An Apple IPhone 4s and Samsung Galaxy S are seen in this illustration photo in Berlin August 27, 2012.

SAN FRANCISCO | Fri Sep 28, 2012 1:57pm EDT

SAN FRANCISCO (Reuters) - A U.S. appeals court ruled on Friday that a lower court should reconsider a sales ban against Samsung's Galaxy Tab 10.1 won by Apple in a patent dispute with the South Korean electronics maker.

The injunction was put in place ahead of a month-long trial that pitted iPhone maker Apple Inc against Samsung Electronics Co Ltd in a closely watched legal battle that ended with a resounding victory for Apple last month on many of its patent violation claims.

However, the jury found that Samsung had not violated the patent that was the basis for the tablet injunction and Samsung argued the sales ban should be lifted. U.S. District Judge Lucy Koh said she could not act because Samsung had already appealed.

In its ruling on Friday, the Federal U.S. Circuit Court of Appeals in Washington said Koh could now consider the issue.

The decision comes just a month before the South Korean corporation is expected to unveil the second generation of one of its most successful devices, the stylus-equipped Note.

The Galaxy 10.1 is an older model, but the ban still hurts Samsung in the run-up to the pivotal holiday shopping season.

The world's top two smartphone makers are locked in patent disputes in 10 countries as they vie to dominate the lucrative market, which is growing rapidly.

A U.S. jury found during the just-concluded trial that Samsung had copied critical features of the iPhone and iPad and awarded Apple $1.05 billion in damages.

(Reporting By Dan Levine; Editing by Lisa Von Ahn. Editing by Andre Grenon)

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Shoppers checkout at a Target store in Falls Church, Virginia May 28, 2010. U.S. consumer spending was unexpectedly flat in April but real disposable incomes recorded their biggest increase in nearly a year a government report showed on Friday.

WASHINGTON | Fri Sep 28, 2012 4:31pm EDT

WASHINGTON (Reuters) - U.S. households stretched to pay for costlier gasoline on meager income growth in August, undercutting spending on other items and pointing to lackluster economic growth.

Other data on Friday showed factory activity in the Midwest contracted this month for the first time in three years.

The Commerce Department said consumer spending rose 0.5 percent last month after gaining 0.4 percent in July. The increase was the largest in six months, but it reflected a rise in gasoline costs that pushed inflation up by the most in nearly 1-1/2 years.

Adjusting for the jump in prices, spending edged up a scant 0.1 percent. With inflation wiping out their buying power, consumers curbed their saving to fund purchases -- a potentially bad omen for future spending.

"Consumers are supporting the recovery, but they are just not able to lead it because of the soft jobs market and little income. They are running low on fire power," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.

Income ticked up 0.1 percent but was down 0.3 percent after accounting for inflation and taxes. It was the first decline in real disposable income since November.

With inflation-adjusted spending barely rising last month, real consumer spending, which accounts for about 70 percent of U.S. economic activity, is unlikely to grow much more than the tepid 1.5 percent annual pace recorded in the April-June period.

Walgreen Co, the largest U.S. drugstore chain, posted a lower quarterly profit on Friday and said it had faced a challenging year in which consumers cut back on everyday purchases. At stores open at least a year, sales fell 8.7 percent in Walgreen's latest quarter.

FACTORIES LOSING STEAM

Separately, the Institute for Supply Management-Chicago said its Midwest factory barometer found activity contracted this month for the first time since September 2009, reflecting weak new orders and a slowdown in hiring.

It was consistent with other recent reports flagging a cooling in manufacturing, a sector that had been the pillar of the economy's recovery.

"To the extent that the moderation in manufacturing activity is reflecting weakening domestic and global demand, it may be a harbinger of continued sup-par GDP growth," said Millan Mulraine, a senior economist at TD Securities in New York.

But households appear little perturbed by the gathering dark clouds. Consumer confidence touched a four-month high in September, boosted by higher stock market prices and gains in home values. That resilience could be a boost to President Barack Obama as he seeks a second term in November.

Economists, however, cautioned that household morale could sour towards the end of the year if the U.S. Congress fails to avoid the so-called fiscal cliff -- $600 billion or so in expiring tax cuts and government spending reductions set to take hold in 2013.

The mixed data sent U.S. stocks lower. However, Wall Street recorded its best third quarter since 2010. Prices for U.S. Treasury debt pushed higher, supported by doubts over the chances for success of debt-ridden Spain's 2013 budget. The dollar rose against the euro, advancing for a second straight week.

TROUBLE GAINING STEAM

Slower consumer spending and a drop in farm inventories due to a severe drought in the Midwest held gross domestic product growth to a 1.3 percent pace in the second quarter, a step down from 2 percent in the first three months of the year.

Growth estimates for the third quarter range from 1.2 percent to 2.1 percent. Spending last month was funded by cutting back on saving, which economists said put households on shaky ground, particularly if income taxes go up in January.

"It highlights how imperative it is that Congress deals with this issue. This is not an economy that can bear the burden of fiscal tightening right now," said Julia Coronado, chief North America economist at BNP Paribas in New York.

Inflation pressures picked up last month on the back of the 28.2 cents per gallon rise in gasoline prices. A price index for personal spending increased 0.4 percent, the largest rise since March last year, taking the 12-month gain up to 1.5 percent from 1.3 percent in July.

However, a measure which strips out food and energy costs, rose only 0.1 percent from July. Year-on-year that core measure was up 1.6 percent, the same as in July and the fifth straight month of increases below 2 percent.

The Federal Reserve has a 2 percent inflation target and the still-moderate pace of inflation should give it comfort to maintain its accommodative monetary policy stance for a while as it seeks to spur job growth and domestic demand.

(Additional reporting by Jessica Wohl in Chicago; Editing by Tim Ahmann and Kenneth Barry)

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Fri Sep 28, 2012 6:38pm EDT

n">(Reuters) - Education reform film "Won't Back Down" opened Friday to terrible reviews - and high hopes from activists who expect the movie to inspire parents everywhere to demand big changes in public schools.

The drama stars Maggie Gyllenhaal as a spirited mother who teams up with a passionate teacher to seize control of their failing neighborhood school, over the opposition of a self-serving teachers union.

Reviewers called it trite and dull, but education reformers on both the left and right have hailed the film as a potential game-changer that could aid their fight to weaken teachers' unions and inject more competition into public education.

Private foundations, nonprofit advocacy groups and the U.S. Chamber of Commerce have pumped more than $2 million into advocacy efforts tied to "Won't Back Down," including 30-second ads, promotional bookmarks, websites, private screenings and a six-month, cross-country discussion tour that will keep the film in circulation long after it leaves theaters.

Their goal: To attract new foot soldiers who will help them fight for legislation that allows parents to seize control of local schools, as dramatized in the film; eliminates tenure protections for veteran teachers; and opens the door for more competition to neighborhood schools in the form of charters, which are publicly funded but privately run.

"This movie has the potential to be one of the most transformative vehicles in the history of education reform," said Ben Austin, a longtime Democratic activist.

Austin now runs Parent Revolution, which promotes "parent trigger" laws allowing parents unhappy with struggling schools to take control, fire teachers and bring in private management.

His organization is holding 35 private screenings of "Won't Back Down" in states from Georgia to Utah to New York over the next month to rally more parents to the cause. "This movie is telling a story that's relevant to hundreds of thousands of parents across America," Austin said.

Union leaders, for their part, have slammed the movie as a propaganda film that bears little resemblance to reality.

Randi Weingarten, president of the American Federation of Teachers, has called it "egregiously misleading" and complained that several scenes seemed designed for "the sole purpose of undermining people's confidence in public education, public school teachers and teacher unions."

Parent groups that support teachers' unions have organized protests outside some screenings. And they've been gleefully posting negative reviews of "Won't Back Down" on Facebook and Twitter.

PUSH FOR CHARTER SCHOOLS

So far, the reform coalition has ignored the bad reviews and pushed ahead with their marketing efforts.

The drive to capitalize on the movie grows out of lingering disappointment within the education reform community over the last major film to carry their message, the documentary "Waiting for 'Superman.'"

Produced by Walden Media, which is also behind "Won't Back Down," the documentary chronicled dysfunction in urban schools and the desperation of parents trying to find alternatives for their children.

"Waiting for 'Superman'" was well-received and widely viewed, thanks to backing by the Gates Foundation. But activists hoping for a big boost from the film were disappointed.

"We didn't feel we captured anyone," said Matt David, a consultant to Michelle Rhee, former chancellor of Washington D.C. public schools and a major figure in the reform movement. Many viewers walked out angry at the public school system, he said, but had no way to channel that emotion into action.

This time, Rhee is moving quickly to provide a channel. Her advocacy group, StudentsFirst, has bought 30-second ads to run before showings of "Won't Back Down" in 1,500 theaters and sponsored marketing efforts to drive viewers to her website.

That website has been revamped to feature an "action center" where people moved by the film can sign up to join StudentsFirst, view short videos about its agenda (including one from comedian and newly appointed board member Bill Cosby), and share their own experiences with public schools.

The Center for Education Reform's website urges viewers to launch their own charter schools to compete with public schools. "You don't need a PhD or a teaching degree to start a school," the center's website advises. "Remember, you can do it now."

The most enduring campaign linked to the film may be the six-month "Breaking the Monopoly of Mediocrity" tour arranged by the Institute for a Competitive Workforce, an affiliate of the U.S. Chamber of Commerce.

Drawing on a $1.2 million grant from the Daniels Fund, the group plans to stage private screenings and discussion forums for business and civic leaders in cities from Memphis, Tennessee, to El Paso, Texas, to Trenton, New Jersey.

The American Federation of Teachers is countering with its own series of town hall meetings and workshops across the country designed to present teachers - and unions - as natural allies of parents seeking to better their schools.

(Reporting By Stephanie Simon; editing by Todd Eastham)

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n">(Reuters) - Ken Follett's "Winter of the World" debuted at the top spot on Publishers Weekly's bestseller list on Thursday.

The list is compiled using data from independent and chain bookstores, book wholesalers and independent distributors nationwide.

Hardcover Fiction Last Week

1. "Winter of the World" by Ken - (Follett Dutton, $36.00)

2. "A Wanted Man" by Lee Child 1 (Delacorte, $28.00)

3. "The Time Keeper" by Mitch Albom 2 (Hyperion, $24.99)

4. "Gone Girl" by Gillian Flynn 5 (Crown, $25.00)

5. "Low Pressure" by Sandra Brown - (Grand Central, $26.99)

6. "Zoo" by James Patterson/ Michael 4 Ledwidge (Little, Brown, $27.99)

7. "Severe Clear" by Stuart Woods - (Putnam, $26.95)

8. "Delusion in Death" by J.D. Robb 3 (Putnam, $27.95)

9. "The Tombs" by Clive Cussler 6 (Putnam, $27.95)

10. "Telegraph Avenue" by Michael 7 Chabon (Harper, $27.99)

Hardcover Nonfiction

1. "No Easy Day" by Mark Owen 1 (Dutton, $26.95)

2. "I Declare: 31 Promises to Speak" by - Joel Osteen (FaithWords, $21.99)

3. "The Price of Politics" by Bob 2 Woodward (Simon & Schuster, $30.00)

4. "Guinness World Records 2013" 4 (Guinness World Records)

5. "Divine Healing Hands" by Zhi Gang 3 Sha (Atria, $29.95)

6. "Joseph Anton: A Memoir" by Salman - Rushdie (Random House, $30.00)

7. "Killing Lincoln" by Bill O'Reilly & 7 Martin Dugard (Holt, $28.00)

8. "The Oath: The Obama White House" by - Jeffrey Toobin (Doubleday, $28.95)

9. "Free Market Revolution" by Brook/ - Watkins (Palgrave Macmillan, $27.00)

10. "Obama's America" by Dinesh D'Souza 5 (Regnery, $ 27.95)

Week ending Sept 23, 2012, powered by Nielsen BookScan (c) 2012 The Nielsen Company.

(Editing by Piya Sinha-Roy)

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Employees make circuit boards at an electronic component factory in Hefei, Anhui province May 2, 2012.

BEIJING | Sat Sep 29, 2012 12:34am EDT

BEIJING (Reuters) - China's economy has almost certainly suffered a seventh straight quarter of slowing growth, with a new private sector survey of factory managers revealing a near year-long decline in business activity and a fresh fall in export orders in September.

The HSBC China Manufacturing purchasing managers index (PMI) showed overall factory activity shrank for an 11th consecutive month in September, despite the 47.9 final index level being slightly ahead of a preliminary, or flash, estimate of 47.8 and the August reading of 47.6.

It extends the longest run of readings below 50 - which separates expansion from contraction - in the survey's 8-year history, with the need for more pro-growth government policies signaled by a fall in the output sub-index to its lowest since March and a slide in export orders to a 42-month trough.

"The sharper contraction of new export orders and the lingering pressures on job markets mean that Beijing should step up easing to support growth and employment," Qu Hongbin, chief China economist for survey sponsor HSBC, said in a statement.

Two cuts to interest rates, the easing of bank reserve requirements that freed about 1.2 trillion yuan ($190 billion) for lending and the approval of infrastructure projects worth more than $150 billion have so far failed to arrest the decline in China's overall economic growth.

"Fiscal measures should play a more important role in the coming months," Qu said.

Analysts expect 2012 to be China's weakest full year of growth since 1999 at just 7.7 percent, according a Reuters poll which forecasts annual growth of 7.4 percent in Q3, down from Q2's 7.6 percent.

The slide in the PMI's export orders sub-index to a three-and-a-half-year low of 44.9 is a crucial gauge for the accuracy of that call.

EXPORT SLIDE

Exports generated 31 percent of gross domestic product in 2011, according to World Bank data, and support an estimated 200 million jobs - around a quarter of the country's workforce.

Export growth this year is averaging around 7.8 percent versus 2011. August's growth slumped to 2.7 percent compared with a year ago and the Commerce Ministry sees a risk that things get worse in the months ahead - jeopardizing the official 10 percent target for expanding trade this year.

An adviser to China's central bank conceded on Thursday that Beijing policymakers had underestimated the severity of this year's global economic slowdown and said that further cuts to interest rates or reserve requirements would hinge on any new deterioration in the external environment.

China's exports have been hit hard by the festering sovereign debt crisis in the European Union, where a slide back towards recession has sapped demand in the single biggest foreign market for Chinese factory goods.

Analysts say the destocking it has triggered has dragged down industrial production growth and will ultimately show up when Q3 economic data is published in mid-October.

"We expect the data to show that demand remained weak, destocking continued and the recovery has yet to happen," said Tao Wang, China economist at UBS in Hong Kong.

"We forecast that industrial production growth slowed to about 8.6 percent year-on-year in September, while Q3 GDP growth slowed to 7.3 percent year-on-year," she wrote in a client note.

Tao believes the deterioration is so entrenched that GDP growth will slow to an annual rate of 7.0 percent in Q4 before rebounding through the course of 2013.

The consensus view is that Q3 is the nadir of this cycle and the HSBC PMI offers some sign that this may be the case, despite the index having consistently pointed to a more bearish economic backdrop this year than China's official PMI.

The official PMI is set to be released by the National Bureau of Statistics (NBS) on October 1 and analysts polled by Reuters expect it to have rebounded to 49.8 from August's 49.2.

A difference in samples and survey methodology largely explain the discrepancy. The NBS captures data from China's biggest firms - the dominant state-owned enterprises - while Markit, the UK-based data provider that compiles the survey sponsored by HSBC, tracks mainly smaller private sector firms.

SOME SIGNS OF STABILISATION

Markit said its survey detected some signs of stabilization in manufacturing activity in September as the rate of deterioration in the sector eased.

Backlogs of work remained steady for 77 percent of respondents, while only 13 percent reported a decrease.

And it said the rate of job cuts reported was relatively modest, with nearly 85 percent of survey respondents indicating no change in employment levels on the previous month.

Unemployment is a vital indicator for China's ruling Communist Party, which is acutely sensitive to anything that could trigger discontent in the run-up to its party congress - expected later this autumn - when a new generation of leaders will be named ahead of a once-a-decade handover of power.

The loss of millions of Chinese factory jobs in a matter of months in late 2008 as world trade ground to a halt during the depths of the global financial crisis triggered a massive 4 trillion yuan ($635 billion) stimulus package from Beijing.

The lack of job cuts so far and persistent signs of tightness in the labor market are cited by analysts as one reason for the government's reluctance to open the stimulus taps this time around, along with attendant inflationary and speculative risks that it could unleash.

Credit ratings agency Fitch said on Friday it had downgraded its 2012 growth forecast for China to 7.8 percent, from 8 percent previously, on a combination of slowing exports and efforts to squeeze speculative risks from the economy.

But it said it did not expect Beijing to deploy any more than marginal monetary and fiscal tools to boost growth, unless there was a sudden deterioration in the labor market.

"The resilience of the labor market seen in current data suggests growth of 7.5-8.0 percent may be in line with the economy's potential rate," Fitch said.

(Editing by Alex Richardson)

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Cast member Arnold Schwarzenegger poses at the premiere of ''The Expendables 2'' at the Grauman's Chinese theatre in Hollywood, California August 15, 2012. The movie opens in the U.S. on August 17.

LOS ANGELES | Fri Sep 28, 2012 2:29pm EDT

LOS ANGELES (Reuters) - Arnold Schwarzenegger, talking about his affair with a family housekeeper for the first time in a television interview, said it was "the stupidest thing" he did in his marriage to Maria Shriver and said it "inflicted tremendous pain" on his family.

In a "60 Minutes" interview with reporter Leslie Stahl due to air on September 30, Schwarzenegger admitted that he lied to Shriver about the affair. CBS released a clip of the interview on Friday.

"I think it was the stupidest thing I've done in the whole relationship. It was terrible. I inflicted tremendous pain on Maria and unbelievable pain on the kids," Schwarzenegger said.

Schwarzenegger, 65, had been quiet in public about his affair with their housekeeper Mildred Baena. He and Baena had a son, Joseph, who grew up not knowing Schwarzenegger was his father until the scandal made headlines last year.

After the revelations, Shriver and Schwarzenegger began proceedings to end their 25-year marriage. They have four children together.

The interview coincides with the October 1 release of Austrian-born Schwarzenegger's autobiography, "Total Recall: My Unbelievably True Life." He told Stahl that he was determined to write a book that included his "failures" as well as his successes in bodybuilding, film and politics.

Since his term as Republican governor ended, Schwarzenegger has returned to movies with "The Expendables 2" last August, and he has five more films in the pipeline. He also inaugurated a global policy think tank in his name at the University of Southern California's Los Angeles campus.

(Reporting By Piya Sinha-Roy)

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