Finance news. My opinion.

Investors are having a hard time getting a handle on the stock market lately. And many are getting worried.

The whipsaw returns are producing flashbacks to late 2008, when triple-digit swings in the Dow Jones industrial average were the norm.

Wall Street’s worry list is long: the European debt crisis, huge U.S. government deficits, saber-rattling between North and South Korea, and the shakiness of the economic recovery.

With so much unsettled, the urge to go on the defensive is understandable.

"We’ve had a big recovery," says Matt Berler, co-manager of the Osterweis Fund (OSTFX), which has a reputation as a haven in a falling market. "Now that it’s behind us, we could see markets gyrate, and really end up going nowhere."

If that’s not for you, your options aren’t limited to shifting more heavily into bonds or cash. You can stick with stocks, but take a more cautious approach.

A select group of mutual fund managers have shown they’re masters of defense, capable of picking the stocks most likely to emerge unscathed when trouble strikes. They can cushion the blow further by selling some of their riskier picks and shifting heavily into cash.

Below are seven funds with top records during two especially steep recent declines in the Dow Jones industrial average: Jan. 14, 2000, to Oct. 9 2002, when the dot-com bubble burst, and Oct. 9, 2007, to March 9, 2009, when subprime mortgage troubles spread throughout the financial system.

The seven, screened by Morningstar, are diversified stock funds that finished in the top 3 percent among their peers during both downturns.

But these funds are about more than just defense. They’ve held up in rising markets as well. All have 10-year records placing them in the top 10 percent among their peers.

The seven, in alphabetical order:

— American Century Equity Income (TWEIX) has one of strongest records among large value funds over the past 15 years, with low volatility no fax payday advances. Lately, the fund has bet heavily on utilities stocks, typically good defensive plays in times of trouble.

— Calamos Growth & Income (CVTRX) supplements its stock holdings with convertibles, stock-bond hybrids giving the holder the option to swap from a bond to a stock at a predetermined price. It’s a way to get more potential upside than with regular bonds, along with a steady income stream and reduced volatility.

— Forester Value (FVALX) was the lone U.S. stock fund to finish 2008 with a gain, up 0.4 percent, while nearly every other fund suffered a double-digit loss. Forester Value trailed 79 percent of its peers last year as the same defensive characteristics, that protected it in 2008, held it back when the market turned around.

— Parnassus Equity Income (PRBLX) emphasizes mature dividend-paying stocks that can ride out downturns. The strategy has landed the fund in the top 1 percent among its peers over the past 3- and 5-year periods.

— Royce Special Equity (RYSEX) buys stocks of small companies with clean balance sheets and steady cash flow, and rarely trades them. It’s helped the fund post an average 11.5 percent return per year over the last 10 years.

— Sequoia Fund (SEQUX), which typically holds just 10 to 25 favored stocks, and sticks with them for years. Its latest top holding, at 20 percent of the portfolio, is Berkshire Hathaway, Warren Buffett’s investment company.

— Yacktman Focused (YAFFX) focuses on large-company stocks. Its performance ranks in the top 1 percent of its peers over the last 3, 5- and 10-year periods. Lately, it has found safety in beverage stocks that aren’t buffeted by economic cycles.

If the recent slide extends into a bear market — defined as a drop of 20 percent or more — these funds should serve investors well.

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The SEC and the U.S. Attorney’s office in New Jersey on Wednesday charged a Miami Beach-based businessman with allegedly running a Ponzi scheme that sucked in close to $1 billion.

The Securities and Exchange Commission and U.S. District Attorney Paul Fishman filed fraud charges in New Jersey against Nevin K. Shapiro, founder and president of Capitol Investments USA.

Shapiro is accused of fraudulently offering risk-free annual returns as high as 26% to investors in his grocery diverting operation, a type of business where low-cost groceries are purchased in one region and sold for a higher price elsewhere.

"[Shapiro] used his prominence and prestige to gain investors’ trust in funding Capitol’s grocery-diverting business, but behind their backs he diverted their money to enrich himself," said Eric Bustillo, director of the SEC’s Miami regional office.

Investigators from the U.S. Attorney’s office said more than 60 investors, many of them in New Jersey, sent Shapiro more than $880 million, incurring losses of at least $80 million.

The SEC said that Shapiro’s "lavish" lifestyle included a $5 million house in tony Miami Beach and a $1 million boat, as well as "luxury cars, expensive clothes, high-stakes gambling and season tickets to premium sporting events."

In a classic pyramid-style scheme, the Ponzi scammer uses new investments to pay off existing investors, while claiming that the stolen funds are legitimate returns.

The feds said that Shapiro claimed to make tens of millions of dollars a year through Capitol. In reality, Capitol was operating at a loss by 2004 and had "virtually no" legitimate investment activity by 2005, according to federal authorities.

Shapiro paid $13 million to contacts who could reel in fresh investors in order to keep the scam going, according to the SEC.

He is also listed as a donor on the University of Miami’s Web site, which describes him as "an ardent, devoted, intense supporter of the University of Miami Athletics."

"For the tremendous philanthropic support he provides, the University of Miami is proud to name the Student-Athlete Lounge after Nevin Shapiro," the site reads.

A spokesman for the athletics club was not immediately available for comment.

Kate Meyers, one of three lawyers representing Shapiro at the Lewis Tein firm in Coconut Grove, Fla., confirmed that Shapiro "surrendered this morning to authorities in New Jersey."

She said the two lead defense lawyers in the case are Michael Tein and Guy Lewis. 

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Hawaiian Airlines is moving up the start date for its new, nonstop daily flight this summer between Oakland and Maui.

The service will begin on June 4 — almost two weeks earlier than originally scheduled, due to customer demand.

The Oakland-Maui flight, the first for the airline, will operate through Sept. 6.

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As the Missouri Gaming Commission sets out to award the state’s precious 13th casino license, it faces a dizzying array of options. Cities and companies will argue that they are the best choice. External circumstances will influence who fits where. It’s a high-stakes decision, one the state can’t afford to get wrong. The right choice will be the perfect mix of location, operator and conditions.

Here’s a cheat sheet for what is on the table.

The players

Isle of Capri Corp. — The Creve Coeur-based company has three Missouri casinos but none in St. Louis. It has tried to buy or build one several times but lost out, most recently to Pinnacle. Now it is a logical candidate to try again.

Penn National Gaming — This Pennsylvania-based operator got a foothold in Missouri and the Metro East when it bought Argosy Gaming in 2005. Now it’s flush with cash and growing fast. But with projects under way in Maryland, Ohio and Kansas, is Penn’s dance card full?

Pinnacle — True, they just lost the license. But they could win it back. A third new casino here would give them a strong hand in St. Louis. But empire-builder Dan Lee is gone. And some say Pinnacle’s growth plans left with him.

Ameristar/Harrah’s/Herbst — It’s easier to expand in a state where you already have a license, and all three of these companies are in Missouri now. But Herbst Gaming is in bankruptcy court. Harrah’s Entertainment is slashing costs. Ameristar is stable, and it owns two of the biggest casinos in Missouri. Might it like a third?

A wild card — Countless other casino companies aren’t in Missouri right now, from big-time Vegas outfits such as MGM Mirage and Wynn Resorts to tiny rural operators such as Iowa’s Wild Rose. They would need to build relationships and clear a few more hurdles than their in-state competitors.

The LOCATIONS

Branson — With 8 million visitors a year, Branson could be a gambling gold mine. But state law allows casinos on only the Mississippi and Missouri rivers. Voters shot down a 2005 bid to change that. Don’t be shocked if that issue comes up again.

North St. Louis County — The north county riverfront has long been eyed for a new casino, and a group of investors has zoning approval to put one near the Columbia River Bottoms. To win a license, they would need to overcome loud environmental opposition.

Sugar Creek — A casino project in this town east of Kansas City was moving forward with haste until early 2008, when the Gaming Commission froze licenses ahead of Proposition A. That shelved Sugar Creek. But it could be back in the hunt now.

Cape Girardeau — A pair of businessmen have been pushing a casino in downtown Cape for years, and they quickly re-declared their interest this week. If the Gaming Commission wants to open a new outstate market, this would seem a logical choice.

St. Louis city — The biggest loser in l’affaire d’President is probably St. Louis City Hall. They had two casinos pumping out tax revenue. Now they have one. But there’s plenty of developable riverfront, and prime spots downtown and at the Chain of Rocks Bridge.

The hurdles

Saturation — Does the St. Louis region need seven casinos? Is there room for more in Kansas City? Companies and regulators will make these calculations in months to come and decide whether to place their chips in a current Missouri market or open a new one.

Credit markets — A good casino isn’t cheap. Pinnacle Entertainment spent almost $900 million on its two new facilities in St. Louis. That money gets borrowed. And right now, few people are lending, so a strong balance sheet is a real ace in the hole.

Local support — Regulators won’t force a casino into a place that doesn’t want one. Religious groups in southeastern and southwestern Missouri and environmentalists in north county will make themselves heard and could derail a project even if the numbers make sense.

Regulatory hurdles — The Gaming Commission is the ultimate decider of who gets this license, and they will make every candidate jump. Problems in other states, past troubles in Missouri, any hint of a connection to anything the commission doesn’t like could sink any proposal.

Demand — What Missouri hopes to get out of this license may not match what gambling companies want to build here. The industry’s big boys may rather use their resources making a big splash in a new market than building the 13th casino in a mature one.

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The Toronto stock market started the trading week off positive Monday, led by higher commodity and financial stocks.

The S&P/TSX composite index closed up 65.17 points to 11,750.54 after a lukewarm start to the U.S. quarterly earnings season and moves by China to cool its economy had pushed the main index down more than two per cent last week to below where it started the new year.

“When China raised the reserve requirements (for banks), it was unexpected,” said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier.

“All of a sudden, you say: is some of the global stimulus going to be removed quicker than I thought?”

The TSX Venture Exchange climbed 12.25 points to 1,605.72.

Volumes were lower than normal as New York markets closed for the Martin Luther King holiday.

A day before the Bank of Canada makes its scheduled announcement on interest rates, the Canadian dollar moved 0.28 of a cent higher to 97.42 cents US. The central bank is widely expected to leave rates — which hover near zero — alone until at least the end of the second quarter.

The base metals sector was up 1.39 per cent. Late Monday afternoon, the March copper contract on the New York Mercantile Exchange rose five cents to US$3.41 a pound in electronic trading. Regular trading on the New York Mercantile Exchange was also closed Monday for the King holiday.

Teck Resources (TSX:TCK.B) added 43 cents to $41.23 while Labrador Iron Mines Holdings (TSX:LIM) ran up 69 cents to $5.57.

The February crude contract rose 25 cents to US$78.25 a barrel shortly before the TSX closed, taking the energy sector ahead 0.63 per cent. EnCana Corp. (TSX:ECA) improved 46 cents to $35.67 while Imperial Oil (TSX:IMO) gained 46 cents to $41.10.

Crude prices fell every day last week, losing just over five per cent, as the first batch of fourth-quarter earnings and economic data pointed to signs of continued weakness in the U.S. economy.

Oil and gas explorer Enterra Energy Trust (TSX:ENT.UN) said Monday it will convert to a corporation by the end of May, changing its name in the process to Equal Energy Ltd. Calgary-based Enterra said Monday it wants to make the move before a change in the rules governing the taxation scheme for trusts takes effect in 2011. Enterra units jumped 56 cents or 25.93 per cent to $2.72.

Shares in Cirrus Energy Corp. (TSXV:CYR) dropped 68 cents or 24.46 per cent to $2.10 after delivering a disappointing update on its drilling activities at its subsidiary in Holland. A platform refurbishment was meant to allow “continuous uninterrupted production” from its well. Instead, production performance has steadily declined.

The financial sector moved up 0.65 per cent after losing ground at the end of last week in the wake of disappointing earnings results from American banking giant JPMorgan Chase. TD Bank (TSX:TD) was ahead 75 cents to $64.10 and Manulife Financial was up 22 cents at $20.54 .

The February gold contract was ahead $2.90 to US$1,133.40 an ounce and the gold sector edged up 0.19 per cent.

When Wall Street returns on Tuesday, the focus will turn towards the next batch of fourth-quarter corporate earnings figures, including those from Citigroup Inc. and IBM Corp.

So far, earnings have been fairly mixed, with upside surprises from the likes of Intel Corp. offset by disappointments elsewhere, most notably Alcoa Inc. and JPMorgan Chase.

“Are they going to meet their guidance? And how are they going to meet it? asked Nakamoto.

“Expectations have ratcheted up.”

In other corporate news, a group of bidders, including former Canadian senator Jerry Grafstein, says it’s preparing to make an offer for some of Canwest’s (CGS.V) newspapers, including its flagship National Post. The consortium of investors also includes former Global TV executive and Montreal Star editor Raymond Heard and writer and broadcaster Beryl Wajsman.

But Nakamoto said he expected there are funds and companies that would be interested in the whole newspaper chain.

“I would think there’s a bunch of private equity investors _ like even Onex Corp. (TSX:OCX). Why wouldn’t they look at it? It seems right up their alley. Or why wouldn’t the Ontario Teachers Pension Fund look at it? There’s a lot of money out there.”

Canwest shares were off one cent at 7.5 cents.

Mosaid Technologies Inc. (TSX:MSD) shares rose $1.45 to $21.51 after it said its revenue will be $3 million higher in the 2010 financial year than previously thought, rising to an estimated range of $68 million to $70 million. It said the improved performance is the result of a landmark licensing agreement between the Ottawa patent firm and Samsung Electronics Co., Ltd.

Heritage Oil Corp. (TSX:HOC) says that Tullow Uganda Ltd. has exercised its right to pre-empt Heritage’s sale of a 50 per cent interest of two blocks in Uganda to Italy’s Eni International B.V., and will pay more than US$1.35 billion for the assets. Heritage shares ran ahead $1.90 or 24.24 per cent to $10.20.

Financially troubled Coalcorp Mining Inc. (TSX:CCJ) says the proposed US$150-million sale of its La Francia coal mine in Colombia has been threatened by a company allegedly controlled by former Coalcorp directors. Coalcorp said Monday it received a letter from Blue Pacific Assets Corp. advising that it will ask a court to block the sale unless it receives about $2 million of royalties that are purportedly overdue and assurance that Coalcorp will terminate the proposed sale of La Francia to Goldman Sachs. Coalcorp shares were 1.5 cents higher at 19.5 cents.

New Flyer Industries Inc. (TSX:NFI.UN) said Friday it received orders for 711 buses in the fourth quarter for a total of $308 million. The company said the orders included 506 new firm and option orders and 205 exercised options for buses. Its units added 10 cents to $10.50.

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Safeway Inc. is sponsoring a gameday area on Sunday for the Arizona Cardinals home game in Glendale.

Safeway’s Gameday Experiene includes games, video game and TVs broadcasting other National Football League games. It also features food and drink stands offering samples of tailgating fare and other products fans might buy from the grocery store.

Safeway hosted a similar event outside University of Phoenix Stadium for the Nov payday loans with no fax. 15 game against the Seattle Seahawks.

The Cards game against the Minnesota Vikings is televised Sunday night on NBC. The Safeway promotion is free and located east of the stadium. The game starts at 6:20 p.m.

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The U.S. view that China is keeping its currency undervalued in order to boost exports will foster a “more contentious” relationship between the two nations, said Stephen Roach, chairman of Morgan Stanley Asia in Hong Kong.

The convergence of mounting U.S. unemployment and next year’s Congressional elections will make it easy for both Republicans and Democrats to criticize China, Roach said in a Bloomberg Television interview aired today in New York.

“It will get more contentious as we move into 2010,” he said. “There’ll be a lot of cries on both sides of the aisle to do something about the plight of the American worker. China is, unfortunately, the whipping boy in many of these discussions.”

The U.S. Treasury Department yesterday criticized China in a semiannual report to Congress, saying “the recent lack of flexibility of the renminbi exchange rate and China’s renewed accumulation of foreign-exchange reserves risk unwinding some of the progress made in reducing imbalances.” The Treasury stopped short of branding China a manipulator of its yuan, also known as the renminbi.

Roach, author of the newly released book “The Next Asia: Opportunities and Challenges for a New Globalization,” said the U.S. must think “long and hard” about its relationship with China, which has financed America’s appetite for consumer goods by buying Treasury securities.

Less Influence

China may “move outside the sphere of influence of the U.S.” as its domestic demand rises and exports become a smaller contributor to growth, he said. “The time will come when they are less reliant on us,” Roach said. “We still need an international lender of last resort. Who’s going to help us out, it’s a fair question.”

China needs to boost investment in social security, private pensions, and insurance for unemployment and medical care, Roach said, to prompt its consumers to save less and buy more goods from overseas.

“Until they can address that key issue, the development of a broad-based consumer culture is still too far out in time,” Roach said.

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Confidence in the world economy rose for a third straight month in October as gains in manufacturing and equities added to signs of recovery, a Bloomberg survey of users on six continents showed.

The Bloomberg Professional Global Confidence Index increased to a record 61.7 from 58.54 in September. The index exceeded 50 for a third month, which means there were more optimists than pessimists.

“Conditions have reached a point of stability worldwide,” said Guy LeBas, chief economist and fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, who participated in the survey. “We’re seeing growth even in parts of the world that were looking dull earlier. The eurozone is coming out of the recession fairly quickly and in decent shape and the U.S. is improving.”

The global equity rally has added about $20 trillion to the value of stocks since this year’s low on March 9 as evidence mounts that the world economy is emerging from its deepest recession since the 1930s. The pace of the recovery may be tempered as stimulus measures undertaken by policy makers fade out and unemployment threatens to continue rising.

“Asset markets are rising and that’s having positive wealth effects and helping confidence come back a bit stronger,” said Robert Subbaraman, chief economist for Asia excluding Japan at Nomura International Ltd. in Hong Kong. “There are still problems with the world economy as a lot of the support is being fueled by loose policies which cannot be sustained.”

China Exports, Intel

Stocks rose today. The MSCI World Index climbed 0.9 percent to a one-year high as the decline in China’s exports slowed and Intel Corp.’s sales forecast topped analyst estimates. JPMorgan Chase & Co., the second-largest U.S. bank by assets, said profit in the third quarter soared almost sevenfold as fixed-income revenue surged.

Confidence may abate in the event that stocks erase part of their advance. The MSCI World Index has surged 67 percent since March 9, driving valuations on the gauge of 23 developed countries as high as 27.9 times annual earnings, data compiled by Bloomberg show. The Standard & Poor’s 500 Index is priced at 20.3 times profit, the highest level since 2004.

The survey of more than 1,400 Bloomberg users was conducted between Oct. 5 and Oct. 9. Since the previous survey, Group of 20 leaders vowed to keep stimulus measures until growth takes hold, the International Monetary Fund boosted its forecast for the global economy this year and next, and the Reserve Bank of Australia raised interest rates.

‘Gathering Steam’

Europe’s manufacturing and services industries expanded more than initially estimated last month, while some U.S. gauges of production are showing an acceleration in activity. India’s industrial production rose the most in 22 months in August, while China’s output gains were the fastest in almost a year.

“Investors think the recovery is gathering steam,” said Christopher Low, chief economist at FTN Financial in New York and a participant in the survey. “Manufacturing has shown the most improvement, and global trade is picking up.”

The world economy will contract 1.1 percent this year, and expand 3.1 percent in 2010, the Washington-based IMF said earlier this month.

Policy makers are debating the timing of the withdrawal of monetary and fiscal policies that have helped avert another Great Depression. Federal Reserve Chairman Ben S. Bernanke on Oct. 8 said the U.S. central bank is prepared to tighten monetary policy when the outlook for the economy “has improved sufficiently.”

Exit Strategies

New Zealand’s central bank is removing some of the liquidity facilities it put in place last year, while the Bank of Japan left its benchmark rate near zero today and refrained from saying if it would end its corporate debt purchase programs.

“The dynamic of the global recovery is very intense,” said Jose Carlos Diez, chief economist at Intermoney SA in Madrid. “If the central banks get nervous and put the brakes on too fast, that could abort the recovery.”

Bloomberg users in Spain are the most pessimistic on their economy as the nation remains mired in a recession even after France and Germany returned to growth. Spain’s index fell to a four-month low of 10 from 14.5 in September. The confidence gauge for western Europe rose to 44 from 43.2 last month.

Dollar Weakness

Confidence jumped the most in the Latin American region this month, with its index advancing to 72.9 from 65.5 in September. Brazil, the region’s biggest economy, is unwinding stimulus measures amid a resumption of growth as the central bank tightened rules for lenders to meet reserve requirements.

Sentiment fell in Japan, where a strengthening yen against the dollar is eating into company profits just as global demand stabilizes. The gauge for Japan declined to 38.8 from 48.8, while that for Asia rose to 76.2 from 73.6.

“In Asia, the biggest threat is the weakness in the dollar, because those economies are so dependent on exports to the U.S.,” Low of FTN Financial said.

The U.S. dollar may weaken further in the next six months against the world’s most actively traded currencies, as the survey showed sentiment near an 18-month low. The trade-weighted Dollar Index has fallen 7 percent this year, and gold, which usually moves inversely to the U.S. currency, is at a record. The dollar confidence index was 31.2 from 30.8 in September.

Users in Japan are less optimistic about the yen’s appreciation against the dollar, with the index falling to 56.9 from 62.1. Respondents in western Europe are still betting the euro will strengthen against its U.S. counterpart.

Stocks Sentiment Mixed

Bloomberg users were mixed on the outlook for their equity markets in the next six months. Respondents in the U.S., Japan and Spain expect shares to decline, while those in Brazil, Mexico and Italy predict their markets will extend their advances.

New York University Professor Nouriel Roubini, who predicted the financial crisis, on Oct. 3 said stock and commodity markets have gone up “too much, too soon, too fast” and may drop in the coming months as the gradual pace of the recovery disappoints investors.

Survey participants in the U.S., Europe and Latin America are also more confident short-term interest rates will rise in the next six months, the survey showed.

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The Bank of England plans to spend the remainder of its 175 billion-pound ($278 billion) bond- purchase program as officials seek to drive home the economy’s recovery.

The Monetary Policy Committee, led by Governor Mervyn King, kept the target for its plan unchanged today, as predicted by all 42 economists in a Bloomberg News survey. The central bank also maintained the benchmark interest rate at a record low of 0.5 percent.

Policy makers will use new forecasts next month to appraise the plan, which prompted a split on the committee in August when King favored spending even more. Former Deputy Governor John Gieve said in an Oct. 6 interview that officials may consider an expansion in November because they will be wary of a “false dawn” for the economy.

“We’re heading to a recovery of sorts, but unemployment is still rising and bearing down on inflation,” said Alan Clarke, an economist at BNP Paribas SA in London. “There’s still a case for more purchases, and I think they will do more in November.”

The pound rose against the dollar after the decision. The U.K. currency was at $1.6071 as of 12:48 p.m. in London, from $1.5969 yesterday.

The European Central Bank today kept its benchmark interest rate at a record low of 1 percent, as predicted by all 53 economists in a Bloomberg News survey. The U.S. Federal Reserve held its target rate at close to zero on Sept. 23.

Election Approach

Prime Minister Gordon Brown is trying to revive Britain’s economy in time for an election which he must call by June 2010. His ruling Labour Party fell to third place for the first time since 1982 in an opinion poll finished on Sept. 27.

There are signs that the economy is picking up in the U.K. and around the world. Australia’s central bank on Oct. 6 became the first Group of 20 nation to raise interest rates since the start of the global financial crisis.

U.K. House prices rose 1.6 percent in September, a third consecutive gain, Halifax said on Oct. 6. Services industries expanded at the fastest pace in two years and consumer confidence rose the most since 1995, reports have shown.

At their Sept. 10 decision, policy makers said rising asset prices could create a “virtuous upward spiral” for the economy. Chief Economist Spencer Dale said last month that he favored limiting the increase in so-called quantitative easing to 175 billion pounds because of the risk spending more might stoke asset prices too much.

King’s Vote

King had favored a bigger increase in the program to 200 billion pounds as the bank’s predictions showed inflation may not return to the 2 percent target in two years. He and policy maker David Miles, who had sided with King, opted for consensus on the nine-member panel at the September meeting, while saying a bigger increase could still be justified.

The bank has so far bought more than 160 billion pounds of government and company bonds and has pledged to spend the remainder of its plan by November.

Miles said Sept pay day loan lenders. 30 that the bond purchases are “having an impact that is relevant to economic conditions right across the country.” The yield on the 10-year U.K. government bond was 3.39 percent today, compared with 3.64 percent on March 4, the day before quantitative easing started.

Weakness Persisting

The economy has shown some signs of persisting weakness. Manufacturing unexpectedly dropped in August to the lowest level since 1992, the inflation rate has fallen to the lowest since January 2005 and unemployment is at its highest in 14 years. British Airways Plc, Europe’s third-biggest airline, said Oct. 6 that 1,000 flight attendants have agreed to voluntary job cuts.

“The main risk, short term, is that everyone thinks the recovery is over, we tighten too quickly, and we see a sort of ‘W’ emerge,” Gieve said. “The manufacturing figures are a reminder that it’s too early to say it’s definitely over” and extending the asset-purchase plan next month “will be an option they’ll look at pretty closely,” he said.

David Blanchflower, a former policy maker who left in May, said the bank should expand its bond plan and also cut the rate it remunerates commercial bank reserves. Blanchflower tended to favor lower rates than his colleagues, and in three years on the panel, he voted for a reduction 19 times, favored no change on 16 occasions and wanted an increase only once.

‘Big Meeting’

“They’ve got to do more,” Blanchflower told Bloomberg Television today. “November will be a big meeting, and I suspect they’re going to do some more. The discount rate, remuneration on reserves may well be something that they can cut. Certainly, there’s thinking about more quantitative easing, and I suspect there’s still a thought about the possibility that 0.5 percent rate could come down further.”

Bank lending is also still constrained as institutions repair balance sheets damaged in the financial crisis. Lloyds Banking Group Plc said today that it will keep its options open after the Financial Times said the lender is preparing to raise 15 billion pounds in a share sale.

Britons cut consumer debt for a second month in August, repaying a net 309 million pounds, the most since April 1993. The average interest rate on mortgages fixed for two years was 4.42 percent in August, compared with 3.98 percent in March when the bank started quantitative easing.

Minutes of today’s deliberations will be released on Oct. 21. The next decision is due on Nov. 5 and the bank will publish its new quarterly forecasts a week later.

“This meeting is a holding position until we get to November,” said Colin Ellis, an economist at Daiwa Securities SMBC and a former central bank official. “If I were on the committee, I’d increase quantitative easing, but it’s a difficult decision.”

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