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Republicans yielded on policy affecting communist Cuba and Democrats gave way on new energy standards for light bulbs to seal an agreement Thursday evening on a massive $1 trillion-plus year-end spending package in time avert a possible government shutdown this weekend.

Under pressure from White House veto threats, House Republicans agreed to drop restrictions on people who visit and send money to relatives in Cuba, while Democrats conceded defeat on a GOP demand to delay energy efficiency standards that critics argued could effectively ban inexpensive incandescent light bulbs. In late stage talks, Democrats also agreed to ban the District of Columbia’s government from funding abortions.

These policy issues held up a final agreement on the must-do spending measure for most of the day. It came barely a day after Republicans said they planned to push the 1,200-plus-page legislation through the House with only GOP votes, which seemed like a bluff considering tea party opposition to the measure.

The measure funds 10 Cabinet agencies, awarding a slight increase to the Pentagon and veterans’ programs while trimming most other domestic agencies. It drops most policy provisions sought by GOP conservatives.

Thursday’s legislation implements the details of cost caps set under the August debt and budget accord between Republicans and President Barack Obama and adds to earlier agency savings enacted in April. It pays for programs ranging from border security to flood control to combating AIDS and famine in Africa.

The measure has bipartisan backing but is likely to encounter resistance from conservative tea party lawmakers seeking far more significant cuts to government agencies.

Days after saying that the measure was wrapped up, House Appropriations Committee Chairman Harold Rogers, R-Ky., acknowledged that talks had been reopened, as power lawmakers quarreled over the Cuba provisions and other unresolved issues.

The bill chips away at the Pentagon budget, foreign aid and environmental spending but boosts funding for veterans programs. The Securities and Exchange Commission, responsible for enforcing new regulations under last year’s financial overhaul, won a 10 percent budget increase, even as the tax-collecting IRS absorbs more than a 3 percent cut to its budget.

Popular education initiatives for special-needs children and disadvantaged schools were basically frozen and Obama’s cherished “Race to the Top” initiative, which provides grants to better-performing schools, would absorb more than a 20 percent cut. The maximum Pell grant for low-income college students would remain at $5,550, but only after major cost-cutting moves that would limit the number of semesters the grants may be received and make income eligibility standards more strict.

Environmentalists scored clear wins in stopping virtually every significant GOP initiative to roll back Environmental Protection Agency rules. Most importantly, industry forces seeking to block new greenhouse gas and clean air rules, as well as a new clean water regulation opposed by mountaintop removal mining interests, were denied. But Republicans succeeded in blocking new energy efficiency standards for light bulbs and won delays to a new Labor Department rule requiring a reduction of coal dust responsible for black lung disease.

Drafted behind closed doors, the proposed bill would provide $115 billion for overseas security operations in Afghanistan and Iraq but give the Pentagon just a 1 percent boost in annual spending not directly related to the wars, though creative accounting such as mixing war funds with the core Defense Department budget is allowing billions of dollars more into Pentagon coffers.

The Environmental Protection Agency’s budget would be cut by 3.5 percent. Foreign aid spending would drop and House lawmakers would absorb a 6 percent cut to their office budgets.

And with tensions plain in the U.S.-Pakistan relationship, counterinsurgency aid for Pakistan would be cut to $850 million from Obama’s $1.1 billion request. All told, $11.2 billion in emergency foreign aid funding would be provided for counterterrorism, humanitarian aid and training of Iraqi security forces, among other anti-terror activities.

The measure generally consists of relatively small adjustments to thousands of individual programs. Agencies like the Border Patrol and Immigration and Customs Enforcement will get a boost within the Homeland Security Department, while GOP defense hawks won additional funding to modernize the U.S. nuclear weapons arsenal. The troubled, over-budget, next-generation F-35 fighter plane program would be largely protected.

Social conservatives won a ban on government-funded abortions in Washington, D.C., and restored a longstanding ban on funding for needle exchange programs used to prevent the spread of HIV. But efforts to take away federal funding for Planned Parenthood failed, as expected.

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An early rally fizzled on the stock market Friday but still left the Standard & Poor’s 500 index up 7.4 percent for the week, its biggest gain since March 2009.

A surprise drop in the U.S. unemployment rate sent stocks higher in early trading, but the gains faded during the afternoon.

The Dow Jones industrial average dropped 0.61 of a point to close at 12,019.42. The Dow ended the week up 7 percent, the largest weekly gain since July 2009.

Bank stocks rose sharply, continuing a weeklong rally. JPMorgan Chase & Co. jumped 6.1 percent, the most among the 30 stocks in the Dow average. Morgan Stanley leapt 6.9 percent, the second-biggest gain of any stock in the S&P 500 index.

European stock indexes and the euro rose after German Chancellor Angela Merkel made a speech pushing for tighter rules on government spending. Merkel said the 17 countries that use the euro must quickly restore market confidence by making financial controls stricter.

Bond yields for Spain and Italy fell, a sign that investors are becoming more confident in the ability of those countries to pay their debt. France’s CAC-40 and Britain’s FT-SE each rose 1.1 percent.

Markets could be in for more volatility next week as European leaders prepare for a summit to propose new measures for containing the crisis.

The Labor Department reported before the market opened that the unemployment rate fell to 8.6 percent last month, the lowest level in 2 1/2 years. Economists had expected the rate to stay at 9 percent. But a key reason the unemployment rate fell so much was that more than 300,000 people gave up looking for work and were no longer counted as unemployed.

The Nasdaq composite index inched up 0.73 to 2,626.93. The Standard & Poor’s 500 index fell 0.31 of a point to 1,244.28. The S&P surged 7.4 percent over the week, the most since March 2009.

Decisive steps by world leaders to right Europe’s teetering economy sent stocks soaring on Wednesday. The Dow jumped 490 points, its biggest gain since March 2009 and its seventh-largest one-day point gain in history. The weekly point gain of 787 in the Dow was the second-biggest in its history, following a 946-point gain in October 2008.

“This market has been gripped with fear for a long time,” said Peter Cardillo, chief market economist at Rockwell Global Capital. “And I think some of these fear factors are beginning to dissipate.”

This week’s strong stock performance is partially a reflection of the market’s increased volatility since August, when concerns that Europe’s debt was spinning out of control made dramatic stock price swings the norm. On Monday the S&P 500 broke a 7-day slide that had taken the index down 7.9 percent.

The improvements in the U.S. job market are “another illustration that the US economy is, for now at least, shrugging off the global economic downturn and fears about the collapse of the euro-zone,” Capital Economics Chief U.S. Economist Paul Ashworth said in a note to clients.

Merkel and French President Nicolas Sarkozy will meet Monday to discuss changes to European Union treaties. The talks will culminate in a Dec. 9 summit of EU leaders, where the proposals are expected to be debated and detailed. Analysts say stricter controls on spending could encourage the European Central Bank to offer more short-term help for governments struggling with their debts.

If the European Central Bank takes a larger role in buying government debt, “it will certainly be a relief to markets,” Cardillo said, “and maybe even mean Europe avoids falling into a deep recession. Not that it’s going to cure all the problems of Europe.”

In corporate news:

_ Western Digital Corp. soared 7.5 percent, the most in the S&P. The data storage provider raised its revenue estimate for the current quarter and said that recovery efforts at its facility in Thailand following massive flooding there were proceeding faster than had been expected.

_ Big Lots Inc. slumped 8.7 percent, after the retailer reported a 76 percent plunge in income because of lower margins and a loss related to a newly acquired Canadian business. The company buys overstocked items including food and housewares and sells them at a discount.

_ H&R Block Inc. fell 6.4 percent. The country’s largest tax-preparation company reported a wider quarterly loss late Thursday. H&R Block also said there was a jump in claims tied to bad loans made by its former subprime mortgage unit.

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Jewelry seller Tiffany & Co. said Tuesday its fiscal third quarter profit rose 63 percent on strong sales globally, particularly in Asia.

The luxury retailer known for its iconic turquoise box is also raising its full-year forecast on the strong quarter.

Tiffany’s results show the luxury shopper is continuing to spend freely. That segment has rebounded more quickly from the recession than others. High-end jewelry sold better than other categories.

The New York company’s net income rose to $89.7 million or 70 cents per share in the three months ended Oct. 31. That compares with $55.1 million, or 43 cents per share, a year ago. Analysts expected earnings of 60 cents per share, according to FactSet.

Revenue rose 21 percent to $821.8 million. Analysts expected $801.8 million.

“Increased sales in all regions contributed to the continuation of strong worldwide sales growth in the third quarter,” said CEO Michael J. Kowalski.

In the Americas, sales grew 17 percent to $387.7 million. Revenue in stores open at least one year rose 16 percent.

The measure is considered a key gauge of a retailer’s financial health because it excludes stores that open or close during the year.

Tourists helped push the measure up 30 percent Tiffany’s the New York flagship store.

In Asia-Pacific, revenue rose 44 percent to $183.2 million, helped by strength in the greater China region.

Revenue rose 12 percent in Japan and 19 percent in Europe.

Tiffany now expects net income of $3.70 to $3.89 per share, for prior guidance of $3.65 to $3.75 per share. Analysts expect $3.72 per share.

Tiffany expects revenue to rise in the high-teens percentage for the year.

In the fourth quarter, the company expects net income of $1.48 to $1.58 per share. Analysts expect $1.63 per share.

Tiffany operates 243 stores globally..

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U.S. stocks tumbled in the worst Thanksgiving week loss for the Standard & Poor’s 500 Index since 1932 as concern grew that Europe’s debt crisis will spread and as American policymakers failed to reach agreement on reducing the federal budget.

Shares of Bank of America Corp., Hewlett-Packard Co. and Caterpillar Inc. dropped at least 7.6 percent to lead declines in the Dow Jones Industrial Average.

Energy stocks fell the most in the S&P 500 as oil declined for a second week and as Chevron Corp. lost 5.7 percent after it was blocked from drilling in Brazil while the government investigates a recent spill. Netflix Inc. slid 18 percent after raising $400 million to bolster cash.

The S&P 500 slid 4.7 percent to 1,158, closing at the lowest level since Oct. 7. The Dow fell 564 points, or 4.8 percent, to 11,231 this week.

“We’ve resumed focus on the European debt issues,” Terry Morris, senior equity manager at National Penn Investors Trust Co., based in Wyomissing, Pa., said in a telephone interview. His firm manages about $2.2 billion.

The situation in Europe doesn’t seem to be improving, which makes the market defensive, he said. Spending cuts taking hold in the U.S. will be a negative, too, because they will be a drag on economic growth.

The S&P 500 has fallen for seven days, the longest streak in four months, and has tumbled 7.6 percent so far this month. U.S. equities erased an early advance in the final session of the week as S&P lowered Belgium’s credit rating and Reuters reported that Greece was demanding that private investors accept larger losses on their debt.

Debt Concerns

The cost of insuring European sovereign bonds against default rose to a record this week as Germany failed to find buyers for 35 percent of the bonds offered at an auction.

German Finance Minister Wolfgang Schaeuble said market turbulence sparked by the euro region’s sovereign-debt crisis would last for a few months.

Congress’ special debt reduction committee failed to reach an agreement this week, setting the stage for $1.2 trillion in automatic spending cuts and fueling concern that economic stimulus measures that are set to expire will not be renewed.

Still, S&P reaffirmed it would keep the United States’ credit rating at AA+ after stripping the government of its top AAA grade on Aug. 5.

Stocks fell Tuesday as revised Commerce Department figures showed that gross domestic product climbed at a 2 percent annual rate from July through September, less than projected and down from a 2.5 percent prior estimate. U.S. stock exchanges were shut Thursday for Thanksgiving and closed three hours early on Friday payday loan online.

Macro Factors

“The market’s not trying to distinguish between stocks right now; it’s focused almost exclusively on macro factors,” John Linehan, director of U.S. equities and a portfolio manager at T. Rowe Price Associates Inc., said at a press briefing Tuesday in New York. “There’s a tremendous amount of volatility in the marketplace. The market’s on the gas pedal and the tires are spinning, but we’re really actually not going anywhere.”

Companies most closely tied to the economy fell, sending the Morgan Stanley Cyclical Index down 6.2 percent, the most since the week ending Sept. 23. Caterpillar, the world’s largest construction and mining equipment maker, dropped 7.7 percent to $86.72.

All 10 groups in the S&P 500 fell this week, led by a 6.2 percent slump in energy producers and a 5.8 percent drop in financial shares.

Bank of America declined 11 percent, the most in the Dow, to $5.17, while Citigroup Inc. decreased 10 percent to $23.63. Both are among lenders that may have to temper plans to raise dividends and buy back stock next year as the Federal Reserve toughens capital tests for the biggest U.S. banks.

Netflix sank 18 percent, the most in the S&P 500, to $63.86. Technology Crossover Ventures will buy $200 million in zero-coupon senior convertible notes due in 2018 in the video-streaming and DVD subscription service, and T. Rowe Price Associates Inc. funds will buy $200 million in stock. The transactions suggest Netflix’s cash squeeze may last longer than it had anticipated, said Michael Pachter, an analyst with Wedbush Securities. The company needs to spend more to make its streaming content stand out against a growing list of competitors, he said.

Commodity producers declined as reports showed that manufacturing contracted in Europe and may shrink by the most in more than two years in China. AK Steel Holding Corp., the third-largest U.S. steelmaker by volume, plunged 16 percent to $7.04. Alpha Natural Resources Inc., the coal producer that bought Massey Energy Co. for $7.1 billion in June, lost 15 percent to $18.81.

Chevron in Brazil

Chevron lost 5.7 percent to $92.29. The U.S. oil producer operating the $3.6 billion Frade oilfield off Brazil was blocked from drilling in the South American country while the government investigates a recent spill.

Hewlett-Packard slipped 9.3 percent to $25.39 after profit forecasts that missed analysts’ estimates. Meg Whitman, who took over as chief executive officer two months ago, used her first earnings conference call to tell investors they needed to lower expectations. The first-quarter profit forecast and full-year earnings outlook missed estimates

Yemeni President Ali Abdullah Saleh was in Saudi Arabia on Wednesday to sign a U.S.-backed power transfer deal mediated by Gulf Arab states to resolve the impoverished country’s crisis, Yemen’s state television reported.

Saleh has repeatedly promised to sign the Gulf-brokered agreement, only to change his mind every time. Under the deal, Saleh would step down and transfer power to the vice president in exchange for immunity from prosecution.

The TV said Saleh arrived in the Saudi capital Riyadh on Wednesday morning but did not say when the deal would be signed. It said that along with Gulf Arab representatives who sponsored the agreement, European and American envoys would also attend the signing.

Saleh has clung to power despite an 8-month-old uprising, mass protests calling for his ouster and a June assassination attempt that left him badly wounded and forced him to travel to Saudi Arabia for more than three months of hospital treatment.

But things appeared to be shifting on Tuesday, when the U.N. secretary-general’s envoy to Yemen, Jamal bin Omar, said all parties had agreed on a plan that would have Saleh step down.

“All parties agreed today on the Gulf initiative and the implementation of its mechanism,” bin Omar said after meetings with Yemen’s vice president, Abed Rabbo Mansour Hadi, in Sanaa.

Security in Yemen has unraveled amid the uprising against Saleh’s 30-year reign. The situation is particularly bad in the south, where al-Qaida militants _ from what is perhaps the world’s most active branch of the terror network _ have taken control of entire towns, using the turmoil to strengthen their position.

The unarmed protesters have held their ground with remarkable resilience, flocking to the streets of Sanaa and other Yemeni cities and towns to demand reforms from the autocratic government and braving a violent crackdown by government forces that has killed hundreds.

But their uprising, inspired by other Arab revolts in the region that saw longtime rulers of Egypt and Tunisa go, has at times been hijacked by Yemen’s two traditional powers _ the tribes and the military _ further deepening the country’s turmoil.

Breakaway military units and tribal fighters have been battling in Sanaa with troops loyal to Saleh, in fighting that has escalated in recent months.

An impoverished nation of some 25 million people, Yemen is of strategic value to the United States and its Gulf Arab allies, particularly Saudi Arabia. It sits close to the major Gulf oilfields and overlooks key shipping lanes in the Red and Arabian seas.

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A top U.S. tech analyst is predicting Amazon is likely to launch its own under-$200 smartphone by next year.

And Amazon could sell the device for $170 U.S. or less, said Citigroup analyst Mark Mahaney.

It would be the second head-on Amazon assault on Apple, right after the launch of the iPad tablet competitor Kindle Fire in the United States.

Mahaney based his prediction

Pope Benedict XVI has had his first meeting with Italy’s new leader on the tarmac of Rome’s airport just before taking off for a trip to Africa.

Premier Mario Monti greeted the pope Friday morning as Benedict descended from the helicopter that brought him from the Vatican to Rome’s Leonardo da Vinci airport. They chatted as they walked slowly across the tarmac to the pope’s waiting plane.

Monti later Friday faces the second of two confidence votes for his government in parliament cash advance flexible payments. The Senate on Thursday easily approved his government, formed of bankers, professors and CEOS aimed at saving Italy from its debt crisis.

Benedict then took off for the west African nation of Benin for a three-day visit where he will speak of the role of the church in Africa.

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Chrysler is counting on a new Jeep sport utility vehicle and its strong brand name to help withstand uncertainty in the European auto market and expand into new markets in China and Russia, the automaker’s chief executive said Wednesday.

The company announced plans to spend $500 million at its Ohio assembly complex that will make the new model and add 1,100 jobs by late 2013. The expansion is part of a $1.7 billion investment to build the new Jeep.

Chrysler CEO Sergio Marchionne said Jeep is becoming the star of its European market and that sales have been doubling.

“It’s the best brand Chrysler owns by a long margin,” he said. “It’s got a glorious history.”

Italian automaker Fiat SpA, which now controls Chrysler, has been hit hard this year by slumping overall sales in Europe. It has been turning more toward business in the United States and Brazil, said Marchionne, who is CEO of both companies.

He said next year will be even worse in Europe. “The majority of the growth and expectations around Fiat are unfortunately outside the European context,” he said

Marchionne said that he’s confident the leaders forming the Italy’s new government can help it avoid financial disaster, but he added that instability there could influence where it locates its new headquarters when Fiat combines with Chrysler.

He is working toward bringing the two automakers together and faces the thorny political issue of where to base the company. The instability in Italy can’t be overlooked, he said Wednesday.

“I would be lying to you if I told you it didn’t,” he said. “It’s one of the things we’ll look at. That’s not to say the current situation would force us to move away from Italy. We’re committed to the industrial back bone of the country.”

Premier Mario Monti formed a new Italian government on Wednesday puts bankers, diplomats and business executives in charge instead of politicians. The former European Union competition commissioner said economic growth is a top priority and will put out an emergency plan Thursday

“Monti has all of the qualities to get this done,” Marchionne said. “It’s in the interest of every Italian to get behind him.”

Whether the country can recover soon depends on its political forces, he said. “If they do, it can be done relatively quickly,” he said. “The execution may take longer, but the plan can be put in place.” `

Sales of the stylish Fiat 500 mini car have been far below expectations in the United States since its debut in March, Marchionne said. It’s Fiat’s first vehicle in the U.S. since it pulled out of the market in 1983.

He blamed the low sales on a lack of dealerships selling the Fiat and said more are coming on line.

While Fiat is struggling, Chrysler is moving toward its first annual profit since 2005 behind strong third quarter sales of its new or revamped Chrysler, Dodge, Jeep and Ram cars and trucks.

Marchionne thinks the Jeep brand can continue to grow worldwide behind its unique history. Originally made for the military, workers in Toledo have been producing Jeeps since 1941.

“The horrible thing about Jeep is it hasn’t been exploited internationally,” he said. “It’s off-road capabilities are unique in the marketplace and we need to preserve that going forward.”

No decision has been made on what the new model will be called. Marchionne said it will be more technologically advanced than the Jeep Grand Cherokee.

The assembly plant in Ohio that now has 1,800 workers makes the Jeep Wrangler and Liberty along with the Dodge Nitro and will be central to the company’s future and its SUV exports, Marchionne said.

It’s likely the plant will build more vehicles in the coming years, he said. He also didn’t rule out expanding Wrangler production at the plant if sales take off outside the U.S.

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Carol Behr thinks she knows why many students at Southern Illinois University Carbondale are buying their books online, and it’s not just the convenience.

It’s the sales tax savings, says Behr, a vice president of Kennedy Book Store, which owns Southern Illinois Book & Supply in Carbondale. The company also has a store in Lexington, Ky., and of the two, she says the Carbondale store has lost more business to competitors such as Amazon.com.

The difference? Kentucky doesn’t charge sales tax on textbooks, but Illinois does.

To Behr, the slipping Illinois sales figures highlight an unfair competitive situation. “A business is a business,” she says. “Why do I have to charge sales tax and they don’t, if we’re in the same business?”

Ten senators, including Illinois Democrat Richard Durbin and Missouri Republican Roy Blunt, introduced a bill Wednesday that would remove Amazon’s competitive advantage over bookstores such as the one in Carbondale. And, surprisingly, Amazon has endorsed the bill.

The proposed Marketplace Fairness Act would require retailers to collect taxes on remote sales, including those made online or through mail order. It would apply only to businesses with at least $500,000 of remote sales, and only in states that adopt a simplified sales tax structure.

Large sums of money are at stake. William Fox, a professor of economics at the University of Tennessee, estimates that state and local governments lose $11.4 billion a year in revenue from online retail sales, and a total of $23.6 billion from untaxed online, catalog and business-to-business sales.

In the past, Amazon has fought hard to avoid collecting its share of that money. In Illinois, North Carolina and Rhode Island, it canceled relationships with local affiliates to get around so-called “Amazon tax” laws. In Texas, it threatened to close a warehouse rather than pay $269 million in sales taxes.

Now, though, Amazon says it ’strongly supports enactment” of the Marketplace Fairness Act. Not all companies agree: eBay, for example, says the bill “fails to protect small business retailers using the Internet.”

Past congressional efforts to address the sales tax issue

By the third time around, it really shouldn’t be a surprise. The latest “Call of Duty” video game set a first-day sales record this week, generating $400 million in sales in its first 24 hours in stores. That breaks the record its predecessor set this time last year.

“Call of Duty: Modern Warfare 3″ is the third game in the military shooter series to set such a record. Last year, “Call of Duty: Black Ops” raked in $360 million in its first 24 hours on sale. “Call of Duty, Modern Warfare 2,” sold 4.7 million copies in its first 24 hours to reap $310 million

The latest installment of the game from Activision Blizzard Inc. went on sale at midnight Tuesday in North America and the U.K.

Activision said Friday the game sold 6 faxless payday advance.4 million units in its first 24 hours.

A rival shooter game from Electronic Arts Inc., “Battlefield 3,” meanwhile, sold 5 million units in its first week in stores last month, making it the fastest-selling game in EA’s history.

The figures show there’s a big appetite for big shooter games this holiday season, boding well for their publishers and retailers such as GameStop Corp.

Shares of Activision Blizzard slipped 16 cents to $12.82 in morning trading Friday.

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