Money world

Asian markets rose Monday on the heels of a report showing a rebound in U.S. manufacturing, reinforcing the view that the slowdown in the world’s No. 1 economy was only temporary.

Japan’s Nikkei 225 index was 1.1 percent higher at 9,971.59 _ a two-month high _ lifted by investor optimism about the U.S. economy after manufacturing data for June by the Institute for Supply Management beat expectations. However, the Nikkei failed to breach the psychologically important 10,000 mark, last reached on May 5.

Exporters were among the day’s major gainers. Honda Motor Corp. jumped 3.1 percent. Toyota Motor Corp. was up 1.7 percent. Consumer electronics giant Panasonic Corp. moved 1.2 percent higher.

Elsewhere South Korea’s Kospi rose 1.1 percent to 2,148.45. Hong Kong’s Hang Seng rose 1.6 percent to 22,763. Benchmarks in Australia, mainland China, Singapore, Taiwan and Indonesia were also higher.

Companies that do well during times of economic expansion enjoyed broad gains. Japan’s Komatsu Corp., a world leader in heavy equipment manufacturing, added 1.8 percent. Korean steel maker POSCO rose 1.1 percent.

Meanwhile, recovering crude prices helped lift oil-related shares. Hong Kong-listed China National Offshore Oil Corp., known as CNOOC, rose 2.2 percent.

Benchmark crude for August delivery rose 20 cents to $95.14 on the New York Mercantile Exchange on Monday. The contract declined 48 cents to settle at $94.94 per barrel on the Nymex on Friday.

In currencies, the euro rose to $1.4555 from $1.4511 in late trading in New York on Friday. The dollar weakened to 80.76 yen from 80.84 yen.

Wall Street posted strong gains Friday, after the ISM report showed manufacturing across the U.S. had expanded. Federal Reserve Chairman Ben Bernanke and a number of prominent economists have argued that the economy will pick up again once the effects of Japan’s earthquake-tsunami disaster in March and a spike in oil prices waned.

The Dow rose 1.4 percent to 12,582.77. The Standard and Poor’s 500 index gained 1.4 percent to 1,339.67. The Nasdaq composite added 1.5 percent to 2,816.03.

Many economists and analysts began lowering their estimates for U.S. growth in May after a string of negative reports on manufacturing, consumer spending and hiring by private companies. A shortage of computer chips and auto parts from Japan, higher gas prices and severe weather all contributed to what appeared to be a slowdown in the economic recovery.

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China raised banks’ reserve requirements for the fifth time this year to restrain prices, underscoring the risk that tightening measures will cause a slowdown in the world’s second-biggest economy.

Reserve ratios will increase 0.5 percentage point from May 18, the People’s Bank of China said on its website today. That will boost levels for the nation’s biggest lenders to a record 21 percent.

The central bank moved after reports yesterday showed inflation and lending exceeded economists’ estimates in April, with consumer prices rising more than 5 percent for a second month. Premier Wen Jiabao aims to tame inflation that is spreading beyond food to other goods, while sustaining growth as the economy shows signs of cooling.

“Controlling inflation will definitely entail a slowdown in growth and the authorities understand that,” said Wang Qing, chief China economist at Morgan Stanley. “The slowdown we’ve seen so far doesn’t indicate there is a risk of a hard landing, that’s why the policy priority at the moment is still to control inflation.”

Commodities extended declines after the announcement, with the Standard & Poor’s GSCI Index of 24 raw materials sliding 1.7 percent to 669.25 points at 11:42 a.m. in London.

Stronger Yuan

Besides raising interest rates and reserve requirements, and guiding banks to limit credit growth, officials have accelerated gains in the yuan, which broke 6.5 per dollar for the first time since 1993 on April 29. U.S. Treasury Secretary Timothy F. Geithner pushed at talks in Washington this week for faster appreciation that he says would boost consumption in China, ease inflation and limit global economic imbalances.

Jim O’Neill, who chairs Goldman Sachs Asset Management and coined the acronym BRIC for the economies of Brazil, Russia, India and China, said today that China’s inflation “won’t be a problem” in the second half of this year. The nations’ stocks may have a “big rally” as price gains moderate and tightening ends, he told reporters in Hong Kong.

Weaker growth in industrial production, detailed in yesterday’s statistics bureau report in Beijing, came after a manufacturing index declined in April, signaling economic growth may be cooling after a 9.7 percent expansion in the first quarter. Power shortages in some provinces may also have affected the output numbers. The economy’s growth peaked at 11.9 percent during last year.

Locking Up Cash

Today’s move locks up about 370 billion yuan ($57 billion), according to Barclays Capital. It may have been triggered by the extra cash entering the financial system from maturing central bank bills, according to Royal Bank of Scotland Plc.

Inflows of so-called hot money, or speculative capital, may also have been a factor, said Lu Ting, a Hong Kong-based economist for Bank of America Merrill Lynch.

The ruling Communist Party aims to prevent increases in food and housing costs from fueling social unrest. Consumer prices jumped 5.4 percent in March, the most since July 2008. In April, the gain was 5.3 percent.

Clothing costs climbed 1.4 percent last month from a year earlier, the biggest gain since 1997, a statistics bureau report showed yesterday. Non-food inflation held at 2.7 percent, the fastest pace in at least six years. Food inflation, the biggest single driver of the consumer-price index, exceeded 11 percent for a third month.

Higher commodity costs, inflows of capital, and the extra cash in the economy from a stimulus program started in late 2008 have added to inflation risks. The nation’s world-record foreign-exchange reserves exceeded $3 trillion for the first time in March.

Unilever, the world’s second-largest consumer-goods maker, said March 31 that it was among companies to have postponed price increases at the government’s request. Officials later announced that the company will be fined for telling the media of its plans to raise prices.

–Nerys Avery, Sophie Leung. Editors: Paul Panckhurst, Nerys Avery.

To contact Bloomberg News staff for this story: Paul Panckhurst in Hong Kong at +852-2977-6603 or ppanckhurst@bloomberg.net

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Hardee’s, which has built a testosterone-rich image around serving “young, hungry guys” ever bigger thickburgers, shocked many when it became the first major fast food chain to roll out a turkey burger last month.

The move came on the heels of McDonald’s recent introduction of fruit and maple oatmeal. Not to mention the fact that Burger King trotted out apple fries a couple of years ago.

After years of criticism for contributing to America’s ever-expanding waistline, is the fast food industry finally going on a diet?

Well, not exactly.

“We have not gone with the carrot sticks and tofu topping,” Andrew Puzder, chief executive of CKE Restaurants, which oversees St. Louis-based Hardee’s, said of the turkey burgers. “This is not nuts and bark. These are delicious, delicious, craveable burgers.”

Hardee’s charbroiled turkey burgers still clock in at between 460 and 480 calories. But they are better for you compared to the chain’s thickburgers, which start off around 620 calories and go up to 1,320 calories.

And McDonald’s oatmeal, at 290 calories and 4.5 grams of fat, has been criticized by some for having more sugar than a Snickers bar and only 10 calories fewer than one of the chain’s cheeseburgers.

“It’s always been my position that it’s not my job to tell people what to eat,” Puzder said. “It’s my job to figure out what they want to eat and to serve it to them. So for years, we pooh-poohed the healthy food only because people didn’t buy it.”

Some of the salads and lower-calorie chicken sandwiches the company tested out in the past didn’t do very well. But now, research indicates that younger people want healthier, lower-fat options, he said.

Fast food experts say Hardee’s turkey burgers are a bold statement and a good step forward cash advance no faxing. But they note that consumers have not been too receptive to healthier food items in the past.

One of the big hurdles is that consumers don’t want to give up taste or to pay more for healthier choices, said Bonnie Riggs, restaurant analyst for the research firm NPD Group.

“If you’re going to go in that direction, it’s going to have to taste good and it’s going to have to be affordable,” she said.

Another hurdle is that only about 10 percent of consumers say they actually want healthier items, she said. But that percentage, which stopped growing during the recession as people gravitated toward value menus, is on the rise now that the economy is on the mend, she said.

And the consumers who say they are looking to eat “healthy” when they go out don’t necessarily mean low-fat, low-calorie and low-salt items, Riggs said.

“It is quality foods as in fresh ingredients, going for smaller portions and more balanced food groups,” she said. “They watch calories when they are at home. But when they go out, they indulge a bit more.”

Words like “organic,” “hormone-free” and “all-natural” can actually be turnoffs to many consumers because they will assume that the products won’t taste good or be filling enough, she said.

So instead, restaurants should position them as “fresh,” “premium,” and “quality,” she said.

Darren Tristano, executive vice president of restaurant consulting firm Technomic, noted that Burger King has struggled to keep up interest in the veggie burger it launched several years ago.

“It’s just a very narrow niche,” he said. “It’s been a struggle for them to maintain a volume to keep it in all of the stores.”

McDonald’s offering of apple slices in children’s meals seems to have been marginally successful

Think housing investments are safe? Check your assumptions. It’s difficult to read a magazine or go to a cocktail party without hearing that housing investments are safe choices, certainly much safer than investing in the stock market. This belief is so prevalent that the average Canadian family maintains the majority, if not all, of its net worth in housing.

Unbeknownst to most of these families, their theory of home ownership as a safe, low volatility investment is based on the often-mistaken premise of no or little debt. This is a crucial blind spot because the moment that a large amount of debt is used to buy a home, that safe investment theory goes completely out the window.

Put simply, housing is only a safe asset under conditions of no or very low financial leverage or debt. A lack of appreciation for this critical assumption led to major tracts of the U.S. housing sector being wiped out and with it, the net worth of millions of U.S. families.

But Canadian homeowners have no reason to be smug

Talks appear to be intensifying on Capitol Hill on reaching a deal on long-overdue legislation to finance the government through the end of September _ and avoid a government shutdown. Whether a shutdown can be avoided in three days’ time is another matter.

A White House meeting Tuesday that included President Barack Obama, House Speaker John Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nev., failed to produce the hoped-for breakthrough, however, with a stopgap government funding bill set to expire Friday at midnight.

Obama ratcheted up the pressure afterward, sounding exasperated with Republicans for not warming to a White House proposal that matched, more or less, an earlier GOP framework proposed in February. In it, Democrats propose cuts netting $73 billion in savings below Obama’s original requests _ or $33 billion below current spending levels.

Boehner said yet again that there is no agreement on a level of spending cuts. And there’s been little progress on the 50-plus GOP policy “riders” dotting the House version of the measure.

“There’s no reason why we should not get an agreement,” Obama said. “We have now matched the number that the speaker originally sought. The only question is whether politics or ideology are going to get in the way of preventing a government shutdown.”

Talks also took place Tuesday between Boehner and Reid at the Capitol, with both sides reporting a productive discussion.

All sides say they don’t want a partial shutdown of government agencies that would close national parks, shutter passport offices and turn off the IRS taxpayer information hot line just a week before the April 18 filing deadline. But numerous other essential federal workers would stay on the job, including the military, FBI agents and Coast Guard workers. Social Security payments would still go out and the mail would be delivered.

There was at least a hint of flexibility Tuesday, accompanied by sharply partisan attacks and an outburst of shutdown brinksmanship.

According to Democratic and Republican officials, Boehner suggested at the White House meeting that fellow Republicans might be able to accept a deal with $40 billion in cuts. That’s more than negotiators had been eyeing but less than the House seeks.

The speaker’s office declined to comment, and Boehner issued a statement saying, “We can still avoid a shutdown, but Democrats are going to need to get serious about cutting spending _ and soon.”

Obama took his most forceful steps yet in trying to prod the stalled talks. He called the White House meeting, rejected a Republican proposal for an interim bill pairing additional spending cuts with a one-week plan to keep the government open, and then announced that Boehner and Reid would meet later in the day quick cash.

If they can’t sort out their differences, Obama said, “I want them back here tomorrow.”

At issue is legislation needed to keep the day-to-day operations of federal agencies going through the Sept. 30 end of the budget year. A Democratic-led Congress failed to complete the must-pass spending bills last year. Republicans stormed into power in the House in January and passed a measure with $61 billion in cuts that even some GOP appropriators saw as unworkable. It was rejected in the Democratic-controlled Senate.

Republicans also have added dozens of policy provisions concerning hot-button topics like abortion, global warming and the environment, and Obama’s health care law. Those appear as troublesome as finding agreement on what and how much to cut from agency budgets.

“What we can’t be doing is using last year’s budget process to have arguments about abortion, to have arguments about the Environmental Protection Agency, to try to use this budget negotiation as a vehicle for every ideological or political difference between the two parties,” Obama said.

Democrats said Boehner eventually would have to part company with tea party-backed lawmakers who propelled Republicans to power, and they accused him of reneging on an agreement to cut $33 billion, increasing the chances of a shutdown.

In return, Republicans accused Democrats of resorting to budget gimmicks to make it look like they favored deep cuts, when in fact they were finding ways to ease the potential pain.

Twin partial closures in the mid-1990s boomeranged on Republicans when Newt Gingrich was speaker, helping President Bill Clinton win re-election in 1996.

This time, it’s Obama who is exuding confidence as Boehner seems hemmed in by his hard-charging class of 87 freshmen, many of whom won office with backing from tea party purists.

On Monday, Boehner informed rank-and-file Republicans he would seek passage of a new stopgap bill, a weeklong measure that includes $12 billion in cuts and funds the Defense Department through the end of the year.

Obama rejected it. He said he would sign an interim bill only if one were needed to get the paperwork together on a broader agreement and pass it through both houses.

Meanwhile, 16 moderate Senate Democrats sent Boehner a letter urging against a shutdown that could harm the economy and instill hard feelings that would harm the chances of bipartisan cooperation on long-term fiscal challenges.

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India’s economy grew more than 8 percent for the fourth straight quarter, adding to pressure on inflation that has sparked public protests and undermined Prime Minister Manmohan Singh’s government.

Gross domestic product rose 8.2 percent in the three months ended Dec. 31 after an 8.9 percent expansion in the previous quarter, the Central Statistical Office said in a statement in New Delhi today. The median of 29 estimates in a Bloomberg News survey was for an 8.6 percent gain.

Finance Minister Pranab Mukherjee, scheduled to unveil the budget today, may cut the personal income tax and boost spending on food subsidies and rural jobs to buffer citizens against rising prices, Nomura Holdings Inc. and Goldman Sachs Group Inc. said. Asian nations including Hong Kong and Singapore are expanding benefits to people as the region faces inflationary pressures stoked by faster growth.

“Price pressures are climbing in India,” Sonal Varma, a Mumbai-based economist at Nomura, said before the release. “The government is worried and will unveil steps in the budget to protect the poor.”

The Bombay Stock Exchange’s Sensitive Index, which has declined about 14 percent since Jan. 1 and is the worst performer after Egypt and Tunisia this year, gained 0.7 percent as of 11:05 a.m. in Mumbai. The rupee was little changed, while the yield on the 8.08 percent bond due August 2022 dropped three basis points to 8.12 percent as of 11:00 a.m. in Mumbai.

Inflation Woes

The expansion of India’s $1.3 trillion economy last quarter makes it the fastest-growing major economy after China. China’s $5.88 trillion economy grew 9.8 percent in the same period.

India’s benchmark wholesale-price inflation rate averaged 9.4 percent in the nine months through December, the most in the past decade, the finance ministry said in a report on Feb. 25. The price gauge rose 8.23 percent in January.

Singh’s government faces five state elections this year and said last week that its “foremost” priority is to curb inflation, which reduces purchasing power in a nation where the World Bank estimates more than three-quarters of the people live on less than $2 a day.

Thousands of workers from across India led by trade unions marched toward the country’s parliament in New Delhi on Feb. 23, the fourth major rally in the capital in a year, protesting rising food prices, low wages and job insecurity.

Singh is also battling corruption allegations and on Feb. 22 agreed to a parliamentary probe into the sale of second- generation mobile-phone licenses, surrendering to three months of opposition demands that had derailed legislation and eroded investor confidence. The final parliament session of 2010 was the least productive in 25 years.

‘Relief Measures’

“From a political management perspective, we expect the government to announce some relief measures for urban poor,” said Chetan Ahya, Singapore-based economist at Morgan Stanley. “There is a possibility that the finance minister announces reduction in income tax burden for the lower income segment.”

Mukherjee may raise the income-tax exemption limit from 160,000 rupees ($3,537) in the financial year starting April 1, and increase spending on the government’s rural jobs program by 60 percent to 640 billion rupees, said Tushar Poddar, Mumbai- based economist at Goldman Sachs. He said food subsidies may be increased as well.

Poddar also expects the government to step up its outlay on infrastructure including roads and power. The finance ministry estimates that India produces about 10 percent less electricity than it needs, and roads, which handle 65 percent of the nation’s cargo, are plagued by single lanes and irregular surfaces, raising the cost of goods and services.

Singapore’s Plan

Singapore plans to spend S$6.6 billion ($5.2 billion) on benefits including tax cuts and rebates, the government said on Feb. 18. In Hong Kong, relief measures announced this month to help residents cope with inflation included an electricity subsidy and a waiver of property rates.

Mukherjee has room to maneuver in next year’s budget because less bonds are due for repayment and the government in May earned 677.2 billion rupees from the sale of third- generation phone licenses to companies including Vodafone Group Plc, more than the budgeted 350 billion rupees.

India may seek a record 500 billion rupees from the sale of stakes in state-run companies, said Anubhuti Sahay, an economist at Standard Chartered Plc in Mumbai. Proposed sales of stakes in Indian Oil Corp., the country’s biggest refiner, and Steel Authority of India Ltd., its second-largest producer of the alloy, may help raise about 104 billion rupees next fiscal year, according to data compiled by Bloomberg.

Companies including Maruti Suzuki India Ltd., the nation’s biggest carmaker, said an increase in government levies will hurt profit, already squeezed by rising input costs.

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U.S. stocks rose, pushing the Dow Jones industrial average to its first close above 12,000 since June 2008, after American and Chinese manufacturing expanded and United Parcel Service Inc fast cash without a hassle. beat analysts

Spain sold 3 billion euros ($3.95 billion) of bonds in its first debt auction of the year, meeting its maximum target as demand increased.

The Treasury sold the five-year bonds at an average yield of 4.542 percent, the Bank of Spain said, compared with 3.576 percent the last time the securities were auctioned on Nov. 4. Similar-maturity bonds traded at a yield of 4.630 percent before the auction and demand was 2.1 times the amount sold compared with 1.6 times at the previous sale.

Italy, the euro-region’s second most-indebted nation, sold 6 billion euros of bonds due in 2015 and 2026. The shorter-dated notes yielded an average 3.67 percent, compared with 3.24 percent in November.

Spain’s 10-year borrowing costs, which rose to the most in a decade on Jan. 10, fell for a third day today as European leaders considered bolstering the region’s bailout facility. The extra yield investors demand to hold the Spanish securities over German equivalents dropped to 234 basis points after the sale, down from 240 basis points yesterday and a euro-era high of 298 basis points on Nov. 30. The average was 15 basis points during the euro’s first decade.

‘Quite Pleased’

“I think the Spaniards will be quite pleased they got it away with a very high bid-to-cover ratio of 2.1, which is impressive and bodes well for future auctions,” Georg Grodzki, head of credit research at Legal & General Investment Management, said in an interview on Bloomberg Television’s “The Pulse” with Andrea Catherwood payday loan. “Only a few days ago it looked as if they could fail.”

European governments are considering aid for Portugal, debt buybacks and lower interest rates on loans from the region’s bailout facility as part of a package to quell the financial crisis, according to four people with direct knowledge of the talks. Euro-area finance ministers will discuss elements of the package next week at a meeting in Brussels. The European Commission is considering a proposal to double the size of the 750 billion-euro bailout fund, Expansion reported today, citing people it didn’t identify.

Spain’s Socialist government, which faces its first bond redemptions in April, is trying to prove to investors it can slash the region’s third-largest deficit to 6 percent of gross domestic product this year from 9.3 percent in 2010, and shore up its struggling savings banks. The country faces repayments of 15.5 billion euros in April, data compiled by the Treasury show.

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China’s stocks fell for a fourth day and bonds declined after the central bank increased interest rates for a second time since October to tame inflation.

The benchmark Shanghai Composite Index dropped 1.3 percent to 2,799.43 at 2:32 p.m., led by consumer and commodity companies. The yield on the 3.77 percent note due December 2020 climbed seven basis points to 3.88 percent, and the price of the security dropped 0.57 per 100 yuan face amount to 99.10, according to the China Interbank Bond Market.

“This interest-rate increase isn’t probably enough to bring inflation under control,” said Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co. “We’ll see more rate increases next year and that’ll keep depressing valuations of stocks. I don’t see any buying opportunities emerging yet.”

The People’s Bank of China increased key one-year lending and deposit rates by 25 basis points on Christmas Day in its second move since mid-October. The benchmark lending rate rose to 5.81 percent, compared with 7.47 percent before cuts from late 2008 to counter the global financial crisis. The deposit rate increased to 2.75 percent, compared with the 5.1 percent annual pace of inflation in November, the highest in 28 months.

China’s stocks pared earlier gains as metal and consumer companies slumped on concern tightening will slow economic growth. Aluminum Corp. of China Ltd. and Zhuzhou Smelter Group Co., the nation’s biggest producers of aluminum and zinc, slid more than 2 percent. Kweichow Moutai Co. and GD Midea Holding Co. dropped more than 3 percent.

Bank Loans

The central bank raised rates for the first time since 2007 in October, and ordered lenders to set aside more money as reserves for the third time in five weeks Dec. 10. Premier Wen Jiabao is seeking to slow gains in property values and consumer prices that are making it harder for families to buy homes and pay for food.

Chinese new bank loans have fallen for two straight months, to 564 billion yuan ($85 billion) at the end of November from 596 billion yuan in September, government figures show. The seven-day repurchase rate, which measures lending costs between banks, has more than doubled in the past two weeks and reached a three-year high of 5.67 percent on Dec. 23. The cash crunch contributed to a 13 percent decline in the Shanghai Composite this year, the biggest drop among the world’s 15 largest equity markets, including a 2 percent loss last week.

Yuan Forwards

Twelve-month non-deliverable yuan forwards strengthened 0.4 percent to 6.4765 per dollar as of 1:06 p.m. in Hong Kong, the highest level since Nov. 22, according to data compiled by Bloomberg. The contracts reflect bets the currency will strengthen 2.3 percent from the spot rate, which was little changed at 6.6270.

“Investors are worried about the times of interest rate hikes next year after the earlier-than-expected rate increase,” said Yang Yongguang, a bond trader at Sealand Securities Co. in Shenzhen. “The 10-year bond yield won’t rise much because banks have a strong demand for bond assets at the beginning of the year.”

The rate increase “is more a signaling tool than anything else,” Yu Song and Helen Qiao, analysts at Goldman Sachs Group Inc., wrote in a Dec. 25 report. “We still expect the government to take a combination of measures to control inflation, including further rate hikes and possibly slightly faster currency appreciation, and believe the heavy lifting of controlling inflation will still fall on quantitative measures.”

Premier Wen said measures to curb the country’s property market weren’t well implemented and reiterated his goal for home prices to return to a “reasonable level” during his term that ends in 2012. The government will also increase the supply of affordable housing and introduce more measures to curb speculation, he said on National Radio yesterday.

Rate Swaps

China’s monetary tightening in 2011 may be mainly in the first half, JPMorgan Chase & Co. and Morgan Stanley said. China may raise rates as many as three times in the first half of next year, according to Morgan Stanley, while JPMorgan forecasts two increases in that period.

One-year interest rate swaps, the fixed rate needed to receive the floating seven-day repo rate, gained three basis point to 3.18 percent, according to data compiled by Bloomberg. The swaps touched 3.1825 percent, the highest since Dec. 10.

The yuan has risen 0.3 percent since Dec. 6, when 30 U.S. senators sent a letter to Chinese Vice Premier Wang Qishan calling for the yuan to “appreciate meaningfully” before President Hu Jintao’s visit to Washington next month. A stronger yuan would help curb a trade surplus that exceeded $20 billion for the fifth time in sixth months, indicating a recovery in international trade from the global financial crisis.

–Zhang Shidong, Judy Chen and Hanny Wan. Editors: Allen Wan, Richard Frost

To contact Bloomberg News staff on this story: Zhang Shidong in Shanghai at +86-21-6104-3040 or szhang5@bloomberg.net; Judy Chen in Shanghai at +86-21-6104-3043 or xchen45@bloomberg.net; Hanny Wan in Hong Kong at +852-2977-6601 or hwan3@bloomberg.net

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President Barack Obama warned Monday the United States faces a new “Sputnik moment” in an increasingly one-world economy and said it must move dramatically to hold its place as global leader.

Obama pressed anew in a North Carolina speech for an accommodation with Republicans on extending Bush era tax cuts, saying he would cede ground in his positions in order to help lawmakers reach a bipartisan compromise.

The president signaled a deal could be close, and said “weve got to make sure we’re coming up with a solution, even if it’s not 100 percent what I want or 100 percent what the Republicans want.”

The president used much of his 10-day Asian tour recently to argue America’s case for more open markets for U.S. goods, and in his remarks Monday at the Forsyth Technical Community College, he carried the appeal even further.

Proclaiming a “new Sputnik moment,” Obama recalled the shock in this country over the Soviet Union’s launch of the first satellite in 1957 and the national response that put America in the forefront of technology development. He said the most important competition for America today is not between Democrats and Republicans but with other nations.

“The hard truth is this: in the race for the future, America is in danger of falling behind,” he warned.

In Washington, Democrats and Republicans are seeking a compromise in Capitol Hill talks on extending the Bush-era tax cuts, which are due to expire at the end of the year. An outline is emerging that would temporarily extend the cuts for all taxpayers and extend jobless benefits for millions of American.

Obama said lawmakers are still engaged in “serious debate” as they work through differences. He reiterated his opposition to a permanent extension of tax cuts for top income earners, saying the country couldn’t afford them.

The negotiations between the administration and lawmakers of both parties have centered on a two-year extension of current rates.

With the nation’s unemployment rate hovering near 10 percent, Obama also said it was equally important for lawmakers to pass an extension of the jobless benefits.

Republicans have insisted that any extension of jobless aid be paid for with cuts elsewhere in the federal budget. The White House opposes that, saying such cuts are economically damaging during a weak recovery.

With the nation’s unemployment rate hovering near 10 percent, Obama said it was equally important for lawmakers to pass an extension of the jobless benefits. Republicans have insisted that the benefits be paid for with cuts elsewhere in the federal budget. The White House opposes that, saying such cuts are economically damaging during a weak recovery.

A month after his party suffered sweeping defeats in the midterm elections, Obama said it’s time for lawmakers to stop making decisions based on the political implications for the next election.

“I believe that right now there are bigger issues at stake for our country than politics,” he said.

During his three-hour stop in North Carolina, Obama also offered a glimpse of his 2011 agenda as he called for new investments that would put the U.S. in a better competitive position in the world.

Obama spoke in general terms, mentioning future investments in areas like education and infrastructure, though he outlined no specific initiatives he would promote. White House spokesman Bill Burton said Obama would likely speak about some of his plans in his State of the Union address early next year.

The president also said America’s competitiveness would be buoyed by favorable trade agreements, like the free trade deal completed with South Korea last week. Obama dismissed critics who argue that trade deals will hurt businesses at home, arguing instead that American companies will get a boost by expanding their markets overseas.

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