(Reuters) – European leaders agreed on Friday to push for a free-trade pact with the United States, putting the onus on the White House to decide whether to try for a deal that would encompass half the world’s economic output.

Major exporters Germany and Britain won support from the rest of the European Union at a summit in Brussels to reach a deal with Washington that many leaders hope will help Europe pull out of its banking and debt crises.

In their final statement, leaders said the European Union gave “its support for a comprehensive trade agreement” with the United States.

“We need to move forward,” European Commission President Jose Manuel Barroso said at the end of the summit, referring to the United States.

“The Commission will push ahead to realize the full potential of an integrated transatlantic trade agreement,” said Barroso, who heads the EU executive responsible for negotiating the European Union’s trade agreements.

The EU leaders’ statement raises expectations that U.S. President Barack Obama may endorse the initiative next Tuesday in his annual State of the Union speech, which presidents traditionally use to lay out their priorities for the year.

Europe’s main business lobby, Business Europe, urged him to do just that in a letter released on Friday on behalf of 41 business federations, calling on Obama to give “a strong signal” and “political support” for the talks.

With economic growth elusive on both sides of the Atlantic, Obama and EU leaders tasked their trade chiefs in 2011 to look at whether it was feasible to agree a deal to further integrate the two blocs that already have low tariffs.

A U.S.-EU draft proposal drawn up by EU Trade Commissioner Karel De Gucht and U.S. Trade Representative Ron Kirk is essentially ready. De Gucht, who went to Washington this week, has given strong signals that there is enough common ground to go ahead with negotiations.

Talks could start in months, and while De Gucht was warned of difficult negotiations, both sides appear to want to agree on an accord quickly, possibly by the end of 2014.

“WITHIN REACH”

Following the collapse of global trade talks in 2008, both the United States and Europe have sought to tie up as many free-trade agreements as possible, and Brussels alone is negotiating with more than 80 countries.

Efforts to agree a U.S.-EU pact could spur the rest of the world to revive global talks for fear of being sidelined in the emerging shape of global commerce, Indonesia’s candidate to head the World Trade Organization told Reuters.

But U.S. officials, wary of getting bogged down in endless talks, have said they need a strong political commitment from the 27-nation European Union that Brussels is serious about opening up its markets before they can go ahead with talks.

German Chancellor Angela Merkel, with support from free-trade advocate Britain, has been eager for a deal for months.

“I wish for nothing more than a free-trade agreement with the United States,” Merkel said on January 29 in Berlin.

Diplomats say the time is right for a deal that was first talked about three decades ago but was considered too difficult because of worries from protectionists on both sides of the Atlantic, especially in the farming sector.

The European Union dropped its ban on some U.S. meat imports this week in a gesture aimed at starting talks, but countries such as France, and U.S. states such as Georgia, are reluctant to fully open up to foreign competition.

Still, a deal could increase Europe’s economic output by 65 billion euros ($88 billion) a year, according to the European Commission, benefiting industries from chemicals to automakers.

The United States too is dissatisfied with its meager economic growth since the global financial crisis of 2008/2009 and sees removing barriers to trade with the European Union as a way to unleash billions of dollars in transatlantic business.

In a speech on Saturday in Munich, U.S. Vice President Joe Biden said the economic benefits of a comprehensive trade agreement would be “almost boundless” if the two sides could muster the political will to resolve longstanding differences in regulations that have blocked farm and other exports.

Biden said: “This is within our reach.”

(Additional reporting by Doug Palmer in Washington; Editing by Jon Hemming)

(Reuters) – CIT Group Inc (CIT.N) had preliminary talks over the past year and a half to sell itself to banks, including Toronto-Dominion Bank (TD.N) and Wells Fargo & Co (WFC.N), but nothing came of the conversations, according to three people familiar with the specialty finance company.

Goldman Sachs (GS.N) bankers have had informal talks on behalf of CIT with a number of banks, but the Wall Street firm has not been formally retained as an adviser, according to two of the people. CIT Chief Executive Officer John Thain, who formerly worked at Goldman, is not under any immediate pressure to sell the company, the sources said.

Spokesmen from CIT and TD declined to comment on what they characterized as “speculation and rumors.” A Goldman Sachs spokesman and a Wells Fargo spokeswoman declined to comment.

While CIT does not have a sales process in place, selling itself could be a quick fix for some of its difficulties. The company has higher funding costs than its competitors do because it has fewer deposits, which makes it harder for CIT to offer competitive rates when it lends. But getting regulators to allow the company to fund more of its businesses with deposits has taken time, analysts said.

Deposit funding is crucial for CIT, which has an online bank with $9.6 billion in deposits. Before the financial crisis, it relied heavily on bond market borrowing to fund its assets, including railcar and airplane leases, loans to finance retailers’ inventories, and loans to small businesses.

But during the crisis, CIT lost access to that funding. It became a bank holding company in December 2008 just before it received $2.3 billion of bailout money, but the emergency funds were not enough, and it filed for bankruptcy in November 2009.

Since emerging from bankruptcy in December 2009, CIT has increased its reliance on deposit funding and has wiped out $30 billion of high-cost debt, reducing its funding costs, but analysts say the company still has work to do.

Since August 2009, CIT has been under a written agreement with the Federal Reserve Bank of New York that gives the regulator broad power over the company’s capital plans, corporate governance and risk management.

Last month, Thain said CIT did not have a timetable for when the New York Fed might lift its written agreement or provide guidance on its capital plan, but he did say that it could get approval to return amounts of capital to shareholders. CIT is seeking permission to return a “modest” amount.

If CIT sells itself, it could get out from under the New York Fed’s written agreement, enabling it to put excess capital to work and provide a higher return on equity to shareholders, analysts and bankers said.

Janney Capital Markets, for example, estimates that CIT has about $2 billion of excess equity capital that it could return to shareholders.

“It could take a while for all of the excess capital to be returned to shareholders, and a large bank that buys CIT might be able to extract that capital more quickly,” said Janney analyst Sameer Gokhale.

BARRIERS TO A SALE

Foreign banks, particularly Canadian or Japanese banks that have expressed interest in expanding in the United States, may be candidates to acquire CIT, the bankers said.

But analysts and bankers warned that there are a number of barriers to a sale of CIT, including finding a bank that wants all of the company’s businesses.

TD, for example, might be interested in CIT’s factoring business, which finances retailers’ inventories. But sources said the Canadian bank would be less interested in something like airplane leases, which require a good deal of capital.

Moreover, regulators are under pressure to reduce systemic risk and are unlikely to allow large acquisitions by financial institutions anytime soon.

“None of the major banks have a hall pass from the regulators that would encourage them to buy a company like this,” said Sterne, Agee & Leach analyst Henry Coffey.

One idea suggested by bankers would be for CIT to combine with auto lender Ally Financial, whose bank has about $50 billion of deposits.

CIT would gain more deposit funding, and government-owned Ally would have a broader array of assets. Right now, Ally has mainly car loans, leaving it poorly positioned for any slowdown in that sector.

Ally would probably not be able to do a deal until it resolves the bankruptcy of its Residential Capital LLC unit, which housed most of the company’s mortgage assets. That bankruptcy is expected to continue for months. Ally declined to comment.

Under Thain, CIT has been steadily working through its problems since emerging from bankruptcy.

In the fourth quarter, CIT posted its first profit in four quarters as its program to cut high-cost debt started to pay off.

CIT has also been building other businesses. In November, it said it had launched a maritime finance business to underwrite large ships, an area where it believes it has growth opportunities as lenders in the space pull back.

Last month, it said it had acquired $1.26 billion of commercial loans from U.S. Midwestern regional bank Flagstar Bancorp (FBC.N).

CIT’s stock price has jumped to nearly $42 as of Friday from around $32 when Thain took over.

Some analysts said that if the stock were to get to $55 or higher, a serious exploration of a sale would make better sense.

“Why would they quit now, just after all of that hard work?” Coffey said. “There would be no benefit selling today when you can wait a year or two and have a better bid.”

(Reporting By Jessica Toonkel and Dan Wilchins; Editing by Lisa Von Ahn)

(Reuters) – The U.S. economy likely expanded slightly in the fourth quarter as higher exports and a slump in oil imports narrowed the trade gap, suggesting a surprise drop in economic output reported last week was overstated.

America’s trade deficit shrank in December to its narrowest point in nearly three years in December, the Commerce Department said on Friday.

That suggests trade added to economic growth in the final three months of last year, rather than holding it back as the government said last week when it estimated gross domestic product fell at a 0.1 percent annual rate.

The GDP report had shocked economists, who had been looking for the economy to expand at a 1.1 percent pace.

“Trade data for December paint a reassuring and encouraging picture of the U.S. economy at the end of last year,” said Chris Williamson, chief economist at Markit.

A separate report from the Commerce Department showed wholesale inventories unexpectedly declined in December.

While the decline in inventories would subtract from GDP, economists said the drag was not big enough to offset the positive impact of December’s trade performance.

Taken together, the reports pointed to an economy that was still growing at the end of the year, and was poised to grow at a quicker pace in early 2013 as firms rebuild inventories to keep up with demand.

Macroeconomic Advisers, a forecasting firm, said the data pointed to a growth rate of 0.5 percent in the fourth quarter.

JPMorgan economist Michael Feroli said the decline in inventories helped lead him to boost his forecast for first quarter GDP growth to a 1.5 percent annual rate – a still-tepid pace that would reflect the hit most Americans took in January from higher taxes. Feroli and other economists expect growth to pick up as the year progresses.

Prices for U.S. stocks rose as investors were impressed by a batch of strong trade data, which included readings showing stronger exports and imports by China during January as well as the U.S. figures for December. Prices for U.S. government debt fell.

IMPORTS DECLINE

The U.S. report showed the country’s trade gap narrowed to $38.5 billion in December, which was a much smaller deficit than analysts polled by Reuters had expected.

U.S. exports increased $8.6 billion in December, boosted by sales of industrial supplies, including a $1.2 billion rise of non-monetary gold.

In a reflection of America’s current oil and natural gas boom, petroleum exports rose by nearly $1 billion to a record high level.

A fall in petroleum imports led overall purchases from abroad to decline $4.6 billion in December. Both the price per barrel and volume of imports fell, although those data are not adjusted for seasonal swings.

For the entire year, the country’s imports of crude oil fell to their lowest levels since 1997 in terms of volume.

For all of 2012, the U.S. trade gap fell by 3.5 percent to $540.4 billion as exports rose 4.4 percent. While trade was still a drag on the economy, rising exports made it less of a drag than in prior years.

While the overall deficit shrank last year, it grew with China, raising the hackles of U.S. manufacturers who feel Beijing gives its exporters an unfair edge by keeping its currency undervalued.

“Congress and the administration must take on currency manipulation,” said Scott Paul, president of the Alliance for American Manufacturing

But even the figures on China had a silver lining. While U.S. imports last year from China increased to a record high, so did America’s exports to the country.

America’s December trade deficit with China for goods, which was not seasonally adjusted, narrowed by $4.5 billion on a drop in imports.

(Reporting by Jason Lange; Editing by Neil Stempleman and Tim Ahmann)

(Reuters) – Guaranteed Rate, Inc, a home loan company, opened shop in 2000 in Chicago with a single office. Now it is one of the 20 biggest U.S. mortgage lenders, with more than 140 offices.

Most of that growth has come in the last two years and Chief Executive Victor Ciardelli said in an interview he is not planning to slow down.

“We’ve hired over a thousand people over the last year and we’re trying to hire a ton more,” Ciardelli said.

Guaranteed Rate is one of scores of independent mortgage lenders and community banks pushing up through the rubble of the housing collapse, as profits rise amid improving demand for home loans for new purchases or mortgage refinancing. They are winning business from banks such as Citigroup Inc (C.N) or Bank of America Corp (BAC.N) that have retrenched after the financial crisis.

The five biggest U.S. mortgage lenders controlled just 53.2 percent of the market last year, down from nearly two-thirds in 2010, Inside Mortgage Finance data shows. As small lenders grow, that share could shrink to 40 percent of the $1.8 trillion mortgage market by 2014, a recent FBR Capital Markets report forecast.

The rise of smaller lenders is a boon for consumers. Several smaller lenders said lower costs, low interest rates and their faster processing times allowed them to be more aggressive on pricing than the bigger banks.

“When the big guys get backed up, they have a tendency to raise their price, to slow down volume. And that gives other lenders an opportunity, because the consumer thinks, ‘Why would I pay an extra $100 a month,'” said Brian Hale, chief executive of Stearns Lending Inc.

Stearns, a home lender based in Santa Ana, California, saw originations increase 107 percent in 2012.

But the proliferation of lenders also comes with risks. While mortgage experts said underwriting standards are stricter now than in the years leading to the financial crisis, the rush into the sector raises the risk that regulators might not be able to police them effectively.

The Consumer Financial Protection Bureau, for example, has unveiled new rules for underwriting standards, but the bureau that was formed in 2011 as part of financial reforms has yet to prove itself.

“The CFPB is a very new agency that has been building out its examination force. They’ve been doing a very good job of that, but nevertheless a lot of the examiners are relatively new,” said Patricia McCoy, a financial-institutions law professor at the University of Connecticut and a former senior mortgage-market official at the CFPB.

A CFPB official said the agency was staffing up and would continue to grow until it is at full capacity.

Small lenders, some of which are backed by private equity and hedge fund money, are also aggressively taking advantage of federal guarantees to make home loans geared toward low-income borrowers – more so than the big banks. Such loans, which are insured by the Federal Housing Authority (FHA), require a down payment of as little as 3.5 percent of the purchase price, compared with the usual 20 percent.

The CFPB’s mortgage regulations specifically exempt the FHA, noted Guy Cecala, the publisher of Inside Mortgage Finance.

“There’s no question that the FHA has the loosest underwriting of any mortgage program in the industry right now, and that naturally brings some risk,” Cecala said. “The million-dollar question is, How much risk?”

Meanwhile, fast money looking for big returns is pouring into the sector.

“I get offers to be purchased by hedge funds and private equity all the time,” Guaranteed’s Ciardelli said.

To be sure, the increase in business for small lenders could be cut short as big banks ramp up. The two biggest players in the market now, Wells Fargo & Co (WFC.N) and JPMorgan Chase & Co (JPM.N), have been gaining market share in recent years. Others such as Citigroup and Bank of America pulled back from the market during the financial crisis, but have been hiring loan officers in an effort to regain lost share.

Moreover, mortgage rates have risen recently, which could ultimately cut into demand for home loans.

But for now, small lenders and experts said the ramp up by the large banks is not enough to make up for all of the business they shed.

“There is a real opportunity for well-capitalized community banks and independent mortgage bankers to take market share,” said Richard Bennion, director of residential lending at Seattle-based HomeStreet Bank.

BIG PROFITS

One reason for the rush into the market is enormous profits. The U.S. Federal Reserve last year said it was buying $40 billion of mortgages a month, which adds to demand for home loans and increases profits for banks that make loans and sell them to investors.

JPMorgan, for example, said earlier in January that margins from selling mortgage loans to investors were about 1.60 percentage points, more than double the historical level of about 0.65 percentage points.

Those kinds of margins give smaller competitors room to cut rates and still make money.

On its website at the end of January, Guaranteed Rate offered a $300,000, 30-year, fixed-rate home loan for 3.5 percent with up-front fees of $1,250. It claimed that compared favorably with three large banks – Wells Fargo, Citigroup and Bank of America – whose rates that day ranged from 3.625 percent to 3.75 percent for a similar mortgage, with fees starting at $3,200.

“The big banks are doing pretty well just turning on the lights and opening up the doors at their branch offices every day, so there’s no need to compete on pricing,” Inside Mortgage Finance’s Cecala said.

Citigroup spokesman Mark Rodgers said the bank continually seeks to ensure that its mortgage rates are competitive. Wells Fargo spokesman Tom Goyda said he is confident his bank’s pricing is competitive and noted that price is not a customer’s only consideration when shopping for a mortgage. Bank of America spokeswoman Kris Yamamoto said rates and fees depend on multiple variables and that the bank offered discounts to certain customers who maintain assets with the bank.

‘LENDER FOR THE MASSES’

While the FHA’s lending has gradually decreased since the crisis, it has been a source of opportunity for smaller lenders. The agency insured $213 billion of loans in fiscal 2012, compared with $218 billion in 2011 and $298 billion in 2010, according to its 2012 annual report to Congress.

Cecala said this puts the FHA at 13.5 percent of the lending market, within its stated target range of 10 to 15 percent, and down from over 25 percent in 2009, when FHA lending peaked.

More so than big banks, many independent lenders are relying on FHA loans to keep their origination volumes high.

“This recession hit a lot of people hard and (the FHA program) gave us the opportunity to support those folks in a situation that was difficult for them,” said Stanley Middleman, CEO of Freedom Mortgage Corp.

The Mount Laurel, New Jersey-based lender said about 35 percent of its $13 billion in mortgage origination for 2012 was FHA lending.

In contrast, JPMorgan’s total government lending, which includes FHA, as well as programs targeted at veterans and rural homeowners, made up less than 21 percent of its overall origination volume, a spokeswoman said.

A Wells Fargo spokesman said an estimate of FHA lending at 15 to 20 percent would be reasonable, but would not confirm an exact number.

At another lender, Sherman Oaks, California-based Prospect Mortgage, FHA lending accounted for over 25 percent of its $8.42 billion in loans in 2012, a company spokesman said.

“We like to think of ourselves as the lender for the masses, not the classes,” said Doug Long, Prospect’s president of retail lending.

(Reporting By Anna Sussman; Editing by Carrick Mollenkamp, Dan Wilchins, Paritosh Bansal and Andre Grenon)

(Reuters) – Two top Federal Reserve officials painted a picture of cautious optimism on Friday for the U.S. economy in 2013, helped by stronger global growth as the central bank aggressively prints money to curb the nation’s lofty rate of unemployment.

The Fed this week decided to keep buying bonds at a $85 billion monthly pace, and hold interest rates near zero until the jobless rate falls to 6.5 percent, so long as inflation does not threaten to rise above a threshold of 2.5 percent.

U.S. unemployment edged up 0.1 percentage point to 7.9 percent in January, and the economy shrank slightly in the final quarter of 2012.

But New York Federal Reserve President William Dudley and St. Louis Fed chief James Bullard, who both voted in favor of the U.S. central bank’s policy decision this week, saw reasons to be cheerful about the year ahead.

Their remarks are the first public comments by Fed policy-makers since the central bank issued a statement on Wednesday outlining its decision to keep in place an unprecedented level of monetary stimulus, which has tripled its balance sheet to almost $3 trillion since 2008.

“I think a lot of uncertainties that were around this economy in 2012 have come off the table,” Bullard told Bloomberg Television in an interview.

“The (U.S.) election has come off. Some of the fiscal risk that was in the U.S. has come off. The European situation has settled down a lot. China looks like it will have a better year. Emerging markets generally…will have a better year,” he said.

U.S. lawmakers on Thursday voted to allow the federal government to keep borrowing money until at least May 19, averting a potential collision with the U.S. debt limit that could have caused the nation to default on its debt obligations.

Politicians had already sidestepped potential tax hikes on all Americans at the start of 2013 by agreeing to raise taxes only on families who make more than $450,000 a year.

SLOWING BOND PURCHASES?

Bullard, who is viewed as a centrist on the Fed’s 19-member policy committee, said that continued improvements in the labor market during the course of the year would put the Fed “in a position to slow down or stop the purchases.”

A closely watched employment report released by the U.S. government earlier on Friday showed that 157,000 new jobs were created in January, while the previous two months’ scale of employment creation was also revised higher. U.S. stocks rallied on the news.

“Things aren’t perfect. But things are definitely improving, and that will actually be helpful for the U.S. outlook,” Dudley told the New York Bankers Association in a speech that was mostly focused on revamping the wholesale funding market.

“If the rest of the world gets healthier, the demand for U.S. goods and services will increase and that will provide support to our own economy,” he said.

With the Fed forecasting unemployment to decline only slowly over the next two years, economists do not expect it to begin raising interest rates until 2015 and see bond purchases continuing for the rest of this year and possibly into 2014.

However, minutes of the Fed’s December 11-12 meeting, which were released with a three-week lag, showed that several policymakers wanted to slow or halt the buying well before the end of 2013.

Bullard, who had opposed the third round of bond purchases when it was announced in September, said he voted to back its continuation at the most recent meeting because it was a decision to keep policy steady.

“I felt that was probably the right thing to do at this meeting and so I was in agreement with the chairman and the majority in this case,” he said.

However, he made clear that the central bank’s policy committee continued to wrestle with quantitative easing.

Nor was there any consensus on providing markets with more clues on when the purchases will end, beyond current Fed guidance that it will look for a substantial improvement in the labor market outlook in weighing when to stop.

“I don’t think we have any more agreement among members at this point,” he said.

Some Fed officials favor adopting numerical economic thresholds to guide expectations of when buying will end. But Fed-watchers doubt the committee will be able to quickly come to a consensus over this matter, and it may prove impossible.

(Reporting By Alister Bull)

(Reuters) – Banks eased credit standards somewhat over the last three months and reported stronger demand for loans and residential mortgages, according to the Federal Reserve’s latest quarterly Senior Loan Officer Survey, which was released on Monday.

The January report, based on responses from 68 domestic banks and 22 U.S. branches of foreign firms, also asked if domestic banks had tightened lending standards to European competitors, but found that only 10 percent had done so.

Signs of improved access to lending and stronger demand for debt would chime with more upbeat U.S. economic data on consumer and business spending, and brighter news from the nation’s battered housing market.

But U.S. officials have been frustrated by the difficulty experienced by some households and businesses in obtaining credit, despite ample bank liquidity and overnight interest rates that the Fed has held near zero since late 2008.

“Modest fractions of domestic banks reported having eased their standards across major loan categories over the past three months on net,” the Fed said. “Domestic respondents indicated that demand for business loans, prime residential mortgages, and auto loans had strengthened.”

The Fed has flooded the economy with money via three rounds of bond purchases, tripling its balance sheet to almost $3 trillion since 2008. But growth remains fragile and U.S. gross domestic product actually shrank slightly in the fourth quarter of last year.

Commercial loan standards were eased almost entirely because of greater competition for business, the Fed said, while stronger demand was driven by customer investment in plant or equipment, and the need for finance related to mergers and acquisitions.

Credit standards for residential mortgages had not changed, but demand was higher, according to the survey, as was demand for car loans. U.S. auto sales rose 14 percent in January, according to data released last week.

In addition to its regular assessment of lending conditions, the Fed also asked survey participants three specific questions, including queries about commercial real estate, or CRE, and the outlook for credit quality.

“Respondents indicated that they had eased selected CRE loan terms over the past 12 months,” the Fed said, adding that “moderate to large fractions of banks expect improvements in credit quality in most major loan categories.”

It also asked about lending to European banks. In addition to revealing that only a small portion of domestic banks had tightened loan standards to European counterparties, most also said they experienced a drop in competition from this source.

Europe has been battered by a prolonged sovereign debt crisis, although strains have eased somewhat following policy responses last year led by the European Central Bank.

(Reporting By Alister Bull; Editing by Neil Stempleman)

By BILL VLASIC

Published: February 1, 2013

DETROIT — American automakers said new-vehicle sales in the United States rose sharply in January, raising expectations that the industry’s steady recovery would accelerate in 2013.

The advance could help researchers better understand the role of proteins in disease.

By Susan Young on February 1, 2013

Two reports published online in Science on Thursday open up the possibility that researchers may be able to determine the structure of individual proteins in living cells. Although the work is still in early stages, the potential is that researchers could get a better handle on the role of proteins in disease.

Physicists in the U.S. and Germany report important steps toward magnetic resonance imaging, or MRI, of molecules in two separate studies. In both reports, the researchers show how specially modified diamond flakes can be used as nanoscale magnetic field detectors. These tiny sensors can elucidate the structure of single organic molecules. With nanoscale MRI, researchers may one day be able to directly image proteins and other molecules at the atomic scale.

“If you can see on single molecule scale what is going on, and understand more details about what is happening, you may be able to find exactly what the problem is and target it specifically,” says Texas A&M University electrical engineer Philip Hemmer, who was not involved in the study but wrote a perspective on the work for the same issue of Science.

Currently, researchers have limited tools to study the molecular structure of proteins. X-ray diffraction can give them an atomic-level view of some proteins, but many copies of the protein must be crystallized into a rigid lattice, a process that does not work for all proteins and results in an averaging of protein shape. Conventional MRI, which can be used by doctors to peek inside the body, doesn’t let researchers see anything smaller than a few micrometers in size because the detectors aren’t sensitive enough to pick up magnetic field signals from very small structures. The authors of one of this week’s studies, led by Daniel Rugar, manager of nanoscale studies for IBM Research, had previously reported a method to study single molecules at the nanometer level, but that technique required ultra-cold cryogenic conditions, which precludes studies on living cells.

To develop a method that works at ambient temperatures with single, unmodified molecules, Rugar’s team, as well as a group based Stuttgart, Germany, takes advantage of defects in flakes of diamond that behave as tiny magnetic field sensors.  The teams show that they can detect atomic sizes as small as five nanometers. Both groups examined a plastic-like organic polymer called PMMA, and the Germany-based team also looked at molecules within oils and other liquids.

Friedemann Reinhard, a coauthor on the Germany-based study, says that today’s results are a step toward a new technique that could determine the three-dimensional structure of a specific protein, perhaps even while it acts in a larger biological structure. Such studies could help identify differences in proteins, including spotting misbehaving proteins that might be implicated in triggering disease. Indeed, directly seeing the structure of a single protein has long been a dream of biologists. Says Reinhard: “It finally might be feasible.”

(Reuters) – U.S. small businesses boosted employment in January by the most in nine months, helped by the transportation and real estate sectors, the National Federation of Independent Business said on Thursday.

The NFIB said the net change in employment per firm rose to 0.09 this month from 0.03 in December.

January’s reading was the highest since April 2012.

The NFIB survey was released a day ahead of the government’s monthly payrolls report. Analysts polled by Reuters expect non-farm payrolls to have increased by 160,000 in January, a lackluster rate although marginally higher than in December.

The jobless rate is seen holding steady at 7.8 percent.

(Reporting by Jason Lange; Editing by Leslie Adler)

(Reuters) – Employment grew modestly in January and gains in the prior two months were bigger than initially reported, supporting views the economy’s sluggish recovery was on track despite a surprise contraction in output in the final three months of 2012.

Other data on Friday also suggested the recovery was intact, with factory activity hitting a nine-month high in January on strong new order growth. Consumer confidence perked.

Employers added 157,000 jobs to their payrolls last month and there were 127,000 more jobs created in November and December than previously reported, the Labor Department said.

The closely watched report showed an increase in hourly earnings and solid gains in construction and retail employment.

The unemployment rate, however, edged up 0.1 percentage point to 7.9 percent.

“This is actually a really good number when you take into account the net upward revision,” said Terry Sheehan, an economic analyst at Stone & McCarthy Research Associates in Princeton, New Jersey.

The Institute for Supply Management said its index of national factory activity rose to 53.1 last month, the highest level since April, from 50.2 in December. That offered hope manufacturing will continue to support the economy.

U.S. stocks rose on the fairly upbeat reports and the dollar advanced against the yen. U.S. Treasury debt prices were trading higher as the rise in the unemployment rate suggested the Federal Reserve would maintain its easy monetary policy stance.

OUTPUT CONTRACTION SEEN AS A FLUKE

Coming on the heels of data on Wednesday showing a surprise contraction in gross domestic product in the fourth quarter, the reports should ease any worries the economy was at risk of recession, even though the unemployment rate ticked up.

GDP contracted at a 0.1 percent annual rate in the fourth quarter, largely because of a sharp slowdown in the pace of inventory accumulation and a plunge in defense spending.

A monster storm that hit the East Coast in late October also weighed on output, a drag that should lift this quarter.

“This shows that underneath the surface, the fourth-quarter economy was really pretty good despite all the defense cuts. I think the private sector is leading the way,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

Fed officials said on Wednesday that economic activity had “paused,” but they signaled optimism the recovery would regain speed with continued monetary policy support. The Fed left in place a monthly $85 billion bond-buying stimulus plan.

Economists polled by Reuters had expected employers to add 160,000 jobs and the unemployment rate to hold steady at 7.8 percent last month.

The Labor Department also published benchmark revisions to payrolls data going back to 2008. It said the employment level in March 2012 was 422,000 higher on a seasonally adjusted basis than previously reported. Average job growth in 2012 was raised to 181,000 a month from 153,000.

It also introduced new population factors for its survey of households from which the unemployment rate is calculated. This had a negligible effect on the major household survey measures.

MODEST JOB GROWTH

Economists say employment gains in excess of 250,000 a month over a sustained period are needed to significantly reduce unemployment.

Though the unemployment rate dropped from a peak of 10 percent in October 2009, that was mostly because some unemployed Americans gave up the search for work because of weak job prospects.

The share of the working age population with a job has been below 60 percent for almost four years.

All the job gains in January were in the private sector, where hiring was as broad-based as it was in December and declines in public sector employment remained moderate.

Steady job gains could help the economy weather the headwinds of higher taxes and government spending cuts. A payroll tax cut expired on January 1 and big automatic spending cuts are set to take hold in March unless Congress acts.

The goods-producing sector showed a third month of solid gains, with manufacturing employment advancing for a fourth straight month. Construction payrolls increased 28,000, adding to December’s healthy 30,000 gain.

Construction jobs are expected to rise further as the housing market recovery gains momentum. Housing is expected to support the economy this year, taking over the baton from manufacturing.

Within the vast private services sector, retail jobs increased by a solid 32,600 jobs after rising 11,200 in December. Retail employment has now risen for seven straight months.

Education and health payrolls added 25,000 jobs in January after employment grew by the most in 10 months in December.

Government payrolls dropped by 9,000 last month after falling 6,000 in December. The pace is moderating as local government layoffs, outside education, subside.

Average hourly earnings rose four cents last month. Hourly earnings have been rising steadily. They were up 2.1 percent in the 12 months through January.

“It may be that we are now getting to a point in the labor market where we are going to see an upward creep in average hourly earnings,” said John Ryding, chief economist at RDQ Economics in New York.

“That’s going to be good for the consumer and they need help because they are being whacked by the payrolls tax increase.”

The length of the workweek for the average worker was steady at 34.4 hours for a third straight month.

(Additional reporting by Ellen Freilich and Steven C. Johnson, and Leah Schnurr in New York; Editing by Andrea Ricci)