Wed Jan 2, 2013 5:53pm EST

n">(Reuters) - SunPower Corp (SPWR.O) said it sold two solar projects in California to a company controlled by Warren Buffett's Berkshire Hathaway Inc (BRKa.N), and would receive up to $2.5 billion in proceeds and related contracts.

Berkshire utility MidAmerican Energy Holdings Co will pay SunPower between $2.0 billion and $2.5 billion for the 579-megawatt (MW) Antelope Valley solar projects and for designing, installing and constructing them, the company said in a regulatory filing on Wednesday. (link.reuters.com/bag94t)

Construction of the projects, which the companies called the world's largest photovoltaic power development, will begin this quarter and is expected to be completed by the end of 2015.

The stamp of approval from a Buffett utility, combined with expected cashflow from the projects, will make SunPower more bankable and more creditworthy, its Chief Executive Tom Werner told Reuters.

"If you are a bank you are looking at us a lot differently today than you did last week," he said.

SunPower shares ended up 9 percent at $6.13 on Wednesday on the Nasdaq, their highest closing in about eight months.

Raymond James analyst Marshall Adkins said the monetization of the projects "does not alter the fact that SunPower retains a markedly high-cost structure and razor-thin margins in the context of a massively oversupplied market."

The projects, based in Kern and Los Angeles counties, will add to MidAmerican Energy's growing investments in clean energy.

It bought a 49 percent stake in a 290 MW solar power plant in Arizona from NRG Energy Inc (NRG.N) and acquired First Solar Inc's (FSLR.O) 550 MW Topaz Solar Farm power plant in California in late-2011.

The SunPower projects will sell power to California utility Southern California Edison under two long-term contracts.

California plans to reduce emissions of planet-warming greenhouse gases to 1990 levels by 2020, and by an additional 80 percent by 2050.

(Reporting By Garima Goel in Bangalore and Nichola Groom in Los Angeles; Editing by Sriraj Kalluvila)

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n">(Reuters) - Family Dollar Stores Inc (FDO.N) posted a lower-than-expected quarterly profit on Thursday as its emphasis on selling more everyday items such as cigarettes and soft drinks put pressure on margins.

Its shares fell 8.6 percent premarket as the company also lowered its forecast for the year and said that December sales, which came in after the quarter ended, were hurt as shoppers cut back on discretionary spending.

The discount chain added cigarettes and other tobacco products, Pepsi drinks, gift cards, magazines and some other goods to its assortment in recent months to better compete against chains such as Dollar General Corp (DG.N).

While that change has helped bring in more traffic, those items tend to carry lower profit margins. Gross profit margin fell to 34.1 percent in the quarter from 35.3 percent a year earlier, the company said.

Its profit was $80.3 million, or 69 cents a share, in the fiscal first-quarter that ended November 24, compared with a profit of $80.4 percent, or 68 cents, a year earlier.

Analysts on average forecast 75 cents a share, according to Thomson Reuters I/B/E/S.

Sales rose 12.7 percent to $2.42 billion. Analysts on average forecast $2.38 billion.

Sales at stores open at least a year rose 6.6 percent. The company had forecast an increase of 4 percent to 6 percent.

But in December, same-store sales rose only 2.5 percent

Sales of "consumables" such as food and beauty products - by far the chain's largest category - rose 18.5 percent in the first quarter, the company said.

For the year, Family Dollar said it expects earnings of $3.95 to $4.20, below its prior forecast of $4.10 to $4.40. Analysts on average forecast $4.24 a share.

(Reporting by Jessica Wohl and Brad Dorfman in Chicago; Editing by Maureen Bavdek)

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Speaker of the House John Boehner (R-OH) (front, in green tie) walks with Congressman Dave Camp (R-MI) (R) after a meeting with House Republicans about a ''fiscal cliff'' deal on Capitol Hill in Washington January 1, 2013.

NEW YORK | Wed Jan 2, 2013 12:16am EST

NEW YORK (Reuters) - U.S. stocks are poised for gains to begin the year after the late passage of a bill to avoid harsh tax hikes that would have hit most Americans and crimped economic growth.

However, harsh reality awaits any euphoria that comes from avoiding the "fiscal cliff". In two months, battles over further spending cuts and, in particular, the U.S. federal debt limit will come to a head.

The House of Representatives voted for a bill passed on Monday by the Senate that will raise taxes on wealthy individuals and families and preserve certain other benefits that will, together, soften some of the blow that would have been sustained without an agreement to avoid the fiscal cliff.

That puts Wall Street in prime position to begin 2013 with a rally, even if thorny issues remain to be addressed in the coming months in Washington.

Asian markets extended gains modestly, with the MSCI Asia Pacific ex-Japan index of stocks up 1.7 percent. U.S. markets will not have a chance to react until 6 a.m. ET, when futures trading begins after the New Year's Day holiday.

"When you separate the fundamentals of the economy from the headlines, the fundamentals really suggest we can support higher prices in the new year," said Bill Vaughn, equity portfolio manager at Evercore Wealth Management in San Francisco.

The Standard & Poor's 500 stock index ended the year up 13 percent, its best gain since 2009, mostly shrugging off the debt-related worries that dominated headlines during the year.

Equity markets held up in the last two months of the year as well, expecting a resolution to head off $600 billion in spending cuts and tax hikes that could push the economy into recession if they stay in effect for long. While the deadline to avert the cliff was December 31, legislation can be formulated to retroactively prevent going over.

The back-and-forth in recent weeks has primarily been of concern to businesses, where confidence has eroded. Some slowing in economic growth due to the impasse is expected, but that may play into the hands of value investors if the market corrects in coming months.

"It appears as though politics will dominate for some time," said Richard Bernstein, chief executive of Richard Bernstein Advisors in New York. "That being said, equity market valuations already reflect this ... the stock market is attractive from my perspective."

Stock markets around the world were closed Tuesday because of New Year's Day. Some Republicans in the House had expressed concern on Tuesday afternoon that a bill would not be finished before U.S. markets open.

Many traders will still be away from their desks because of the holiday, indicating trading volume will stay near its recent low levels. The anemic action, coupled with uncertainty over the cliff, resulted in a spike of volatility in December, with the CBOE Volatility index jumping 13.5 percent in the month.

DEBT CEILING BATTLE REMAINS

The bill that passed does not contain the kind of spending cuts that many conservative Republicans favor in order to bring down the high U.S. federal debt.

Even as this battle recedes, markets will look ahead to another fight in the next few months, this time over whether Congress will approve an increase in the U.S. debt ceiling.

The White House has said it will not negotiate the debt ceiling as in 2011, when the fight over what was once a procedural matter preceded the first-ever downgrade of the U.S. credit rating. But it may be forced into such a battle again. A repeat of that war is most worrisome for markets.

"The spending side fight looms and it will be tougher," said David Kotok, chairman and chief investment officer at Cumberland Advisors in Sarasota, Florida. "The Republican caucus is tighter on that side."

Markets posted several days of sharp losses in the period surrounding the fight in 2011. Even after a bill to increase the ceiling passed, stocks plunged in what was seen as a vote of "no confidence" in Washington's ability to function, considering how close lawmakers came to a default.

Economists at Goldman Sachs, in a note Tuesday, said the coming fight to raise the debt ceiling -- where Republicans are likely to demand spending cuts while President Obama pushes for more taxes -- "is likely to be at least as politically difficult as the last increase was in the summer of 2011."

During this fight, the markets have been less volatile, largely because the effects of the spending cuts and tax hikes will be gradual, and there was an ongoing expectation that a retroactive fix was in the offing.

(Additional reporting by David Gaffen, David Randall, Chuck Mikolajczak and Richard Leong; Editing by Neil Fullick and Paul Tait)

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Cranes tower over the World Trade Center site in New York's lower Manhattan, December 12, 2012.

WASHINGTON | Wed Jan 2, 2013 10:12am EST

WASHINGTON (Reuters) - Construction spending fell in November for the first time in eight months, as an extended bout of weakness in the business sector outweighed modest growth in outlays on residential projects.

Construction spending dropped 0.3 percent to an annual rate of $866 billion, the Commerce Department said on Wednesday. Analysts polled by Reuters had expected a 0.6 percent gain.

Businesses have shown signs they are holding back on investments because of worries over federal austerity plans, and the construction data could be another sign of flagging confidence.

Private spending on nonresidential projects slipped by 0.7 percent, the fourth decline in six months.

Spending on private residential projects, however, rose 0.4 percent, a reflection of the country's improving housing market.

Home building likely added to economic growth in 2012 for the first time since 2005, although the housing sector remains a shadow of what it was before the 2007-09 recession.

Public sector construction spending fell 0.4 percent. State and local spending edged 0.1 percent higher, while outlays on federal government projects - a relatively small component of overall construction spending - declined 5.5 percent.

(Reporting by Jason Lange; Editing by Neil Stempleman)

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Job seekers apply for the 300 available positions at a new Target retail store in San Francisco, California August 9, 2012.

NEW YORK | Thu Jan 3, 2013 8:41am EST

NEW YORK (Reuters) - Private-sector employers added more new jobs than expected last month even as a possible budget crisis loomed, helping the job market end 2012 on a high note, a report by a payrolls processor showed on Thursday.

The ADP National Employment Report showed the private sector added 215,000 jobs last month, comfortably above economists' expectation of a 133,000 gain. The report is jointly developed with Moody's Analytics.

The increase came even as companies worried the economy might fall off the "fiscal cliff" at year end, which would have meant higher taxes and, some predicted, suppressed hiring.

"All the labor market data…has held up very, very well so (there is) no sign of the fiscal cliff impact on the job market," Mark Zandi, chief economist at Moody's Analytics, told CNBC television.

A last-minute deal to avoid going over the fiscal cliff was struck on New Year's day.

"The underlying economy has momentum and the employment data confirms that," said John Brady, managing director at R.J. O'Brien & Associates in Chicago. "The hope and prayer of the market is that our political leaders don't screw it up."

A revival in new construction jobs was also a hopeful sign, Zandi said, though the gains were likely boosted by rebuilding efforts after Superstorm Sandy hit the east coast in October.

November's private payrolls tally was also revised upward to show an gain of 148,000 from the previously reported 118,000.

The Bureau of Labor Statistics' more comprehensive payrolls report due on Friday is expected to show the economy added 150,000 jobs last month after adding 146,000 in November.

(Editing by Chizu Nomiyama)

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Ford Assembly workers Calvin Thompson (R ) and Jimmie Lackey install a battery in the back of a partially assembled C-MAX Hybrid vehicle at the Michigan Assembly Plant in Wayne, Michigan November 7, 2012.

NEW YORK | Wed Jan 2, 2013 9:03am EST

NEW YORK (Reuters) - U.S. manufacturing closed out 2012 on the upswing as increased demand at home and abroad helped the sector grow in December at its fastest rate in seven months.

Financial data firm Markit said on Wednesday its U.S. Manufacturing Purchasing Managers Index rose to 54.0 from 52.8 in November. December's reading was a touch below the "flash," or preliminary estimate of 54.2 but was still the highest since May on a final basis.

A reading above 50 indicates expansion.

Firms tied the faster growth to a rise in new orders, with one in five companies reporting an increase. The index's new orders component rose to 54.7, the fastest increase since April, from 53.6 in November.

The second straight monthly increase in new export orders also boosted the sector and could bode well for the year ahead.

"With recent indications that growth is also picking up in other key economies around the world, notably in emerging markets such as China and Brazil, and that the euro zone's economic crisis is easing, U.S. companies should benefit as stronger demand lifts exports in early 2013," said Markit Chief Economist Chris Williamson.

The pace of hiring hit an eight-month high, "suggesting underlying improvement in demand pushed away worries about the 'fiscal cliff' to the backs of manufacturers' minds," Williamson said.

For months, Americans had been worried about the "fiscal cliff", some $600 billion of automatic tax hikes and spending cuts that had been set to take effect in January, which economists had said could push the economy into recession. On Tuesday, U.S. lawmakers reached a deal to avoid the tax hikes and spending cuts.

(Reporting By Steven C. Johnson; Editing by Chizu Nomiyama)

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