S&P 500 ends at five-year high on banks, materials

NEW YORK (Reuters) - Bank and commodity shares led the Standard & Poor's 500 to a fresh five-year closing high on Tuesday on hopes that the global economy continues to mend.

The Dow Jones industrial average also ended at a five-year high, buoyed by an advance in Travelers' shares after the insurer's earnings.

The market also gained on signals that Republican leaders in the U.S. House of Representatives aim on Wednesday to pass a nearly four-month extension of the U.S. debt limit. The White House welcomed the move, saying it defuses fears of a U.S. default on its debt.

Investors, however, were cautious ahead of an increase in earnings reports and as the S&P 500 rose for a fifth straight day.

Jack de Gan, chief investment officer of Harbor Advisory Corp, in Portsmouth, New Hampshire, said better economic numbers in the United States and China, as well as more stabilization in Europe, were driving buyers into sectors associated with economic growth.

"Any (bearish) news could turn us down for a day or so," he said, referring to the recent string of gains.

Freeport-McMoRan Copper & Gold led gains in the materials sector after it reported a 16 percent rise in fourth-quarter profit on higher production. Shares gained 4.6 percent to $35.19.

The Dow Jones industrial average <.dji> rose 62.51 points, or 0.46 percent, to 13,712.21 at the close. The S&P 500 <.spx> gained 6.58 points, or 0.44 percent, to 1,492.56. The Nasdaq Composite <.ixic> added 8.47 points or 0.27 percent, to 3,143.18.

Signs of improved sentiment toward world growth were seen in European bond markets. The yield on Portugal's benchmark 10-year note fell below 6 percent for the first time since late 2010 on news that the country was set to tap the bond market this week for the first time since it was bailed out in 2011.

Technology shares underperformed as concerns about Apple's ability to continue to grow at hyper speed and a weak outlook from Intel Corp diminished optimism about the sector's prospects. The S&P technology index <.splrct> added 0.16 percent, compared with 0.9 percent gains in energy <.spny>, financials <.spsy> and basic materials <.splrcm>.

In extended-hours trading, Google shares rose 4.5 percent to above $734 after the world's No. 1 search engine reported a jump in fourth-quarter revenue, while IBM added more than 3 percent to trade above $200 after the world's largest technology services company reported earnings and revenue that beat estimates.

During the regular session, shares of blue chips Travelers , DuPont , and Verizon Communications rose following earnings

Travelers rose 2.2 percent to $77.95, a closing high. DuPont's shares gained 1.8 percent to $47.82 and Verizon's stock rose 0.9 percent to $42.94.

Thomson Reuters data through Tuesday morning showed that of the 74 S&P 500 companies that have reported earnings so far, 62.2 percent have topped expectations, roughly even with the 62 percent average since 1994, but below the 65 percent average over the past four quarters.

Overall, S&P 500 fourth-quarter earnings are forecast to have risen 2.6 percent. That estimate is above the 1.9 percent forecast from the start of earnings season, but well below the 9.9 percent fourth-quarter earnings forecast from October 1, the data showed.

U.S.-listed shares of Research in Motion rallied 13 percent to $17.90 a day after its chief executive said the Canadian company may consider strategic alliances with other companies after the launch of devices powered by RIM's new BlackBerry 10 operating system.

About 6.2 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below last year's daily average of about 6.45 billion shares.

On the NYSE, advancers outnumbered decliners by a ratio of roughly 7 to 3. On the Nasdaq, five stocks rose for every three that fell.

(Reporting by Rodrigo Campos; Editing by Jan Paschal)

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U.N. Agency Warns of Rising Unemployment

PARIS — More than 197 million people worldwide are jobless, and an additional 39 million have simply given up looking for work, a United Nations agency said on Monday, warning that government budget-balancing was hurting employment and would probably lead to more job losses soon.

Luca Bruno/Associated Press

Perusing job postings in Milan. More than 197 million people worldwide are unemployed.

With global growth stalling five years after the financial crisis upended much of the world economy, the number of jobless is expected to rise by 5.1 million this year, to more than 202 million, the International Labor Organization said in a special report. And it predicted there would be a further three million newly jobless people next year.

High unemployment rates in the developed world — 7.8 percent in the United States, 11.8 percent in the euro zone — weigh on demand and hold back economic growth. Global gross domestic product will probably expand about 3.6 percent this year, the International Monetary Fund said in October, below its previous forecast.

Addressing the issue of unemployment last Thursday, the I.M.F.’s managing director, Christine Lagarde, urged governments to focus on “growth that can actually deliver jobs.”

“We stopped the collapse,” Ms. Lagarde said during a news conference in Washington, warning about the risks to growth posed by complacency in Europe and difficult budget negotiations in the United States. “We should avoid the relapse, and it’s not time to relax.”

The International Labor Organization found that macroeconomic imbalances “have been passed on to the labor market to a significant degree.” With aggregate demand weakening, employment “has been further hit by fiscal austerity programs in a number of countries, which often involved direct cutbacks in employment and wages, directly impacting labor markets.”

More troubling, it said, was that while governments had sought to counter the effects of the financial crisis with fiscal stimulus, later austerity measures in some countries appeared to be reinforcing the downturn.

The effects of the recession in Europe are being felt elsewhere through “a spillover effect,” the organization found, mostly through the mechanism of reduced demand for foreign goods, but also in the form of volatile capital inflows in places like Latin America and the Caribbean. These forces have left policy makers with difficult choices about how to keep soaring currencies in check without strangling economic growth.

The agency said that it was common for the rate of job creation to be slow after a financial crisis, but that there had been “a short-lived respite” for developed countries beginning in 2010. That period has now ended, and once again “further job restructuring is likely before a stronger rebound can be expected in labor markets.”

More people were simply leaving the job market altogether, particularly in the developed world, with labor force participation rates falling “dramatically,” it said, “masking the true extent of the jobs crisis.”

The ratio of employment-to-population ratio has fallen as much as four percentage points or more in some areas, it noted, and even where jobless rates have eased, the participation rate “has not yet recovered.”

The labor organization also spotlighted youth unemployment, noting that there were 73.8 million young people unemployed worldwide. It estimated that an additional half million would join the ranks of the jobless this year. The youth unemployment rate, now 12.6 percent, will probably rise to 12.9 percent by 2017, the agency said.

“The crisis has dramatically diminished the labor market prospects for young people,” the agency said, “as many experience long-term unemployment right from the start of their labor market entry, a situation that was never observed during earlier cyclical downturns.”

The agency said employment tapered off in 2011 before turning negative in 2012, with four million people added to global unemployment rolls last year.

But even countries in which jobless rates have not risen “often have experienced a worsening in job quality,” the organization said.

This article has been revised to reflect the following correction:

Correction: January 22, 2013

An earlier version of this article misstated the International Monetary Fund’s forecast for global growth in 2013, made in October. It forecast an expansion of 3.6 percent, not 3.3 percent, which was its revised 2012 forecast.

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Putin orders Russian computers to be protected after spy attacks

MOSCOW (Reuters) – President Vladimir Putin has ordered Russian authorities to protect state computers from hacking attacks, the Kremlin said on Monday, after an Internet security firm said a spy network had infiltrated government and embassy computers across the former Soviet bloc.

Dubbed Red October, the network used phishing attacks – or unsolicited emails to intended targets – to infect the computers of embassies and other state institutions with a program designed to harvest intelligence and send it back to a server.

Putin signed a decree on January 15 empowering the Federal Security Service (FSB) to “create a state system for the detection, prevention and liquidation of the effects of computer attacks on the information resources of the Russian Federation”.

State computer and telecommunications networks protected by the cyber security system should include those inside Russia and at its embassies and consulates abroad, according to the decree, which was published on a Kremlin website on Monday.

The Russian Internet security firm Kaspersky Labs said last week that the computer espionage network, discovered last October, had been seeking intelligence from Eastern European and ex-Soviet states including Russia since 2007. (http://r.reuters.com/mag45t )

Many of the systems infected belonged to diplomatic missions, Vitaly Kamluk, an expert in computer viruses at Kaspersky Labs, said last week. He declined to name specific countries.

Kamluk said last week that the network was still active, and that law enforcement agencies in several European countries were investigating it.

Kaspersky Labs said the infiltrators had created more than 60 domain names, mostly in Russia and Germany, that worked as proxies to hide the location of their real server.

The FSB declined immediate comment last week when asked whether Russia had taken action to bring any suspected members of the espionage network to justice, or acted to improve Internet security in light of the discovery.

The FSB – the main successor agency of the Soviet KGB – requested a written query, to which it has not yet responded. The Kremlin declined immediate comment on Monday when asked whether Putin’s decree was linked to Red October.

(Reporting by Steve Gutterman and Thomas Grove; Editing by Kevin Liffey)

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President Obama: I Love Michelle's New Bangs

01/21/2013 at 04:20 PM EST

President Barack Obama and Michelle Obama

Matthew Cavanaugh/EPA/Landov

First Lady Michelle Obama's new do has the approval of a very powerful man.

Following his official swearing-in ceremony on Sunday, President Barack Obama attended an Inauguration eve gala at the National Building Museum, where he complimented his wife's fresh look.

"To address the most significant event of the weekend, I love her bangs," Obama said, according to USA Today. "She looks good. She always looks good."

The First Lady debuted her cut in a photo released on her 49th birthday last Thursday – and showed it off (along with her Thom Browne dress) again at the Inauguration on Monday.

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European shares test two-year highs, yen volatile before BOJ

LONDON (Reuters) - European shares inched towards two-year highs on Monday, as a political attempt to break a budget impasse in the United States and expectations of aggressive Japanese stimulus bolstered the appetite for shares.

U.S. House Republican leaders said on Friday they would seek to pass a three-month extension of federal borrowing authority in the coming days to buy time for the Democrat-controlled Senate to pass a plan to shrink budget deficits.

European shares <.fteu3> were supported by the news <.eu>, but with no clear response from the Democrats and a thin session expected due to a market holiday in the United States, the impact on assets such as bonds and commodities was limited.

By 1500 GMT London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> were up 0.4 to 0.6 percent, leaving the pan-European FTSEurofirst 300 within touching distance of a two-year high and MSCI's world index <.miwd00000pus> steady at a 20-month high. <.l><.eu/>

Expectations that the Bank of Japan will deliver a bold monetary easing plan at the end of its two-day meeting on Tuesday also supported shares and created choppy conditions in the currency market.

According to sources familiar with the BoJ's thinking, the government of new Prime Minister Shinzo Abe and the central bank have agreed to set 2 percent inflation as a new target, supplanting a softer 1 percent 'goal'.

The yen, which has fallen 13 percent against the dollar over the last two months as the shift in Japanese policy has taken shape, touched a new 2-1/2 year low in early trading but then firmed as traders cut short positions given the BOJ has often fallen short of market expectations.

"Investors are being mindful that the moves we have seen over the course of the last month or two are just worth locking in at least until we understand how the BOJ are really going to play in the future," said Jeremy Stretch, head of currency strategy at CIBC World Markets.

CURRENCY WARS

Japanese equities have surged in recent weeks in anticipation of a more aggressive monetary policy stance, but not everyone is happy.

The slump in the yen has prompted Russia's deputy central bank governor to warn of a new round of 'currency wars' and the medium-term risk of running ultra-loose monetary policies is likely to be a theme of the World Economic Forum in Davos, which opens on Wednesday.

With little in the way of economic data or debt issuance and U.S. markets shut for the Martin Luther King public holiday, the rest of the day was expected to be a fairly quiet for investors.

As the first European finance ministers' meeting of the year got under way, most euro zone government bonds were trading virtually flat and the euro was steady at $1.3316.

Market pressure on Europe is now less intense thanks to the European Central Bank's promise to prevent a collapse of the euro. Policymakers are set to discuss Cyprus's plight and plans for the euro zone's bailout fund to directly recapitalize banks.

French Finance Minister Pierre Moscovici said as he arrived at the Brussels meeting that a proper recapitalization strategy was very important.

"Negotiations will be complex, and a final decision is unlikely to emerge soon. Risks for sovereign spreads in the periphery should be limited, but we have some concerns that the long-term solution may fall short of what a real banking union needs," said UniCredit economist Marco Valli.

POLITICAL GAME

The efforts by Republican lawmakers to give the U.S. government leeway to pay its bills for another three months dented demand for safe haven assets and pushed German government bond yields near the top of this year's range.

The U.S. Treasury needs congressional authorization to raise the current $16.4 trillion limit on U.S. debt sometime between mid-February and early March. A failure to achieve that could lead to a debt default.

"This is part of the political game, it remains to be seen whether the Democrats will accept it," KBC strategist Piet Lammens said, adding that investors' working scenario was that a solution to raise the ceiling would be eventually found anyway.

One of the key factors that drove 2-year German yields higher last week was also the prospect of sizeable early repayments of the 1 trillion euros euro zone banks took from the ECB roughly a year ago.

The central bank will publish on Friday how much banks plan to return at the optional first repayment date on January 30. A Reuters poll on Monday showed around 100 billion euros are expected to be repaid although some predict it could be as high as 250 billion.

OIL OVERSUPPLY

German markets showed no reaction after the country's center-left opposition party edged Chancellor Angela Merkel's conservatives from power in a regional election on Sunday, reviving its flagging hopes for September's national election.

The Bundesbank's latest report delivered an upbeat message on the country's economy, saying a recent slump should be short-lived and may have already bottomed out.

Oil prices took their cues from a report in the United States at the end of last week that showed consumer sentiment at its weakest in a year as a result of the uncertainty surrounding the country's debt crisis.

Concerns about demand overshadowed supply disruption fears reinforced by the Islamist militant attack and hostage-taking at a gas plant in Algeria, a member of the Organization of Petroleum Exporting Countries.

Brent futures were down by 40 cents to $111.47 per barrel by mid-afternoon. U.S. crude shed 43 cents to $95.13 per barrel after touching a four-month high last week.

"The over-riding fundamental feeling in the market is that crude oil is over-supplied in 2013," said Tony Nunan, an oil risk manager at Mitsubishi.

Last week's data showing a pick-up in the Chinese economy helped keep growth-sensitive copper prices steady at roughly $8,056 an ounce. Gold, meanwhile, reversed Friday's losses to stand at $1,688 an ounce.

(Additional reporting by Sudip Kar-Gupta, Marious Zaharia and Anooja Debnath; Editing by Peter Graff)

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Coup Attempt Is Said to Fail in Eritrea

GARSEN, Kenya — Eritrea, a sliver of a nation in the Horn of Africa that is one of the most secretive and repressive countries in the world, was cast into confusion on Monday after mutinous soldiers stormed the Ministry of Information and took over the state-run television service, apparently in a coup attempt.

According to several people with close contacts inside Eritrea, the coup attempt failed, with government troops quelling the would-be rebellion and no one rising up in the streets. But many analysts said it was only a matter of time before President Isaias Afwerki, Eritrea’s brash and steely leader for the past 20 years, is overthrown — and most likely from within.

“There’s a lot of dissatisfaction within the armed forces,” said Dan Connell, a professor at Simmons College in Boston and the author of several books on Eritrea. “If this is suppressed, it won’t be the end.”

Eritrea is often called the North Korea of Africa because it is so isolated and authoritarian, with few friends and thousands of defectors in recent years as Mr. Isaias tightens his grip and the economy teeters on the brink of ruin.

In the early 1990s, when Mr. Isaias first took power, Eritrea was hailed as a beacon of hope in Africa, a country of low crime, ethnic harmony and can-do spirit along the Red Sea. The Eritreans fought for years in trenches and from craggy mountaintops to defeat a Soviet-backed Ethiopian government and win their independence.

But the euphoria did not last. In the late 1990s, Eritrea and Ethiopia waged a costly war over their shared border, in which tens of thousands of people died. Shortly afterward, Mr. Isaias rounded up political dissidents and journalists, dooming them to years in prison, often in sweltering, underground shipping containers.

Thousands of young Eritreans have been drafted into the army and then required to work indefinitely for the government for pittance wages in what is called “national service.” Each year, many young people risk their lives to escape.

Eritrea has waged war with just about all of its neighbors, and it has been sanctioned by the United Nations over what is suspected to be its support of Somali militants.

By nightfall on Monday, it seemed that the government had beaten back the mutineers, with some analysts saying that the government broadcaster, Eri-TV, whose motto is “Serving the Truth,” was back on the air.

The rebellious soldiers, believed to number around 100, made it as far as the director’s office in the Ministry of Information, forcing him to read a statement on air calling for the release of political prisoners. Then the broadcast signal abruptly cut out. They also may have briefly taken hostage Mr. Isaias’s daughter, Elsa, who is said to work in the Ministry of Information.

It was not clear what happened to the renegade soldiers; analysts said that troops loyal to the government had surrounded the Ministry of Information and that the mutineers would most likely be captured and imprisoned.

The United States State Department said that the situation remained fluid, and the small embassy in Asmara, Eritrea’s capital, sent out a warning on Monday to the few American citizens living there.

“The U.S. Embassy has been made aware of increased military presence in some sections of Asmara,” the warning said. “Employees of the U.S. government have been advised to limit their movements within the city, avoid large gatherings and exercise caution. We strongly recommend that private U.S. citizens do likewise.”

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Notre Dame football star says he was not in on hoax – ESPN

(Reuters) – Notre Dame football star Manti Te’o has denied ever being in on an elaborate hoax, telling ESPN he had believed his relationship with a woman who turned out to be an online fabrication was real.

The tragic story of his girlfriend and her injuries from a car accident and death from leukemia was one of the most widely recounted U.S. sports stories last year as Notre Dame made a drive toward the national championship game.

“I wasn’t faking it,” Te’o told ESPN in an off-camera interview on Friday, excerpts of which were posted on ESPN.com. “I wasn’t part of this.”

When asked whether he had made up the tale to support his chances of winning the Heisman Trophy, the highest individual honor for a college football player, Te’o replied: “Well, when they hear the facts they’ll know. They’ll know that there is no way that I could be part of this.”

The interview was Te’o's first since the sports blog Deadspin.com on Wednesday exposed the heart-wrenching tale of his girlfriend, Lennay Kekua, and her death as a hoax and that a friend of Te’o's named Ronaiah Tuiasosopo was behind it.

Te’o told ESPN that Tuiasosopo called him on Wednesday and admitted he was behind the hoax and it was then Te’o was sure the woman had never existed.

“I don’t wish an ill thing to somebody,” Te’o said of Tuiasosopo, according to ESPN. “I just hope he learns. I think embarrassment is big enough.”

Outside Tuiasosopo’s home in Palmdale, California, on Thursday, a member of his family who did not identify himself told reporters they had no comment.

Te’o acknowledged in a statement on Wednesday that he had never met the woman in person, though he considered her his girlfriend and said he had been duped.

In the ESPN interview, Te’o said he tried to video chat with her several times, but she could never be seen on the other end. He also said he intentionally told people stories about her in a way that would make people believe they had met in person.

“I even knew that it was crazy that I was with somebody that I didn’t meet,” Te’o said.

NATIONAL PROMINENCE

ESPN said the interview was held at a training facility in Florida where Te’o has been preparing for the National Football League draft. The star linebacker was expected to be a high draft pick before the hoax was revealed.

Te’o sprang to national prominence last fall when he led Notre Dame to a victory over Michigan State within days of learning his grandmother and girlfriend had both died. The grandmother’s death was real.

The story grew to become a big feature in coverage of the team, which went undefeated in the regular season and reached the national championship game. Alabama defeated Notre Dame in the title game on January 7.

Notre Dame, one of the most powerful institutions in U.S. collegiate athletics, held a news conference within hours of the Deadspin.com article to say that Te’o had been duped.

Notre Dame Athletic Director Jack Swarbrick said on Friday the Indiana university was comfortable, based on a private investigation it launched and on four years experience with Te’o, that he was the victim and encouraged Te’o to speak publicly.

(Reporting by David Bailey in Minneapolis; Editing by Eric Beech)

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Selena Gomez: It Helps Being Friends with Taylor Swift and Vanessa Hudgens

By Alison Schwartz and Michelle Ward

01/20/2013 at 04:00 PM EST

From left: Taylor Swift, Selena Gomez and Vanessa Hudgens

Stephen Lovekin/Getty; Bryan Bedder/Getty; Javier Mateo/StarTraks

Boyfriends come and go, but Selena Gomez has a few very special – and very, very famous – faces to depend on.

The starlet, 20, counts Taylor Swift, 23, and Vanessa Hudgens, 24, among her inner circle, and she has plenty of compliments for their support along the way.

"It’s helped having Taylor and Vanessa both be older than me," she told PEOPLE at her New York City acoustic concert benefit for UNICEF, the children's rights organization for which she is a goodwill ambassador. "They’ve kind of experienced a little bit more, and at the same time we’re experiencing the exact same things together."

Her pals are just a call away, and "it's nice just to be able to pick up the phone and be like, 'Ugh, I had this person say this and it's annoying,' and have someone understand and really get what you're going through," adds Justin Bieber's on-again, off-again girlfriend. "I think that's [our] main connection. I just enjoy having people in the business in my life because it helps."

She recently worked with Hudgens on Spring Breakers, a comedy following four college gals that arrives in theaters in March. “I feel like I want to be her," Gomez says of her costar. "She’s been such an incredible person, and she’s fantastic in [Spring Breakers]. "She’s a really good friend.”

And if imitation is the sincerest form of flattery, her feelings on Swift – whom she called "one of the most inspirational, positive, good-hearted people that I know" – were clear by an addition to her concert set-list: a cover of the Red singer's hit, "I Knew You Were Trouble." (Yes, she also learned a dance to her friend's tune, just before the two hit the Utah ski slopes in December with their boyfriends at the time.)

“I met [Swift] when she was 18. This is before [Swift's 2008 album] Fearless came out, and it was absolutely incredible to see someone so successful and so humble," she says. "I think she has been a big part of me kind of staying the way I am too."

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Flu season fuels debate over paid sick time laws

NEW YORK (AP) — Sniffling, groggy and afraid she had caught the flu, Diana Zavala dragged herself in to work anyway for a day she felt she couldn't afford to miss.

A school speech therapist who works as an independent contractor, she doesn't have paid sick days. So the mother of two reported to work and hoped for the best — and was aching, shivering and coughing by the end of the day. She stayed home the next day, then loaded up on medicine and returned to work.

"It's a balancing act" between physical health and financial well-being, she said.

An unusually early and vigorous flu season is drawing attention to a cause that has scored victories but also hit roadblocks in recent years: mandatory paid sick leave for a third of civilian workers — more than 40 million people — who don't have it.

Supporters and opponents are particularly watching New York City, where lawmakers are weighing a sick leave proposal amid a competitive mayoral race.

Pointing to a flu outbreak that the governor has called a public health emergency, dozens of doctors, nurses, lawmakers and activists — some in surgical masks — rallied Friday on the City Hall steps to call for passage of the measure, which has awaited a City Council vote for nearly three years. Two likely mayoral contenders have also pressed the point.

The flu spike is making people more aware of the argument for sick pay, said Ellen Bravo, executive director of Family Values at Work, which promotes paid sick time initiatives around the country. "There's people who say, 'OK, I get it — you don't want your server coughing on your food,'" she said.

Advocates have cast paid sick time as both a workforce issue akin to parental leave and "living wage" laws, and a public health priority.

But to some business owners, paid sick leave is an impractical and unfair burden for small operations. Critics also say the timing is bad, given the choppy economy and the hardships inflicted by Superstorm Sandy.

Michael Sinesky, an owner of seven bars and restaurants around the city, was against the sick time proposal before Sandy. And after the storm shut down four of his restaurants for days or weeks, costing hundreds of thousands of dollars that his insurers have yet to pay, "we're in survival mode."

"We're at the point, right now, where we cannot afford additional social initiatives," said Sinesky, whose roughly 500 employees switch shifts if they can't work, an arrangement that some restaurateurs say benefits workers because paid sick time wouldn't include tips.

Employees without sick days are more likely to go to work with a contagious illness, send an ill child to school or day care and use hospital emergency rooms for care, according to a 2010 survey by the University of Chicago's National Opinion Research Center. A 2011 study in the American Journal of Public Health estimated that a lack of sick time helped spread 5 million cases of flu-like illness during the 2009 swine flu outbreak.

To be sure, many employees entitled to sick time go to work ill anyway, out of dedication or at least a desire to project it. But the work-through-it ethic is shifting somewhat amid growing awareness about spreading sickness.

"Right now, where companies' incentives lie is butting right up against this concern over people coming into the workplace, infecting others and bringing productivity of a whole company down," said John A. Challenger, CEO of employer consulting firm Challenger, Gray & Christmas.

Paid sick day requirements are often popular in polls, but only four places have them: San Francisco, Seattle, Washington, D.C., and the state of Connecticut. The specific provisions vary.

Milwaukee voters approved a sick time requirement in 2008, but the state Legislature passed a law blocking it. Philadelphia's mayor vetoed a sick leave measure in 2011; lawmakers have since instituted a sick time requirement for businesses with city contracts. Voters rejected a paid sick day measure in Denver in 2011.

In New York, City Councilwoman Gale Brewer's proposal would require up to five paid sick days a year at businesses with at least five employees. It wouldn't include independent contractors, such as Zavala, who supports the idea nonetheless.

The idea boasts such supporters as feminist Gloria Steinem and "Sex and the City" actress Cynthia Nixon, as well as a majority of City Council members and a coalition of unions, women's groups and public health advocates. But it also faces influential opponents, including business groups, Mayor Michael Bloomberg and City Council Speaker Christine Quinn, who has virtually complete control over what matters come to a vote.

Quinn, who is expected to run for mayor, said she considers paid sick leave a worthy goal but doesn't think it would be wise to implement it in a sluggish economy. Two of her likely opponents, Public Advocate Bill de Blasio and Comptroller John Liu, have reiterated calls for paid sick leave in light of the flu season.

While the debate plays out, Emilio Palaguachi is recovering from the flu and looking for a job. The father of four was abruptly fired without explanation earlier this month from his job at a deli after taking a day off to go to a doctor, he said. His former employer couldn't be reached by telephone.

"I needed work," Palaguachi said after Friday's City Hall rally, but "I needed to see the doctor because I'm sick."

___

Associated Press writer Susan Haigh in Hartford, Conn., contributed to this report.

___

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Euro zone surveys to offer hope as Japan eases

LONDON (Reuters) - The prospect of stronger European manufacturing surveys and decisive monetary easing in Japan this week ought to bolster confidence that the global economy can look forward to better days.

It is definitely not yet time to break open the champagne.

The index derived from polls of purchasing managers across the euro zone, though recovering, is likely to remain well below the 50 threshold that signals expansion.

If the Bank of Japan bows to political pressure and relaxes policy more boldly, it is because the country's noxious cocktail of a huge debt burden, deflation and dwindling external surpluses threatens an eventual fiscal crunch.

And an expected contraction in Britain's economy when fourth-quarter figures are released on Friday will be a reminder, as was Germany's grim end to 2013, that Europe has to dig itself out of a deep hole.

"The real hard economic data are still very negative," said Bert Colijn, an economist in Brussels with the Conference Board, a business research group. "There are improvements, but it still doesn't look that bright."

However, he said the economic news from the euro zone rim was not quite as troubling, and the mood was brightening among the core countries of the single currency area.

Lena Komileva, managing director of G+ Economics, a London consultancy, said it was hard to argue against investors' new-found appetite for riskier assets given that the volatility of equity prices was approaching historical lows and yields on corporate bonds had fallen sharply.

"Financial stress indicators signal a significant improvement in the health of the global economy," she said.

Friday's solid fourth-quarter economic data from China reinforced that view.

PURCHASERS' PROGRESS

Economists polled by Reuters expect an uptick in Thursday's advance purchasing managers' indexes for France and Germany as well as for the euro zone as a whole.

Germany's IFO business confidence survey on Friday is also projected to have risen for the third month in a row.

"The fact that business confidence measures are coming in more positive is a good sign," Colijn commented.

Commerzbank said its leading indicator for the German economy reached an all-time high in December after the European Central Bank's pledge to buy the bonds of troubled economies eased fears of a break-up of the euro.

"We assume that increasingly more companies are gaining confidence and viewing business prospects more positively," said Commerzbank economist Ralph Solveen.

BNP Paribas is also bullish on Germany and is looking for a marked pick-up in growth.

In addition to the ECB's safety net, the global manufacturing cycle is pointing up, while a strong labor market and easy financial conditions are supporting consumption, economists Evelyn Herrmann and Ken Wattret said in a report.

"Moreover, should the global economy surpass expectations and euro zone market stress ease further, upside surprises would be likely to follow. A key issue in this respect would be higher export growth and confidence triggering a stronger rebound in investment," they said.

That is exactly what Japan would like to see, too.

To that end, the government of new Prime Minister Shinzo Abe and the Bank of Japan have agreed to set 2 percent inflation as a new target, supplanting a softer 1 percent ‘goal', according to sources familiar with the central bank's thinking.

They said the BOJ, which meets on Monday and Tuesday, will also consider making an open-ended commitment to buy assets until the target is in sight.

FOR AND AGAINST EASING

Credit Suisse's global equity strategists said an easier monetary policy is justified to cushion the significant fiscal tightening on which Japan will have to embark before long to whittle down a government debt that has reached some 220 percent of national income.

This task is all the more pressing because Japan is moving towards a current account deficit, which will make it more reliant on foreign investors to finance its budget shortfall, Credit Suisse argued.

Trade figures on Thursday will underline the deterioration in Japan's external accounts, with economists polled by Reuters forecasting the sixth consecutive monthly deficit.

Nomura reckons the deficit for all of 2012 widened to 6.6 trillion yen ($73.4 billion) from 2.7 trillion in 2011.

Japanese equities have surged in anticipation of a more aggressive monetary policy stance, but not everyone is happy.

The accompanying slump in the yen has prompted Russia's deputy central bank governor to warn of a new round of ‘currency wars' and the medium-term risk of running ultra-loose monetary policies is likely to be a theme of the World Economic Forum in Davos, which opens on Wednesday.

"I'm pretty worried about the new policies of Japan's newly elected government," German Finance Minister Wolfgang Schaeuble said last week. "When you think of the surplus of liquidity on global financial markets, it is fuelled further by a wrong understanding of central bank policy.

(Editing by Susan Fenton)

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