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Stock futures are pointed higher as traders await economic reports that could signal the relative strength of the U.S. economic recovery.

Ahead of the opening bell, Dow Jones industrial average futures are up 39 points, or 0.3 percent, at 12,571. Standard & Poor’s 500 index futures are up 4, or 0.3 percent, at 1,343. Nasdaq 100 futures are up 6 points, or 0.3 percent, at 2,368.

The Labor Department reports ahead of the market opening on the number of new unemployment claims last week. Economists expect a decline to 420,000 from 434,000.

Reports are also due on existing home sales and leading economic indicators.

Sears Holding Corp. reports that softer sales at its Kmart and Sears stores caused a first-quarter loss of $1.58 per share, worse than analysts expected. The results signal persistent weakness in the U.S. consumer recovery.

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China reported a more-than-estimated $11.4 billion trade surplus for April as U.S. officials pushed at talks in Washington for faster gains in the yuan.

Today’s number, released by the customs bureau, compared with a surplus of $140 million the previous month and $1.68 billion a year earlier. Import growth slowed to 21.8 percent in April from a year earlier while exports grew 29.9 percent.

At the start of the two-day Strategic and Economic Dialogue yesterday, U.S. Treasury Secretary Timothy F. Geithner said China has been making progress “towards a more flexible exchange rate” and weaning its economy off a dependence on exports. The yuan has strengthened this year to the highest levels since 1993 and the fastest inflation since 2008 may encourage officials to allow more gains to pare import costs.

“The yuan is facing great appreciation pressure” because of inflation, Ma Jun, chief China economist at Deutsche Bank AG, said before the data. Political relations with the U.S. play “a very delicate role” in the nation’s currency policy, he said.

The median forecast of 27 economists surveyed by Bloomberg News was for a $3.2 billion surplus.

The People’s Bank of China set the yuan’s reference rate at a record high of 6.4988 per dollar yesterday and allowed the currency to strengthen 0.9 percent in April, the biggest monthly gain this year.

‘Unjust’ Manipulation

Senator Sherrod Brown, a Democrat from Ohio, urged the U.S. administration to press China on the currency issue and also said Congress should pass legislation to protect American workers from an undervalued yuan. Brown and Senator Olympia Snowe, a Republican from Maine, have proposed a measure to allow additional sanctions to address currency issues.

“The Obama Administration has a unique opportunity during this meeting to urge Chinese officials to stop the unfair and unjust currency manipulation that threatens American manufacturing and eliminates American jobs,” Brown said in a statement. “China’s unfair currency manipulation has gone on for far too long, and it’s clear that legislation is needed to level the playing field.”

The U.S. has delayed its semi-annual foreign-exchange report, which had been due on April 15, until after this week’s meetings. The previous report, due on Oct. 15, 2010, was released on Feb. 4 and declined to brand China a currency manipulator while saying the No. 2 U.S. trading partner has made “insufficient” progress on allowing the yuan to rise.

China argues that its currency is not a key cause of global economic imbalances, and highlights the role of U.S. restrictions on Chinese purchases of high-technology products in lopsided trade between the two nations.

April Inflation

In China, consumer prices rose 5.4 percent in March, the most in 32 months, and may have climbed 5.2 percent in April, according to the median estimate in a Bloomberg News survey. The statistics bureau will release inflation data in Beijing tomorrow.

Exports rose to $155.7 billion in April and imports climbed to $144.3 billion, the customs bureau said today. The median forecast in Bloomberg News surveys was for a 29.5 percent gain in overseas sales and a 28.9 percent jump in inbound shipments.

“The price factors that have boosted the import bill recently are expected to ease markedly due to the recent sharp correction in global commodity prices,” Deutsche Bank’s Ma said.

Commodities had their worst weekly plunge since December 2008 last week, with oil declining 15 percent. Higher fuel and raw-material prices had contributed to the nation recording its first quarterly trade deficit since 2004 in the January-to-March period.

Companies benefiting from the nation’s trade gains this year include Cosco Pacific Ltd., part of China’s largest shipping group. Cosco said it more than doubled first-quarter profit, helped by a 20 percent increase in throughput at its container terminals after it added facilities to cope with rising exports of toys, furniture and auto parts to the U.S. and Europe.

–Victoria Ruan. Editors: Nerys Avery, Paul Panckhurst

To contact Bloomberg News staff on this story: Victoria Ruan in Beijing at +86-10-6649-7570 vruan1@bloomberg.net

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Russia, the world’s biggest energy exporter, expects the price of oil shipments to the global market to start decreasing next year as governments begin to withdraw stimulus measures, Finance Minister Alexei Kudrin said.

Urals, the nation’s major export oil blend, will stay above $90 a barrel for 12 months to 18 months, Kudrin told a press briefing in Washington, D.C., yesterday. The price will probably fall to $60 a barrel in the next two years and stay at that level for about six months, he said, reiterating a forecast he made a year ago.

“With oil prices above $110 a barrel we are already in the zone of a slowing global economy,” Kudrin told reporters. “We expect oil prices to begin to decrease next year because excessive liquidity will be withdrawn from the international markets.”

Urals, Russia’s benchmark export blend, climbed above $100 a barrel in February as unrest in north Africa and the Middle East disrupted some oil flows. The International Monetary Fund cut its 2011 growth forecasts for the U.S. and Japan on April 11, citing “key downside risks” tied to surging oil prices.

Russia’s budget deficit is expected to be between 1 percent and 1.4 percent of gross domestic product in 2011, Kudrin said. Inflation will be at “about 7 percent” in Russia in 2011, Kudrin also said.

The country will use windfall revenue from energy sales to replace about 280 billion rubles ($10 billion) of planned spending from its Reserve Fund, Kudrin said.

Windfall Revenue

The government will use part of the windfall oil revenue to avoid some of the planned borrowing, Kudrin said. It will borrow mostly on the domestic market and won’t approve any decisions on the foreign market for now, he said.

“If we are able to borrow on the domestic market without rates going significantly higher, we will be borrowing,’’ Kudrin said. “If not, we can use between $200 million and $400 million, not more than that, to replace what we had planned to borrow domestically.’’

Kudrin said he will resign as chairman of the board of ZAO Alrosa, the world’s biggest diamond miner by output, and as a chairman of VTB Group, Russia’s second-largest bank.

Medvedev Order

Russian President Dmitry Medvedev on April 2 instructed eight senior government officials, including Deputy Prime Minister Igor Sechin, who is chairman of the largest Russian oil company OAO Rosneft, to quit their jobs at state-owned companies by July 1. Independent directors should replace them to improve transparency, the president said.

Russia won’t extend a tax break on oil shipments from the Vankor field for OAO Rosneft, the country’s biggest oil producer, Kudrin said. The company has been allowed to pay a reduced fee on exports of oil from the Vankor field. The measure expires in May and won’t be prolonged, he said.

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Stocks in Portuguese banks are surging on the Lisbon stock exchange a day after the debt-stressed country said it would ask for a bailout.

Portugal’s yearlong debt crisis has hurt the banks, which have relied heavily on getting liquidity from the European Central Bank.

The country’s three biggest banks posted gains of more than 5 percent, leading the benchmark PSI-20 index 1.4 percent higher in early trading Thursday.

The government’s announcement late Wednesday that it will ask for a bailout came after bankers warned they could no longer buy Portuguese debt payday loan lenders.

Portugal is following Greece and Ireland, other financially troubled eurozone countries, in asking for aid from Europe’s bailout reserve and the International Monetary Fund.

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This week may — just may — mark the end of the often crazed debate about how much spending should be cut from the federal budget over the next six months.

But even if it doesn’t, a far more difficult and contentious debate will begin over how much should be cut in the 2012 budget.

On Tuesday, House Budget Chairman Paul Ryan is expected to put out his 2012 proposed budget resolution.

His budget will give the first real indication of how House Republicans want to tackle the country’s long-term budget shortfalls.

Budget resolutions, typically partisan documents, will lay out House Republicans’ preferred levels of spending and revenue for 2012 and in the future.

Ryan told Fox News Sunday that his plan would cut more than $4 trillion, exceeding the targets set for the next decade by the president’s bipartisan debt commission.

How would his plan do that? "By cutting spending, reforming entitlements and growing the economy," said Ryan, who was a member of the debt commission.

Taking on entitlements: Ryan said his budget resolution would propose overhauling Medicare, the health care program for seniors, and Medicaid, which provides health benefits to the poor and disabled. Spending on the entitlement programs is one of the biggest drivers of the country’s future debt.

"By addressing the drivers of our debt now … [we will get] our debt on a downward trajectory," Ryan said. And in the process, he asserted, "we save Medicare, save Medicaid."

Under his proposal, he said spending for each of the programs would still go up every year, just not at as fast a rate as would otherwise be the case.

Ryan is the only Republican who has offered concrete proposals in the past to reform Medicare and Medicaid.

He said the proposals in the resolution would be similar to those he proposed most recently with longtime budget expert Alice Rivlin, who served as President Clinton’s budget director and founded the independent Congressional Budget Office.

The resolution would convert the federal government’s Medicaid payments into a block grant to be allocated among states. Currently, federal payments to states are determined by a formula.

It would also convert Medicare into a voucher program — what Ryan called a "premium-support system" — for those turning 65 after 2020. Under such a system, seniors would choose from a Medicare-approved list of private insurance plans and have their premiums subsidized by the federal government. No one 55 or older now would be affected by the change, Ryan said.

It’s not clear yet whether the resolution would include another Ryan-Rivlin proposal. Under their plan, they chose to gradually raise the age of Medicare eligibility to 67. Starting in 2021, the current eligibility age of 65 would start to increase by two months a year until it reaches 67 in 2032.

The House GOP budget is not expected to call for significant changes to the Social Security program, the reform of which remains a political hornet’s nest.

Cutting spending: The GOP resolution would roll back so-called discretionary spending to 2006 levels, one House Republican source with knowledge of the proposal told CNN.

It’s unclear how much that would slash, but it would be far more than the roughly $61 billion dollars in spending cuts House Republicans passed in February.

Ryan told Fox News that the GOP budget resolution would cap all spending as a percentage of the economy at levels equal to the historical average. He didn’t offer a specific percentage, however.

Reforming the tax code: Ryan said the resolution would call for pro-growth tax reform that would lower tax rates and broaden the tax base — which typically means eliminating tax breaks. He didn’t say which breaks or specify whether he was talking about the individual tax code, the corporate tax code or both.

Sources familiar with the plan told CNN that Ryan’s plan would make permanent the Bush-era tax cuts, which, under a compromise with President Obama, were extended last year through 2012.

The fight ahead

The House Budget Committee might vote on the GOP budget resolution as soon as Wednesday.

House Republicans are still divided over the magnitude of spending cuts for this fiscal year. And some lawmakers are pointing to the 2012 budget as the place where Republicans can offer the kinds of major spending cuts and reforms that the newest and most conservative members are miffed they are not getting in the 2011 fight.

In any case, it’s a sure bet that Republicans will point to their budget resolution as a far more fiscally responsible document than President Obama’s budget request put forth in February.

A budget resolution and a presidential budget request, however, are very different documents, and comparing them is not as telling as those doing the comparing will claim.

For one thing, the Congressional Budget Office has already offered an independent analysis of the costs and savings included in the president’s budget, which is far more detailed than a budget resolution.

The CBO, however, will not be scoring the House budget resolution, so any costs or savings claimed by Republicans will only reflect the calculations of the House budget and tax committees.

What’s not clear is when the Senate’s budget committee chairman, Democrat Kent Conrad, will release his proposed budget resolution for 2012. Typically the House and Senate budget committees submit budgets and work out their differences to provide a single measure for the upcoming year.

But this year is hardly typical.

Conrad has said that he might use the budget resolution to incorporate a long-term debt reduction plan. He is part of the bipartisan Gang of Six senators who are trying to convert into legislation proposals from the president’s debt commission. Like Ryan, Conrad and Rivlin were members of that commission.

How Conrad’s budget resolution will jibe with what Ryan puts out is anyone’s guess.

Unlike Conrad, Ryan didn’t vote for that group’s final report. He said he liked many of the report’s proposals, but he objected to "the increase in taxes and the lack of structural reform to health care."

– CNN senior congressional correspondent Dana Bash and congressional producer Deirdre Walsh contributed to this report. 

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A third explosion in four days rocked the earthquake-damaged Fukushima Dai-ichi nuclear plant in northeast Japan early Tuesday, the country’s nuclear safety agency said.

The blast at Dai-ichi Unit 2 followed two hydrogen explosions at the plant _ the latest on Monday _ as authorities struggle to prevent the catastrophic release of radiation in the area devastated by a tsunami.

The troubles at the Dai-ichi complex began when Friday’s massive quake and tsunami in Japan’s northeast knocked out power, crippling cooling systems needed to keep nuclear fuel from melting down.

The latest explosion was heard at 6:10 a.m. Tuesday (2110 GMT Monday), a spokesman for the Nuclear Safety Agency said at a news conference. The plant’s owner, Tokyo Electric Power Co., said the explosion occurred near the suppression pool in the reactor’s containment vessel. The pool was later found to have a defect.

International scientists have said there are serious dangers but not at the level of the 1986 blast in Chernobyl. Japanese authorities were injecting seawater as a coolant of last resort, and advising nearby residents to stay inside to avoid contamination.

Tokyo Electric Power said some employees of the power plant were temporarily evacuated following Tuesday morning’s blast.

The accidents _ injuring 15 workers and military personnel and exposing up to 190 people to elevated radiation _ have compounded the immense challenges faced by the Tokyo government as it struggles to help hundreds of thousands of people affected by twin disasters that flattened entire communities and may have left more than 10,000 dead.

The crisis also has raised global concerns about the safety of such reactors at a time when they have enjoyed a resurgence as an alternative to fossil fuels.

Japanese authorities said there have been no large-scale radiation releases, but have detected temporary elevations in levels, and have evacuated tens of thousands of people from around affected reactors. Prevailing winds were pointing out to sea, and U.S. ships assisting tsunami recovery moved further way to avoid potential danger.

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The euro’s two-month rally against the dollar is running into renewed rifts over Europe’s sovereign debt crisis just as optimism about the U.S. economy increases.

Bolstered by the prospect of higher European Central Bank interest rates as soon as next month, the euro has climbed almost 9 percent against the dollar from this year’s low. Bets by futures traders on more strength are at levels that indicated reversals in the past. The euro has gained about half as much versus a group of nine developed-nation peers including the pound, franc and Swedish krona, Bloomberg Correlated-Weighted Currency Indexes show.

While German Chancellor Angela Merkel and French President Nicolas Sarkozy have said nothing will allow the single European currency to crumble, investor concerns are rising as European Union leaders meet this month to debate fixes to the region’s fiscal crisis. Portuguese bond yields have risen to levels that preceded last year’s bailouts of Ireland and Greece, both of which are trying to renegotiate terms of their rescues.

“The European crisis isn’t over,” said Andrew Balls, the London-based head of European portfolio management at Pacific Investment Management Co., which runs the $237 billion Total Return Fund, the world’s biggest bond fund. “The euro-dollar exchange rate has been driven more by relative interest-rate outlooks, but the public statements ahead of the forthcoming meetings suggest that hopes for a grand bargain may be overdone.”

Trichet’s Rally

The euro appreciated 1.7 percent last week to $1.3987, and is up from this year’s low of $1.2867 on Jan. 10. ECB President Jean-Claude Trichet stoked the gains on March 3 after he said the central bank may boost its benchmark rate from a record low 1 percent when policy makers meet in April because of faster inflation. The Federal Reserve’s target rate for overnight loans between banks ranges from zero to 0.25 percent.

Strength in the euro has focused on the dollar as Fed Chairman Ben S. Bernanke shows no signs of raising interest rates even though the economy is strengthening.

Growth in the U.S. may total 3.2 percent this year, according to the median estimate of 66 contributors in a Bloomberg survey. The European Commission raised its growth forecast to 1.7 percent last week and said higher oil and commodity prices may keep inflation above the ECB’s 2 percent limit for most of the year.

Correlation Performance

Bloomberg Correlation-Weighted Currency Indexes show the euro has appreciated 4.6 percent from its low this year against a basket of the most-widely traded currencies. It’s up 3.8 percent versus the pound, 4.2 percent against the franc and 2 percent versus the krona.

“I’m a big buyer of the U.S. dollar” because of Europe’s debt crisis, Laurence Fink, chief executive officer of New York- based BlackRock Inc., said in an interview with Bloomberg Television’s Erik Schatzker on March 3. BlackRock is the world’s largest asset manager, overseeing $3.56 trillion.

Bank of America Corp. strategists led by David Woo in New York said March 2 that the euro would likely weaken more than 14 percent to $1.20 by the end of the second quarter as Europe’s fiscal situation worsens, even as the bank raised its longer- term forecasts for the 17-nation currency.

A day later, Commerzbank AG strategist Ulrich Leuchtmann in Frankfurt said the currency’s gains may end amid investor pessimism that the EU’s leaders will solve the region’s debt crisis. Last week’s rally isn’t the beginning of an “uptrend,” Bilal Hafeez, the London-based head of foreign-exchange strategy at Deutsche Bank AG, said in an investor note on March 4.

‘Like Arthritis’

The median estimate of 44 strategists and economists surveyed by Bloomberg is for it to weaken to $1.34 by year-end.

Europe’s debt “problem is like arthritis,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York. “It doesn’t always hurt you, but it can flare up.”

Greece had to seek a bailout after its debt reached 127 percent of gross domestic product in 2009. Ireland was next after the economy was devastated by the collapse of a decade- long real estate boom and the demise of its financial system, which forced the government to take over some of the nation’s biggest banks. The EU created the 440 billion-euro ($615 billion) European Financial Stability Facility last year, committing part of the money to finance the Irish program.

Now, austerity measures imposed by the bailout programs are clashing with demands by the citizens of Greece and Ireland to avoid cutting public services Faxless payday loans. Enda Kenny, Ireland’s next prime minister, has asked for an extension on the rescue loans, while repeating a call for lower interest rates on aid that was granted in November.

Too Bullish

Speculators have become so bullish on the euro that past trading trends suggest they may start reversing those bets. The number of contracts that hedge funds and other large speculators hold at the Chicago Mercantile Exchange anticipating a gain in the single currency jumped to 51,308 as of March 4, according to the latest data from the Washington-based Commodity Futures Trading Commission.

The last time so-called net longs exceeded 45,000 contracts was in October. The following month the euro depreciated 6.9 percent against the dollar. They also topped the 45,000 mark a year earlier, just before the currency began about a six-month, 21 percent decline.

‘Whatever is Needed’

Two-year German notes yield 108 basis points more than equivalent U.S. debt, the most since December 2008. The ASE Index of Greek stocks has risen 12 percent in 2011. The Standard & Poor’s 500 Index advanced 5.1 percent.

“I would rather buy euro assets,” said Adrian Lee, who oversees $8.5 billion as chief investment officer at Lee Overlay Partners in Dublin.

Merkel has said she will do “whatever is needed to support the euro,” and promised that meetings scheduled for March 11 and then on March 24 and 25 will produce a “comprehensive” solution to the crisis. Sarkozy said the monetary union is so important “that we will be there whenever it needs to be defended.”

Merkel’s task may have been complicated after Finance Minister Wolfgang Schaeuble said Feb. 28 that Germany won’t budge on the conditions for euro-area bailouts, rebuffing calls by Ireland and Greece for easier terms.

Position Hardened

The cost of insuring Greek, Portuguese and Spanish bonds against losses using credit-default swaps rose last month, pushing the Markit iTraxx SovX Western Europe Index of 15 governments to 188 basis points on Feb. 24, the highest in five weeks. The contracts pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a swap protecting $10 million of debt.

Merkel’s position has hardened as her Christian Democratic Union party woos voters wary of supporting the monetary union. Seven German state elections are scheduled this year, including one before and one just after this month’s summit. Her party lost power in Hamburg for the first time in a decade in a Feb. 20 vote she described as a “stinging defeat.”

Resolving the crisis was also complicated when the Irish Fianna Fail government that negotiated the nation’s bailout was ousted in favor of the Fine Gael party on Feb. 25. The new leaders vowed to lower the 5.8 percent rate on the rescue loans.

“Our overall requirement is that there be a reduction in the cost of the package,” Kenny said on March 4 in Helsinki.

Rising Bond Yields

Investors have been driving up Portugal’s borrowing costs. The nation’s 10-year bond yield has closed above 7 percent since Feb. 4. Greece needed a rescue within 17 days of its 10-year yield breaching 7 percent on April 6, while Ireland sought aid about a month after it cracked that level in October.

The gap, or spread, between yields on Portuguese 10-year debt and similar-maturity German bunds was 420 basis points, or 4.20 percentage points, last week, compared with a mean of 53 basis points since the euro started.

The spread illustrates the widening fissures in the euro- region economy. German gross domestic product will expand 2.6 percent this year, trailed by 1.7 percent in France, 0.6 percent in Spain and a contraction of almost 1 percent in Portugal, Bloomberg surveys show.

Any rise in interest rates may increase Europe’s disparities and investor concern about the euro, rather than highlight the region’s strengths, according to Daragh Maher, deputy head of global foreign-exchange strategy at Credit Agricole Corporate & Investment Bank in London.

“Normally, when interest rates go up the currency starts to strengthen,” he said in an interview on March 4. “If policy makers don’t come up with a solid solution, the periphery may not be insulated from rate rises and then hikes by the ECB may start to be viewed as a euro negative.”

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Federal regulators say the number of banks on their confidential “problem” list increased by 24 in the final quarter of last year, even as the industry continued to heal with the recovering economy.

The Federal Deposit Insurance Corp. reported Wednesday that banks earned $21.7 billion in the fourth quarter. That compared with a net loss of $1.8 billion a year earlier. The agency said bank earnings were buoyed in the latest quarter by reduced charges for soured loans.

The FDIC called 2010 a turnaround year for the banking industry, with net income reaching a three-year high of $87 bad credit payday loans.5 billion. It contrasted with a loss of $10.6 billion in 2009.

The FDIC said the number of troubled banks rose to 884 in the quarter from 860 in the third quarter. That was the slowest rate of increase to the problem list since the first quarter of 2008.

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There have been plenty of hockey fights started because of beer. Now there

Winter weather kept job seekers home and offices closed in January, getting the year off to a disappointing start, while the unemployment rate took a surprising tumble.

The economy added just 36,000 jobs in January, falling far short of expectations. Meanwhile, the unemployment rate unexpectedly sunk to 9%, down from 9.4% the month before.

Economists surveyed by CNNMoney were expecting the economy to add 149,000 jobs during the month, and the unemployment rate to rise to 9.5%.

After the report was released, economists weren’t quite sure what to make of the numbers, and used a mix of colorful adjectives like "lousy," "mysterious," and "confounding."

But one thing was clear — weather played a large role in January.

"It’s a disappointing employment report, with a touch of skepticism because of the weather’s impact on the overall number," said John Silvia, chief economist with Wells Fargo.

Major storms across large swaths of the country had a huge impact on businesses. According to the Labor Department’s household survey, which calculates the unemployment rate, severe winter weather kept 886,000 people from going to work during the week of January 9.

All those snow days kept a lot of companies from hiring, said economist John Canally with LPL Financial. It’s possible that nasty weather could have reduced the overall payroll number by about 100,000, he said.

The Labor Department also announced that job growth last year was weaker than originally stated. After 2010 revisions, there were about 900,000 jobs created during the year — 215,000 fewer than previously reported cash advance loans.

The labor market typically needs at least 300,000 job gains each month to make a difference in the unemployment rate, economists say, and at least 150,000 to keep pace with population growth.

Headed in the right direction?

While the sluggish growth to payrolls was disappointing, the drop in unemployment was interpreted in different ways.

Some economists thought it was a result of people dropping out of the labor force, though others pointed to a once-a-year population adjustment based on census data that skewed the numbers.

Almost all of the drop was due to unemployed people finding jobs again, said Zach Pandl, an economist with Nomura Securities.

"This part of the report deserves a positive interpretation," he said.

Overall, the unemployment rate has had its largest two-month decline since 1958, he said.

The two parts of the report sometimes differ, because they’re derived from separate surveys. While the payroll number stems from a survey of employers, the unemployment rate comes from a different survey of American households.

Canally said he expects the job market to show a spike in payrolls in February, and then resume a gradually improving trend. Any improvements though, are still likely to be at a very slow pace.

"People should not be too fearful of losing a job they have," Canally said. "But if they don’t already have a job, it’s still tough. Companies are still reluctant to hire." 

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