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Giving Iran another chance at diplomacy, deeply skeptical Obama administration officials return to nuclear negotiations this weekend looking for quick progress _ or at least enough hope to hold off urgent calls from Israel for military action.

The U.S. and other world powers are stopping short of saying the gathering in Istanbul is a make-or-break situation. But as they sit down with Iranian officials for the first time in more than a year to press yet again for an agreement on Tehran’s disputed nuclear program, American officials say the window for a diplomatic breakthrough is closing. And in the event the talks fail completely, all U.S. options remain on the table.

Speaking Thursday after hosting foreign ministers from the Group of Eight leading industrialized nations, Secretary of State Hillary Rodham Clinton urged Iran to prove to the world its claim that its uranium enrichment activity is for peaceful purposes. The U.S. and many other countries fear Tehran is trying to produce an atomic bomb and have challenged Iran’s Ayatollah Ali Khamenei to substantiate his edict that weapons of mass destruction violate Islamic law.

“We’re looking for concrete results,” Clinton told reporters. “They assert that their program is purely peaceful. They point to a fatwa that the supreme leader has issued against the pursuit of nuclear weapons. We want them to demonstrate clearly in the actions they propose that they have truly abandoned any nuclear weapons ambition.”

The ball is clearly in Iran’s court. Mounting U.S. and European measures are crippling the Iranian economy, with the rial depreciating dramatically under the weight of restrictions on petroleum exports and efforts to cut off Iranian banks from the world financial system. U.S. and European sanctions will get more severe this summer.

Ahead of the talks, chief Iranian nuclear negotiator Saeed Jalili vowed to present new initiatives, without specifying what they might be. Iranian officials have suggested scaling back on uranium enrichment while continuing to make nuclear fuel. It’s unlikely such an offer would satisfy the demands of the U.S. and its fellow negotiators _ Britain, China, France, Germany and Russia _ but may illustrate enough of a compromise to justify follow-up talks over the next several weeks.

Iran has been skilled at using negotiations to stall for time. It has reneged repeatedly on understandings reached behind closed doors over eight years of talks, initially with European mediators and later expanded to include the United States and the other permanent members of the U.N. Security Council. All the while, Tehran has intensified its uranium enrichment program.

Israel wants tougher action. The Jewish state sees a nuclear-armed Iran as the greatest threat to its existence and has made a point of reminding the world that it sees the threat more urgently than others and that it is prepared to strike Iranian nuclear facilities with or without international support. Israeli military officials believe they’d have to strike by summer to be effective business card templates.

The United States can afford to be a little more patient. But it is dealing with its own clock counting down the time left for diplomacy. The fact that President Barack Obama, too, has committed to preventing Iran from obtaining a nuclear weapon _ and not simply containing Iran should it acquire one _ means the U.S. might similarly be compelled to act. Adding to the tension is an election season in which Obama’s Republican rivals accuse him of being soft on Iran and weak on defending Israel.

Obama has underlined the need to give time for diplomacy alongside sanctions and fired back at his critics for “beating the drums of war.” But the president also will need some signs of a possible breakthrough to show Israeli Prime Minister Benjamin Netanyahu if he is to fundamentally change the Israeli calculus. And unless the Iranians break from the mold set at previous gatherings, he will be hard pressed to do so.

Speaking earlier this month in Istanbul, Clinton said Iran could demonstrate its seriousness in a number of ways. She suggested that Iran end its production of highly enriched uranium, which at 20 percent can more easily be transformed into bomb-making material. She also urged Tehran to ship out its existing stockpile of this uranium to another country and open up its facilities to “constant inspections and verifications.”

The most feasible model for a deal may involve an arrangement Iran agreed to in Geneva in 2009, and then quickly walked away from. It involved the Islamic republic shipping out its highly enriched uranium in exchange for nuclear fuel rods. Although Western officials see the contours of such an agreement as still viable, they say it must be updated to represent more than two years of continued Iranian enrichment. Another compromise could see Iran suspend its higher enrichment if the West holds off on some sanctions.

Failure of the process raises the possibility of a military attack that could lead to severe repercussions in the region and around the world. Even if it is the U.S. that chooses to intervene, Iran’s retaliation could come through attacks on Saudi oil infrastructure, attempts to block the strategic strait of Hormuz, or proxy terrorist activity against U.S. allies such as Israel or in instable states such as Lebanon. Conflict also could drive up oil prices beyond their $100-plus per barrel level today and raise gasoline costs worldwide.

For that reason, the U.S. and its European partners are prepared to show some _ but not much _ patience if they can create a framework for progress. It’s an approach that aims to avoid the all-or-nothing stakes of previous meetings that have consistently left world powers with nothing. But they’ll have to get to something quickly.

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Japan’s quarterly central bank survey shows no improvement in business confidence from the previous quarter. The worse-than-expected result reflects a deteriorating outlook among medium and smaller manufacturers despite easing worries over the crisis in Europe.

The Bank of Japan’s quarterly “tankan,” released Monday, showed the main index for big manufacturers was at minus 4 for the January-March quarter, unchanged from the last quarter of 2011. Many analysts had forecast an improvement to minus 1 faxless pay day loans.

A negative reading indicates greater pessimism than optimism among those surveyed.

Data released last week showed weaker than expected factory production in February, underscoring the fragility of the economic recovery as growth in Asia slows.

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Stock futures are falling as financial turmoil grips Spain and before a U.S. report that is expected to show a slight rise unemployment benefit applications.

Dow Jones industrial futures are down 26 points to 13,027 and the Standard & Poor’s 500 futures are down 3.3 points to 1,396.9. The Nasdaq composite futures are down 5.75 points to 2,762.25.

Protesters flooded the streets of Madrid on Thursday and there are clashes with police a day before massive spending cuts and tax hikes are expected to be revealed.

European markets are down with investors keeping an eye on events at home and in Asia, where Chinese economic indicators are compounding fears of a broader economic slowdown.

The U.S. Labor Department will release its latest unemployment claims numbers at 8:30 a.m. Eastern time.

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Bentley Motors Ltd. and Rolls-Royce Motor Cars Ltd. are preparing to be occupied by India

ST. LOUIS • A developer is pouring $30 million into renovating a Cupples Station building downtown, while in the same complex of 19th-century warehouses a similar structure continues to sit empty and in danger of collapse.

It’s a tale of different buildings and different owners with starkly different approaches. Both buildings are within a city historic district and are on the National Register of Historic Places.

Cupples 9, a seven-story warehouse built in 1894, had been empty for years when an affiliate of the Koman Group, a Creve Coeur-based developer, bought the building out of foreclosure last spring. Clayco Inc. is Koman’s general contractor to restore the building’s red brick exterior and renovate the interior of heavy Douglas fir beams and columns as modern loft-style offices.

Koman already has two Cupples 9 tenants: Osborn & Barr, an agriculture-focused marketing firm, and Mackey Mitchell Architects, a St. Louis design firm founded in 1968.

Mackey Mitchell announced this week that it will leave its longtime home near Union Station and by late this year take over about half the fifth floor at Cupples 9, which is a block west of Busch Stadium.

The firm, begun in 1968 by Gene Mackey, plans to lease about 11,000 square feet of Cupples 9 space, about 4,000 square feet fewer than what it occupies now at Power House, an office building just south of Union Station. Mackey Mitchell designed that building, where it has rented space for 24 years.

Dan Mitchell, the firm’s president, said Mackey Mitchell plans to retain all 45 employees when it moves Cupples 9, which has 12-foot ceilings, large windows and exposed brick walls. The firm is planning “a more linear” seating arrangement to enhance employee communication, creativity and collaboration, Mitchell said.

“We’ll have a kind of bench-style configuration with more community space or team space dispersed through the studio,” he said.

Mackey Mitchell chose Cupples 9 after examining numerous buildings downtown, in the Central West End and near St. Louis University before opting to remain downtown, said Mitchell, adding that the firm’s Power House lease expires next February.

Osborn & Barr, as Cupples 9’s anchor tenant, will occupy floors two through four.

Dan Farris, Koman’s senior investments manager, declined Thursday to discuss details of the Cupples 9 redevelopment. He said more information about the project will be announced in about two weeks.

A block west of Cupples 9 on Spruce Street is Cupples 7, which has experienced only decay since 2005, when developer McGowan/Walsh bought the building and announced plans to convert it to lofts and commercial space. The project never got off the ground.

Ballpark Lofts III LLC, the building’s current owner, applied last year for a demolition permit, which the city’s cultural resources officer, Betsy Bradley, denied. The city’s Preservation Board upheld Bradley’s decision. Pending in St. Louis Circuit Court is Ballpark Lofts’ appeal of the Preservation Board’s ruling. A hearing on the appeal is scheduled for Thursday.

Joining the appeal is Montgomery Bank, which lent Ballpark Lofts more than $1 million to buy Cupples 7. The loan is in default. The bank has an agreement with the St. Louis treasurer’s office, which would pay off the loan, then work out a payback agreement with Ballpark Lofts. Such a transaction would occur only if Cupples 7 is demolished first.

The treasurer owns a parking garage next to Cupples 7 and is concerned the garage would be damaged if the old warehouse collapses. Barricades the city put up around the building in September impedes access to the garage, the treasurer office’s lawyer has said.

Much of the building’s roof has collapsed and most of the interior is in ruins. A structural engineer hired by the owner told the Preservation Board last year the brick walls are unstable. Bracing the walls and “mothballing” the building for possible redevelopment later could cost $8 million to $10 million, officials said.

Osborn & Barr’s move to Cupples 9 will result in a two-floor vacancy at Cupples 8, another of the old warehouses that McGowan/Walsh renovated as offices and condos.

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News Corp. executive James Murdoch acknowledged Wednesday that he could have done more to investigate the phone hacking scandal that has rocked Britain and threatened his place as the likely heir to his father’s global media empire.

Murdoch’s admission came in a detailed, seven-page letter written to British parliamentarians investigating the scandal. In it, he repeated his insistence that he knew nothing about the criminality which had taken place at the now-defunct News of the World tabloid newspaper, saying that the extent of the wrongdoing had been hidden from him by members of his staff.

“It would have been better if I had asked more questions,” Murdoch said. “However the truth is that incomplete answers and what now appear to be false assurances were given to the questions that I asked.”

Murdoch has already appeared twice before lawmakers, who grilled him in detail about what he knew about the phone hacking scandal and alleged attempts to bury evidence of any illegal activity.

Murdoch was the one who signed off on a massive settlement to one of the first known victims of the practice, a deal which the company’s former in-house lawyer has acknowledged was aimed at keeping a lid on the scandal.

But the cover-up failed after the Guardian and The New York Times revealed that phone hacking was endemic at paper, an expose which has led to dozens of arrests and resignations. Murdoch’s father, Rupert, was forced to close the News of the World following an advertiser boycott. Lawmakers are now sifting through the scandal’s fallout in an effort to find out who was responsible.

In a separate development, police said that a 51-year-old man has been arrested Wednesday on suspicion of intimidating a witness.

Scotland Yard said the man taken into custody Wednesday had been previously arrested on April 5, 2011. Police did not identify the man, but The Associated Press had identified a man arrested that day as former News of the World reporter Neville Thurlbeck, who was 50 at the time.

Thurlbeck did not immediately return a text message seeking details about the arrest. His law firm had no immediate comment.

Wednesday’s developments follow the arrests Tuesday of six other suspects, including former News International executive Rebekah Brooks.

News International, the British newspaper arm of News Corp., has made cash settlements to 58 victims, including celebrities, politicians and the families of crime victims.

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Some of the world’s largest drugmakers will face an uphill battle next week in their bid to revive a class of experimental arthritis drugs that have been sidelined by safety concerns for nearly two years.

The Food and Drug Administration says there is a clear association between the nerve-blocking medications and incidents of joint failure that led the agency to halt studies of the drugs in 2010.

However, the agency also notes that those side effects were less common when the drugs were used at lower doses, potentially leaving the door open for future use. The agency released its safety analysis ahead of a public meeting.

On Monday Pfizer, Johnson & Johnson and Regeneron will make their case to continue studies of the drugs, with precautions to protect patients.

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The U.K. government should bolster aid to companies to help them weather headwinds from Europe

Japan may cancel its multibillion-dollar plans to buy dozens of F-35 stealth fighter jets from the United States if prices continue to rise or delays threaten the delivery date, its defense minister said Wednesday.

Defense Minister Naoki Tanaka said failure by manufacturer Lockheed Martin to deliver on time at current price levels would force Tokyo to consider switching to a different aircraft.

Japan announced late last year that it would purchase 42 F-35 jets in a deal expected to cost more than $5 billion. The next-generation fighter is set to become the centerpiece of the U.S. military and allied air forces around the world, but the program has been plagued by delays and its cost overruns.

Japan hopes to receive its first F-35s in 2016, at a cost of about $120 million per plane.

“I think we will reach a formal agreement before the summer,” Tanaka told a session of Parliament. “If we cannot reach an agreement at that time, this would create a great deal of uncertainty for our national defense and preparedness. We would naturally have to view the possibility of canceling our plan or selecting another aircraft.”

Lockheed Martin, in conjunction with Northrop Grumman and BAE Systems, is building 2,400 F-35s for the U payday advance low fees.S. as well as partner nations. But the cost of the program has jumped from $233 billion to $385 billion. Some estimates suggest that it could top out at $1 trillion over 50 years.

Lockheed is building three versions of the F-35 _ one each for the Navy, Air Force and Marine Corps. The plane would replace Cold War-era aircraft such as the Air Force F-16 fighter and the Navy’s F/A-18 Hornet.

Last January, then-Defense Secretary Robert Gates had put the Marines’ version of the aircraft on a two-year probationary period because of “significant testing problems.”

His successor, Leon Panetta, ended the probation late last month.

But the Pentagon has said it will slow its purchases of the fighter to save money, which has raised concerns abroad. Slowed production could lead to delays in delivery to foreign buyers, and could make the planes more expensive to produce.

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In March, Sherry Hunt and a co-worker were called into a meeting at CitiMortgage’s big operations base in O’Fallon, Mo.

A high company executive awaited her there.

“It’s your asses if these defects don’t improve,” Hunt recalled being told by her “boss’s boss’s boss.”

Hunt didn’t create the “defects” in mortgage applications. It was her job to find them — red flags for bad loans. She felt the executive wanted her to stop doing her job and let the bank make bad loans that would be guaranteed by the federal government.

“The message was clear to me,” Hunt recalled. “I was threatened.”

Her experience provides a telling window into the inner-workings of mortgage misconduct that continued to occur even after the global financial system nearly collapsed due to the industry’s shady dealings with subprime loans and mortgage-backed securities.

Hunt, rather than cave to pressure, filed a “whistleblower” lawsuit against CitiMortgage and its Citigroup parent, claiming the mortgage lender deliberately ignored fraud and errors in government-insured mortgage programs. The U.S. Department of Justice then joined the suit.

Earlier this month, Citigroup admitted that it approved Federal Housing Administration mortgages that failed to meet government guidelines. It agreed to settle the suit for $158 million, the amount government expects to lose on FHA mortgages it claims Citi should never have made.

Hunt filed suit under the federal False Claims Act, which lets whistleblowers share in the payout if their suits succeed. Her take, minus legal fees, will be $31 million.

“I didn’t do it for the money,” said Hunt in an interview last week with her and her lawyer, Finley Gibbs.

As she tells it, Hunt tried hard to persuade Citi management to root out fraud. She complained weekly in memos, and finally took her case to human resources. When all that failed, and the pressure to bend kept building, she went to a lawyer.

In an emailed statement, Citi said it settled “so we could put these issues behind us and focus on serving our clients. We take our quality assurance processes seriously and have pro-actively undertaken process improvements.”

The bank declined to respond to specific allegations. A spokesman also would not say if Citi had removed or reassigned executives because of the case, or describe other changes it made to satisfy the government.

Now that it’s over, Hunt thinks CitiMortgage will finally reform. But it’s not clear if she’ll be there to see it; she’s now negotiating whether she remains an employee with the company.

INSPECTING LOANS

Hunt lives on a “hobby farm” in Silex with her retired husband, Jonathan. They grow alfalfa and vegetables. She is reticent about her private life. She declined to say how many children she has, for instance, or describe her upbringing. She wouldn’t say what she might do with so much money.

Her entire working life — 37 years — has been spent in the behind-the-scenes paper-shuffle of mortgage processing.

Citigroup, the nation’s third largest bank, is a giant in the mortgage business. It made 30,000 FHA loans since 2004, totaling more than $4.8 billion. About 30 percent have defaulted, according to the government.

Like many big lenders, Citi can make government-backed loans — putting taxpayers on the hook for defaults — without sending applications to the FHA for review. But it has to abide by strict guidelines and set up separate quality control departments, independent of the bank’s other operations, to flag suspicious applications.

That was Hunt’s job at CitiMortgage. She had started in the mortgage business in 1975 at age 18 as a lowly processor, then climbed the ladder into management. By 2008, she supervised nine workers in the quality control department. They scrutinized one out of every 10 mortgage applications.

They caught “over a thousand” applications with problems, according to Gibbs, her lawyer. Some were obvious fraud – such as numbers whited-out on a W-2 wage form faxless payday loans. Others may have been goofs, such as missing documents or wrong calculations.

The cases were passed on to a fraud unit, which verified that about half really were attempts to cheat, says Hunt. Such cases were supposed to be reported quickly to the Department of Housing and Urban Development, which overseas the FHA. But the government wasn’t hearing of the problems.

At first, Hunt didn’t blame the Citi system. “The sheer volume of referrals was overwhelming,” she thought.

More than 1,000 cases referred by Hunt’s unit were backed up in the fraud unit in 2009, according to the government. More than 80 percent were loans that had defaulted shortly after they were made, which the government calls an indicator of fraud. Eventually, Citi simply erased those records from its files, the government charged.

Then Hunt suspected something more sinister, a “pattern of behavior,” she said. “As I found things against the HUD rules and reported them to management, nothing happened, even after more follow-ups.”

According to the government, Citi’s misbehavior started in 2004, when it took the quality control function away from an outside contractor and moved it in house. It continued until mid-2011. That was more than two years after CitiGroup nearly failed over problems that included massive investments in bad mortgages. The government bailed out the bank to the tune of $45 billion.

BULLYING

Hunt wasn’t alone in her worries. According to the government’s suit, Michael Watts, the director of quality control, complained repeatedly to company officials charged with controlling risk. He warned that employees had “marching orders” to fight quality control decisions.

At one large staff meeting, managers praised loan processors for “beating back” the quality control team and getting them to withdraw complaints, she said. The quality control team was standing there listening. “Someone was allowing them to bully us,” Hunt said.

In June of last year, Hunt wrote a memo complaining about pressure from Jeffrey Polkinghorne, Citi’s director of “front-end” risk. “We also have Polkinghorne telling us it is our asses . . . if the quality does not improve,” she wrote, according to the federal complaint.

At that point, Hunt could have shut up and started overlooking problems. Instead, she complained to CitiMortgage human resources department. There were meetings. Five months later, nothing had changed.

That’s when she decided to blow the whistle outside Citi.

Part of the decision was self interest — she wanted to separate herself from an illegal activity. Hunt also felt an obligation to keep the mortgage industry honest. The FHA had certified her to handle its mortgages. “I uphold their standard,” she said.

She talked with her husband about the costs of standing up, about everything they could lose. Her career. Their home.

She talked to Gibbs, a lawyer from Columbia, Mo., who she knew. Gibbs knew about the federal false claims act, although he had never handled such a case. He filed suit in August.

Then Hunt went back to work. “I kept a low profile. It wouldn’t serve a purpose for me to go blasting this all over the place,” she said.

False Claims Act suits are filed under seal, and they remain sealed until the government decides whether to participate. For the first few weeks, Citigroup didn’t know it was being sued.

The Justice Department got interested and took up the case. It began negotiating with Citgroup. The law forbids employers from retaliating against whistleblowers, and Hunt said she felt no blowback at work.

“I don’t believe much of this filtered down to the O’Fallon office,” she said. “I was comforted in my mind that nobody I was passing in the hallways knew.”

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