Business news for Sun, 23 Dec 2007 & with words banks+billion. 6 news.

EUROPEAN stocks retreated last week on concern losses from the United States subprime-lending market are spreading through the region's broader economy. Vinci SA, the world's biggest builder, Ericsson AB and Anglo American Plc led declines of companies most affected by changes in the pace of economic growth. UBS AG, Europe's largest bank, and Barclays Plc fell after Goldman, Sachs & Co cut its recommendation on European banks. "We're maybe at the tip of the iceberg," said Franck Hennin, who helps oversee US$7.3 billion at Richelieu Finance in Paris. "The contagion from the US that we anticipated is becoming a reality. Many expected a year-end rally. Now the market is back-tracking." The Dow Jones Stoxx 600 Index fell 0.8 percent last week, led by construction and materials firms. The measure is heading for a 0.2 percent drop this year, weighed down by banks and financial-services companies on credit-markets losses, Bloomberg News reported. Goldman Sachs

UNITED States stocks rose for the third time in four weeks, led by energy companies, as higher consumer spending and the Federal Reserve's efforts to give cash to banks spurred speculation the economy will keep expanding. Exxon Mobil Corp and Hess Corp led energy companies to the biggest gain in the Standard & Poor's 500 Index after oil prices climbed for a second week. Earnings reports from Oracle Corp and Research In Motion Ltd drove technology stocks to the second-steepest advance among 10 industries. "You can just feel the tide turning here," said Jim Paulsen, who helps oversee about US$200 billion as chief investment strategist at Wells Capital Management in Minneapolis. "Economic data keeps coming in better than expected and I think it's part of the recovery story." The S&P 500 added 16.51, or 1.1 percent to 1,484.46 last week, bringing its year-to-date advance to 4.7 percent. The Dow Jones Industrial Average rose 0.8 percent to 13,450.65. The Nasdaq

GOLDMAN Sachs Group Inc, the world's biggest securities firm, awarded Chief Executive Officer Lloyd Blankfein a record US$67.9 million bonus in 2007 as mortgage losses drove his counterparts at Morgan Stanley and Bear Stearns Cos to forgo year-end payouts. Blankfein, 53, will receive US$26.8 million in cash, and US$41.1 million in restricted stock and options, the New York-based firm said in a regulatory filing. Co-Presidents Gary Cohn, 47, and Jon Winkelried, 48, will each receive restricted shares and options valued at about US$40.5 million, up from US$25.7 million last year. Cash payments weren't disclosed for anyone other than Blankfein, who reaped a record-setting US$53.4 million last year. Goldman shattered Wall Street profit records for the fourth consecutive year even as banks and securities firms, including Citigroup Inc and Merrill Lynch & Co, were forced to take at least US$96 billion of writedowns. Goldman set aside US$20.2 billion to pay employee salaries, benefits

ITALY'S second-largest bank, Intesa Sanpaolo SpA, is to pay 310 million euros (US$446 million) to settle a lawsuit with Parmalat SpA, an Italian dairy company that went bankrupt in December 2003. "The settlement brings all pending revocatory and damages actions and all reciprocal claims eventually to be filed to an end," the companies said in a joint statement distributed by the Milan-based Italian exchange. In June, Parmalat also settled lawsuits with Merrill Lynch & Co, ING Groep NV and Banca Monte Parma SpA for a total of 72 million euros, concluding all outstanding claims with those banks, Bloomberg News said. Legal action is still pending against Bank of America Corp, Citigroup Inc, accountant Grant Thornton and other Italian lenders. Parmalat collapsed in 2003 with debt of 14 billion euros, almost eight times the amount reported by former management. The company had never generated a profit after its stock market listing in 1992, though it reported earnings

CITIGROUP Inc, Bank of America Corp, and JPMorgan Chase & Co have abandoned a United States Treasury-sponsored plan to buy assets from cash-strapped structured investment vehicles. The "SuperSiv" fund brokered by Treasury Secretary Henry Paulson, said to be about US$80 billion when it was announced in October, "is not needed at this time," the banks said. The need for a bailout has diminished as HSBC Holdings Plc, bond insurer MBIA Inc and other companies that manage SIVs arranged their own rescues. The steps lessened the threat that SIVs would dump their holdings and further affect credit markets suffering from losses in securities tied to subprime mortgages. New York's Citigroup said last week it would guarantee US$58 billion in debt from SIVs it manages in order to avoid a sale of the assets, Bloomberg News reported. More than 20 banks, SIVs and investment managers participated in the discussion with BlackRock Inc the adviser, the statement said. The banks

UNITED States 10-year Treasury note yields have risen to a three-day high on signs that central banks were adding enough funds to the financial system to spur bank lending. Ten-year notes fell on Friday by the most since December 12, paring a weekly advance, as central bank auctions of short-term loans totaling US$64 billion brought down bank-lending rates, fueling optimism the US economy will avoid a recession. Reports this week may show a slide in home prices is deepening. "As we move through 2008, we expect rates to move higher because consumers will prove resilient despite declines in housing, and growth will not fall off a cliff as the market is implying," Michael Pond, an interest-rate strategist in New York at Barclays Capital Inc, one of the 20 primary securities dealers that trade with the Federal Reserve, told Bloomberg News. Ten-year yields rose 12 basis points on Friday, or 0.12 percentage point, to 4.17 percent, according to bond broker Cantor Fitzgerald