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Speaking on the economy to a Rotary Club meeting in Fredericksburg, Va., Mr. Bush reinforced his opposition to a federal bailout of lenders and real-estate speculators, but said administration initiatives will help still-creditworthy homeowners renegotiate their mortgages and remain in their homes. "The [Fed's] proposal will be based on detailed analyses of the issues and our statutory authority to address them, and will attempt to adequately protect consumers while maintaining responsible lending markets," Fed chief Ben Bernanke wrote in a response to North Carolina Congressman Brad Miller, who had written Mr. Bernanke about his concerns over subprime loans.

President Bush and Treasury Secretary Henry Paulson began a full- court press to make the administration's case that it has the twin housing and credit situations well in hand.

Speaking on the economy to a Rotary Club meeting in Fredericksburg, Va., Mr. Bush reinforced his opposition to a federal bailout of lenders and real-estate speculators, but said administration initiatives will help still-creditworthy homeowners renegotiate their mortgages and remain in their homes. "It's going to take a while to work through the housing bubble, but we can mitigate some of the issues," Mr. Bush said. "We've got a strategy." Further south, Mr. Paulson told a town hall meeting on the outskirts of Orlando, Fla., that there was no "silver bullet" to solve the country's credit-market problems, though he expressed optimism about several programs that are designed to limit mortgage foreclosures and restoring market stability. The stop was the first of several visits to towns across the country this week to discuss the multipronged efforts by the Bush administration to minimize foreclosures. "The magic here is investors and servicers coming together to deal with an unprecedented situation so we don't have perverse outcomes and so that we don't have a market failure," Mr. Paulson said. With a whiff of recession in the air, it was at least the second time during the Treasury secretary's time in Florida that he described the current market as "unprecedented."

In the meantime, there were more indications that the housing market remains mired in its tough slog. The National Association of Home Builders' index of builder sentiment for sales of new, single-family homes was unchanged at 19 in December, where it was in both October and November. That's the lowest since the inception of the index in 1985, the NAHB said. "At this point, many builders are bracing themselves for the winter months when home buying traditionally slows, scaling down their inventories and repositioning themselves for the time when market conditions can support an upswing in building activity -- most likely by the second half of 2008."

The Federal Reserve intends to use new regulations to address one aspect of the boom and bust in housing, subprime loans. The Fed is slated on Tuesday to propose broad new curbs on such loans, which could limit the kinds of mortgages that can be issued and toughen qualification requirements. "The [Fed's] proposal will be based on detailed analyses of the issues and our statutory authority to address them, and will attempt to adequately protect consumers while maintaining responsible lending markets," Fed chief Ben Bernanke wrote in a response to North Carolina Congressman Brad Miller, who had written Mr. Bernanke about his concerns over subprime loans. The Democratic lawmaker's office released the letter today. Despite all of the cooing from politicians and policy makers, there seems to be continued jitters in global credit markets. To wit: Fears of a year- end money-market meltdown spurred the European Central Bank today to guarantee euro-zone institutions unlimited funds at a fixed rate. The move, which supplies loans for a two-week period that will cover the turn of the year, marks the second time in the central bank's nine- year history that it has preannounced it will meet all bids at a particular rate. The first was Aug. 9, when fears about European banks' subprime exposure pushed up euro-zone overnight lending rates to a peak and prompted the ECB to pump in nearly 95 billion euros in overnight funds. "It's an extraordinary move to guarantee all the bids," said Michael Schubert, an economist with Commerzbank in Frankfurt. "But we have a very abnormal situation over year-end, and so the ECB decided to do something very unusual."

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Mergers Fail to Rally Stocks

A string of deals that harkened back to the frenzied "merger Mondays" that were a familiar component of the recent buyout boom, failed to invigorate shares early Monday. The Dow Jones Industrial Average moved lower by 172.65, or 1.3%, to 13167.20. Meanwhile, the S&P 500 stock index sank by 22.05, or 1.5%, to 1445.90. The tech-heavy Nasdaq composite index suffered a slightly harder fall, dropping by 61.28, or 2.3%, to 2574.46. Treasury prices rose, with the yield on the 10-year Treasury note slipping to 4.15% from 4.24% late Friday. Light, sweet crude futures dropped by 64 cents, or 0.7%, lower at $90.63 a barrel. The dollar weakened slightly against the yen and strengthened slightly versus the euro. Asian and European markets fell sharply.

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Premier Event

Russia's Vladimir Putin showed part of his political hand today by saying he would accept the job of prime minister, though some wonder what other cards he plans to play. Mr. Putin told a confab of his United Russia party that he would accept the premiership, if his handpicked successor -- who asked him to take the position -- wins the country's March 2 presidential vote. That's not exactly a long-shot bet, as Mr. Putin's popularity and the firm hand he keeps on the political system all but ensure the victory of Dmitry Medvedev, a first deputy prime minister, chairman of state-controlled energy giant Gazprom and Putin protege. Even so, the announcement offers some resolution to the Kremlin intrigue that has infused the looming transfer of power as the constitutionally mandated end of Mr. Putin's stint as president approaches. In his statements today, Mr. Putin suggested he wouldn't use his new position to undermine the powers of the presidency, saying "If the citizens of Russia show trust in Dmitry Medvedev and elect him the new president, I would be ready to continue our joint work as prime minister, without changing the distribution of authority." For his part, Mr. Medvedev played up the role Mr. Putin would have, saying "I don't have the slightest doubt that Vladimir Vladimirovich Putin, in the future, will keep using his enormous political and professional resources, his influence both in our society and in the world, for the benefit of Russia and its citizens."

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Deals Galore

Plains Exploration said it is going to sell units to Occidental Petroleum for $1.75 billion and buy back $1 billion in shares. Also Monday, National Oilwell Varco said it agreed to buy oil-equipment company Grant Prideco in a cash-and-stock deal worth about $7.5 billion. And Bristol-Myers Squibb reported it has signed an agreement to sell its medical imaging group to private equity firm Avista Capital Partners for about $525 million. The sale comes two weeks after the company announced as part of its restructuring that it planned to sell the unit.

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Loews to Spin Off Lorillard

Loews announced plans to eliminate its Carolina Group tracking stock and replace it with that of tobacco maker Lorillard, which will be spun off as a separately traded company.

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Current Account Deficit Shrinks

The U.S. current account deficit narrowed to $178.5 billion during the third quarter as exports of capital goods and motor vehicles increased, the Commerce Department reported. Also, the Treasury Department said net foreign buying of long-maturity U.S. securities rebounded to $101.5 billion in October, following sales of $5.2 billion the month before. "U.S. assets are still viewed as a safe place to be in times of turmoil, which is good news for the [dollar]," said BMO Capital Markets analyst Jennifer Lee in a note.

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Appointments in Financial Sector

Hustling to put his stamp on Citigroup, Chief Executive Vikram Pandit named Don Callahan, a longtime colleague and former Morgan Stanley executive, as chief administrative officer. The post has been vacant, but previously was held by Lewis Kaden, who is now a vice chairman at Citigroup. Also on the personnel front, Merrill Lynch plans to bring back former top bond executive Jeffrey Kronthal as a consultant on its portfolio of sub-prime mortgage assets which have triggered huge losses, people close to the firm said. Morgan Stanley named Ellyn A. McColgan as president and chief operating officer of the global wealth management group, effective in April. Ms. McColgan, 53, will be a member of the New York securities firm's management committee and report to co-President James P. Gorman, whom she succeeds. Ms. McColgan most recently was Fidelity Investments' president of distribution and operations.

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Kyrgyzstan's Ruling Party Poised for Victory

Kyrgyzstan's ruling party appeared set to sweep all 90 legislative seats in an electoral landslide that would be another blow to democracy and pluralism in the energy-rich country.

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Suicide Attack Kills Nine in Pakistan

A suicide bomber blew himself up among a group of Pakistani army recruits, killing nine soldiers, the latest in a string of suicide attacks targeting security forces.

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Russia Makes Nuclear-Fuel Shipment

Russia has made its first shipment of nuclear fuel to an Iranian nuclear power plant at the center of the international tensions over Tehran's atomic program, the Foreign Ministry said Monday. The U.S. said the Russian delivery gave Iran another reason to suspend its enrichment program.

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National City Warns of Loan Losses

National City expects to set aside about $700 million to cover loan losses in the fourth quarter, and said it incurred mortgage-related charges of about $200 million in October and November. The Cleveland- based bank also said that its net interest income for the quarter is likely to be "flat to down slightly" compared with the third quarter. Meanwhile, Milwaukee financial services company Marshall & Ilsley expects charge-offs and loan-loss reserves to surge in the fourth quarter as the company continues to review its portfolio and "the real estate segment continues to deteriorate."

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Pilgrim's Pride CEO Dies

The chief executive of poultry producer Pilgrim's Pride Corp. died Monday, two days after suffering a massive stroke. The company said O.B. Goolsby Jr., 60 years old, was stricken Saturday while on a hunting trip with customers in South Texas. He was airlifted to a San Antonio hospital, where he was listed in critical condition Monday in the intensive care unit.

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No Joke: NBC Talk Shows to Return Jan. 2

The "Tonight" show and "Late Night" will return to late-night television with fresh episodes on Jan. 2 without writers supplying jokes to Jay Leno and Conan O'Brien, the shows' respective hosts. NBC, which is a unit of General Electric, said the decision was similar to what happened in 1988, when Johnny Carson brought back the "Tonight" show two months into a writers' strike.

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Lieberman Backs McCain

Sen. Joe Lieberman formally endorsed Sen. John McCain this morning for president, making him the 11th senator to endorse the Arizona lawmaker but the only member of Congress to cross party lines so far in the cycle. "I know it's unusual for a Democrat to be supporting a Republican but there are some things that are more important than the political parties," Mr. Lieberman, whose formal Senate status is independent, said on Fox News. Read more on WSJ.com's Washington Wire Blog.

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Qwest Plans Limited Fiber Upgrade

Qwest's CEO said the company plans to deploy fiber-optic connections to select areas within 20 markets, but unlike rivals has no plans for an Internet TV service.

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Man Profiled in WSJ Is Freed In Nicaraguan Murder Case

American Eric Volz, a surfer turned real-estate broker serving a 30- year jail term in a Nicaraguan prison, was ordered freed Monday after an appeals court threw out his conviction in the murder of his Nicaraguan lover. Mr. Volz, who was the subject of a page one article in The Wall Street Journal in March, was expected to depart Nicaragua immediately, said a Volz family spokeswoman.

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Jersey Jailbreak

The hunt is still on for two men who escaped from a jail in New Jersey's Union County on Saturday night, in a breakout that could have come straight from a screenplay. Authorities surmised that Jose Espinosa, who was awaiting sentencing for manslaughter, and Otis Blunt, who was facing robbery and other charges, had used some sort of tool to remove the cement blocks from two walls -- one from the walls separating their cells and one from the outside wall -- then squeezed through the holes, jumped to a rooftop below and then either scaled -- or ran and jumped from the roof -- over a 25-foot-high fence tipped with razor wire, the Associated Press reports. Though the details of the escape could have come directly from "The Shawshank Redemption" -- the men covered the holes in the wall with pictures of bikini clad women -- the Newark Star-Ledger reports that any comparisons to that film or "Escape from Alcatraz," in which Clinton Eastwood uses dummies and carves a hole through the wall, didn't amuse Prosecutor Theodore J. Romankow. "This isn't fiction; this is real life," said Mr. Romankow, who has ordered his office to review Union County jail's security measures. "It is dangerous for other people, and I don't find it entertaining."

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The Associated Press contributed to this report.

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Write to Matt Phillips at matt.phillips@wsj.com