Obama says rescue working but U.S. data weak

By John O'Callaghan

WASHINGTON (Reuters) - 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 (GS.N) 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.

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.

In Europe, disappointing earnings at Dutch electronics giant Philips (PHG.AS) added to evidence the recession was still taking its toll, while Swiss bank UBS (UBSN.VX)(UBS.N) was set to cut more jobs.

Intel Corp (INTC.O) 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.

"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.