Japan Mulls Sending Warship To Tackle Pirates Off Somalia

TOKYO (AFP)--Japan said Thursday it was considering dispatching a destroyer to waters off Somalia to guard against pirates who are inflicting a costly toll on the shipping industry.

A growing number of nations are sending navy ships to fight pirates near the lawless East African country, with Japan's neighbor and sometime rival China set to dispatch three vessels on Friday.

"Japan has to deal quickly with this issue," Chief Cabinet Secretary Takeo Kawamura, the government spokesman, told a news conference.

But Japan has legal problems with sending warships because of its pacifist post-World War II constitution. Under domestic laws, the navy can only protect ships flying the Japanese flag or carrying Japanese nationals.

"Are the current laws appropriate for a mission like this?" Kawamura said.

"The laws stipulate that, as a general rule, Japanese (military) ships can operate within our territorial waters. But is that OK when we are discussing cooperation with the international community?" he said.

Kawamura said ruling bloc lawmakers will study changes in legislation.

The Mainichi Shimbun, quoting unnamed sources, said Prime Minister Taro Aso may announce a decision on an operation by the end of the year.

BOND REPORT: Treasurys Tread Water; Data Underscore Economic Weakness

By Deborah Levine

Treasury prices traded mostly flat ahead of the Christmas holiday Wednesday, after government reports on joblessness and consumer spending pointed to ongoing strains in the U.S. economy.

Two-year note yields (UST2YR) were little changed at 0.90%, recovering from their earlier decline.

Ten-year note yields (UST10Y) were also little changed at 2.19%.

Initial claims for unemployment benefits rose 30,000 to a seasonally adjusted 586,000 in the week ended Dec. 20, marking the highest level seen for first-time claims since 1982.

A separate report showed a decline of 0.6% in consumer spending during November, though economists surveyed by MarketWatch had been looking for a drop of 0.7%. A measure of consumer inflation excluding energy and food prices was flat in November, as predicted.

Another government report indicated durable-goods orders fell 1% last month, a better performance than the 3% drop that had been forecast.

MARKET SNAPSHOT: U.S. Stocks Make Modest Gains In Light Pre holiday Trading

By Nick Godt

U.S. stocks finished higher after a shortened pre-holiday trading session Wednesday, gaining ground as data on consumer spending and durable goods orders for November came in better than expected.

The New York Stock Exchange closed early at 1 p.m. ET, ahead of the Christmas holiday.

"We're on the plus side, which is sort of a treat, considering that the market has been down for the past five sessions," said Peter Cardillo, chief market economist at Avalon Partners.

The Dow Jones Industrial Average (DJI) gained 49 points, good enough for a 0.6% advance to 8,468, with 22 of its 30 components trading higher.

Shares of General Motors Corp. (GM), hit hard this week, led the blue-chip gains, up 8%.

Automotive rival Toyota Motor Corp. (TM) said that its domestic production dropped 27.2% in November from a year earlier to 288,138 vehicles, the fourth straight monthly decrease.

BOND REPORT: Treasurys Gain As Data Underscore Economic Weakness

By Deborah Levine

Treasury prices rose Wednesday, pushing yields down, after government reports on joblessness and consumer spending pointed to ongoing strains in the U.S. economy.

Two-year note yields (UST2YR) fell 3 basis points, or 0.03%, to 0.88%.

Ten-year note yields (UST10Y) were little changed at 2.18%.

Bond prices move inversely to their yields.

Initial claims for unemployment benefits rose 30,000 to a seasonally adjusted 586,000 in the week ended Dec. 20, marking the highest level seen for first-time claims since 1982.

A separate report showed a decline of 0.6% in consumer spending during November, though economists surveyed by MarketWatch had been looking for a drop of 0.7%. A measure of consumer inflation excluding energy and food prices was flat in November, as predicted.

BOND REPORT: Treasurys Curb Losses On Auto Bailout, Yields Rise

By Laura Mandaro

Treasurys pared their losses in early afternoon trade Friday after some of the euphoria over the U.S. auto bailout moderated, though yields on mid-term maturities made sizeable one-day rises.

The 10-year Treasury note last traded flat, with yields (UST10Y) at 2.08%, roughly in line with levels late Thursday. Yields on the benchmark security, which move inversely to prices, had fallen as much as 0.9% earlier, sending yields 11 basis points higher.

In light and choppy trading ahead of a holiday-shortened week, short to medium term Treasurys (UST2YR) took the brunt of selling. Yields on two-year rose 5 basis points to 0.74%, three-year note yields gained 8 basis points to 1.01% and five-year notes advanced 6 basis points to 1.32%.