(12-05) 05:49 PST WASHINGTON, (AP) —

Worker productivity roared ahead at the fastest pace in four years in the summer while wage pressures dropped sharply.

The Labor Department reported Wednesday that productivity, the amount of output per hour of work, was up at an annual rate of 6.3 percent in the third quarter, the best showing since the summer of 2003, and far bigger than had been expected.

Meanwhile, wage pressures slowed with unit labor costs dropping at a rate of 2 percent in the third quarter, the biggest decline in four years.

The combination of stronger productivity growth and fewer wage pressures should ease concerns about inflation at the Federal Reserve and help clear the way for another cut in interest rates next week to guard against the threat the economy could tumble into a recession.

Rising wages are good for workers. But if higher wages are not accompanied by strong productivity gains, they raise concerns among Fed policymakers about inflation.

The 6.3 percent increase in productivity was a significant upward revision from an initial estimate a month ago of a 4.9 percent increase, reflecting the fact that total output was revised higher.

Investor hopes have been rising in recent days that the Fed will cut interest rates for the third time since September when officials hold their last meeting of the year next Tuesday.

Those hopes were bolstered by comments last week from Fed Chairman Ben Bernanke and Vice Chairman Donald Kohn. Both men noted that the economy is likely to slow considerably in the current quarter under the impact of such problems as renewed turbulence in financial markets.

While overall economic growth, as measured by the gross domestic product, roared ahead at a 4.9 percent rate in the third quarter, the fastest pace in four years, GDP is expected to slow to a barely discernible 1.5 percent or even less in the current quarter.

Growth at such a slow pace would increase the risks that the country could dip into a recession, felled by the multiple blows of a prolonged housing slump, a severe credit crunch, rising energy costs and faltering consumer confidence.

The Bush administration, seeking to limit the fallout from the housing bust, has been prodding the mortgage industry to freeze rates on a portion of the 2 million subprime mortgages that are due to reset to higher rates over the next two years.

The rate freeze program, which is expected to be announced on Thursday, would be offered to homeowners who have been able to keep current with their monthly payments at the lower introductory rates but are judged to be unable to meet the sharply higher payments when the rates reset.

LONDON:

For all the talk of “digital this” and “2.0 that,” one part of the advertising world remains defiantly analog: the buying and selling of ad space and time in traditional media like television and print.

Eschewing online auctions and other digital-age transactional tools, owners of offline media and the agencies that allocate marketers ad budgets often turn to an older negotiating forum: the bar.

There, over a beer, they can run through the available ad space in, say, a newspaper, and determine how much an advertiser is willing to pay. They can haggle over how much of a discount the advertiser should get, compared with the media owners published ad rates. And, in some cases, they can decide how much of that discount should go back to the media-buying agency as part of its compensation for brokering the deal.

Advertisers sometimes complain about the lack of transparency in this arrangement, though media buyers say their clout helps them negotiate better deals than their clients would be able to strike otherwise.

Digital evangelists say there is greater clarity online, at least when marketers use systems like Googles AdWords, which places text advertisements alongside search results, using an online auction to allocate a keyword to the highest-bidding advertiser. Google has moved to extend its services to offline advertising in the United States, with agreements to sell newspaper, radio and some television spots.

Now an online media buying venture based in London is trying to do something similar in Britain. The firm, called MediaEquals, was set up by Martin Banbury, a marketing executive and entrepreneur, who described it as an “online stock exchange” for advertising.

The exchange allows media owners to list their available advertising space or time slots online; they can choose from a variety of pricing methods, including an auction system that allows agencies to bid competitively for the ad opportunities. Media buyers can go online and get a clear picture of what is available.

“When theres more transparency, people are able to spot greater value,” Banbury said. “That opens up markets for additional trading.”

Several media buying agencies said they would participate in the MediaEquals pilot. These agencies are eager for alternatives to Google, because its online auction system essentially cuts them out of the deal. MediaEquals, by contrast, keeps them in the loop; its system essentially moves the existing media buying process online.

“They arent looking to replace the traditional buyer-seller relationship,” said Jim Marshall, chairman of one of these agencies, the British unit of Starcom MediaVest, which is owned by Publicis Groupe.

MediaEquals plans to begin operating in a few weeks in Britain. If it succeeds, Banbury said, the goal is to expand the service to other markets, including Continental Europe and the United States.

Some media buyers are skeptical about the benefits of automating the process, noting that the planning of marketing campaigns has grown more complex, given the proliferation of new, digital media formats.

The biggest challenge for Banbury may be to persuade media owners to make attractive ad slots available on the system. MediaEquals is not the first online ad exchange, but previous initiatives have tended to focus on subprime advertising niches, like selling late-night space on cable television. A U.S. service, Bid4Spots, for example, allows radio advertisers to buy unsold radio air time.

Banbury said several media owners, including the magazine publishing arm of the British Broadcasting Corp. and the billboard owner CBS Outdoor, along with radio stations and newspapers, have agreed to join the system for the pilot program. Media owners will be charged a commission to sell their ads on MediaEquals.

“If I can get my inventory across more eyeballs, then Ive got nothing to lose,” said Matt Teeman, ad sales director at BBC Magazines. “The challenge will be to see how it can coexist alongside personal relationship. I dont think people will stop making phone calls or seeing each other in person.”

SINGAPORE: Asian stocks fell more than 1 percent on Thursday as financials slipped on worries over bank earnings, and the dollar hovered near a record low after a drop in U.S. durable goods stoked concerns the worlds top economy is already in a recession.

Further signs the U.S. economy is flagging, and worries that there will be more bank write-downs after a prominent analyst downgraded four major U.S. banks, were compounded by inflation concerns as oil prices headed higher, and investors took refuge in bonds.

Bank shares, like Mitsubishi UFJ in Japan and Macquarie Group in Australia, were among the biggest decliners following the bank downgrades, a profit warning from Deutsche Bank and comments from European central bankers that there was no end in sight to the global credit crunch.

“It feels like a recession and it smells like a recession, so we may as well call it a recession,” said Eric Betts, equities strategist at Nomura Australia.

“Weve had problems at individual banks before but this time it seems to be industrywide. The big worries are the margin crunch and rise in corporate bad debts,” he added.

The Nikkei fell 1.8 percent by the midsession, dragged lower by exporters like Honda Motor as the stronger yen promised to erode their profits.

The MSCI index of other Asian shares fell 1.2 percent in midmorning trade, taking its losses so far this year to just under 15 percent.

The Kospi in Seoul fell 0.9 percent, the SP/ASX 200 index in Sydney shed 0.6 percent, and the Taeix in Taipei dropped 1.9 percent in early trade.

The Hang Seng index in Hong Kong was down 1.40 percent, tracking softer overseas markets as investors remained cautious about the markets uncertain outlook and ahead of earnings reports by several major blue-chip firms.

Oil traded above $106 a barrel after a U.S. government report showed larger-than-expected drops in fuel stocks and declining fuel production in the United States.

U.S. crude oil futures added 29 cents to $106.21, while London Brent traded at $104.40.

The dollar was within striking distance of a record low versus against the euro after the European Central Bank presidents remark that euro zone rates were at the right level cooled expectations for a near-term ECB rate cut.

U.S. short-term interest rate futures now indicate investors see around a 40 percent chance of the Fed cutting interest rates by 50 basis points in April. A 25 basis-point rate cut is fully priced.

Against the yen, the dollar traded at 98.75. The U.S. currency hit a 13-year low of 95.77 on EBS early last week. The euro traded at $1.5803 against the dollar.

Japanese government bond futures were lifted by the Nikkeis fall and strength in the yen.

June 10-year JGB futures rose as high as 141.03, before trimming gains to 140.85, a rise of 0.41 of a point on the day.

The 10-year JGB yield fell 1.5 basis points to 1.260 percent, edging back towards a three-year low of 1.215 percent reached on Wednesday.

Surging oil and a weaker dollar sent investors to gold. Spot prices rose to $952/952.80 an ounce.