(12-28) 03:45 PST TOKYO, Japan (AP) —

Rising energy costs triggered the biggest jump in Japanese consumer prices in almost a decade while industrial production slumped, the government said Friday, clouding the outlook for the world’s No. 2 economy.

The nation’s jobless rate unexpectedly fell to 3.8 percent in November, but overall the mixed data cements expectations that the Bank of Japan will keep interest rates unchanged for some time, even as energy-fueled inflation accelerates.

The nationwide core consumer price index, which excludes volatile fresh food prices, jumped 0.4 percent in November compared to the same month a year ago, the Ministry of Internal Affairs and Communications said.

The reading was above analysts’ expectations and marked the fastest rise since a 1.8 percent increase in March 1998. It was also the index’s second straight month of gains following a 0.1 percent rise in October.

The core CPI was lifted by a 5.4 percent jump in energy prices. Gasoline prices surged 10.8 percent on year.

“The rise in prices involves higher oil prices, and so it’s not a favorable increase,” economy minister Hiroko Ota told reporters.

The Bank of Japan has looked for a rise in consumer prices as a sign the country has fully emerged from years of deflation, a continuous spiraling down of prices that deadens economic activity and brings down wages.

Still, the central bank has been cautious to hike rates too quickly amid concerns over the U.S. subprime loan crisis and the possible impact of the global economic slowdown on Japan’s economy.

The Bank of Japan kept its key interest rate unchanged at 0.5 percent at its policy meeting earlier this month, still the lowest rate among major industrialized countries.

Industrial production, meanwhile, fell 1.6 percent in November from the previous month, the first drop in two months.

Industrial output rose 1.7 percent in October after falling 1.4 percent in September, the Ministry of Economy, Trade and Industry said.

The ministry also said manufacturers polled expect that their output will rise 4.0 percent on month in December, but will be flat in January.

Offering some respite was an unexpected drop in the country’s jobless rate to 3.8 percent in November from 4.0 percent a month earlier.

The Ministry of Internal Affairs and Communications said the total number of jobless was down 130,000 on year, marking the 24th consecutive month of decline.

(10-02) 11:42 PDT NEW YORK, (AP) —

Stocks fell moderately Tuesday as investors disappointed by a sharp drop in pending home sales decided to preserve some profits from the rally that sent the Dow Jones industrial average back into record territory. A decline in oil and gold prices also pulled the market lower.

Wall Street is eager for more evidence to support the case for further interest rate cuts, and got some when the National Association of Realtors said its seasonally adjusted index of pending sales for existing homes fell 6.5 percent in August from July and 21.5 percent from a year ago. The data suggest sales of existing homes will likely keep declining in the coming months.

But while investors hope the Federal Reserve makes borrowing cheaper by lowering rates again at its Oct. 30-31 meeting, they don’t want economic readings to come in so weak that they portend a recession.

On Monday, the first day of the fourth quarter, the Dow gained nearly 192 points to close at 14,087.55 Д a new high and its first foray above the 14,000 level since mid-July, right before a credit market squeeze triggered a stock selloff. Traders believe investors, wary of big stock fluctuations before, took some cash off the table.

“The economy is soft, you have this big run up, and the fact is people are just taking some profit,” said Scott Fullman, director of investment strategy for I. A. Englander & Co. “There’s not a ton of news to trade on, and investors are also looking ahead to the unemployment report on Friday.”

Energy and commodities companies were among the biggest drags on the Dow Jones industrial average as prices for oil and gold continued to weaken in the futures markets. This dimmed the outlook for third-quarter earnings for the likes of Exxon Mobil Corp. and others, Fullman said.

In mid afternoon trading, the Dow fell 42.60, or 0.30 percent, to 14,044.95.

Broader stock indicators also declined. The Standard & Poor’s 500 index fell 2.58, or 0.17 percent, to 1,544.46, while the Nasdaq composite index rose 2.27, or 0.08 percent, to 2,743.26.

Bond prices rose as stocks pulled back, pushing down the 10-year Treasury note to 4.51 percent from 4.56 percent late Monday.

The dollar rebounded from record lows versus the euro, and also recovered some ground against the pound and the Canadian dollar. Gold, which has recently hit multi-decade highs, tumbled under pressure from the rising greenback; an ounce of gold fell $17.80 to $736.30 on the New York Mercantile Exchange.

Meanwhile, light, sweet crude for November delivery fell 20 cents to $80.04 a barrel in on the Nymex. Many analysts say oil’s September rally to record levels above $83 a barrel was due to speculative buying by investors taking advantage of the weak dollar.

A stronger dollar makes commodities more costly to foreign buyers, dampening demand.

Exxon Mobil fell $2.18, or 2.3 percent, to $91.77. It was the biggest decline of the 30 Dow components.

Both Citigroup Inc. and Toronto Dominion Bank announced acquisitions Tuesday, indicating that dealmaking is still happening despite a tighter-than-normal credit market.

Canada-based TD Bank Financial Group agreed to buy Commerce Bancorp Inc. in a cash-and-stock deal valued at $8.5 billion. But the acquisition news got a lukewarm reception from investors. Commerce fell 38 cents to $39.23, and Toronto Dominion fell $4.71, or 6.1 percent, to $72.23.

Citigroup said it is buying the rest of Nikko Cordial Corp. for shares valued at about $4.6 billion. Citigroup already owns a 68 percent stake in Nikko, Japan’s third-largest brokerage. Citigroup, which estimated Monday that third-quarter profit will drop 60 percent, rose 6 cents to $47.78.

In other corporate news, Palm Inc., the maker of the Treo smart phone, reported late Monday it swung to a loss in the fiscal first quarter and predicted weaker-than-expected results for the current quarter. Palm fell 49 cents, or 3.1 percent, to $15.51.

The Russell 2000 index of smaller companies rose 4.85, or 0.59 percent, to 829.59.

Advancing issues slightly outnumbered decliners on the New York Stock Exchange, where volume came to 800.7 million shares.

Overseas, Britain’s FTSE 100 fell 0.09 percent, Germany’s DAX index rose 0.31 percent, and France’s CAC-40 rose 0.45 percent. Japan’s Nikkei stock average closed up 1.19 percent.

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Quality float works has always exported some of its floating metal balls, which find their way into a variety of industrial processes that require pumps and valves. But thanks to the falling U.S. dollar, business is really taking off for the 21-employee Schaumburg (Ill.) company. Orders from customers overseas are up, with export sales for the $2.3 million business jumping to 26% from 3% of total revenues since the beginning of 2003. “Companies have contacted us from Europe because we can be competitive against their local suppliers, all due to the drop in the dollar,” says Sandra Westlund-Deenihan, Quality Float Works’ president and design engineer.

The dollar has been dipping for the past two years, and as of late November was trading at historic lows of 1.48 euros and about 107 yen. That’s been a boon to small companies that export or produce and sell overseas, and a bright spot in an economic picture clouded by record oil prices, a widening trade gap, the subprime mortgage mess, and China’s hinting that it might diversify its currency holdings away from dollars. Exports have grown steadily this year and rose at a 23% annualized rate in the third quarter, according to the National Association of Manufacturers, a Washington trade group. “This is the fastest pace in more than a decade,” says Hank Cox, an NAM spokesman. “We are seeing a significant shift in the trade picture as exports are rising at a much faster rates than imports.”

Of course, importers and small companies that manufacture overseas and sell back home may not be so lucky. “If you are a U.S. manufacturer manufacturing in Europe, but selling back to U.S. customers, your products are more expensive,” says Tim Hanley, vice-chairman and U.S. process and industrial products leader for Deloitte & Touche in New York. Such companies, says Hanley, may want to think about selling directly to overseas markets.

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