Finance news. My opinion.

The spending cuts that helped the U.K. preserve its AAA credit rating last year and bolstered the pound are now weighing on the currency as investors lose confidence that Prime Minister David Cameron will revive economic growth.

Sterling had its worst January since 2008, falling 0.6 percent, after a 3.1 percent advance in the second half of 2011, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-market currencies against each other. Gilts are lagging behind lower-rated Treasuries, after world-beating gains of almost 17 percent last year.

Investors are beginning to favor policies promoting growth over austerity just as the biggest government-spending squeeze since World War II risks sending the U.K. into its second recession since 2009. U.S. President Barack Obama has used outlays to drive America

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The jailed founder of the file-sharing website Megaupload is complaining that women inmates are giving him unwanted attention.

In a New Zealand courtroom to appeal a decision denying him bail, Kim Dotcom said he’s gotten unwanted letters from female prisoners and a phone call from a man posing as a prosecutor, according to reports by media outlets.

A government lawyer said during the hearing that a known forger tried to visit Dotcom.

Dotcom told the Auckland court he would not flee New Zealand and wants to fight to get back his money, some of which authorities seized last month.

U.S. authorities claim Megaupload facilitated millions of illegal downloads. They are trying to extradite Dotcom and three colleagues on racketeering charges.

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WASHINGTON • The economy grew late last year at a pace that in normal times would suggest it’s healthy.

But the 2.8 percent annualized growth rate in the October-December quarter — the fastest pace since the spring of 2010 — isn’t being cheered by most economists or investors. That’s because growth would need to be much stronger to sharply reduce unemployment. And signs in the data point to slower growth ahead.

For all of last year, the economy grew just 1.7 percent. That was barely more than half the growth in 2010. The outlook for all 2012 is slightly better. The Federal Reserve estimates growth of roughly 2.5 percent for the year.

Though the economy has picked up and is far stronger than during the Great Recession, unemployment is still a high 8.5 percent. Many people remain reluctant to spend more or buy homes. Many employers are still hesitant to hire.

For the final three months of 2011, Americans spent more on vehicles, and companies restocked their shelves at a robust pace. But overall growth last quarter — and for all of last year — was held back by the sharpest cuts in annual government spending in four decades, the Commerce Department said Friday.

Several factors are expected to exert more of an economic drag this year: Cuts in military and other federal spending. A slower pace of company restocking. Weak or flat pay increases. Sluggish growth in consumer spending.

“Overall, the pickup in growth doesn’t look half as good when you realize that most of it was due to inventory accumulation,” said Paul Ashworth, an economist at Capital Economics, who expects growth to slow to below 2 percent in the first three months of this year.

In the final three months of last year, consumer spending grew at a 2 percent annual rate. That’s up modestly from the third quarter. Consumer spending is important because it makes up 70 percent of economic activity.

Much of the growth was powered by a 14.8 percent surge in sales of autos and other long-lasting manufactured goods.

Incomes, which have been weak all year because of high unemployment, grew at a modest 0.8 percent annual rate. That followed two straight quarters of declining incomes. But unless pay increases pick up, consumers who have dipped into savings in recent months may pull back.

Business restocking, which can vary widely from quarter to quarter, was the greatest contributor to growth in the October-December period. It added nearly 2 percentage points to the gross domestic product, or GDP.

Government spending at all levels fell at an annual rate of 4.6 percent in the fourth quarter and 2.1 percent for the year — the biggest decline since 1971. Sweeping federal defense cuts at the beginning and end of 2011 were a major factor.

The economy is measured by GDP, which covers everything from haircuts to hotel bookings to jet fighters. Friday’s estimate was the first of three for the fourth quarter.

Other data show that in some ways, the economy ended 2011 on a strong note. Companies invested more in equipment and machinery in December. The unemployment rate fell to 8.5 percent last month — the lowest level in nearly three years — after the sixth straight month of solid hiring.

People are buying more cars, and consumer confidence is rising. Even the depressed housing market has shown enough improvement to make some economists predict a turnaround has begun.

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Turkey’s foreign minister has called for the immediate resumption of talks between Iran and major world powers to end the standoff over Tehran’s disputed nuclear program.

Ahmet Davutoglu also said at a joint news conference with Iran’s Foreign Minister Ali Akbar Salehi that Turkey was ready to host and “make any other kind of contribution” to talks between Iran and six countries leading negotiations _ the U.S., Russia, China, Britain, France and Germany.

Salehi said the six powers should enter talks without conditions, otherwise “it is a sign that they do not approve of the negotiations.”

The U.S. and its Western allies suspect Iran wants to develop nuclear weapons. Iran insists its efforts are designed for civilian power generation and research.

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Shares in Research In Motion are sharply higher amid a new report that the BlackBerry maker is considering selling all or parts of the company.

The report, from The Boy Genius Report blog, which closely follows RIM, says South Korean electronics giant Samsung is the frontrunner among possible bidders for assets of the Waterloo, Ont.,-based maker of smartphones and other products.

The Boy Genius Report also says RIM is currently in talks to license its software to other vendors.

It says one of RIM’s biggest assets is its BlackBerry Messenger instant texting service, which would allow Samsung to differentiate itself from the Android operating system that it uses in its smartphones.

Shares in RIM, which has been the subject of takeover or sale rumours for months, were up 61 cents at $17.47 in afternoon trading after been up more than 75 cents in earlier trading.

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The cost of living in the U.S. was probably little changed in December as stores discounted merchandise during the holidays, supporting the Federal Reserve

The European Commission has criticized Belgium’s 2012 budget as too optimistic, indicating that the country has to adopt more austerity measures or risk sanctions.

The country’s finance minister quickly reacted to the Commission’s intervention, saying Friday that the government was determined to meet its fiscal targets this year.

Belgium has promised to cut its budget deficit to 2.8 percent of economic output this year, from around 3.6 percent in 2011. But the Commission, the European Union’s executive, believes the Belgian government won’t be able meet this target unless tax revenues or spending cuts are increased.

The Commission’s criticism of the budget is a particularly sensitive issue in Belgium, where political parties needed more than one and a half years to set up a government, which was finally sworn in in December.

Prime Minister Elio Di Rupo had to balance the demands of the country’s strong Dutch-speaking community, which has been demanding more financial autonomy, and the French-speaking region, which is weaker economically.

But Belgium has one of the highest debt loads in the eurozone and analysts fear that it risks being dragged into the currency union’s debt crisis. Under EU rules, Belgium has to bring its deficit below 3 percent of GDP and spell out how it plans to reduce it debt to below 60 percent of GDP over the long-term, from about 100 percent currently.

“It is normal that the Commission is asking us questions,” Belgian Finance Minister Steven Vanackere told reporters outside the government offices. “The budget was set up at the end of the year at high speed. It was not the normal way to do things.”

He stressed that the government would strive to get its deficit below the 3 percent limit this year. “Belgium has not plans to skirt its responsibilities,” Vanackere said. “We want to _ also for ourselves and not for Europe _ make sure that the deficit gets under the 3 percent payday loans.”

The EU’s Economic Affairs Commissioner Olli Rehn last fall threatened to hit Belgium _ along with Malta and Cyprus countries _ with sanctions under the bloc’s new, stricter budget rules. Two non-euro countries _ Hungary and Poland _ were also suspected of overspending, but they would not face financial penalties.

A spokesman for the Commission said Friday that Rehn’s office was seeking clarification from the governments of all five countries to assess whether their estimates for both revenue and expenditure estimates were “credible.” No decision on sanction had been taken yet, he said, but added that it could come very soon.

The EU’s executive has been taking a much more active role in policing member states’ budgets after lackluster enforcement of the bloc’s budget rules allowed countries like Greece or Italy run up high debts.

Under the new sanctions regime, a country that is not doing enough to reduce its deficit and debt will have to pay an interest-bearing deposit of 0.2 percent of GDP, which could eventually be turned into a fine. The new rules also make it harder for countries to block sanctions against their partners.

Julien Manceaux, an economist at ING in Brussels, said the intervention from the Commission did not come as a surprise, adding that the Belgian government is already set to re-examine this year’s budget in February.

“The Belgian deficit is among the lowest in the eurozone anyway so it is certainly not a reason to panic,” he said. “But it is for sure that markets will keep an eye on the decisions that will be taken again in 2012 to stabilize debt trajectory.”

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Raf Casert and Mark D. Carlson contributed to this article.

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Chinese and Indian manufacturing gauges rose in December, suggesting that Asia

European stock markets headed higher in early trading Monday, while South Korea’s benchmark Kospi closed flat following the New Year’s holiday weekend.

Britain’s FTSE 100 index rose 0.1 percent at 5,572.28. Germany’s DAX was 1.1 percent higher at 5,960.04. France’s CAC-40 rose 0.5 percent to 3,174.76.

South Korea’s Kospi index, which lost 11 percent of its value last year, closed nearly unchanged at 1,826.37. Most other Asian markets were closed for an extended New Year’s holiday.

South Korea’s tech sector move higher, with Samsung Electronics up 2.1 percent and LG Electronics gaining 2.3 percent. Steel giant POSCO slid 1.1 percent and Korea Electric Power shed 1.8 percent.

Taiwan’s TAIEX, which was also open for business Monday, fell 1.7 percent to 6,952.21. Foxconn Technology, the world’s biggest contract electronics manufacturer, which makes iPads and iPhones for Apple Inc., fell 0.9 percent. Personal computer maker Acer Inc. shed 2.3 percent.

Benchmarks in the Philippines and India rose while Indonesia fell.

The Asian-Pacific region’s major benchmarks, including Japan’s Nikkei 225 index, Hong Kong’s Hang Seng Index and Australia’s S&P ASX 200, were closed. Markets in the U.S. are also closed in observance of New Year’s Day.

Last year was one that traders would prefer to forget: most Asian equity indexes closed out 2011 deeply in the red unsecured personal loans. The Nikkei in Tokyo ended the year at 8,429.45 _ its lowest closing since 1982.

China’s benchmark Shanghai Composite Index, closed Monday, endured a 21 percent loss for the year as the impact of Beijing’s multibillion-dollar stimulus faded and the government tightened curbs on lending and investment to cool blistering economic growth.

Hong Kong’s Hang Seng Index finished at 18,434.39 _ a precipitous slide of 19.7 percent from a year ago. Singapore’s Straits Times Index took a 17.5 percent dive when it closed at 2,646.35 on Friday.

Australia’s benchmark S&P ASX 200 ended the year at 4,140.4 _ 14.5 percent lower for 2011.

India’s benchmark Sensex index fell more than 22 percent in 2011, making it one of the worst performers globally. The rupee also lost about 14 percent this year and recently hit an all-time low, breaching 54 rupees to the dollar.

In hopes of reducing volatility and attracting foreign cash, India announced Sunday that it would allow individual foreign nationals to invest directly in its stock market starting Jan. 15. Currently, foreign investors are limited to indirect investments such as mutual funds.

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Gold fell, capping the longest slump since October 2009, and silver tumbled to a three-month low as Europe’s deepening debt crisis drove commodities and stocks lower.

The euro dropped to an 11-month low against the dollar as lending to financial institutions sent the European Central Bank’s balance sheet to a record high. The Standard & Poor’s GSCI index of 24 raw materials and the MSCI World Index of equities were poised for the biggest declines in two weeks.

Platinum approached the lowest since November 2009, and palladium dropped almost 3 percent.

The ECB said lending to euro-area banks jumped 214 billion euros ($276.9 billion) to 879 billion in the week ended Dec. 23, bolstering credit to the economy during the financial turmoil. Gold has slumped 19 percent from a record $1,923.70 an ounce on Sept. 6, partly on sales to cover losses in other markets.

“What’s going on in Europe is very worrying,” James Dailey, who manages $215 million at TEAM Financial Management LLC in Harrisburg, Pa., said in an e-mail. “The dollar’s strength is working against all commodities, including gold.”

Gold futures for February delivery declined 2 percent to settle at $1,564.10 at 1:47 p.m. on the Comex in New York. The price dropped for the fifth straight session, the longest slide since October 2009. The commodity headed for the first quarterly slump since September 2008.

Silver futures for March delivery fell 5 quick guaranteed personal loans.2 percent to $27.234 an ounce on the Comex. Earlier, the price touched $27.10, the lowest since Sept. 26. The metal has plummeted 45 percent from a 31-year high of $49.845 on April 25.

Gold imports by India, the biggest consumer, may drop as much as 50 percent this month after the rupee plunged, according to the Bombay Bullion Association. China restricted gold trading in spot and futures contracts to the Shanghai Gold Exchange and the Shanghai Futures Exchange to crack down on illegal buying and selling of commodities.

Platinum futures for April delivery declined 3.2 percent to $1,392.40 an ounce on the New York Mercantile Exchange. Earlier, the price touched $1,388.60. On Dec. 15, the metal declined to $1,376, the lowest since Nov. 13, 2009.

Palladium futures for March delivery slumped 2.9 percent to 647.15 an ounce on Nymex, the biggest drop since Dec. 14.

This year, gold has advanced 10 percent, heading for the 11th straight annual gain, on demand for an alternative investment amid slumping equities.

“Gold has been one of the best performers this year, so it comes as no surprise that we are seeing some end-of-year profit-taking,” said Ronald Stoeferle, a commodity analyst at Erste Group Bank AG in Vienna.

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