* Bank of America CEO says profitable in Jan, Feb
* GE stripped of top credit rating by Standard & Poor’s
* U.S. retail sales edged lower in February
* World Bank president sees global economy shrinking 1-2%
* U.S. stocks power higher, European stocks gain (For more on the financial crisis, click on [nCRISIS])
By Lewis Krauskopf
NEW YORK, March 12 (Reuters) - A raft of economic and corporate news showing the severity of the global crisis also offered glimmers of stabilizing, and investors seized upon the silver lining on Thursday.
Bank of America reported a return to profit, General Electric was unruffled by a ratings downgrade, U.S. retail sales surprised with only a slight dip and China reported a surge in lending in the face of its economic slowdown.
Stock investors responded by driving the blue-chip Dow Jones industrials index .DJI 3.5 percent higher. The broader S&P 500 index .SPX rose 4.1 percent. [.N] Earlier, the pan-European FTSEurofirst 300 .FTEU3 index of top European shares turned positive, gaining 0.6 percent. [MKTS/GLOB]
Bank of America Corp (BAC.N) provided the week’s latest reassurance from the fragile U.S. banking sector, recipient of massive government bailouts. The largest U.S. bank said it was profitable in January and February.
Bank of America Chief Executive Kenneth Lewis echoed the heads of Citigroup Inc (C.N) and JPMorgan Chase & Co (JPM.N) who said earlier this week their banks were in the black for this year. [ID:nN12368897]
Lewis said Bank of America should be able to ride out the recession without new help from U.S. taxpayers. He also said Bank of America will make money for all of 2009, after reporting the bank’s first quarterly loss in 17 years for the October-to-December period. Its shares rose 18.7 percent.
General Electric Co (GE.N), a manufacturing and financial conglomerate, lost its top-tier credit rating because of the performance of its finance unit, but investors had feared the cut would be worse. [ID:nN12349101] GE said it anticipates no significant operational or funding impact from the change.
GE shares gained 12.7 percent.
U.S. retail sales dipped only 0.1 percent in February, a hint of economic stabilization even though a record 5.3 million workers on jobless benefits indicated households remain under pressure. [ID:nN12352975]
“Clearly the consumer is not completely knocked out,” said Michael Woolfolk, senior currency strategist at the Bank of New York-Mellon in New York. “The difficulty, though, is we still need jobs growth and credit markets to thaw out before we can have a normal recovery.”
Automaker General Motors Corp (GM.N) said it could survive through March without the additional $2 billion in emergency government aid it had requested. [ID:nN12367732]
China’s industrial growth slowed to a record low at the start of the year, but a surge in bank lending in February spurred optimism that the economy could soon rebound. [ID:nPEK73513]
In Japan, revised data showed the fourth-quarter slump for the world’s second-biggest economy was slightly less severe than initially reported, although it still marked the worst contraction since the 1974 oil crisis. [ID:nSP408321]
A transatlantic rift deepened ahead of the weekend’s G20 economic talks, as France and Germany made clear they would not bow to U.S. demands to spend more to to spur a recovery. The European Union is considering lending up to $100 billion to the IMF to help fight the downturn. [ID:nLC522492]
World Bank President Robert Zoellick told Britain’s Daily Mail newspaper he expected the global economy to shrink about 1 percent to 2 percent this year.
“We haven’t seen numbers like that since World War Two, which really means the ‘30s, so these are serious and dangerous times,” he said. [ID:nLC87050]
For two decades self-regulation was the mantra for British and U.S. policymakers, but multibillion-dollar bank bailouts have pulled the rug out from under their light-touch approach.
The chief executive of Britain’s Financial Services Authority, Hector Sants, bared his teeth at a speech to London’s financial community at Thomson Reuters offices. [ID:nLC683059]
“There is a view that people are not frightened of the FSA. I can assure you that this is a view I am determined to correct. People should be very frightened of the FSA,” he said.
In New York, Bernard Madoff, a symbol of the lax regulatory climate blamed in part for the financial crisis, pleaded guilty to charges he orchestrated the biggest swindle in Wall Street history and was ordered to jail to await a sentence that could send him to prison for the rest of his life. [ID:nN05342616]
German industrial output fell a record 7.5 percent in January, its biggest drop since reunification in 1990, as production for the export sector dived, preliminary Economy Ministry figures showed. [ID:nBAF000839]
A study obtained by Reuters from the German Federal Labor Office said recession could push the number of unemployed to 3.7 million this year, a sharp revision of its earlier prediction of 3.3 million. [ID:nBAE001624]
Italy’s economy contracted at the steepest pace in at least 28 years in the fourth quarter, revised data showed Thursday, led by sharp declines in consumer spending and investment. [ID:nLC222861] (Writing by Lewis Krauskopf; Reporting by Reuters bureaus worldwide; additional writing by Georgina Prodhan, editing by Will Waterman, Steve Orlofsky, Jeffrey Benkoe, Gary Hill)