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Japan's government said the world's second-largest economy is “weakening,'' language it introduced last month for the first time since the country was in a recession seven years ago.

“The economy has been weakening recently,'' the Cabinet Office said in a statement in Tokyo today. The government cut its assessment of capital spending and imports and said it's watching how global financial-market turmoil might affect Japan.

The economy's longest postwar expansion may be over as rising commodity costs discourage spending at home and the world slowdown reduces demand for exports. The Bank of Japan and central banks in North America and Europe yesterday agreed to pump $180 billion into the global financial system to revive confidence in markets battered by the U.S. banking crisis.

“This uncertainty in financial markets will naturally have an impact on the Japanese economy, which depends on foreign demand,'' Economic and Fiscal Policy Minister Kaoru Yosano told reporters in Tokyo. “The economy will remain weak for a while.''

The Bank of Japan agreed to swap currencies with the Federal Reserve, supplying dollars for the first time after the cost of borrowing in the currency soared to a seven-year high following Lehman Brothers Holdings Inc.'s bankruptcy and the U.S quick payday loans. government's takeover of American International Group Inc.

Central bank Governor Masaaki Shirakawa today said there's no end in sight to the market tumult, even as global shares rallied after the U.S. government said it's planning new laws to halt the credit-market meltdown. Shirakawa this week said risks for Japan's economy have intensified since the crisis deepened.

“Attention should be given to further downside risks that stem from growing financial uncertainty in the U.S. and movement of the stock and foreign-exchange markets,'' the government said in today's report.

The Cabinet Office removed the word “recovery'' from its evaluation of the global economy for the first time since June 2002 and downgraded its view of Europe.

Last month was the first time since May 2001 that the government described Japan's economy as weakening.

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The National Cancer Institute awarded a team led by Dr. Gerold Bepler, program leader for thoracic oncology at the H. Lee Moffitt Cancer Center & Research Institute, a Specialized Programs of Research Excellence grant in lung cancer.

The SPORE grant totals $10.5 million over five years, a release from Moffitt said.

It’s Moffitt’s first SPORE grant, which are designed to quickly bring potentially successful treatments from the laboratory to hospitals. Moffitt applied for the grant last year.

The grant will allow Moffitt to continue and enhance its efforts to contribute to the prevention and cure of lung cancer, Bepler said in the release cash advance loan. Lung cancer is a leading cause of cancer death for men and women, and Florida is second behind California in the number of new lung cancer cases each year, the release said.

The H. Lee Moffitt Cancer Center & Research Institute, located in Tampa, is the only Florida-based cancer center designated by the National Cancer Institute as a comprehensive cancer center.

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Bank of Japan Governor Masaaki Shirakawa said the economy will probably keep slowing for now and inflation isn't spreading from commodity-related goods because wage growth is subdued.

“Growth will likely remain sluggish for the time being'' because of higher energy prices and a cooling global economy, Shirakawa said in a speech today in Nagoya, central Japan. “Second-round effects'' of inflation are “unlikely to emerge in the near term,'' he said.

Prices are rising at the fastest pace in a decade, prompting consumers to cut back as wage growth slows. Signs the world's second-largest economy is entering a recession will probably prompt the central bank to keep interest rates on hold at least until next year, according to economists surveyed by Bloomberg.

“The latest economic data suggest Japan's economy will keep deteriorating for the time being and a rate increase remains out of the question,'' said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “The economy won't pick up at least until later next year and the bank won't be able to raise rates until 2010 at the earliest.''

The bank shelved a two-year policy of raising rates in April, the month Shirakawa became governor. The benchmark borrowing cost will stay at 0.5 percent through next June at least, according to 21 of 26 economists surveyed by Bloomberg last month. Four estimated higher rates and one predicted a cut.

Growth, Inflation Risks

“The current situation requires the bank to carefully monitor both downside risks to economic growth and upside risks to inflation,'' Shirakawa said.

The governor warned about the side effects of keeping borrowing costs low for a prolonged period of time, saying the global credit crisis emerged after a sustained period of low interest rates and robust growth around the world quick payday.

“We should keep in mind the view that excessively accommodative financial conditions often cause large swings in the economy after a certain time lag,'' Shirakawa said. “If the downside risks to the economy turn out to decrease, prolonging the period of accommodative financial conditions may lead to swings in economic activity and prices.''

Shirakawa said last month that low rates would help the nation avoid slipping into a “deep'' slump. Japan's key rate is the lowest in the industrialized world.

Core consumer prices, which exclude fresh food, rose 2.4 percent in July, the biggest jump since 1997, a report last week showed. Higher prices are discouraging consumers, whose wages rose 0.3 percent in that same month, the slowest pace this year. Sluggish consumer spending and weakening exports caused the economy to contract at an annual 2.4 percent rate last quarter.

Inflation Expectations

Shirakawa said the surge in consumer prices will probably moderate as global commodity prices cool and companies complete a round of price increases. He also said the bank needs to be mindful of inflationary expectations, given that consumers who grew accustomed to falling prices over the past decade aren't used to paying more for goods and services.

“The bank should pay attention to the risk that possible changes in the inflation expectations of households and firms' price-setting behavior may generate second-round effects,'' he said.

Policy makers need to watch households' inflation expectations to ensure they remain anchored, Bank of Japan board member Miyako Suda said in a speech last week.

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The European Central Bank will announce changes to the rules governing its money-market auctions in coming weeks to head off the risk of abuse by financial institutions, council member Yves Mersch said.

“At the margins there can still be cases where you see dangers of gaming the system,'' Mersch said in an interview on Aug. 23 in Jackson Hole, Wyoming. “The Governing Council has been discussing the whole issue'' and has agreed on a “certain amount'' of refinement to the existing rules, he said.

ECB officials have become increasingly concerned that banks are taking advantage of collateral rules that are broader than those used by the Federal Reserve and the Bank of England. The danger is that banks struggling to sell securities damaged by the credit-market turmoil will dump them on the ECB and become overly reliant on central-bank funds.

Dutch policy maker Nout Wellink said in an interview with the Het Financieele Dagblad newspaper published Aug. 21 that banks shouldn't become too dependent on the ECB for funding.

“It's not a broad-based revolution,'' said Mersch, who is attending a meeting of central bankers and financial officials organized by the Fed. “We are satisfied with our framework. But since there are always on the margins evolutions, we have to adjust our framework regularly to market practices.''

“The precisions'' planned by the ECB “concern some instruments,'' Mersch said, declining to elaborate. Unlike the Fed and the Bank of England, the ECB hasn't had to change its operation rules since the credit crisis began.

Lender of Last Resort

“The ECB is in an unenviable situation,'' said Paul McCulley, a fund manager at Pacific Investment Management Co, in an interview at Jackson Hole. “The lender of last resort should be just that, a last resort, and not a permanent provider of funds to the private sector.''

Central bankers including Federal Reserve Chairman Ben S. Bernanke met in the Teton Mountain retreat at the weekend to discuss ways to address the past year's credit rout. ECB President Jean-Claude Trichet said “we are still in a market correction'' and Bank of Israel Governor Stanley Fischer said the crisis has yet to run its course.

Spain's banks in particular are struggling to attract investors as a decade-long property boom ends and mortgage delinquencies soar to the highest in at least six years. Investors demand higher rewards to buy bonds backed by Spanish mortgages than any other home loans in Europe. The ECB lent Spanish banks a record 49.4 billion euros ($73.1 billion) in July.

Demand From Outside

The ECB's money-market system is also attracting demand from outside the euro region. The Frankfurt-based central bank said in June it will accept asset-backed bonds sold by Macquarie Group Ltd., Australia's biggest securities firm, and backed by Australian consumer loans as collateral bad credit payday loans.

U.K. mortgage lender Nationwide Building Society said Aug. 18 it's planning to expand into Ireland, a member of the euro region, to take advantage of “funding opportunities.''

Banks with operations in the countries sharing the euro can raise funding from the ECB by pledging certain types of collateral including asset-backed securities. Bonds backed by mortgages and other assets accounted for 18 percent of the ECB's loan collateral at the end of 2007, up from 4 percent in 2004, Fitch Ratings data show.

Taking Advantage?

“It has been suspected for some time that banks could be taking advantage of the broad collateral framework since they no longer publicly place asset-backed securities and these securities now only serve as collateral in central bank funding,'' Michael Schubert, an economist at Commerzbank AG in Frankfurt, wrote in a note to investors today. “This means that a necessary market correction in the ABS segment is being put off.''

The ECB lends to banks mostly through the main refinancing operations maturing in one week. Longer-term auctions provide financing to banks during three- and six-month periods.

Mersch said the central bank prefers to tackle any individual instances of abuse with “moral suasion.''

“Our framework is complex, and if we can warn people that this is not acceptable beforehand, and they adjust in due time, we would be satisfied,'' Mersch said. While the ECB hasn't yet taken “specific action,'' the central bank plans to strengthen its powers. He didn't say what that action might be.

Mersch said the ECB's response to any abuse case “would not necessarily be a question to be discussed publicly.''

The financial crisis is taking its toll on Europe's economy, which contracted in the second quarter.

Mersch said “the question is whether the slowdown will last a little bit longer'' and Bundesbank President Axel Weber, who was also in Jackson Hole, said Aug. 22 the current quarter may show “some weakness.'' The economy may expand below its potential rate of 2 percent “into next year,'' he said.

At the same time, “you shouldn't be getting too hung up about the volatility in quarter-to-quarter GDP readings,'' Weber said. Weber and Mersch both said inflation will exceed the ECB's 2 percent limit next year, with Weber saying there's a “substantial risk' that price pressures will persist. The ECB will publish revised projections next month.

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Following is the Bank of Japan's statement on monetary policy, released in Tokyo today following a two-day meeting of its policy board. The central bank left the overnight lending rate at 0.5 percent.

1. At the Monetary Policy Meeting held today, the Bank of Japan decided, by a unanimous vote, to set the following guideline for money market operations for the intermeeting period: The Bank of Japan will encourage the uncollateralized overnight call rate to remain at around 0.5 percent.

2. Economic growth has been sluggish against the backdrop of high energy and materials prices and weaker growth in exports. While growth will likely remain sluggish for the time being, it is expected to return gradually onto a moderate growth path as commodity prices level out and overseas economies move out of their deceleration phase. The CPI inflation rate (excluding fresh food) is currently around 2 percent, highest since the first half of 1990s, due to increased prices of petroleum products and food. It is expected to be somewhat higher over the coming months but to moderate gradually thereafter. Thus it is likely that the economy will return onto a sustainable growth path with price stability.

3. With regard to risk factors, global financial markets remain unstable and there are downside risks to the world economy, particularly the U.S guaranteed cash advance. economy. In addition, weaker income generation reflecting developments in commodity prices could potentially weigh on domestic private demand. Although the economy is under no pressure to adjust production capacity and labor, these downside risks to the economy demand attention. On prices, global inflationary pressures remain high. In Japan, it is necessary to be mindful of upside risks due to changes in the inflation expectations of households and the price-setting behavior of firms in addition to developments in energy and materials prices. Meanwhile, if the downside risks to the economy turn out to decrease, there will be an increased risk that prolonging the period of accommodative financial conditions will lead to swings in economic activity and prices.

4. The Bank, while maintaining the smooth functioning of the money market, will carefully assess the future outlook for economic activity and prices, closely considering the likelihood of its projections as well as factors posing upside or downside risks, and will implement its policies in an accordingly flexible manner.

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Venezuelan President Hugo Chavez is set to tighten his government's grip on the economy by taking over his first bank, the local unit of Spain's Banco Santander SA.

Plans to nationalize the country's third-largest bank, announced yesterday, will give the state access to Banco de Venezuela SA Grupo Universal's 285 offices and $9.46 billion in deposits. It follows nationalizations in the oil, steel, cement, electricity and telecommunications industries.

Chavez is using a surge in oil revenue to increase his control of the economy and move the South American country closer to his goal of “21st-century socialism,'' even as government takeovers scare off investors. The economy expanded at its slowest pace in more than four years in the first quarter as private investment contracted instant payday loan.

“With this price of oil, the government has the capacity to buy, and it seems they're upsizing to control new sectors of everyday life,'' said Alejandro Grisanti, an economist at Barclays Capital Inc. in New York.

Chavez said he will pay fair compensation for Banco de Venezuela, which Santander bought from the government in 1996. He said he has been in touch with the bank's local president, and that he is interested in seeking a “friendly agreement.''

`Service of Venezuela'

“I want to get it back because it's the bank of Venezuela

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Paul Quinn stands among furniture piled in a second-hand store in Wallsend, a town in northeast England where about half of mortgages are subprime. Demand for the chipped tables and cupboards is accelerating, he says.

“One time you couldn't sell, and now they're all buying,'' said Quinn, 57, who minds the shop for Alan Booth Clearances, the local removals company that also sells items owners don't want. “People are coming in even to buy toys.''

Wallsend, which traces its roots back 1,900 years to a Roman garrison at the eastern end of Hadrian's Wall, shows the effects of the subprime infection spreading across the north of England. Asking prices for houses are falling and debt is surging. As wealth vanishes, people have less to spend on everything from food to home repairs.

“From what it was to now, it's just a slum,'' said Fred Peat, 65, who for three decades helped build oil tankers and warships at Wallsend's defunct Swan Hunter shipyard. The cranes are being dismantled and sent to India, girder by girder.

The north is home to Northern Rock Plc, the mortgage company bailed out last year by the government, and Bradford & Bingley Plc, the U.K.'s largest lender to landlords, which this month cut the price of a share sale.

An average house in the northeast sold for 127,581 pounds ($254,319) in May, the least among 10 regions of England, according to the Land Registry. What's more, prices fell 2.4 percent in the month, more than anywhere else.

The most expensive housing was in London, at an average 354,714 pounds. In the five metropolitan areas in and around the city of Newcastle, which abuts Wallsend, prices in May fell an aggregate 3.3 percent, the June 27 Land Registry report shows.

None in Street Sold

In the north, “when people suffer, they have less capital to fall back on than they do in the south,'' said Peter Dixon, an economist at Commerzbank AG in London who was born two miles from Wallsend.

Of the 50 areas with the highest percentage of people whose loans are subprime, 33 are in northern England and none is in the south, according to Experian Group Plc, whose data is based on credit ratings and homeowner profiles. Experian, the largest credit-checking company, says 48.5 percent of mortgages in Wallsend's parliamentary constituency are subprime.

Workers in the area around Wallsend earn, on average, 12 percent less than the British average of 448.60 pounds a week, according to North Tyneside council. Northern Rock as recently as February was selling mortgages valued at 125 percent of the home's value. Such loans have disappeared.

Opposite Wallsend's Citizens Advice Bureau, a charity that offers guidance on dealing with creditors, is Laurel Street, which runs 400 yards down to the boarded-up public baths. There are 10 “For Sale'' signs, three “To Let,'' and zero “Sold.''

Fish & Chips

Three row houses being sold by the Next2Buy local estate agency have had their prices cut payday loans. One three-bedroom home went up for sale in November 2006 for 125,000 pounds. After five reductions, it's now on the market for 104,950 pounds.

The asking price for a home in the north fell 0.9 percent between May 11 and June 14 from a year ago, on average, according to Rightmove Plc, Britain's most-used property Web site. The price rose 2.8 percent in the southeast.

Kuldeep Mahal, 50, who has owned the fish-and-chip shop in Wallsend's Laurel Street since 1987, said falling prices have left people trapped and cash-strapped. His trade has dropped off by about 20 percent over the past six months.

“People used to go out on a Friday and Saturday night and get food on the way back,'' says Mahal, who sells a cod and chips for 4 pounds. “Now they don't have the money.''

`Affects Poor Hardest'

Inquiries to the advice bureau about non-mortgage debt rose 46 percent to 34,441 in the year through April. The money involved exceeded 20 million pounds — the equivalent of 455 pounds for each of Wallsend's 43,905 residents.

“This is the effect of what you might call Britain's subprime lending,'' said Mark Almond, who runs the bureau.

Wallsend, the birthplace of the rock star Sting, is in the top 10 percent of the most deprived areas in England. Almond, whose clients typically have non-mortgage debt of between 10,000 and 30,000 pounds, says the subject is taboo.

“People often don't like to talk about it,'' said Almond. “Debt affects everyone. It just affects the poor hardest.''

At the Wallsend Boys Club, Garry Marshall, its manager, said he sees the crisis in the children.

`Bites With Youngsters'

Marshall, 44, helps get kids off the streets and into the green-and-yellow shirts of the club's soccer teams. It has produced 67 professional players since the 1950s, including former England captain Alan Shearer.

“It bites with the youngsters,'' Marshall said. “You saw kids who came here and had new clothes every few weeks. Over the last four to eight months, you don't see that anymore.''

At Alan Booth Clearances, a pair of army trousers for a three-year-old and a game of Mousetrap sit on top of a chest of drawers among the furniture stacked up in the store.

Quinn said there are few places worse off than Wallsend.

“I've seen people come here to buy second-hand furniture who said they'd never buy second-hand furniture,'' he said. “They can't afford to move.''

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The chief executive of Lowe’s Cos. on Friday said population growth and the aging of the country’s more than 130 million existing homes provides a favorable long-term outlook for the home improvement industry.

"Homes will continue to need repairs and maintenance," said Robert Niblock while meeting with shareholders in Charlotte at the company’s annual meeting. "We want to remain on the minds of consumers."

Niblock acknowledged that Lowe’s (LOW, Fortune 500) faces a tough economic environment, but said the nation’s second-largest home improvement retailer is maintaining its high standards for stores, managing expenses and focusing on customer service.

Earlier this month, the Mooresville-based company reported a nearly 18% drop in first-quarter earnings and lowered its guidance for the year payday advance. Niblock cited the economy and continued turmoil in the housing market.

At the meeting, he said Lowe’s remains committed to finding opportunities that will strengthen the business.

Also during the meeting, shareholders re-elected three board members. They also rejected a nonbinding proposal that would have awarded bonuses and long-term compensation based on performance compared to other companies in the industry.

Lowe’s board increased its quarterly dividend by 6.3% to 8.5 cents. The dividend is payable on Aug. 1 to shareholders of record as of July 18.

Shares fell 32 cents to $24.07 in afternoon trading. 

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Autogrill SpA, the Italian operator of restaurants for travelers, on Monday said it bought a U.K.-based duty free business and took full control of a Spanish duty free chain in deals worth more than €1 billion ($1.5 billion).

Autogrill, which is controlled by the apparel-making Benetton family, said the deals made it the leading player in the airport retail market, with the largest presence in Europe and room to grow elsewhere.

Autogrill said it bought World Duty Free, a unit of airport operator BAA, in a transaction valued at £543.5 million ($1.1 billion). BAA, which runs London’s Heathrow, Gatwick and Stanstead airports, was acquired in 2006 by a group of investors led by Spain’s Grupo Ferrovial SA, which is now selling noncore assets pay day loans.

Autogrill also bought the remaining 50% of Spanish firm Aldeasa from Imperial Tobacco Group PLC, taking full control of the chain of 273 duty free shops, in a transaction valued at €275 million ($424 million).

The purchases will be funded through new debt, said Autogrill, which operates 5,200 restaurants and stores in 42 countries, mostly in airports, highways and railway stations. 

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PG&E, parent of California’s Pacific Gas & Electric utility, said Thursday its fourth-quarter earnings rose 34%, as it reaped benefits from capital investments and a year-ago period that was hurt by severance costs.

The company earned $203 million, or 56 cents per share, compared with $152 million, or 43 cents per share, in the same quarter of 2006. PG&E said the 2006 quarter included $18 million, or 5 cents per share, in severance costs from job cuts.

Analysts were expecting a profit of 55 cents per share, according to a poll by Thomson Financial.

The company said the quarter was driven mostly by earnings from higher capital investments in energy infrastructure projects.

For the full year, the company posted a profit of $1.01 billion, or $2.78 per share, compared with $991 million, or $2.76 per share, in 2006.

Operating revenue rose 6 % to $13.2 billion.

The company also reaffirmed its 2008 adjusted earnings prediction within a range of what Wall Street is expecting.

The company expects earnings from continuing operations, which excludes some one-time items, of $2.90 per share to $3 per share online cash advance. Fifteen analysts polled by Thomson Financial offered predictions between $2.87 and $3.05 per share, with an average estimate of $2.97 per share.

For 2009, the company expects to earn $3.15 per share to $3.25 per share. Ten analysts polled by Thomson Financial forecast earnings between $3.18 per share and $3.25 per share, with an average prediction of $3.21 per share.

PG&E raised its quarterly common stock dividend to 39 cents from 36 cents. The first-quarter dividend is payable April 15 to shareholders of record March 31.

Shares of PG&E (PCG, Fortune 500) rose 41 cents to $39.58 in morning trading. 

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