TOPWRAP 9-Obama says rescue working but U.S. data weak

(For full coverage of the financial crisis [nCRISIS])

* Obama says recovery steps working but retail sales fall
* Goldman sells $5 bln in stock after strong results
* Intel beats forecasts but lack of outlook disappoints
* GM overhaul outside bankruptcy less likely - creditors
* U.S. stocks fall more than 1.5 percent

(Adds Intel results, reporting dates of major U.S. banks)
By John O'Callaghan
WASHINGTON, April 14 (Reuters) - U.S. President Barack
Obama said on Tuesday his economic measures were starting to
work but government data showed an unexpected drop in U.S.
retail sales in March and U.S. stocks retreated sharply.
Goldman Sachs sold $5 billion of stock a day after
the bank sparked confidence with its first-quarter profit,
saying it wanted to pay back $10 billion in government bailout
money it does not need. For more see [nN14414897].
But a source familiar with the Obama administration's
thinking said the U.S. Treasury was worried Goldman's repayment
could make other banks appear weak. [nWEN7159]
In Europe, disappointing earnings at Dutch electronics
giant Philips added to evidence the recession was
still taking its toll, while Swiss bank UBS
was set to cut more jobs. [nLE496533] [nLE404521].
Intel Corp beat forecasts with its results and
said it believed personal computer sales hit bottom in the
first quarter. But the world's top chipmaker did not give a
formal revenue outlook for the current quarter, sending its
shares down 4.6 percent in after-hours trade.
Obama said moves to recapitalize banks, strengthen the
housing market and rescue the auto sector were "necessary
pieces of the recovery puzzle." [nN14428395]
"And taken together, these actions are starting to generate
signs of economic progress," he said in a speech on the moves
taken since he took office. "There is no doubt that times are
still tough. By no means are we out of the woods yet."
Blaming "irresponsibility and poor decision-making that
stretched from Wall Street to Washington to Main Street," Obama
appeared to be trying to reassure Americans of better times
ahead as his presidency nears the symbolic 100-day mark.
His efforts have support, with a Gallup poll released on
Monday showing 71 percent of Americans were confident Obama
will manage the economy properly.

BOOSTING ECONOMIES
The steps by Obama's team to kick-start the world's largest
economy are being closely watched by policy-makers worldwide,
although differences persist about how to stimulate growth and
look after businesses and workers at home.
In Geneva, envoys to the World Trade Organization agreed
there was no imminent threat of tit-for-tat protectionist wars
but also that there was no room for complacency.
Russian Finance Minister Alexei Kudrin said Moscow may
borrow abroad next year for the first time in a decade.
"For us, it will take several years to exit the crisis,"
Kudrin told a ministry meeting.
Spanish Prime Minister Jose Luis Rodriguez Zapatero, who
last week fired his economy minister, said Madrid was ready to
implement more economic stimulus measures if necessary.
U.S. Federal Reserve Chairman Ben Bernanke said there were
hopeful signs, including the latest data on home sales,
homebuilding and consumer spending, as well as sales of new
cars. [nN14413989].
"A leveling out of economic activity is the first step
toward recovery," he said in a speech.
But both Bernanke and White House adviser Christina Romer
said the economy was still contracting. [nN14413913]
Investors will get fresh insights on the health of U.S.
manufacturers on Wednesday with industrial production data that
is expected to show a drop of 1 percent in March, narrower than
the 1.5 percent slide in February.
Over the next week or so, heavyweight industrial companies
including General Electric , United Technologies
and 3M will report quarterly results that are forecast
to feature double-digit falls in profit.
At Caterpillar , the news may be particularly stark,
with most analysts predicting the world's No. 1 maker of
building equipment will be the first blue-chip industrial to
report a quarterly loss in this downturn.
In the banking sector, Goldman's results may raise
expectations for rivals due to report soon, including JPMorgan
Chase on Thursday, Citigroup on Friday and Bank
of America and Morgan Stanley next week.

DATA WEIGHS ON U.S. MARKETS
U.S. stocks [.N] ended down more than 1.5 percent as the
poor numbers for retail sales and falling producer prices
offset better-than-expected quarterly results from healthcare
group Johnson & Johnson . [nN14419657]
General Motors shares fell from earlier highs after
the auto giant's bondholders said completing its restructuring
outside bankruptcy was increasingly unlikely. GM, operating
with $13.4 billion in emergency federal loans, has until June 1
to win concessions from creditors and the auto workers union.
As rival Chrysler [CBS.UL] pins its hopes on a tie-up with
Italy's Fiat , sources said its first-lien lenders were
preparing a counter-offer for the Treasury that may include
equity and cash in exchange for abandoning claims to some $7
billion in debt.
Mexico's auto production and exports fell in March but at a
slower pace than in the previous two months, suggesting the
worst may be over for the sector, industry data showed. Mexico
exports most of the cars it produces to the United States.
Outside Wall Street, shares rose on the Goldman Sachs
results, with European banks especially getting a boost despite
the weak U.S. data. [nLE483692]
"People have been seeing some green shoots," said Georgina
Taylor, equity strategist at Legal & General Investment
Management in London.
"But there's absolutely no evidence that final demand is
recovering. Equity markets are doing what they typically do --
trying to preempt the recovery a couple of quarters ahead."
The dollar <.DXY> and yen rose as the U.S. data and
caution before the string of corporate earnings boosted
safe-haven flows. U.S. Treasury debt prices climbed as
investors moved out of riskier investments.
Oil fell nearly 1.8 percent to $49.16 a barrel.
In trade-dependent Singapore, gross domestic product fell
at a seasonally adjusted annualized pace of 19.7 percent in the
first three months of the year, the trade ministry said.
The city-state's central bank responded to the weak GDP
data and soft export figures by easing monetary policy and
effectively devaluing the Singapore dollar.
But the rate of decline in Singapore's non-oil exports
slowed from January and February and shipments to China rose
for the second straight month. This offered signs that China,
the world's third-largest economy and a major holder of U.S.
government debt, may be headed for a recovery.
"It seems that the first quarter will be the worst and
things will start to get better," said David Cohen at Action
Economics in Singapore.
(Editing by Dan Grebler)
((john.ocallaghan@thomsonreuters.com; Tel: +1 202 789 8015))
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Keywords: FINANCIAL/

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