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Stocks edged lower in early trading Thursday after the government reported that claims for unemployment rose last week, a sign that layoffs are increasing.

First-time applications for unemployment benefits rose last week to 414,000. Economists had expected a slight fall to 405,000. The prior week’s estimate of new claims was also revised higher.

Thirty minutes after the market opened, the Dow Jones industrial average was down 42 points, or 0.41 percent, to 11,373. The Dow jumped 275 points Wednesday after a German court cleared the way for that country’s participation in the bailout of Greece and other European countries.

The Standard and Poor’s 500 index was down 8, or 0.7 percent, to 1,190. The Nasdaq composite fell 12, or 0.5 percent, to 2,536. The Nasdaq had been up in the first few minutes of trading.

Weekly applications for unemployment benefits are a closely-watched figure on Wall Street. Rising claims can add to concerns that the job market is stalled and the U.S. economy is headed for another recession. Applications need to fall below 375,000 to indicate sustainable job growth. Last week the government reported there was zero job growth in the U.S. economy in August.

Not all of the economic news Thursday was negative. American exports of cars, airplanes and other goods reached an all-time high in July, the Commerce Department reported. Economists said the jump in exports suggest future growth in the U.S. economy.

Investors are waiting for two-closely watched speeches Thursday. Federal Reserve Chairman Ben Bernanke will give a speech in the afternoon detailing his outlook for the U.S. economy. President Barack Obama will appear before Congress tonight and lay out his jobs plan.

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The European Union will avoid slipping into recession and is doing all it can to tackle the region’s debt problems, a top official said Monday.

European Commission President Jose Manuel Barroso, who is in Australia on his way to a meeting of South Pacific states, said the 27-nation EU and the euro common currency are resilient and the region will continue to grow, albeit modestly.

“We don’t anticipate a recession in Europe,” Barroso told reporters after a meeting with Australian Prime Minister Julia Gillard and senior ministers. “The latest forecast by the European Commission shows that there will be growth _ modest growth, it’s true.”

“The European Union and euro are strong and resilient and we are doing all it takes from tackling the underlying budget problems to strengthening the governance of the euro zone, from tighter financial regulation to improving our overall competitiveness,” he said.

Disagreements over Greece’s massive budget deficits and how to make up for the funding shortfalls led international debt inspectors to suspend their review and leave Athens last week, as Greek Finance Minister Evangelos Venizelos warned an even deeper recession in his country will hurt its deficit-cutting efforts.

The unexpected departure on Friday of the debt inspectors _ officials from the European Commission, the European Central Bank and the International Monetary Fund _ marked yet another occasion of conflict between international institutions demanding greater reform efforts and a government and country that are reaching their limits.

But Barroso, who heads the EU’s executive arm, said it would be premature to make an assessment now on the Greek government’s latest efforts to tackle debt.

Greece’s troubles are being worsened by a slowing global economy, with growth tapering off in major economies such as Germany, China and the United States.

World business leaders and finance experts gathered in Italy for the annual Ambrosetti Forum at the weekend offered a downbeat assessment of the global economy _ with several predicting another recession due to a calamitous cocktail of sluggish growth, eurozone dysfunction, and financial market volatility.

The Australian government has criticized a lack of political will in Europe to tackle serious economic reform. Deputy Prime Minister Wayne Swan co-wrote an article published in The Financial Times newspaper last month that said a crisis in confidence in policy makers posed a greater challenge than any economic barrier. But Gillard on Monday praised Europe’s efforts to tackle its sovereign debt crisis.

“Australia certainly welcomes the important steps European authorities have taken to address sovereign debt problems and to press on with reform,” she told reporters.

“We know and understand these are difficult decisions, but we know that tough decisions are needed to stabilize financial markets,” she said.

Yet Gillard said she was “not on the same page” with Barroso on the need for a financial transactions tax on the European banking industry. The proposal will be put to a summit of the Group of 20 rich and developing nations in Cannes, France, in November.

While in Australia, Barroso and Gillard agreed to expedite negotiations on a treaty that would formalize Australia’s relationship with the EU.

They also agreed that officials will begin talks about how the EU’s carbon emissions trading scheme can be linked with Australia’s scheme which is scheduled to come into force in 2015.

Barroso is traveling to Auckland, New Zealand, to attend an annual South Pacific leaders’ forum this week.

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Italy’s government, waffling for weeks on an emergency austerity plan, received a stern warning Saturday from the European central bank chief to promptly implement the deficit-fighting measures and to stay on target.

Premier Silvio Berlusconi is caught between trying to placate allies and satisfying both nervous markets and worried European Union officials.

Italy’s Parliament is preparing to take up approval of the package of spending cuts and new taxes which Berlusconi promised will add up to a euro45.5 billion ($64.86 billion) austerity package. But every few days has seen some measures _ including new levies on high-earners and reform of a generous pension system _ dropped to appease coalition partners.

With Italy’s uncertainty, European Central Bank President Jean-Claude Trichet urged Rome to keep to its word and push the package, announced in early August, toward completion.

“It is essential that the target which was announced to diminish the deficit will be fully confirmed and implemented,” Trichet said at an annual economics forum at a Lake Como resort. “This is absolutely decisive to consolidate and reinforce the quality and the credibility of the Italian strategy and its credit worthiness.”

Italy got a boost last month by the ECB when Rome’s borrowing costs dipped, thanks to the central bank’s program of buying peripheral bonds. The intervention helped stem the widening debt costs.

The Italian foreign minister, Franco Frattini, told reporters as he arrived late Saturday at the forum that his government will insist that the ECB keep buying the bonds, the Italian agency LaPresse reported from Cernobbio.

The outgoing central banker deemed as “extremely important” all measures to improve the “flexibility” of Italy’s economy. Both industrialists and union leaders have denounced the austerity plan as relying too much on slashed spending and new taxes and offering little to stimulate the country’s practically flat growth or to encourage job creation.

But the ECB’s own policies were being taken to task on the sidelines of the annual Ambrosetti forum.

“We need more stimulus, we need a weaker euro,” which could spur exports, said New York University economist Nouriel Roubini. “You can’t just talk about austerity.” He urged the ECB to “at least send a signal there is going to be monetary easing” soon.

Asked by The Associated Press to respond to Roubini’s criticism, Trichet, during a brief stroll of the posh lakeside Villa d’Este grounds at lunch time, declined to comment, saying he wouldn’t talk about matters related to policy.

With Berlusconi widely considered to be distracted by a sex scandal linked to his self-acknowledged penchant for young, beautiful women, Roubini expressed concern that whatever the measures are, markets won’t be reassured.

“Italy is always bickering,” the economist, who has warned of a possible double-dip recession in some European countries, told reporters during a break in the closed-door forum sessions.

“Investors have lost credibility in this government,” Roubini added, noting the repeated widening of the spread between Italy’s bond interest rates and that of benchmark German rates.

The latest Berlusconi government proposal to achieve several billion euros in deficit reduction through a crackdown on widespread tax evasion could also rattle the markets since it’s impossible to predict just how much revenue that strategy could achieve.

Earlier in the day, Italian President Giorgio Napolitano echoed Trichet’s call to his country, saying the proposed measures must be quickly “translated into concrete terms” to achieve Berlusconi’s goal of balancing the budget by 2013.

“In effect, we need now and in the near future from Italy clarity and certainty of intentions and of results,” said Napolitano, who noted that an earlier austerity plan in July failed to placate nervous markets.

Napolitano urged Berlusconi’s bickering government to be “coherent and courageous” in meeting the economic crisis. He recalled that Italy, suffering from lackluster productivity, already was lagging before the latest global economic crisis.

“There is no doubt that in general the political (arena) is struggling, in the face of the tensions of the crisis and the risks to which the eurozone is exposed, and that the internal political and social equilibrium of individual countries are being put to a tough test,” Napolitano said in a video hookup from the presidential palace in Rome.

Austria’s former chancellor, Wolfgang Schuessel, went further in characterizing the effects of the crisis on citizens.

“This loss of confidence and trust is much more damaging than any economic data,” he said.

The three-day meeting of bankers, economists and politicians began on Friday and has been marked by generally gloomy assessments of global economic prospects.

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Government-controlled mortgage company Fannie Mae says its second-quarter loss attributable to shareholders widened as it continues to seek out loan modifications to help lower defaults amid the ongoing difficulties in the housing and mortgage markets.

Fannie Mae lost $5.18 billion, or 90 cents per share, for the period ended June 30. That compares with a loss of $3.13 billion, or 55 cents per share, a year earlier.

The quarter included $6.1 billion in credit-related expenses tied to its pre-2009 book of loans cash advance now. Fannie Mae said Friday that it aims to lower its credit losses while keeping as many families as possible in their homes.

The period’s results also included $2.3 billion in dividend payments to the U.S. Treasury.

Revenue climbed to $5.24 billion from $4.5 billion.

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Troubled car maker Saab Automobile AB has received a euro13 million ($18.4 million) car order from a Chinese company that could help pay salaries to its employees, its owner Swedish Automobile AB said Monday.

The company, previously known as Spyker Cars, claimed the deal would provide the ailing car brand with enough funds to also pay back parts of its debt to suppliers, but didn’t reveal the name of the Chinese company.

Last week, Saab said it had run out of cash to pay its 3,700 workers, raising doubts over how long the brand could survive.

Saab spokesman Eric Geers on Monday said the company hopes a prepayment from the Chinese company for the cars will allow it to pay the salaries, which were due last Friday, this week.

Swedish Automobile, which bought Saab from General Motors Co. last year, said it continues to hold talks with several parties to raise more cash for the brand. Among other things, it is in talks to sell and lease back Saab’s real estate.

Shares in Swedish Automobile rose by 21.4 percent to euro1.19 ($1.69) on the Amsterdam Stock Exchange.

Separately, Geers said two union members and Saab’s General Counsel Kristina Geers have resigned from the board of Saab Automobile, leaving Swedish Automobile CEO Victor Muller as the only board member fast payday loan.

“We very much regret the current cash shortage which is causing undeserved hardship to all and we are working relentlessly to resolve the current situation,” Muller said.

Muller said Russian businessman Vladimir Antonov is still interested in investing in Saab, but he has so far failed to receive the necessary approval from the European Investment Bank.

“Antonov can provide much needed financing and/or capital to Swedish Automobile/Saab Automobile at this critical time. We are pushing hard to obtain this vital clearance as soon as practically possible,” Muller said.

EIB spokesman Par Isaksson declined to comment on the bank’s review of Antonov, saying only that it examines all proposals to change the lending agreement thoroughly.

Antonov has previously said he is prepared to invest between $50 million-$150 million in Saab. He was forced out of Spyker as part of its deal with GM amid reports of money laundering. He has denied those allegations and has never been charged.

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Delta Air Lines hastily changed its baggage fees for troops Wednesday after a YouTube video showed soldiers complaining that they had to pay $200 apiece to check extra bags as they made their way home from Afghanistan.

The video was posted Tuesday and was viewed almost 200,000 times before it was removed by the person who put it up. By Wednesday afternoon, a Facebook page called Boycott Delta for Soldiers had sprung up, and the airline was backpedaling and apologizing to the soldiers.

German health authorities say locally-grown beansprouts have been identified as the likely cause of an outbreak of E. coli that has killed 18 people and sickened hundreds in Europe.

Lower Saxony agriculture ministry spokesman Gert Hahne has told The Associated Press an alert will be sent out later Sunday warning people to stay away from eating the sprouts, which are often used in mixed salads.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

HAMBURG, Germany (AP) _ Germany’s health minister is defending his country’s handling of the E. coli outbreak that has killed 18 people and sickened hundreds as he tours a hospital in Hamburg.

Minister Daniel Bahr has admitted that hospitals in northern Germany were struggling to provide enough beds and medical care for patients stricken by the outbreak. But on Sunday he visited the University Medical Center in Hamburg-Eppendorf and defended the efforts of German medical workers.

Bahr told reporters that hospitals have done “everything necessary” to help their patients.

One E. coli survivor told The Associated Press, however, that sanitary conditions at that hospital were horrendous when she arrived with cramps and bloody diarrhea.

German researchers have been unable to pinpoint exactly where or what food was responsible for the deadly outbreak.

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The British Chambers of Commerce pushed back its forecast for when the Bank of England will raise the key interest rate after cutting its growth outlook.

The central bank will raise the rate to 0.75 percent in August from 0.5 percent, BCC Chief Economist David Kern said in an e-mailed statement. The London-based lobby group said in March that the bank would increase the benchmark in May. A separate report showed U.K. house prices fell this month.

The Bank of England’s Monetary Policy Committee is holding off raising interest rates to support the economic recovery, even after inflation accelerated to the more than double its 2 percent target. The BCC sees gross domestic product rising 1.3 percent this year and 2.2 percent in 2012. It previously forecast growth of 1.4 percent and 2.3 percent respectively.

“Although we would prefer to see interest rates held until the fourth quarter, we believe British businesses will be able to absorb small increases,” Kern said in the statement. “But the MPC must act with great caution and must not be too aggressive in its tightening.”

The group sees the Bank of England increasing its key rate to 1 percent this year and 2.75 percent by the end of 2012.

Growth will be slower this year after GDP rose less than forecast in the first quarter, while a higher inflation rate and a faster pace of rate increases will curtail expansion in 2012, the BCC said. It sees growth of 0.3 percent in the current and third quarters and forecasts an acceleration to 0.6 percent at the end of the year.

House Prices

A report from Hometrack Ltd. today showed U.K. house prices fell 0.1 percent in May after demand dropped for the first time in three months. Demand as measured by prospective buyers registering with realtors declined 0.5 percent as “weaker” consumer confidence and two consecutive four-day weekends at the end of last month curtailed activity.

“With concern over household finances and the wider economic outlook, demand for housing is likely to continue to post further modest declines,” Richard Donnell, research director at London-based Hometrack, said in an e-mailed report. “This will result in small single-digit price falls over the coming months and is consistent with our forecast that house prices will end the year down by around 1 percent.”

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A cloud of volcanic ash from Iceland that has caused headaches for air travelers spread to Germany on Wednesday, forcing the closure of Berlin’s airports and disrupting hundreds of flights, but experts said the eruption appeared be winding down.

European air traffic controllers said they expect about 700 flights to be canceled on Wednesday, but Eurocontrol added the ash cloud from Iceland’s Grimsvotn volcano appeared to be dissipating and traffic in European airspace could return to normal Thursday.

The cloud forced the cancellation of hundreds of flights over Britain on Tuesday as winds blew the ash over Scotland, but British airspace was largely clear on Wednesday.

In Iceland, a volcano expert said that observers at the crater were reporting only steam, an indication that the eruption could be nearing its end.

“It’s not over,” said Pall Einarsson, from the University of Iceland. “But it’s declining rapidly.”

German air traffic control ordered all flights to and from Berlin’s Tegel and Schoenefeld airports, stopped at 11:00 a.m. (0900GMT). Airports in Bremen, Hamburg and Luebeck, have already been closed for hours, causing hundreds of flights to be struck. The flight ban is expected to remain in place for much of Wednesday, Eurocontrol said. Sweden saw some 20 flights canceled.

While experts say particles in the ash could stall jet engines and sandblast planes’ windows, many argue the flight bans are a massive overreaction by badly prepared safety regulators.

A British Airways test flight passing through the affected area was unaffected, said Willie Walsh, the chief executive of International Airlines Group _ formed from the merger of BA and Iberia.

“We flew in the red zone for about 45 minutes at different altitudes over Scotland” and the north of England, Walsh told BBC radio cheap pay day loans. “All the filters were removed and will be sent to a laboratory for testing. The simple answer is that we found nothing.”

Irish budget airline Ryanair has also challenged the results, saying Tuesday it had sent its own airplane into Scottish airspace and found no ash in the atmosphere.

But, German transport minister Peter Ramsauer insisted the precautions were justified, and said that authorities were better prepared after the Eyjafjallajokull volcano eruption last year forced the closure of European air space for five days, stranding millions.

“We have developed a very refined regulation since the big ash cloud last April,” Ramsauer told ARD public broadcaster. “We are much better prepared to handle such a situation.”

Last year, European aviation authorities closed vast swaths of European airspace as soon as they detected the presence of even a small amount of volcanic ash in the atmosphere. This year, they are trying a more sophisticated approach.

Aviation authorities will give airlines information detailed information about the location and density of ash clouds. Any airline that wants to fly through the ash cloud can do so, if it can convince its own national aviation regulators it is safe.

The Grimsvotn volcano began erupting on Saturday, sending clouds of ash high into the air.

The main international body representing carriers, the International Air Transport Association, complained to the British government Tuesday about the way it had handled the issue, saying it should have had Cessna planes ready to carry out tests, instead of relying on the weather service.

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Much of central China is enduring its worst energy crisis in years, with factories and residents facing power cuts as supply runs short of demand _ a problem worsening as drought dries rivers, reducing hydroelectric capacity.

Authorities are warning that manufacturers in booming industrial regions west of Shanghai may face even tighter power rationing when demand surges in the peak summer months while electricity generators curb output due to rising costs for coal and oil.

Though summer rains may eventually relieve the drought, with even the powerful Yangtze river running too low for shipping in some stretches, China appears to be hitting limits to its growth in a resource scarce-environment. The power crunch comes at time when worries over inflation make rising energy costs and crop failures less welcome than ever.

Hydroelectricity provides about one-fifth of China’s power and with river beds running dry it has fallen by about 20 percent, according to a report by UBS analyst Tom Price.

The industry group China Electricity Council has estimated a power shortfall of 30 million kilowatts in the summer. That is only 3 percent of China’s generating capacity, but the shortages are concentrated in key manufacturing regions such as Zhejiang and Jiangsu, near Shanghai.

Last week, the government ordered a suspension of diesel exports to help prevent shortages as factories hit by outages step up use of fuel-powered generators.

According to industry reports, petrochemical and plastics manufacturers and smaller factories are among those most affected. But Shanghai-based Baosteel Group, one of the country’s biggest steel makers, is also among companies ordered to prepare for cutbacks, state media reported Tuesday.

Fast-growing China has long experienced periodic power shortages, especially in winter and summer when weather extremes boost demand for heating and cooling. But the problems this year stem mainly from a failure of government-controlled electricity rates to keep pace with the costs paid by utilities for the coal that fuels about three-quarters of the country’s electricity generation cash advance to savings account.

Power companies are reluctant to invest in new projects, while many older, heavily polluting thermal plants are being closed down to help meet environmental targets.

The amount of new installed capacity is due to fall by 10 million kilowatts next year, compared to this year, while demand continues to climb at double-digit rates, Hu Zhaoguang, vice president of State Grid Energy Research Institute, said in comments posted on the Energy Research Observation Net.

The regional power distributor East China Grid Co. estimates that power shortages may reach 19 million kilowatts this summer in Shanghai and four other nearby provinces, the newspaper China Daily reported Tuesday.

The worst will be a shortfall of more than 11 million kilowatts, or 16 percent of total demand, in Jiangsu, upriver from Shanghai along the Yangtze, where drought has sapped water levels to their lowest ever at some points, stalling shipping.

The drought has left nearly 1,400 lakes in Hubei, in central China, so low they are unusable or virtually “dead,” the provincial Water Resources Department said.

It said some 315,000 people and 97,300 head of livestock were short of drinking water.

The Yangtze Power Co., which runs the world’s largest hydroelectric facility at the Three Gorges Dam, has been releasing extra amounts of water to help raise the water level downstream, but so far there was no real improvement, said Zhan Jianying, director of the Waterway Management department at the Yangtze Waterway Bureau in Hubei’s capital, Wuhan.

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