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The International Monetary Fund said Wednesday that European banks are under pressure to preserve capital and could cut back sharply on lending over the next two years, slowing the region’s growth.

The decline in credit is a big reason Europe’s economy is expected to suffer a mild recession this year and barely grow in 2013, the IMF said in a report on the global financial system released Wednesday.

Large banks based in the European Union may reduce their balance sheets _ which include outstanding loans, securities and other assets _ by as much as $2.6 trillion through the end of 2013, the IMF said. That’s about 7 percent of their total assets.

About one-quarter of that reduction will come from reduced lending and could shrink lending by 1.7 percent.

Some reduction in credit, or “deleveraging,” is necessary, the IMF said. Banks aren’t able to borrow as freely as in the past and governments are requiring them to hold more capital.

“But like Goldilocks, the amount, the pace of deleveraging must be just right,” said Jose Vinals, the IMF’s financial counselor. “Not too large or too much.”

European leaders have taken many positive steps to shore up their financial system, the IMF said guaranteed unsecured personal loan. The European Central Bank has provided roughly $1 trillion in loans to European banks since December.

The IMF notes that the central bank’s capital has given European officials more time to push the continent’s shaky banks to raise new capital. The EU’s European Banking Authority is already pressing to do that. It has pushed banks to increase the size of their financial reserves compared to their risky loans and investments _ but it has urged them to do it by finding new capital, not by cutting back on loans.

Even so, the IMF points out that most responsibility for overseeing banks remains at the national level, where authorities have been slower to make banks take tough measures.

Raising capital can be a difficult step because it can dilute shareholders holdings. The IMF also warned that national regulators must restrain banks from using money for payouts of dividends to shareholders and bonuses to top bank executives.

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WICHITA, Kan. • Wichita aircraft manufacturing sites were damaged in the heavy weekend storms and tornadoes that hit the area.

Boeing says the storms that started late Saturday damaged at least three of the company’s buildings in Wichita. Boeing spokeswoman Yvonne Johnson-Jones said Sunday that the company is still assessing the damage and isn’t commenting yet on whether any of its aircraft were damaged.

Boeing employs over 2,000 people at its defense plant there, which modifies and maintains aerial refueling tankers. The company plans to shut down its operations in 2013.

Spirit AeroSystems spokeswoman Debbie Gann said some of that company’s building sustained significant damage.

The Wichita Eagle reports that one of Hawker Beechcraft’s buildings lost part of a roof and repairs were under Sunday.

A tornado in Wichita also damaged McConnell Air Force Base and a mobile home park. The storms also struck in Nebraska, Iowa and Oklahoma, where five people died.

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The good news: Taxpayers have extra time this year to file their federal income tax returns. The bad news: That time is running out.

Taxpayers have until Tuesday to file their tax returns and pay any tax due. That’s because April 15 this year falls on a Sunday, and Emancipation Day, a holiday observed in the District of Columbia, falls on Monday.

Before you file your return, make sure you complete these last-minute checks and take advantage of tax-saving opportunities.

• Check filing status: Choosing the correct filing status is critical because it can affect the amount of your tax refund or tax bill.

Your filing status is used to determine your filing requirements, standard deduction, eligibility for certain tax credits and your correct tax. There are five filing statuses: single, married filing jointly, married filing separately, qualifying widow or widower with dependent child, and head of household. You may qualify for more than one filing status; choose the one that gives you the lowest tax bill.

• Contribute to an IRA: You have until Tuesday to contribute to a traditional or Roth IRA.

Traditional IRA contributions are tax-deductible if you meet certain requirements, but withdrawals are taxable. Roth IRA contributions aren’t deductible, but withdrawals are tax-free if you meet certain conditions.

• Contribute to a health savings account: Again, you have until Tuesday to contribute to a health savings account, but the account has to be linked to an approved high-deductible insurance plan.

The tax-deductible contribution limits are $3,050 for singles and $6,150 for families.

• Look for new information on “cost basis”: The cost basis is the amount you paid for a stock that you sold later. This is the first year that brokerages are required to provide the cost basis to the Internal Revenue Service. The figure will be on IRS Form 1099-B, Proceeds from Broker and Barter Exchange Transactions.

• Verify personal information: A common mistake by taxpayers is misspelling a name or incorrectly recording their Social Security numbers.

“It is vital to clearly record the correct name, Social Security number and address, including ZIP code, directly on the return,” said Jackson Hewitt Tax Service business

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Hewlett-Packard offered a surprising ray of sunshine in an otherwise gloomy first quarter for PCs.

HP’s PC shipments in the United States grew by nearly 7% over the first quarter of 2011, outpacing every other competitor — even mighty Apple (, Fortune 500) — according to estimates compiled by tech research firms Gartner and IDC.

Besting Apple’s growth isn’t easy, since HP is by far the world’s largest PC manufacturer. The last time HP’s U.S. PC sales growth outpaced Apple’s on a year-over-year basis was in late 2009.

Two strategies paid off for HP (, Fortune 500).

It was more successful than its competitors in securing hard drives, which are in short supply following last year’s Thailand floods. Many PC manufacturers faced a hard drive shortage over the past few quarters — including HP, up until the beginning of 2012.

Gartner also cited the resolution of the company’s "internal management issues," a veiled reference to the company’s long stretch of turmoil. Under former CEO Leo Apotheker, HP considered ditching its PC business, but current CEO Meg Whitman decided late last year to hang onto it.

For everyone not named HP or Apple, this quarter was yet another dismal one. Dell’s (, Fortune 500) U.S. PC shipments fell by nearly 4%, Acer tanked by 26% and Toshiba dropped 19%.

Overall, shipments of PCs in the United States fell by 3.5%, the second straight quarter of sizable declines. Worldwide, PC shipments grew by about 2% to 89 million, which is slightly better than expected.

PC shipments are on pace to grow just 4.4% this year, Gartner estimated.

That’s better than last year, when shipments of PCs were flat, but still tepid compared to previous years.

The good news for PC makers is there is — potentially — a light at the end of the tunnel. Microsoft (, Fortune 500) Windows 8 and Intel’s Ivy Bridge processor are expected to launch later this year. After Ivy Bridge is released, Intel (, Fortune 500) expects its ultra-thin ultrabook lineup to represent 40% of all consumer notebook sales by the end of the year.

The year-end holiday season will be a make-or-break stretch, according to IDC analyst Loren Loverde.

"That alone will likely determine if there is any growth at all in the U.S. market in 2012," he said.

Meanwhile, consumer attention has shifted to tablets like the iPad. A separate Gartner forecast released this week anticipated Apple would sell 73 million iPads this year, up from 40 million last year.

That number is expected to grow to a stunning 170 million in 2016. 

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China returned to an export-led trade surplus in March, heralding the prospect that the global economy may be passing its low point in the current cycle and lifting overseas orders just in time to compensate for a slowdown in domestic demand.

The trade surplus of $5.35 billion last month confounded expectations of a $1.3 billion deficit as exports grew faster than expected and import growth eased from a 13-month peak, customs data showed on Tuesday.

The data reinforced the view of most analysts that China’s trade-sensitive economy is set for a soft landing, with GDP growth likely to have eased for a fifth successive quarter to 8.3 percent in the first three months of 2012 and remaining on course for its slowest year of expansion in a decade.

“The trade data looks okay… it shows the global economy is recovering, albeit slowly,” said Zhou Hao, an economist with ANZ Bank in shanghai.

“Given that China had a trade surplus in the first quarter versus a deficit in the Q1 last year, it indicates a positive contribution to GDP growth. We reckon Q1 GDP growth should be 8.6 percent. I think the market is a bit too pessimistic about China’s economy.”

Exports to the United States - the single country with the biggest trading relationship with China - were a particular high point, up 10.4 percent from a year ago.

Those to the 27 members of the European Union - the biggest overall market for Chinese goods - were down 3.1 percent from March last year.

Import and export growth were both down sharply from February’s Lunar New Year distorted surge, though within sight of the government’s target of 10 percent expansion for 2012.

SMALLER SURPLUS

Import growth of 5.3 percent in March compared with economists’ expectations of 9.0 percent and February’s 39.6 percent growth, while export growth of 8.9 percent compared with a consensus call for 7.2 percent, still a marked easing from February’s 18.4 percent rate.

The two numbers left the overall trade balance in surplus, reversing February’s $31.5 billion run of red ink on the balance of payments and confounding market expectations of a $1.3 billion deficit.

Zheng Yuesheng, statistics chief with the Customs Administration, told state television that China was expected to post a trade surplus for the full year, but that the overall size of its surplus was expected to be smaller than 2011.

China’s trade surplus narrowed for a third straight year to $155 billion in 2011, from $183 billion in 2010, $196 billion in 2009 and $296 billion in 2008. The trade surplus as a share of gross domestic product (GDP) dropped to about 2 percent in 2011 from 3.1 percent in 2010.

But despite the unexpected return to surplus, the relatively slack pace of export growth may still concern investors who believe the risks of recession in the debt-ridden EU could be a dangerous drag on growth in the world’s number 2 economy.

REAL ECONOMY RISKS

It will remain a concern for China’s export-oriented manufacturing sector, which has seen new orders and profit margins slump through 2011 as the euro zone’s debt crisis has dampened global economic activity.

“Our new orders have fallen 30-40 percent this year. We are doing our best, but frankly I don’t know how long we can maintain our business,” Chen Lifeng, manager of Ningbo Tengsheng Garments Co., told Reuters on a recent visit to his factory in China’s east coast Zhejiang province.

Rows of empty sewing machines on the factory floor - about a third of the capacity - were testament to the tough times faced by China’s manufacturers, not only from sluggish demand, but from rising domestic wage costs and energetic foreign competition from the likes of Vietnam, India and Bangladesh.

March data provided the first hard economic numbers of the year not distorted by the impact of the Lunar New Year holiday that fell in January this year, causing considerable skew in comparisons with 2011 when the holiday was in February.

China’s data releases build to a crescendo through the week, with first quarter GDP numbers expected to be published on Friday and forecast to show the slowest quarter of growth in nearly three years.

Inflation data published on Monday kept the government on stand-by to deliver more growth-oriented policies, with a trend of easing consumer costs in the first quarter confirmed while producer prices revealed risks to the industrial sector recovery.

The People’s Bank of China has cut the proportion of deposits banks must keep as reserves by 100 basis points in two moves since autumn 2011 in a bid to keep credit growing in the face of a recent slowdown of foreign capital inflows, which had underpinned money supply growth for much of the last decade.

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Top executives at three companies bailed out by U.S. taxpayers during the 2008 financial crisis were ordered to take pay cuts by the federal government.

The Treasury Department says nearly 70 executives at American International Group Inc., Ally Financial Inc. and General Motors Co. had their annual compensation reduced by 10 percent. The CEOs of each company had their pay frozen at 2011 levels.

All three companies have yet to repay what they received from the $700 billion bailout and therefore are subject to pay cuts payday loan.

AIG still owes taxpayers around $50 billion. General Motors owes about $25 billion. Ally Financial about $12 billion.

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The number of people seeking U.S. unemployment benefits fell to a four-year low last week, as layoffs slow and the job market strengthens.

Weekly applications dropped 6,000 to a seasonally adjusted 357,000, the Labor Department said Thursday. That’s the fewest since April 2008.

The four-week average, a less volatile measure, fell to 361,750, also the lowest in four years. The average has fallen nearly 13 percent in the past six months.

When unemployment benefit applications drop consistently below 375,000, it usually signals that hiring is strong enough to lower the unemployment rate.

On Friday, the government issues its March jobs report, which is expected to show the fourth straight month of strong hiring. From December through February, employers added an average of 245,000 jobs per month. That has pushed down the unemployment rate to 8.3 percent, the lowest in three years.

Hiring is picking up as the economy is showing signs of steady growth. Consumer spending jumped in February by the most in seven months, the government said last week.

That’s boosting retailers, restaurants, hotels and other service firms. The service sector expanded at a healthy pace in March, according to a private survey released Wednesday. The Institute for Supply Management, a trade group of purchasing managers, said that its survey found that a measure of employment rose to nearly a six-year high.

A separate survey by the ISM of manufacturing companies found that they also stepped up hiring last month, and boosted production.

Companies are investing more, boosting factory output. Businesses ordered more machinery, equipment and other capital goods in February, according to a government report this week.

Yet, greater hiring hasn’t led to bigger paychecks. Americans’ income grew just 0.2 percent in February, matching January’s weak increase. And after taking inflation into account, income after taxes fell for a second straight month. Consumers have boosted their spending by saving less, which economists worry isn’t sustainable.

And some companies are still letting workers go. Yahoo said Wednesday that it is cutting 2,000 jobs, or 14 percent of its work force. It is the Internet company’s sixth mass layoff in the past four years.

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Egypt’s Muslim Brotherhood-led parliament began drawing up a no-confidence motion against the military-appointed government Thursday, further escalating the Islamists’ increasingly public power struggle with the country’s ruling generals.

The Islamists were also squabbling with liberal and secular groups over the commission that is to draw up the nation’s new constitution. After the Brotherhood took a clear majority on the 100-member body for itself, 25 other members resigned. The latest was the representative of Al-Azhar, the pre-eminent institute of Islamic learning in the Sunni Muslim world.

On Thursday, a meeting between the Islamists and liberals chaired by military ruler Field Marshal Hussein Tantawi produced no compromises.

Liberals fear the Islamists plan to impose their religious agenda on the constitution. Islamists say liberals are a minority who have no popular support.

Relations between the military and the Brotherhood have deteriorated in recent weeks, as the fundamentalist group has pushed for the army to fire the Cabinet for alleged incompetence. The Brotherhood wants to form a new government, a task it claims is urgent because of Egypt’s deteriorating security and economic situation.

During a heated session in parliament Thursday, lawmakers lambasted Prime Minister Kamal el-Ganzouri’s government for its performance, accusing it of wasting billions of dollars of public funds. Six Cabinet ministers stormed out in protest.

Lawmakers also started drafting a motion for a vote of no confidence in the government, said parliamentarian Hussein Ibrahim. He said that parliament, where the Brotherhood and other Islamists hold nearly 75 percent of the seats, will vote on the measure within two weeks.

“No one can give a kiss of life to a dead government,” lawmaker Osama Yassin said.

While Egypt’s interim constitution does not give parliament the power to dismiss the Cabinet, a no-confidence vote would be a sharp blow to the ruling generals and make it difficult for them to continue backing el-Ganzouri’s government.

For months, the Brotherhood and the military, which have emerged as the two most powerful institutions since the uprising that ousted longtime ruler Hosni Mubarak last year, have alternated between cooperating and jockeying for position.

Thursday’s move pointed to the Brotherhood’s growing confidence. The group holds nearly half the seats in parliament, making it the largest bloc. Its strength grows even more on some issues in which it is backed by the second-largest bloc, the ultraconservative Islamic Salafis guaranteed pay day loans.

Last week, the military council issued a veiled threat of a crackdown on the Brotherhood if it persisted in its demands to form a new government.

The showdown over the government is but one front in a deepening political struggle in Egypt ahead of presidential elections scheduled for late May. That vote is supposed to be the last chapter in Egypt’s transition from decades of authoritarian rule to democracy.

Once a president is elected, military rule is supposed to end and the current Cabinet will resign, to be replaced by one appointed by the new president.

Brotherhood officials have said they feel increasing urgency to oust the current government now and replace it with one selected by the parliament they dominate. They say further delays would leave the next government with a gutted economy because of the current Cabinet’s inaction.

The military is anxious to protect its special privileges, including widespread economic interests, and deny civilians any oversight powers over its budget. The military also objects to the Muslim Brotherhood’s plans to change Egypt’s political system from presidential to parliamentarian, which the army fears would allow Islamists to carry out sweeping changes in the country’s institutions.

Saad Emara, a parliamentarian with the Brotherhood’s Freedom and Justice Party, said that the military initially agreed to allow the parliament to form a Cabinet _ but only if two deputy prime ministers and 10 ministers, including defense and security ministers, were appointed by the military. The Brotherhood refused.

“The Cabinet showdown is a symptom, while the military’s worries over its special interests are the heart of the issue,” Emara said.

Also Thursday, a Cairo court convicted and sentenced Mubarak’s ex-housing minister to eight years in prison for corruption. Egypt’s MENA state news agency said Mohammed Ibrahim Suleiman was found guilty of squandering public funds, profiteering and illegally seizing a large swath of land.

MENA said the court also sentenced businessman Magdi Rasekh in absentia to three years in prison in the same case. Rasekh is the father-in-law of Alaa Mubarak, the former dictator’s eldest son.

Suleiman and Rasekh were fined nearly 2 billion Egyptian pounds ($330 million) together.

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April 2 (Bloomberg) –Italy

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