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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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SYDNEY—Tests uncovered oil stains in three Rolls-Royce engines on Singapore Airlines’ A380 superjumbos, prompting the airline to yank the planes from service Wednesday just two days after Qantas announced troubling oil leaks on its A380s.

The oil on the Qantas and Singapore planes was discovered during tests prompted by the explosion of a Rolls-Royce engine on a Qantas A380 during a flight from Singapore to Sydney last week. The plane made a safe emergency landing in Singapore, but the Australian airline immediately grounded its entire fleet of A380s while it investigated the cause.

Singapore Airlines said it does not know whether the oil stains found in its engines have any connection to the engine oil leaks found on Qantas, but was temporarily pulling the planes from service as a precaution. The planes, in Melbourne, Sydney and London, will be flown to Singapore without passengers, where they’ll be fitted with new engines.

“We apologize to our customers for flight disruptions that may result and we seek their understanding,” airline spokesman Nicholas Ionides said in a statement.

Twenty planes operated by Qantas, Germany’s Lufthansa and Singapore Airlines use the Trent 900 engines. With the decision by Singapore, nine aircraft with the engines have been grounded.

On Monday, Qantas CEO Alan Joyce said tests had uncovered oil leaks in the turbine area of three engines on three different A380s. The leaks were abnormal and should not be occurring on new engines, he said. All six of the Australian airline’s A380s remained grounded Wednesday.

London-based Rolls-Royce, an aerospace, power systems and defense company that is separate from the manufacturer of Rolls-Royce cars, had recommended a series of checks for the Trent 900 engines used in the A380s operated by Qantas, Singapore Airlines and Germany’s Lufthansa.

Singapore Airlines grounded its entire fleet of 11 A380s following last Thursday’s engine explosion on Qantas, but after initial checks, returned them to service Friday. However, on Wednesday, based on fresh analysis of the tests, Singapore took three of its A380s out of service again, because of oil stain results.

Singapore’s eight other A380s, also flying with Trent 900 engines, remain in service.

Lufthansa spokesman Thomas Jachnow said the airline was aware of the Singapore problem, but its maintenance crews had not found any oil leaks in their Trent 900 engines. However, the German airline did say it had replaced the Rolls-Royce engine on one of its A380s after detecting a problem it said was not connected to the oil leaks that grounded the Qantas and Singapore superjumbos.

The most likely cause of an oil leak or stain is a tiny crack in the oil supply pipe that lubricates the engine’s bearings, said John Page, an aircraft designer and senior lecturer in aerospace engineering at the University of New South Wales in Sydney.

Oil leaks in an engine’s turbine area can spark fires, which could then put too much stress on the rapidly spinning engine parts and lead to a breakdown absolutely free credit score. There are many possible culprits behind a crack, such as poor design or chafing from the pipe rubbing against another engine part.

However, Page said, trace amounts of oil are not necessarily considered a serious issue.

“Normally it’s not a critical problem, but if it’s associated with a growing crack, then obviously it becomes a problem,” Page said. “If it’s a first indication it’s a growing crack, then it’s serious.”

The Australian Transport Safety Bureau is leading an international investigation of the incident. The agency has said it is trying to find a missing piece of a turbine disc that could help explain what happened.

The bureau released a photo of a jagged and bent piece of turbine disc from the Trent 900 that seems to indicate a failure of the metal disc at the centre of the turbine. Turbines spin at extremely fast speeds during takeoff and initial climb, generating massive centrifugal forces.

Martin Chalk, president of the Brussels-based European Cockpit Association that represents 38,200 pilots from 36 European nations, said it was unlikely that a single cause such as an oil leak could have been responsible for the Qantas incident.

“Normally, when these things happen, it’s a series of factors that contribute to an accident,” Chalk said.

Meanwhile, Singapore plans to replace the affected engines on its A380s with other Trent 900s, said Bryony Duncan-Smith, a Sydney-based spokeswoman for Singapore Airlines. The airline does not know how long that will take, she said.

Rolls-Royce did not immediately respond to a request seeking comment Wednesday. On Monday, it issued a statement saying it had made progress in understanding what caused the Qantas engine to burst, but offered no details on what that cause might be.

Singapore said the engine changes don’t affect its eight other A380s at this point.

The Qantas and Singapore incidents are not the first problems Rolls-Royce have faced with its engines. In September 2009, a Singapore Airlines A380 was forced to return to Paris mid-flight after an engine malfunction. Last August, a Lufthansa crew shut down one of its engines as a precaution before landing in Frankfurt after receiving confusing information on a cockpit indicator.

On Tuesday, the European Aviation Safety Agency said it was closely monitoring the probe into the Qantas incident. The agency issued orders twice this year advising airlines about extra inspections or repairs needed for the Trent 900s.

A380s flown by Emirates and Air France use engines manufactured by the Engine Alliance, a 50/50 joint venture between GE Aircraft Engines and Pratt & Whitney.

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The bulls are back on Wall Street. After a bearish August, stocks roared into September with a major rally Wednesday, as investors cheered signs of strength in the manufacturing sector.

The Dow Jones industrial average (INDU) gained 256 points, or 2.2%.The S&P 500 (SPX) soared 31 points, or 2.9%. The Nasdaq (COMP) composite rallied 63 points, or 3%.

Stocks rallied right out of the gate as investors welcomed a rebound in Chinese manufacturing and robust economic growth in Australia. The advance kicked into high gear following an unexpectedly strong report on U.S. manufacturing activity.

The manufacturing data boosted industrial names and companies in the materials sector. Caterpillar (CAT, Fortune 500), United Technologies (UTX, Fortune 500), Boeing (BA, Fortune 500) all gained between 2% and 4%. Energy producers Exxon (XOM, Fortune 500) and Chevron (CVX, Fortune 500) also rose as oil prices spiked 3%.

But the rally was broad-based. Six stocks gained for every one that fell on the New York Stock Exchange. All 30 Dow components closed higher, with Bank of America (BAC, Fortune 500) gaining over 6%.

While the improvement in manufacturing allayed some concerns about the U.S. economy, traders said the market remains vulnerable given the uncertain outlook for growth this year.

Investors shrugged off a weaker-than-expected report from payroll processing firm ADP, which is widely seen as a leading indicator for Friday’s jobs report from the Labor Department.

"This market is looking for something to grab on to," said Mark Luschini, chief investment strategist for Janney Montgomery Scott. "And for the moment it’s manufacturing."

The focus could shift to jobs Thursday morning when the government’s weekly report on initial claims for jobless benefits comes out. Investors will also take in the latest readings on factory orders and pending home sales shortly after the market opens.

"The manufacturing number is nice to hang your hat on, but the state of the consumer is still paramount for what’s happening in the economy, " said Luschini.

The major gauges ended Tuesday’s session essentially unchanged, closing out a lackluster August. Stocks typically start September strong, but often end on a weak note due to end-of-the-quarter movements by mutual funds.

Economy: The Institute for Supply Management’s (ISM) said its index of manufacturing activity rose to 56.3 in August. Economists were expecting the index to edge lower. Any number above 50 indicates growth in the sector.

Meanwhile, payroll processing firm ADP reported that employers cut 10,000 jobs in August. Economists were expecting private sector employers to add 13,000 jobs during the month, after adding 37,000 in July.

A separate report showed that planned job cuts plummeted to a 10-year low in August, as employers shed 34,768, down 17% from the previous month, according to outplacement firm Challenger, Gray & Christmas.

The reports come two days before the government’s monthly report on jobs and unemployment. Economists expect the government to report that the economy lost 120,000 jobs in August, after employers cut payrolls by 131,000 in July. The unemployment rate is expected to edge up to 9.6% from 9.5%.

Other reports on Wednesday included construction spending, which fell 1% in July, versus a forecasted 0.7% decline.

Companies: General Motors, Ford Motor (F, Fortune 500) and Toyota (TM) all reported disappointing sales Wednesday, kicking off what is expected to be the worst August for industrywide auto sales in 27 years.

The drop in auto sales is partly a result of tough comparisons to the Cash for Clunkers program of last summer.

Shares of Burger King Holdings (BKC) jumped 14%, following a report that the fast food chain is considering a possible sale to buyout firms. The Wall Street Journal reported that that private equity firms that have expressed interest in buying Burger King include Britain’s 3G Capital Group.

Apple’s (AAPL, Fortune 500) stock was up 2.8% as the company held its annual music-themed special event. CEO Steve Jobs is expected to unveil its newest iPods and advances in the iTunes music store.

Shares of BP (BP) climbed 3.7% as the oil giant said it has agreed to sell its interests in ethylene and polyethylene production in Malaysia to government-owned Petronas for $363 million in cash.

World markets: European shares closed sharply higher. The FTSE 100 in Britain jumped 2.7%, the CAC 40 in France added 3.8% and the DAX in Germany gained 2.7%.

In Asia, Japan’s benchmark Nikkei index gained nearly 1.2%, rebounding after hitting a 16-month low on Tuesday, and the Hang Seng in Hong Kong rose 0.4%. The Shanghai Composite fell 0.6%, despite a report that showed China’s manufacturing sector bounced back in August after several months of slowing.

Currencies and commodities: The dollar fell against the euro and the British pound, but rose versus the Japanese yen.

Currency trading volume around the world has hit $4 trillion a day, a 20% jump compared to 2007, said the Bank of International Settlement.

Oil futures for October delivery rose $2.08 to $74.03 a barrel. Gold for December delivery fell $2.20 to $1,248.10 an ounce.

Bonds: The yield on the 10-year Treasury note rose to 2.58% from 2.48% late Tuesday. 

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Apartment rental and vacancy rates for properties in the Raleigh-Durham region improved in first half of 2010, as demand strengthened and new construction slowed.

The average vacancy rate for the 103,383 apartment units tracked by apartment market research firm Real Data of Charlotte improved to 8.7 percent in July compared to a rate of 9.9 percent in January and a rate of 10.4 percent in July 2009, when the market’s vacancy rate peaked.

Renters signed to lease 2,912 vacant units between February and July, which was an improvement over the absorption of 604 units during the same period a year ago.

The Triangle apartment market’s average rental rate was $786 in July, which was up by 2.5 percent in the past six months. New apartments that are still in the lease-up stage have the highest average rental rate in the market, at $1,017 per month.

Real Data projects that average rents and occupancy levels will continue to rise over the next year as demand increases and new construction remains tempered.

Only 1,273 apartment units were under construction in July, Real Data’s report states, which compares to 3,234 units that were under construction the year prior Same day payday loans. Another 1,137 units are proposed to be built in the Triangle, but many projects have been put on hold due to lack of financing.

Apartment communities that are under construction include the following:

• Alexan Garrett Farms, with 116 units on U.S. 15-501 in central Durham.

• Final phase of American Tobacco Campus’ remaining 17 apartment units in downtown Durham.

• Trinity Commons, with 335 units on Douglas Street in Durham.

• Chapel Hill North, with 123 units on Airport Road in Chapel Hill.

• Landings at Winmore, with 60 units on Winmore Avenue in Carrboro.

• Meridian at Wakefield, with 369 units on Capital Boulevard in north Raleigh.

• Final phase of Chancery Village at the Park, with 42 units in Cary.

• Final phase of Grace Park, with 24 units on Davis Drive in Morrisville.

• Swift Creek Commons, with 196 units on West Chatham Street in Cary.

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