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Portugal says it has paid out euro4.2 billion ($6.1 billion) in a bond redemption, avoiding default but further depleting its cash reserves ahead of a promised international bailout.

An official from the Finance Ministry said on condition of anonymity, in line with government policy, that Portugal repaid the maturing loan Friday, as expected.

Portuguese authorities have admitted they don’t have enough money to settle a euro7 billion debt falling due in June and have asked for financial help.

Portugal’s European partners and the International Monetary Fund have agreed to provide aid which could reach euro80 billion. But negotiations on the loan’s terms, especially how much interest Portugal will pay, are likely to take weeks.

The country is facing unsustainable borrowing costs, with its 10-year bond yield reaching 8.9 percent Friday.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

LISBON, Portugal (AP) _ Portugal is having to find euro4.2 billion ($6.1 billion) for a bond redemption, stoking financial pressure on the cash-strapped country which has requested a bailout.

Authorities say Portugal has enough money in reserve to cover the loan repayment Friday. However, they admit the country won’t be able to settle other debts in June.

Portugal’s European partners and the International Monetary Fund have agreed to provide a financial rescue package which could reach euro80 billion.

But negotiations on the terms of that loan, especially how much interest Portugal should pay on it, are likely to take weeks.

The bailout pledge hasn’t defused market tension, with the country’s 10-year bond yield reaching an unsustainable 8.9 percent Friday.

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While the full extent of the disaster’s aftermath is not yet clear, the earthquake and tsunami that devastated parts of Japan could be the most expensive quake in history.

Its toll on Japan — its people and its institutions — is already staggering.

By official counts, more than 1,500 people have perished and about as many have been reported missing. There are fears that the death count could go much higher as rescuers get to towns that were washed away by powerful flooding.

Damage to power reactors has sparked fears of nuclear meltdown and radiation contamination. As of Sunday morning, nearly 5 million homes were without power. (Bank of Japan to help banks)

And the financial cost to the Japanese government, businesses and individuals is expected to be big. Cautioning that their estimates are preliminary, several experts made early calculations of the quake’s financial cost on Sunday.

Losses from the quake, tsunami and fires will total at least $100 billion, including $20 billion in damage to residences and $40 billion in damage to infrastructure such as roads, rail and port facilities, catastrophe modeling firm Eqecat estimated.

Another firm, AIR Worldwide, estimated that losses covered by insurance could reach between $15 billion and $35 billion from the earthquake alone. It did not estimate losses from the tsunami or the damage to the the Fukushima Daiichi nuclear plant in northeastern Japan.

According to AIR, the number of Japanese businesses and homeowners with earthquake insurance is relatively low, ranging between 14% to 17%. As a result, the total financial toll for the catastrophe could be considerably higher than the estimate of insured losses.

In the 1995 earthquake in Kobe, the most expensive in history, total losses were $100 billion but insured losses only $3 billion, according to the Insurance Information Institute.

By comparison, the 1994 quake in Northridge, Calif., northwest of Los Angeles, had the highest tally of insured losses ever — $15.3 billion. In today’s dollars, adjusted for inflation, that comes to insured losses of $22.7 billion.

The Insurance Information Institute said it believes the losses from Friday’s disaster will prove to be the most expensive earthquake in history, although it did not give any dollar estimate of the costs. 

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European Union commissioners Olli Rehn and Michel Barnier said they are confident in Greece’s efforts to tackle its debt in the wake of its downgrade by Moody’s Investors Service.

Rehn, the EU’s economic and monetary affairs commissioner, and Barnier, who is in charge of financial-services policy in the region, said they are “confident in the actions the Greek government is carrying out.” Planned EU rules to regulate credit-rating companies “will be fundamental and tackle the problems we know exist,” the commissioners said in an e-mailed statement today.

Proposals on rating-firm regulation are “due before the end of the summer,” they said in the statement no fax needed payday loans. “The last few days highlight, once again, how important a more and better regulated environment for ratings is.”

Moodys downgraded Greece’s government bond ratings to B1 from Ba1, and assigned a negative outlook to the rating, on March 7. The ratings firm today cut Spain’s credit rating to Aa2, citing its concerns that the cost of shoring the banking industry will eclipse government estimates.

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U.S. stocks closed little changed Wednesday in what was mostly a quiet session, as investors closely tracked developments in Libya and oil prices.

The Dow Jones industrial average (INDU) lost 1 point to close at 12,213.

IBM (IBM, Fortune 500) was the best performer among the blue chips. IBM’s shares climbed more than 2% after Deutsche Bank analysts upgraded their price target on Big Blue to $200 a share and maintained a "buy" rating on the stock

The S&P 500 (SPX) fell 1.8 points, or 0.1%, to 1,320. The Nasdaq (COMP) composite lost 14 points, or 0.5%, to 2,752.

Investors had little market-moving data to work with Wednesday, with no major economic reports and no companies releasing quarterly results.

Oil remained the dominant issue for investors. Crude prices have been surging for weeks, and there’s been little on the domestic front to help give stocks a sustained boost.

Oil posted modest losses on Wednesday, falling 85 cents, or less than one percent, to $104.16 a barrel.

"The story is higher oil, and it will remain so as long as oil remains higher than it has been in recent years," said Frank Davis, director of sales and trading with LEK Securities.

Investors said there’s a reasonable chance prices could continue to rise in the near-term as unrest and violence continue to rattle North Africa and the Middle East. But they also think oil will ease as the year goes on once the fears subside.

"This $105 oil is not demand-driven as the global economy is still struggling," said Keith Goddard, president and portfolio manager at Capital Advisors. "Oil’s fluctuations are all fear-based at the moment — we can wake up one morning and Libya’s fine, or we can wake up another day and Libya’s in focus again."

"Investors are slowly starting to reposition portfolios for the possibility that these prices may stay around for awhile," Davis said.

U.S. stocks closed broadly higher Tuesday, led by a strong performance in the financial sector. Bank of America (BAC, Fortune 500) CEO Brian Moynihan issued a rosy multi-year outlook at the bank’s first shareholder meeting in four years.

Companies: The biggest loser on the S&P 500 was JDS Uniphase (JDSU), with shares of the optical networking equipment maker plunging 17%. The entire sector got hammered after rival Finisar (FNSR) issued a weak outlook Tuesday, citing weak demand out of China. Shares of Finisar sank 39% Wednesday.

After the close, Hot Topic (HOTT) and Coldwater Creek (CWTR) release quarterly results.

Economy: The Commerce Department said wholesale inventories rose 1.1% in January, slightly better than the 1% rise economists had expected, according to a consensus estimate from Briefing.com.

World markets: European stocks closed lower. Britain’s FTSE 100 slid 0.6%, the DAX in Germany lost 0.5%, and France’s CAC 40 lost 0.6%.

The yield on Portuguese bonds jumped as the European nation issued two-year bonds on Tuesday, but fears of a potential bailout didn’t have much impact on international markets.

Asian markets ended with gains. The Shanghai Composite rose nearly 0.1%, the Hang Seng in Hong Kong added 0.4%, and Japan’s Nikkei advanced 0.6%.

Currencies and commodities: The dollar slipped versus the euro and the British pound but was flat against the Japanese yen.

Gold futures for April delivery closed up $2.40 to $1,429.60 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose, with the yield slipping to 3.54% from 3.54% late Tuesday.  

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Bill Donius will not seek re-election to Pulaski Financial Corp.’s board of directors next year and instead will devote his time to civic, charitable and unspecified commercial interests, the Creve Coeur-based bank announced Tuesday.

Donius is currently a member of the board and has previously served subsidiary Pulaski Bank as senior manager, chairman, CEO or director continuously since 1992. Donius stepped down as CEO in May 2008 when Gary Douglass took on the role.

“I plan to focus my full-time energies on community service, publishing the book I’ve written and continuing to write for the Huffington Post,” Donius said in a statement.

When he was CEO, Donius had been the third member of his family to run Pulaski. He succeeded his father, Walter Donius, who took over from Bill Donius’ grandfather, Michael Burdzy.

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Americans increased spending in November for a fifth straight month and companies stepped up orders for equipment, more evidence the U.S. economy is gaining momentum heading into 2011.

Household purchases rose 0.4 percent after a 0.7 percent increase in October that was almost twice as large as previously estimated, figures from the Commerce Department showed today in Washington. The agency also reported a 2.6 percent gain in bookings for capital goods like computers and electronics.

Rising incomes and stock prices are giving consumers the wherewithal to boost the purchases that account for 70 percent of the world’s largest economy, improving earnings prospects for companies including Bed Bath & Beyond Inc. A drop in claims for jobless benefits reported today indicates employers are slowing the pace of firings, a step toward cutting unemployment from close to a 26-year high.

“The recovery is moving into higher gear,” said Jim O’Sullivan, global chief economist at MF Global Ltd. in New York. “The unemployment rate will gradually come down, which in turn should reduce the downward pressure on inflation.”

First-time filings for jobless insurance declined by 3,000 to 420,000 in the week ended Dec. 18, matching the median forecast in a Bloomberg News survey, according to Labor Department figures released today.

Another report today showed a measure of consumer confidence climbed to a six-month high in December. The Thomson Reuters/University of Michigan final index of consumer sentiment rose to 74.5, matching the median estimate in a Bloomberg survey, from 71.6 in November. The preliminary December reading was 74.2.

Stocks, Treasuries

Stocks were little changed after the reports. The Standard & Poor’s 500 Index fell 0.1 to 1,257.03 at 11:40 a.m. in New York. The index has climbed more than 12 percent this year on prospects for economic growth. Treasury securities fell, sending the yield on the benchmark 10-year note up to 3.38 percent from 3.35 percent late yesterday.

Today’s reports add to a run of better-than-forecast data that have prompted economists to raise their estimates for economic growth. Retail sales increased more than forecast in November, the trade deficit shrank as exports jumped to a two- year high in October, and regional as well as nationwide figures showed factories are ramping up production.

Economists at Morgan Stanley in New York today raised their tracking estimate for consumer spending this quarter to 4.1 percent from 3.5 percent. They project the economy will expand at a 4.5 percent pace in the October-December period, up from a prior estimate of 4.3 percent.

Tax Cuts Extended

The extension of Bush-era income-tax cuts for two years, a reduction in the payroll tax next year and the Federal Reserve’s plan to buy $600 billion of Treasury securities are adding to the optimism.

Housing remains a weak spot for the economy as an overhang of unsold properties weighs on the market. Purchases of existing homes increased 5.5 percent to a 290,000 annual rate from a 275,000 pace in October that was slower than previously estimated, the Commerce Department said today. The median forecast of economists surveyed by Bloomberg projected a 300,000 pace direct payday lenders.

“While the economic environment appears to have stabilized and is perhaps improving, it looks as if the consumer continues to face challenges resulting from the macroeconomic environment such as historically high unemployment rates,” Leonard Feinstein, co-chairman of Bed Bath & Beyond, said on a conference call yesterday.

Earnings Forecast

Union, New Jersey-based Bed Bath & Beyond yesterday increased its fiscal year earnings forecast to as much as $2.90 a share from a previous forecast of as much as $2.76.

Economists forecast consumer spending would rise 0.5 percent, according to the median of 75 projections in a Bloomberg survey. Estimates ranged from increases of 0.1 percent to 0.8 percent. The revisions made October’s gain in spending the biggest since August 2009.

Inflation remained below the Fed’s comfort zone. The central bank’s preferred price measure, which excludes food and fuel, rose 0.1 percent from the prior month and was up 0.8 percent from a year earlier, matching October’s 12-month gain as the smallest on record.

The economy grew at a 2.6 percent annual pace in the third quarter, the government reported yesterday. Consumer spending rose at a 2.4 percent pace, the fastest since the first three months of 2007.

Unemployment Rate

Growth hasn’t been fast enough to bring down the unemployment rate, which rose last month to 9.8 percent. Fed policy makers last week maintained their program to buy up to an additional $600 billion in Treasury securities through June to try to bolster the economy and support prices.

“Consumer spending has moved into a period of healthy growth and we do think even if we don’t maintain the extremely strong fourth quarter pace consumer spending will grow solidly into 2011,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York.

Today’s durable goods report from the Commerce Department showed that total orders dropped 1.3 percent, depressed by volatile demand for aircraft, and bookings excluding transportation equipment rose more than forecast.

Capital spending has been a source of strength for the world’s largest economy at the same time that household purchases are starting to accelerate. Manufacturing, the industry that helped pull the U.S. out of the worst recession since the 1930s, has been resilient throughout the recovery, bolstered in part by overseas demand for American-made goods.

Higher Profits

Some manufacturers are projecting higher profits as orders increase. Joy Global Inc., the maker of P&H and Joy mining equipment, last week announced a fiscal 2011 profit forecast that topped analysts’ estimates in a Bloomberg survey.

“The improving bookings rate supports our view that our mining customers will continue to increase their capital expenditure plans,” Mike Sutherlin, chief executive officer of the Milwaukee-based company, said in a Dec. 15 statement. “We continue to ramp up our production to meet this expected growth in demand.”

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Wells Fargo, in an agreement with California’s attorney general announced Monday, said it would provide $2 billion worth of loan modifications to nearly 15,000 homeowners.

Under the deal, the bank is also paying a total of $32 million to borrowers who lost their homes to foreclosure, according to the AG.

Attorney General Jerry Brown said Wells Fargo (WFC, Fortune 500) will offer modifications to 14,900 homeowners, who have so-called "pick-a-pay" loans.

"Customers were offered adjustable-rate loans, with payments that mushroomed to amounts that ultimately thousands of borrowers could not afford," said Brown, who takes over as California’s governor next month. "Recognizing the harm caused by these loans — Wells Fargo accepted responsibility and entered in this settlement with my office."

Pick-a-pay loans, where the rate changes throughout the life of the loan, became notorious during the housing market meltdown. According to the AG’s office, payments often started low — at levels that were "insufficient to cover the monthly interest owed, and the unpaid interest was added to the loan balance." The loans would ultimately increase "dramatically," soaring to unaffordable heights for the homeowner and creating the risk of foreclosure.

In addition to the loan modifications, Wells Fargo will pay $32 million in restitution to more than 12,000 pick-a-pay borrowers who lost their homes through foreclosure in California.

The attorney general noted that the loans were not made by Wells Fargo, but by banks that it acquired: World Savings and Wachovia.

Wells Fargo stated that so far it has already extended significant home payment relief to more than 50,000 at-risk, pick-a-payment homeowners in California — through interest rate reductions, term extensions, tax forgiveness, insurance advances and principal forgiveness.

This adds to the list of pick-a-pay settlements that Wells Fargo has previously signed with attorney generals in Arizona, Colorado, Florida, Illinois, Nevada, New Jersey, Texas and Washington. 

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The amount Canadian

China’s property prices rose at a slower pace for a seventh month in November, when the government raised the reserve-ratio requirement for banks twice and expanded measures to limit the risk of asset bubbles.

Home prices in 70 cities climbed 7.7 percent from a year earlier, China Information News, the statistics bureau’s newspaper, reported today. That’s slower than the 8.6 percent increase in October, and the 8 percent median estimate in a Bloomberg News survey of seven economists.

China has tightened measures on home purchases this year, suspending mortgages for third-home purchases and pledging to speed up trials of property taxes nationwide. It also raised interest rates in October for the first time in three years on concerns of inflation and increases in asset prices quick payday loans.

“The year-on-year price growth is starting to stabilize amid a series of government tightening measures,” Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia, said before the report. “The gain in home prices also slowed due to a higher base last year.”

–Bonnie Cao, Huang Zhe. Editors: Linus Chua, Joshua Fellman

To contact Bloomberg News staff for this story: Bonnie Cao in Beijing at +86-21-6104-3035 or bcao4@bloomberg.net

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Beijing has the capacity to control surging prices while keeping economic growth on track, China’s main planning agency said Monday, in the latest effort to quell public anxiety about simmering inflation.

Conditions are right for cooling prices, despite worries over rising food costs, the National Development said Reform Commission said Monday on its website.

“This fear is understandable, but we can safely say that the current conditions in China are fully conducive to maintaining basic price stability,” the statement said. “This country has the capacity to keep the price level basically stable.”

The effort to defuse public unease came after Beijing announced its second bank reserve increase in two weeks on Friday in an effort to curb lending and cool inflation that rose to a 25-month high in October payday loan in 1 hour.

Many in China expect an interest rate hike to follow.

Food costs jumped 10.1 percent in October over a year earlier, boosting inflation to 4.4 percent, well above the government’s 3 percent target. That worries Chinese communist leaders who fear price hikes could trigger unrest.

Chinese stock markets have fallen amid investor fears a rate hike or tighter economic controls imposed to control inflation might further slow growth that has declined after hitting double-digit levels this year.

The planning agency said supplies of farm products such as poultry, eggs, grain and cooking oil are sufficient. It said the government has adequate reserves, even after droughts and other natural disasters this year.

The agency called on local authorities to ensure steady production and supplies and to better regulate markets to prevent any disruptions.

Economists say money flooding through the economy thanks to stimulus spending and bank lending helped push up October inflation.

China’s regulators also worry that soaring lending is fueling overspending on real estate and other assets and could leave banks burdened with unpaid loans if ill-considered projects default 500 payday loans.

Beijing has slammed the U.S. for monetary policies it says are flooding emerging economies with cash seeking higher returns due to low interest rates and the weakening U.S. dollar.

China’s Cabinet promised last week to ensure adequate supplies of coal, power, oil and gas and said it would impose price controls on daily necessities if required.

The government also has promised food subsidies for the poor and increases in pensions and minimum wages.

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