NY lawyer Dreier indicted for money laundering

* Money laundering added to investment fraud charges

* U.S. seeks $700 mln in forfeiture from Dreier (Adds comment by Dreier's lawyer)

High-profile New York lawyer Marc Dreier, under house arrest on charges of running an investment fraud involving as much as $700 million, was indicted on an additional charge of money laundering on Tuesday.

Papers filed in U.S. District Court in Manhattan detailed money laundering and other charges against Dreier, and showed that prosecutors are seeking about $700 million in forfeiture from the lawyer, who once ran a 250-member law firm. The indictment indicated that fraud victims were owed about $400 million.

Dreier's lawyer Gerald Shargel said the money laundering indictment did not change his view of the case.

"We are looking for a fair resolution and will continue with that effort," Shargel said. He said Dreier has been working with a court-appointed trustee and a receiver for the bankrupt firm Dreier LLP.

Dreier, previously indicted by a U.S. grand jury on Jan. 30 on charges including securities fraud, conspiracy and wire fraud, was released from jail on bail last month into house arrest and under armed guard in his apartment.

The 58-year-old lawyer has pleaded not guilty to charges he lied to hedge funds and investment funds that he was selling promissory notes on behalf of a New York developer and a pension fund in Canada.

Harvard-educated and a lawyer for 30 years, Dreier was arrested on a charge in Canada, but granted bail there. He was arrested upon his Dec. 7 return to New York.

The superseding indictment said that from 2004 to December 2008, Dreier "sold to funds and others approximately $700 million worth of Fake Developer Notes and Fake Pension Plan Notes."

It said that "as a result of committing the money laundering offense, Marc Dreier shall forfeit to the United States all property, real and personal, involved in the offense."

Adobe Systems profit drops 29%

Adobe Systems Inc. posted a 29% decline in its fiscal first-quarter profit.

For the December-February period, Adobe, based in San Jose, earned $156.4 million, or 30 cents a share, compared with $219.4 million, or 38 cents, a year earlier.

Excluding one-time items, adjusted earnings were 45 cents a share, beating average analysts' estimates by a penny.

Revenue declined 12% to $786.4 million, roughly in line with analysts' estimates of $784.2 million, according to a survey by Thomson Reuters.

New home construction logs unexpected gain

The number of new housing projects that builders broke ground on in February rose sharply, defying economists' forecasts for yet another drop in activity.

The Commerce Department reported Tuesday that construction of new homes and apartments jumped 22.2 percent from January to a seasonally adjusted annual rate of 583,000 units. Economists were expecting construction to drop to a pace of around 450,000 units.

February's pickup was led by a big increase in apartment construction.

By region, all parts of the country reported an increase in overall housing construction, except for the West, which led the housing boom and has been hard hit by the bust.

Some economists said the new housing figures offered a glimmer of hope.

"While it may be premature to call an absolute bottom in residential construction, we are clearly getting close," said Adam York, economist at Wachovia.

Overall housing construction activity fell to a pace of 477,000 units in January, according to revised figures. That was a little higher than first reported but still marked a record low.

Applications for building permits, considered a reliable sign of future activity, also rose in February by 3 percent to an annual rate of 547,000. Economists were expecting permits to fall to a pace of 500,000 units.

Even with February's rare burst of activity, housing construction is down a whopping 47.3 percent from a year ago.

"This is a temporary rebound, not a recovery," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

The collapse of the once high-flying housing market has been devastating to the United States' economic health.

Its spreading fallout has contributed to big pullbacks by consumers and businesses alike, plunging the economy into a recession now in its second year.

The Obama administration has announced a $75 billion program to stem skyrocketing home foreclosures, which have dumped even more properties on an already crippled market.

More than 2 million American homeowners faced foreclosure proceedings last year, and that number could soar as high as 10 million in the coming years depending on the severity of the recession, according to a report last month by Credit Suisse.

Home mortgages are harder to come by because of the credit crisis and unemployment is at a quarter-century peak of 8.1 percent, factors that will make it difficult for the depressed housing market to snap back to full health.

Builders aren't optimistic that will happen any time soon.

The National Association of Home Builders' housing market index was flat in March at a reading of nine. That was one point above the all-time low reached in January. Readings lower than 50 indicate negative sentiment about the market. The index has been below 10 since November, reflecting the toughest market conditions in a generation.

Tighter lending standards for home mortgages, rising defaults and fear about the housing market's future have sidelined buyers, an absence felt acutely by homebuilders such as D.R. Horton Inc., Pulte Homes Inc. and Centex Corp.

Caterpillar To Idle Nearly 2,500 More US Workers

Caterpillar Inc. (CAT) said it will lay off nearly 2,500 U.S. employees and close a plant in Georgia because of slumping demand for its construction equipment.

The bulk of the cuts are on top of 22,100 layoffs that the company announced in January. The company has already offered buyouts to about 25,000 U.S.-based employees, a reduction in work hours at some plants and pay cuts for management employees.

The Peoria, Ill.-based company said Tuesday it plans to close its Jefferson, Ga., plant, which employs 89 workers. Fuel-system production done at the plant will be moved to company facilities in Thomasville, Ga., and Pontiac, Ill.

In Griffin, Ga., 200 employees will be idled at an engine plant. In addition, the company plans to lay off 911 workers at its East Peoria, Ill., plant where bulldozers are built and 815 employees at an Aurora, Ill., plant for assembling wheel loaders and excavators.

In Lafayette, Ind., where Caterpillar manufactures large engines, 439 employees received layoff notices.

Tuesday's announced layoffs include 245 white-collar and support positions that are part of the 5,000 salaried positions already targeted for layoffs.

Mark Patton, president of United Auto Workers Local 145, which represents hourly workers at the Aurora plant, described the latest layoffs as " devastating." Of the 815 employees receiving layoff notices in Aurora, 665 are hourly.

Patton said the 500 Aurora employees who received layoff notices in January have yet to vacate their jobs. He said about 2,000 hourly employees worked at the suburban Chicago plant before the cutbacks started.

"It's a bad time," Patton said.

UPDATE 2-World Bank cuts China 2009 GDP forecast to 6.5 pct

* China 2009 GDP forecast lowered by a percentage point

* China urged not to lose sight of rebalancing goals

* World Bank downplays social repercussions of slower growth

The World Bank lowered its forecast for China's 2009 economic growth on Wednesday but warned Beijing that it would be thwarting its own medium-term goals if it tried to offset the slowdown by further boosting investment.

In a quarterly economic update, the bank cut its projection of gross domestic product growth this year to 6.5 percent from the 7.5 percent outcome it had forecast in November. It said there were both upward and downward risks to its outlook.

The global crisis would be a drag both this year and next, mainly via weaker exports and non-government investment, but the bank said China's economic fundamentals were still strong enough to give policymakers the luxury of looking well beyond 2009.

The bank welcomed the inclusion of steps to boost consumption in the government's 4 trillion yuan ($585 billion) stimulus package since over-reliance on capital-intensive investment could damage the pace of job creation and the quality of growth.

Indeed, it said there was room for a further shift towards consumption and for less emphasis on capital spending in order to rebalance the economy so that growth is more sustainable economically, socially and environmentally.

"The fundamentals for China are strong enough to ride out this storm, and it may be just as appropriate to shift the focus as much as possible to the medium and long-term challenges instead of a very narrow focus on short-term growth objectives," Louis Kuijs, the senior economist in the bank's Beijing office, said at a news conference to launch the report.

The bank said it expected 16-17 million non-farm jobs to disappear this year but it played down the social repercussions.

"Somewhat lower overall growth is not likely to jeopardise China's economy or social stability, especially if the adverse consequences of dislocation and layoffs are alleviated by using and expanding the social safety net," the report said.

The median forecast in a Reuters poll of economists published on Wednesday is for GDP to expand by 7.8 percent this year, narrowly missing Beijing's target of 8 percent. [ID:nPEK164391]

For a table with details of the World Bank's forecasts, see [ID:nPEK319067]

For a graphic on China's growth over the past three decades, click on: here

COULD BE WORSE

The bank's advice flies in the face of the ruling Communist Party's determination to do whatever is necessary to meet its self-imposed target of 8 percent growth this year.

Last Friday, Premier Wen Jiabao said the government was ready to roll out extra stimulus measures if needed.

But the World Bank said Beijing should keep some of its powder dry in case growth next year proves even weaker.

What's more, the government cannot hope to take up all the slack left by the collapse in exports and knock-on drop in private investment; for a start, there may be limits to how much money can be spent efficiently on traditional investment schemes.

As it is, the bank already expects 4.9 percentage points of its projected 6.5 percent growth this year to stem from government-influenced investment and public-sector consumption.

"China's economy cannot escape the impact of the global weakness. Government-influenced activity makes up a modest share of the total: it cannot and should not offset fully the downward pressures on market-based activity," the report said.

The bank tempered this message of resignation with the assurance that China would continue to grow substantially faster than most other countries this year and next.

Indeed, the stimulus is already supporting activity and sentiment, even if it is too early to expect a sustained rebound, the World Bank said.

The bank said it expected the yuan to keep strengthening in the next decade given China's prospective balance-of-payments and productivity trends.

Kuijs described the outlook for exports this year as "grim" and "sombre". But he said depreciating the currency in the short term would not help revive exports, because global demand is so weak, and would slow China's switch to consumption-led growth.

IBM bids for Sun Microsystems

According to media reports, IT giant IBM is in takeover talks with Sun Microsystems. The deal could be closed as early as this week, writes Wall Street Journal.

In its online issue, WSJ quotes "persons familiar with the matter" saying that IBM is offering $6.5 billion for its smaller rival, about twice the current market value.

Both companies are offering large server computers. They have several aspects in common: They pursuit a strategy to stay independent from IT market giants Microsoft and Intel, and both are supporting open software universes such as Linux and Java. A possible takeover would strengthen the position of the companies against Hewlett-Packard.

The deal is however far from being set and done, the paper writes, adding that the companies involved declined to comment.