report.

As Obama has been traveling, lawmakers back in Washington were taking the first steps to break his nearly $450 billion jobs bill into pieces for possible votes. It’s the only way elements of the measure stand a chance of passing, given that Senate Republicans blocked action on the full package last week.

The bus trip has given the president the opportunity to promote elements of his jobs plan in places the White House says would benefit most should the measures pass.

Obama has spoken at high schools and community colleges where the administration says new spending would prevent teacher layoffs, as well as a small, regional area airport near Asheville, N.C., where Obama pressed for government funds to renovate an outdated runway.

Wednesday’s stops were following a similar pattern.

Obama has proposed a Returning Heroes tax credit of up to $5,600 for businesses that hire unemployed veterans who have been out of work for six months or more, as well as a Wounded Warriors tax credit of nearly $10,000 for unemployed veterans with service-related disabilities who also have been looking for work for at least six months.

“When I first proposed this idea in a joint session of Congress, people stood up and applauded on both sides of the aisle,” Obama said about tax credits to encourage hiring of veterans. “So when it comes for a vote in the Senate, I expect to get votes from both sides of the aisle. Don’t just applaud about it. Vote for it.”

Obama was on his way to North Chesterfield, Va., where he was to speak at a local fire station. He was returning to Washington later Wednesday.

Republicans have criticized Obama’s bus trip as being more focused on selling the president’s re-election than solving the country’s economic woes. Senate Minority Leader Mitch McConnell said Wednesday: “”Let’s park the campaign bus, put away the talking points, and do something to address this jobs crisis.”

Top Virginia Democrats, including Sens. Mark Warner and Jim Webb, are not expected to appear with the president Wednesday, nor is Tim Kaine, the former governor and chairman of the Democratic National Committee, who is running to replace the retiring Webb.

However, Virginia’s popular Republican Gov. Bob McDonnell did meet with the president Wednesday morning at Joint Base Langley-Eustis.

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The United States has raised the tempo in its war against al-Qaida in Yemen, killing nine of the terror group’s militants in the second, high-profile airstrike in as many weeks. The dead in the late Friday night strike included the son of Anwar al-Awlaki, the prominent American-Yemeni militant killed in a Sept. 30 strike.

Yemeni officials on Saturday attributed the recent U.S. successes against al-Qaida to better intelligence from an army of Yemeni informers and cooperation with the Saudis, Washington’s longtime Arab allies.

The successes come even as Yemen falls deeper into turmoil, with President Ali Abdullah Saleh clinging to power in the face of months of massive protests. Saturday saw the worst bloodshed in weeks in the capital, Sanaa: At least 18 people were killed when Saleh’s troops fired on protesters and clashed with rivals. Witnesses estimated up to 300,000 people joined Saturday’s demonstrations, the largest in the capital in several months.

“Everyone with interests in Yemen, including al-Qaida and the Americans, is raising the stakes at this time of uncertainty” said analyst Abdul-Bari Taher. “The Americans are wasting no time to try and eliminate the al-Qaida threat before the militants dig in deeper and cannot be easily dislodged.”

Also dead in the Friday airstrike in the southeastern province of Shabwa was Egyptian-born Ibrahim al-Banna, identified by the nation’s Defense Ministry as the media chief of the Yemeni branch of the al-Qaida.

Al-Qaida in the Arabian Peninsula, as the branch is known, is considered by the U.S. the most dangerous of the terror network’s affiliates after it plotted two recent failed attacks on American soil. Its fighters and other Islamic militants have taken advantage of Yemen’s chaos to seize control of several cities and towns in a southern province. That has raised American fears they can establish a firmer foothold in the strategically located country close to the vast oil fields of the Gulf and overlooking key shipping routes.

The U.S. airstrikes in Shabwa pointed to Washington’s growing use of drones to target al-Qaida militants in Yemen. The missile attacks appear to be part of a determined effort to stamp out the threat from the group.

Yemeni officials familiar with the U.S. military drive against al-Qaida in Yemen said a shift of strategy by the Americans was finally yielding results, with human assets on the ground directly providing actionable intelligence to U.S. commanders rather than relying entirely on Yemen’s security agencies the Americans had long considered inefficient or even suspected of leaking word on planned operations.

They said there were as many as 3,000 informers on the U.S. payroll around the country _ some without even knowing it.

The Saudis, on the other hand, have traditionally kept an elaborate patronage system and an information network in Yemen, their neighbor to the south. They have for decades paid monthly stipends to key tribal leaders, military commanders and politicians to secure their loyalty. They also paid ordinary Yemenis to provide them with intelligence.

“The Saudis are making their information available to the Americans,” said one of the defense officials, all of whom spoke on condition of anonymity because they were not authorized to share the information. “Both them and the Americans are broadening their cooperation without direct Yemeni involvement.”

Tribal elders in the area where Friday’s strikes took place said the dead included Abdul-Rahman al-Awlaki, the 21-year-old son of Anwar al-Awlaki, a Muslim preacher and savvy Internet operator who became a powerful al-Qaida recruiting tool in the West and who was on a U one hour payday loan.S. capture-or-kill list. The elder al-Awlaki and another propagandist, Pakistani-American Samir Khan, were killed in the Sept. 30 srike.

The tribal elders, who spoke Saturday on condition of anonymity because they feared reprisals, said four other members of the al-Awlaki clan and another local militant were also killed in the same drone attack. There was no immediate confirmation of the younger al-Awlaki’s death from Yemeni authorities.

Security officials said the strike was one of five carried out overnight by American drones on suspected al-Qaida positions in Shabwa and neighboring Abyan province in Yemen’s largely lawless south. They said two more militants were killed and 12 wounded in other strikes in the two provinces.

The first strike late Friday targeted a house in the Azan district of Shabwa, but hit just after al-Qaida militants had a meeting in the building, security officials and tribal elders said.

They said a second strike then targeted two sport utility vehicles in which the seven were traveling, destroying the vehicles and leaving the men’s bodies charred. It was not clear whether other participants in the meeting were targeted in separate strikes.

Yemen’s al-Qaida offshoot has taken advantage of the political turmoil roiling the country. Saleh, who has ruled the country for more than 30 years, has been struggling to stay in power in the face of eight months of massive street protests demanding his ouster and the defection to the opposition of key aides and military commanders.

In Sanaa, forces loyal to Saleh opened up on protesters with assault rifles and anti-aircraft guns, medical officials and witnesses said. The casualty figures _ 12 dead and up to 300 wounded _ were confirmed by Mohammed al-Qubati, director of the field hospital set up at Change square, the name given to a central Sanaa intersection that saw the birth of the eight-month-old, anti-Saleh uprising.

The medical officials requested anonymity because they were not allowed to speak to journalists.

In Sanaa’s northern district of Hassaba, fighting between Saleh’s forces on one side and anti-regime tribesmen and renegade troops on the other killed two civilians and four supporters of tribal chief Sadeq al-Ahmar, a one-time regime ally who defected to the opposition in March. At least 13 people were wounded in the fighting.

A three-story building housing an independent TV station, Al-Saeedah, in the area took a direct hit, destroying the channel’s equipment and studios, according to a statement by the management. The privately-owned station went off the air.

Khaled al-Ansi, a prominent leader of the protest movement, blamed the death of the proetsters on opposition parties, arguing that their acceptance of a U.S.-backed settlement plan proposed by Yemen’s Gulf Arab neighbors gave Saleh license to kill protesters at will. The plan provides for the Yemeni leader to step down and hand over power to his deputy in exchange for immunity.

“The political parties are participants in the killings,” said al-Ansi. “The immunity from prosecution is giving Saleh a temptation to kill more of us.”

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Stock futures are falling a day after the Dow Jones industrial average posted its largest gain since early August.

Investors worried that Slovakia might not approve a plan to strengthen Europe’s bailout fund. All 17 countries that use the euro must agree on the plan, which is considered essential to resolving the region’s debt crisis. Sixteen countries have approved it so far.

In the U.S., Alcoa Inc. will become the first major company to report third-quarter results low interest rate personal loans.

Ahead of the opening bell Tuesday, Dow industrial average futures are down 35, or 0.3 percent, at 11,333. Standard & Poor’s 500 futures are down 6, or 0.5 percent, at 1,185. Nasdaq 100 futures are down 6, or 0.3 percent, at 2,271.

The Dow rose 330 points Monday, its largest gain since Aug. 11.

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Forecasters say a weakening Hurricane Ophelia is expected to pass near Newfoundland, Canada, early Monday.

The National Hurricane Center in Miami said early Monday that Ophelia was still a Category 1 storm with top sustained winds of about 75 mph (120 kph). The storm was moving northeast at 43 mph (69 kph).

Ophelia was centered about 185 miles (295 kilometers) west-southwest of Cape Race, Newfoundland, and a tropical storm watch was in effect for Newfoundland’s Avalon Peninsula. The center says Ophelia is expected to weaken steadily but should be a strong tropical storm when it passes over the peninsula.

Meanwhile, Tropical Storm Philippe was moving over the central Atlantic and is not expected to affect land.

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