Dow, S&P rise, but Nasdaq sours with Apple in wild day

NEW YORK (Reuters) - A volatile trading session ended with U.S. stocks mostly higher on Wednesday, even as Apple, the most valuable company in the United States, suffered its worst day of losses in almost four years.

In a strange occurrence, Apple accounted for the entirety of the Nasdaq 100's <.ndx> fall of 1.1 percent, while the Dow industrials - which do not include Apple as a component - enjoyed the best day since November 28.

With the drop, Apple shed nearly $35 billion in market capitalization, its biggest one-day market-cap loss ever. The company's market value, or market capitalization, now stands at $506.85 billion.

"Today's move is because of index weightings, with the Nasdaq down because of Apple's decline," said Rex Macey, chief investment officer of Wilmington Trust in Atlanta. "The S&P is up because Apple isn't as big a weight in that index, and the Dow is up even more because it isn't there at all."

The broad market seesawed, with the S&P 500 dropping into negative territory before it rebounded off the 1,400 level, seen as a key support point over the past two weeks. Investors cited comments from President Barack Obama suggesting a potential near-term resolution to the "fiscal cliff" wrangling in Washington as a catalyst for the rebound.

Shares of The Travelers Cos Inc rose 4.9 percent to $74. The stock ranked as the Dow's top percentage gainer after the insurance company said it intended to resume stock buybacks it had temporarily suspended while it assessed its exposure to Superstorm Sandy. The company also said a preliminary estimate of net losses from Sandy was about $650 million after tax.

The Dow Jones industrial average <.dji> rose 82.71 points, or 0.64 percent, to 13,034.49 at the close. The Standard & Poor's 500 Index <.spx> gained 2.23 points, or 0.16 percent, to 1,409.28. But the Nasdaq Composite Index <.ixic> fell 22.99 points, or 0.77 percent, to end at 2,973.70.

Apple, the largest U.S. company by market capitalization and a big weight in both the S&P 500 and the Nasdaq, fell 6.4 percent to $538.79. Apple is down more than 20 percent from an all-time high reached in late September, putting the stock into bear market territory.

Banking shares were led higher by a 6.3 percent jump in Citigroup to $36.46 after the company said it would cut 4 percent of its workforce. The S&P financial sector index <.gspf> climbed 1.3 percent, and Bank of America hit a 52-week high of $10.55 before pulling back slightly. The stock, a Dow component, ended at $10.46, up 5.7 percent for the day.

Cyclical sectors, which are tied to the pace of economic growth, rallied on optimism about progress on a solution to avoid the fiscal cliff. An S&P index of industrial stocks <.gspi> rose 1.1 percent, buoyed by Caterpillar Inc , up 2.2 percent at $86.05, while an S&P index of energy shares <.gspe> climbed 0.7 percent. The Dow Jones Transportation Average <.djt> gained 0.9 percent, with CSX Corp jumping 2.7 percent to $20.16.

Still, Apple struggled throughout the session. Market participants cited a host of reasons for the drop in the iPad maker's stock, including a consultant's report about the company losing share in the tablet market and reports that margin requirements had been raised by at least one clearing firm, as well as year-end tax selling ahead of a possible rise in capital-gains tax rates next year.

On the Washington front, Obama told the Business Roundtable, a group of chief executives, on Wednesday that a fiscal cliff deal was possible "in about a week" if Republicans acknowledged the need to raise taxes on the wealthiest Americans.

Equities have struggled to gain ground recently because of concerns over the fiscal cliff - a series of mandatory spending cuts and tax increases effective in early January that could push the U.S. economy into recession next year. Recently equities have moved on any whiffs of sentiment from Washington in headlines about negotiations.

"Obama's comments generated a lot of optimism, but to the extent the market believes them, that's how much we're setting ourselves up for a decline if that deadline passes with no progress," said Macey, who helps oversee about $20 billion in assets.

In an interview on CNBC after the market closed, U.S. Treasury Secretary Tim Geithner said that uncertainty over the fiscal cliff was standing in the way of stronger economic growth, and that there was no prospect for an agreement if tax rates didn't rise on the wealthiest taxpayers.

The stock of Freeport-McMoRan Copper & Gold Inc fell 16 percent to $32.17 and ranked as the S&P 500's biggest percentage decliner. The company said it was acquiring Plains Exploration & Production Co and McMoRan Exploration Co in two separate deals for $9 billion in cash and stock in a major expansion into energy.

McMoRan Exploration soared 87 percent to $15.82 and Plains surged 23.4 percent to $44.50.

About half of the stocks traded on the New York Stock Exchange closed in positive territory, while about 54 percent of Nasdaq-listed shares ended lower.

Volume was higher than it has been in recent sessions, with about 6.93 billion shares changing hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, above the daily average so far this year of about 6.48 billion shares.

(Editing by Jan Paschal)

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Typhoon Bopha Kills Hundreds in Philippines

Bullit Marquez/Associated Press

A resident hung clothing amid fallen trees and debris on Wednesday, a day after Typhoon Bopha made landfall in the village of Andap, in southern Philippines. More Photos »

MANILA — With many roads and bridges washed away, rescue teams struggled Wednesday to reach isolated villages in the southern Philippines after a powerful out-of-season typhoon tore through the region, leaving more than 270 people dead and hundreds more missing, officials said.

Typhoon Bopha packed winds of up to 100 miles per hour when it struck Tuesday, bringing torrential rains that washed away villages and left thousands homeless.

The deaths were concentrated in the province of Compostela Valley, a mountainous gold mining area, and the neighboring province of Davao Oriental, on the eastern coast of the southern Philippine island of Mindanao, Lt. Col. Lyndon Paniza, a military spokesman, said in a telephone interview late Wednesday afternoon.

A national disaster official, Benito Ramos, said at a news conference on Wednesday afternoon that 274 people had died, 339 were injured and 279 were missing. Those figures were likely to rise, he suggested, since rescue workers had not yet reached several villages in the hardest-hit areas and the casualties there were not known.

Most of the dead appeared to have drowned or been hit by falling trees or flying debris, officials said.

“There is debris in the road, so our soldiers are moving by foot,” Colonel Paniza said. “They are crossing rivers and landslides. I don’t want to speculate, but we don’t know what they will find when they reach those cut off areas.”

Three soldiers are known to have died, and eight are missing, he said. Some of the soldiers died when a landslide washed out their patrol base, and others disappeared while on search-and-rescue operations.

Local television crews broadcast grisly footage of mud-covered bodies being loaded into trucks in villages that appeared flattened by the storm. In some areas, not a single structure could be seen standing.

In areas where roads were washed out, the government sent seagoing vessels to take relief goods to remote coastal areas from the provincial capital of Davao Oriental, Mati.

“I have thus authorized the local government of Mati, its mayor and the provincial governor to use their calamity funds to hire all available large, local fishing boats for an immediate sea-lift transfer of goods to the affected areas,” Manuel Roxas, the interior secretary, said in a statement.

The eastern coast of Mindanao, which was the area hardest hit by the storm, is a remote, impoverished agricultural area. Mr. Roxas told reporters on Wednesday that during his visit to the area, he had seen tens of thousands of fallen coconut trees and many acres of destroyed banana plantations.

In New Bataan, the town hit hardest by the storm, Virgilia Babaag had been waiting nervously in her home before dawn on Tuesday as hard rain from the approaching typhoon pounded her small village.

“My neighbors started yelling, ‘The water is coming fast! Run! Run!’ ” she said Wednesday by telephone.

Ms. Babaag gathered up her three young nieces staying with her and ran through the night toward high ground. There she stayed with dozens of others as winds ripped through the town.

“When I came back, my roof was gone,” she said from her devastated home. “The houses around my place are destroyed. There are so many who have died here. The soldiers are still finding more.”

The Philippines is hit by as many as 20 powerful tropical storms each year, but this one struck remote communities south of the usual typhoon path.

“This is the first time that the people in this area have experienced a storm like this,” Colonel Paniza said. “They aren’t accustomed to big storms.”

Last December, Tropical Storm Washi — another out-of-season storm that hit south of the usual Philippine typhoon belt — killed more than 1,200 people and left hundreds of thousands homeless.

This year, officials put out strong warnings days in advance and carried out mandatory early evacuations of vulnerable communities.

President Benigno S. Aquino III, stung by criticism last year that the national government had not done enough to prepare for Tropical Storm Washi, went on television the day before the storm hit and pleaded with people to follow the instructions of local government officials.

“I am facing you now because the incoming storm is no laughing matter,” Mr. Aquino said, adding later, “We expect the cooperation of everyone so that nobody gets in harm’s way.”

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Microsoft #DroidRage Tweet Shows How Malware Has Moved Past Windows

“Do you have an Android malware horror story?” Microsoft asks through its @windowsphone Twitter account, in what may be one of the most ironic tweets of the year.

After all, it wasn’t that long ago that “virus” and “worm” stories made headlines on a regular basis, all of them about “computer viruses” which were really Windows viruses. Just a few years ago, Apple advertised the fact that a Mac “Doesn’t get PC viruses” as a reason to buy one.

But this year, 600,000 Macs were infected by the Flashback trojan, an epidemic which exceeded the scale of history’s single largest Windows infection. And now ​Microsoft​ is implying that its phones don’t get malware, as a way to advertise them. How did things get to be this way, and what will malware and virus authors do next?

​When virii attack

For years, Microsoft’s DOS and Windows operating systems were the biggest targets for virus and malware authors simply because they were the least secure. Today’s PC security best practices had yet to be built into them, and trying to bolt features on to ancient programming code was a half-baked solution at best. HugeWindows malware epidemics spread as the malware programs were able to install themselves without explicit permission and operate without user intervention.

​Network effects

One reason Microsoft Windows dominated the computing world for years and years was simply because it was dominant. More people using Windows meant more profits for Windows app developers, which meant more games and apps for Windows, which meant more people buying Windows PCs so they could use Windows games and apps.

Like with apps, malware is a business that makes money for the people who write it. And while it was theoretically possible to infect a computer running a more secure operating system, like OS X (used on Macs) or Ubuntu (powered by Linux), it was considered impossible to get it to spread far enough to be profitable. Whereas on Windows it was (and still is) possible to infect vast numbers of PCs, even chaining them into zombified “botnets” which act as supercomputers-for-hire.

​How the mighty have fallen?

OS X’s more secure design makes it extremely hard to infect with malware — normally. The Flashback trojan sneaked in this year using the Java web browser plugin, which is bundled with the Mac’s Safari web browser and was poorly maintained.

Plugins like Java and Flash open up new ways to infect a computer, which was one reason why Apple stopped including the Flash plugin (already absent on its iPhone and iPad) by default. Apple created a fix for the problem, but not before over half a million Macs were infected.

​What about on smartphones?

Unlike Apple and Microsoft’s app stores, the Google Play store allows anyone to submit anything with no review. It’s up to Android smartphone and tablet users to look at the “permissions” each game or app requests, as well as the reputation of their developers, and decide whether or not to install them.

While some consider this approach more “trustworthy” and respectful of users, it’s also helped lead to a comparatively enormous number of malware infections on Android, including “The Mother of All Android Malware,” which completely took over tens of thousands of phones last year.

​Are you #DroidRage-ing yet?

Microsoft’s tweet says “we may have a get-well present” for people who send it their best or worst stories of Android malware. Even if all the apps in the Windows Store are virus-free, however, there are still far fewer of them than there are for Android.

Jared Spurbeck is an open-source software enthusiast, who uses an Android phone and an Ubuntu laptop PC. He has been writing about technology and electronics since 2008.
Social Media News Headlines – Yahoo! News

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Kate Receives Hospital Visit from Pippa and James

12/05/2012 at 07:30 PM EST

James and Pippa Middleton

Alpha /Landov; Inset:Allpix/ plash News Online

The Duchess of Cambridge had more hospital visitors on Wednesday.

Just two days after husband Prince William, 30, was photographed leaving the King Edward VII Hospital in Central London where a pregnant Kate, 30, was admitted for hyperemesis gravidarum, her sister, Pippa Middleton, brother James and mom Carole (not pictured), also dropped by to keep the mom-to-be company.

Pippa was bundled up in a coat, sporting a tan-colored ensemble, while her brother was casually dressed in jeans and layered tops.

The Palace announced the Duchess's pregnancy Monday in a statement. "Their Royal Highnesses The Duke and Duchess of Cambridge are very pleased to announce that The Duchess of Cambridge is expecting a baby," it said. "The Queen, The Duke of Edinburgh, The Prince of Wales, The Duchess of Cornwall and Prince Harry and members of both families are delighted with the news."

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Study could spur wider use of prenatal gene tests

A new study sets the stage for wider use of gene testing in early pregnancy. Scanning the genes of a fetus reveals far more about potential health risks than current prenatal testing does, say researchers who compared both methods in thousands of pregnancies nationwide.

A surprisingly high number — 6 percent — of certain fetuses declared normal by conventional testing were found to have genetic abnormalities by gene scans, the study found. The gene flaws can cause anything from minor defects such as a club foot to more serious ones such as mental retardation, heart problems and fatal diseases.

"This isn't done just so people can terminate pregnancies," because many choose to continue them even if a problem is found, said Dr. Ronald Wapner, reproductive genetics chief at Columbia University Medical Center in New York. "We're better able to give lots and lots of women more information about what's causing the problem and what the prognosis is and what special care their child might need."

He led the federally funded study, published in Thursday's New England Journal of Medicine.

A second study in the journal found that gene testing could reveal the cause of most stillbirths, many of which remain a mystery now. That gives key information to couples agonizing over whether to try again.

The prenatal study of 4,400 women has long been awaited in the field, and could make gene testing a standard of care in cases where initial screening with an ultrasound exam suggests a structural defect in how the baby is developing, said Dr. Susan Klugman, director of reproductive genetics at New York's Montefiore Medical Center, which enrolled 300 women into the study.

"We can never guarantee the perfect baby but if they want everything done, this is a test that can tell a lot more," she said.

Many pregnant women are offered screening with an ultrasound exam or a blood test that can flag some common abnormalities such as Down syndrome, but these are not conclusive.

The next step is diagnostic testing on cells from the fetus obtained through amniocentesis, which is like a needle biopsy through the belly, or chorionic villus sampling, which snips a bit of the placenta. Doctors look at the sample under a microscope for breaks or extra copies of chromosomes that cause a dozen or so abnormalities.

The new study compared this eyeball method to scanning with gene chips that can spot hundreds of abnormalities and far smaller defects than what can be seen with a microscope. This costs $1,200 to $1,800 versus $600 to $1,000 for the visual exam.

In the study, both methods were used on fetal samples from 4,400 women around the country. Half of the moms were at higher risk because they were over 35. One-fifth had screening tests suggesting Down syndrome. One-fourth had ultrasounds suggesting structural abnormalities. Others sought screening for other reasons.

"Some did it for anxiety — they just wanted more information about their child," Wapner said.

Of women whose ultrasounds showed a possible structural defect but whose fetuses were called normal by the visual chromosome exam, gene testing found problems in 6 percent — one out of 17.

"That's a lot. That's huge," Klugman said.

Gene tests also found abnormalities in nearly 2 percent of cases where the mom was older or ultrasounds suggested a problem other than a structural defect.

Dr. Lorraine Dugoff, a University of Pennsylvania high-risk pregnancy specialist, wrote in an editorial in the journal that gene testing should become the standard of care when a structural problem is suggested by ultrasound. But its value may be incremental in other cases and offset by the 1.5 percent of cases where a gene abnormality of unknown significance is found.

In those cases, "a lot of couples might not be happy that they ordered that test" because it can't give a clear answer, she said.

Ana Zeletz, a former pediatric nurse from Hoboken, N.J., had one of those results during the study. An ultrasound suggested possible Down syndrome; gene testing ruled that out but showed an abnormality that could indicate kidney problems — or nothing.

"They give you this list of all the things that could possibly be wrong," Zeletz said. Her daughter, Jillian, now 2, had some urinary and kidney abnormalities that seem to have resolved, and has low muscle tone that caused her to start walking later than usual.

"I am very glad about it," she said of the testing, because she knows to watch her daughter for possible complications like gout. Without the testing, "we wouldn't know anything, we wouldn't know to watch for things that might come up," she said.

The other study involved 532 stillbirths — deaths of a fetus in the womb before delivery. Gene testing revealed the cause in 87 percent of cases versus 70 percent of cases analyzed by the visual chromosome inspection method. It also gave more information on specific genetic abnormalities that couples could use to estimate the odds that future pregnancies would bring those risks.

The study was led by Dr. Uma Reddy of the National Institute of Child Health and Human Development.

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Online:

Medical journal: http://www.nejm.org

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Marilynn Marchione can be followed at http://twitter.com/MMarchioneAP

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Wall Street slips as investors seek cliff progress

NEW YORK (Reuters) - Stocks finished slightly lower in a quiet session on Tuesday as the back-and-forth wrangling over the "fiscal cliff" gave investors little reason to act.

Trading volume was light as legislators continue to negotiate a deal to avoid a $600 billion package of tax hikes and federal spending cuts that would begin January 1 and could push the economy into recession.

Just 5.86 billion shares changed hands on the New York Stock Exchange, the Nasdaq and the NYSE MKT, below the year's daily average of 6.48 billion shares.

A key measure of investor anxiety has remained muted. The CBOE Volatility Index or VIX <.vix>, a gauge of market anxiety, was at 17.12, up 2.9 percent. It has not traded above 20 since July.

Optimism for progress was dented after remarks by President Barack Obama, who rejected a Republican proposal to resolve the crisis as "out of balance" and said any deal must include a rise in income tax rates on the wealthiest Americans.

"People don't know if what's going on is political posturing or real negotiations that represent progress," said Bernard Baumohl, managing director and chief global economist at the Economic Outlook Group in Princeton, New Jersey.

Expectations of higher taxes on dividends beginning in 2013 have pushed many companies to pay special dividends this year or advance their next payback to investors. Coach became the latest to move up the date of its next dividend payment, and the news lifted shares of the upscale leather-goods maker earlier in the session. By the close, though, Coach was down 1.2 percent at $57.52.

One of the S&P 500's top sectors for the day was health care <.gspa>, considered a defensive group.

The Dow Jones industrial average <.dji> fell 13.82 points, or 0.11 percent, to 12,951.78 at the close. The Standard & Poor's 500 Index <.spx> dipped 2.41 points, or 0.17 percent, to 1,407.05. The Nasdaq Composite Index <.ixic> shed 5.51 points, or 0.18 percent, to close at 2,996.69.

The market has been sensitive to rhetoric from Washington, as a failure to reach an agreement could send the U.S. economy back into recession. Still, many expect a resolution to be found, which could extend the S&P 500's rally of 12 percent so far this year.

Differences within the Republican Party came to the fore on Tuesday as one senator opposed to raising taxes lashed out at Republican House Speaker John Boehner for proposing to increase revenue by closing some tax loopholes.

Congressional Republicans recently proposed steep spending cuts to bring down the budget deficit, but gave no ground on Obama's call to raise tax rates on the rich. The proposal was quickly dismissed by the White House.

"We're on hold trying to figure it out, but investors are stressed since they have to make decisions soon about how to proceed with their investments if taxes are indeed going up. We could see a real pick-up in volume over the next week or so," Baumohl said.

Netflix Inc was the S&P 500's top percentage gainer, advancing 14 percent to $86.65 after Walt Disney Co agreed to give the company exclusive TV distribution rights to its movies, starting in 2016.

Intel Corp shares rose 2.2 percent to $19.97 after the top chipmaker sold $6 billion in bonds to fund stock buybacks and other business activities.

Darden Restaurants Inc shares plunged 9.6 percent to $47.40 as the S&P 500's worst performer after the company warned that its latest quarter would miss expectations after unsuccessful promotions led to a decline in sales at its Olive Garden, Red Lobster and LongHorn Steakhouse chains.

In contrast, Big Lots Inc surged 11.5 percent to $31.27 after the close-out retailer posted a smaller-than-expected loss and boosted its full-year adjusted earnings forecast.

MetroPCS Communications shares tumbled 7.5 percent to $9.96 after Sprint Nextel appeared unlikely to make a counter-offer for the wireless service provider.

Almost half of the stocks traded on the New York Stock Exchange closed lower, while 50 percent of Nasdaq-listed shares closed in negative territory.

After the closing bell, Pandora Media Inc

shares plunged 23 percent after the company reported its third-quarter results.

(Editing by Jan Paschal)

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32% of Young People Use Social Media in the Bathroom

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How Adriana Lima Got Her Body Back for the Victoria's Secret Fashion Show

Jennifer Graylock/JPI

With just eight weeks between the birth of daughter Sienna and the annual Victoria’s Secret Fashion Show, Adriana Lima wasted no time hitting the ring.

Taking three weeks off to recover from the delivery, Lima had the five remaining weeks to prepare — and she did, following an intense workout plan designed by her trainer of six years, Michael Olajide, Jr. of Aerospace NYC. According to the model’s fitness guru, Lima’s “working weight” varies depending on what project she’s working on, but for the brand’s big event, “she wanted to be more defined and athletic.”

But before the bombshell could start Olajide’s cardio muscle aeroboxing endurance plan, “her doctor had [to give] her a clear pass to do everything we’d done together before,” he explains. ”Adriana’s metabolism had slowed down, and that’s what happens when you’re nesting, but we had to get her burning 24/7.”

He’s not kidding: “We were doing four to six hours every day, seven days a week,” Olajide shares.

Starting at 9 a.m., Lima’s twice-daily workouts included 20 to 30 minutes on an exercise bike, followed by 20 to 30 minutes of core work and a “quick-reflex” shadowboxing routine created by Olajide, a former middleweight boxing champion. Next, the mom-of two would don real boxing gloves and practice punching combinations to learn speed and power, followed by glute and leg sculpting exercises, and a rigorous jump-roping routine finished with stretching.

Sound exhausting? That’s just her morning workout. “She’d head home to be with the family and the babies and then, pow! She’d come back that night from 5 to 8 p.m.,” he marvels. “It was incredible to see that type of dedication and fortitude.”

Although Lima came under fire for her pre-show diet last year, Olajide ensures she’s responsible about her health.

“Adriana enjoys her food. She eats anything from chocolate mousse to steak and hamburgers,” he says. “But when it’s time to prepare for something, she has the discipline to prepare for it.”

This time around, that also meant working with a nutritionist to cut out salt and seasonings, and eating steamed dark greens and lean proteins. ”It was a roller coaster, but she’s a fighter. She just bit down on her mouthguard and got it done.”

The Victoria’s Secret Fashion Show airs Tuesday at 10 p.m. EST on CBS.

– Catherine Kast

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Study: Drug coverage to vary under health law

WASHINGTON (AP) — A new study says basic prescription drug coverage could vary dramatically from state to state under President Barack Obama's health care overhaul.

That's because states get to set benefits for private health plans that will be offered starting in 2014 through new insurance exchanges.

The study out Tuesday from the market analysis firm Avalere Health found that some states will require coverage of virtually all FDA-approved drugs, while others will only require coverage of about half of medications.

Consumers will still have access to essential medications, but some may not have as much choice.

Connecticut, Virginia and Arizona will be among the states with the most generous coverage, while California, Minnesota and North Carolina will be among states with the most limited.

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Online:

Avalere Health: http://tinyurl.com/d3b3hfv

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Fed officials laud stimulus, quibble over future plans

NEW YORK/LITTLE ROCK, Arkansas (Reuters) - Central bankers appear satisfied with the impact of their latest monetary stimulus, though there is some disagreement over how forcefully to continue purchasing bonds, remarks by two top policymakers on Monday showed.

Boston Federal Reserve Bank President Eric Rosengren, one of the most vocal proponents of Fed asset purchases, said there was a "strong case" for the Fed to stay the course on accommodative policies next year and continue buying a total of $85 billion in bonds each month.

In September, the Fed announced an open-ended bond buying scheme that began with $40 billion per month in mortgage-backed securities.

That new effort to boost the economy comes on top of a separate program in which the Fed was buying $45 billion of longer-term Treasury securities per month with proceeds from sales of a like amount of shorter-term debt.

The latter plan, known as Operation Twist, is set to expire at the end of this month, and most analysts expect the central bank to substitute an equal amount of long-term Treasury buying.

However, James Bullard, president of the St. Louis Fed, argued the central bank should not replace its expiring 'Operation Twist' program on a dollar-for-dollar basis. He said purchases that expand the Fed's $2.8 trillion balance sheet would have a bigger effect than Twist, which does not add to the balance sheet.

"If the goal is to keep policy on its present course, the replacement rate should be less than one-for-one," Bullard told the Little Rock Chamber of Commerce, suggesting $25 billion as an adequate monthly amount.

THRESHOLDS

Whether to expand the Fed's balance sheet further will be a key topic of debate at Fed policymakers' next meeting on December 11-12. Also under consideration: tweaking Fed communications by adopting numerical thresholds for inflation and joblessness to signal when rates might rise.

Bullard on Monday said he supported the adoption of such thresholds as long as the Fed can address his concerns, especially his worry that the Fed is seen as trying to target unemployment. That approach was badly discredited in the 1970s, he said, when rates were kept low to boost jobs and inflation skyrocketed.

Bullard had previously sounded more skeptical on thresholds, saying they could rob the central bank of flexibility.

But the idea has recently gained traction, with Fed Vice Chair Janet Yellen voicing strong support for the idea, first advocated by Chicago Fed President Charles Evans a year ago.

Evans wants the Fed to keep rates low until unemployment drops to at least 6.5 percent, as long as inflation does not threaten to rise above 2.5 percent. Minneapolis Fed President Narayana Kocherlakota and Boston Fed's Rosengren have also pitched specific proposals.

GROWTH

The U.S. economy grew at a 2.7 percent annual rate in the third quarter but is expected to have slowed in the final months of the year. Unemployment remains elevated at 7.9 percent.

Bullard said he expects the expansion to pick up steam in 2013, allowing gross domestic product to rise about 3.5 percent. But he added that estimate was predicated on a successful resolution of a year-end budget crunch, still a big "if".

William Dudley, head of the New York Fed, argued the Fed's mortgage-backed securities purchases have provided much-needed support to the economy, even if their benefits in easing financial conditions have not been fully passed through from financial institutions down to customers.

"Our policy has been and continues to be effective - though it is certainly not all-powerful in current circumstances," he said at a conference on mortgage finance at the New York Fed, at which his Boston Fed counterpart Rosengren was the keynote speaker.

The conference was aimed at exploring some of the blockages in the transmission of Fed policy to American consumers, Dudley said.

"We are focusing on ... the significant widening of the spread between yields on mortgage-backed securities and primary mortgage rates," he said.

In response to the financial crisis and deep recession of 2007-2009, the Fed had already slashed official rates to zero and bought some $2.3 trillion in government and mortgage-backed bonds prior to the launch of its latest stimulus.

(Writing by Pedro Nicolaci da Costa; Editing by Chizu Nomiyama)

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