INFLATION

U.S. Treasury Secretary John Snow said on Friday he was confident the Federal Reserve will protect growth by keeping inflation in check, and denied the Bush administration was softening its strong-dollar policy.

The drop in oil and metal prices this week has raised fears that a speculative bubble in commodities is bursting, but giant U.S. fund manager PIMCO says fundamentals will hold up the asset class.

Wholesale prices rose more quickly in April than they have in the past seven months, led largely by higher energy costs, including gasoline, the U.S. Department of Labor reported Tuesday.

Stocks lost ground for a second straight session Friday when the dollar weakened and bonds prices fell after data showing higher import prices stoked the market's inflation worries.

Federal Reserve policymakers sit down on Wednesday to decide on what might be the last increase in interest rates for some time, but they will also discuss how to leave their options open in the statement that accompanies the move.

Top European Central Bank policymakers on Friday left open the possibility of a bigger than expected rate rise as the ECB's chief expressed dissatisfaction with inflation running above target.

Federal Reserve Chairman Ben Bernanke on Thursday said for the first time the central bank could at some point pause its 22-month interest-rate rising campaign to allow time to divine the economy's path.

The $70-a-barrel mark for oil, decisively breached this week, is seen by many analysts as a danger level. But some argue sustained prices of well over $60 have inflicted surprisingly little pain and done some good.

An indicator of future U.S. economic activity slipped for a second month in March, hinting at slower growth ahead, while separate data showed Mid-Atlantic factory activity edged up in April despite higher costs.

Soaring energy costs helped push U.S. consumer prices up a steep 0.4 percent last month, while rising apparel prices spurred core inflation more than expected, a government report showed on Wednesday.

U.S. stocks climbed on Tuesday as strong corporate earnings and evidence of tame inflation in March countered a rise in the price of oil to a record high.

Byow U.S. unemployment reflects a vigorous economy but does not risk fueling inflation at the moment, U.S. Treasury Assistant Secretary for Economic Policy Mark Warshawsky said on Monday.

Federal Reserve governors said on Monday it was still unclear how much further interest rates need to rise to achieve appropriate levels of balance between growth and inflation.

It would be harder for the Federal Reserve to deal with a spike in inflation than a softening of growth, a key Fed policy-maker said on Friday, suggesting the central bank may want to err on the side of higher interest rates.

U.S. stocks fell on Friday as interest-rate worries outweighed expectations that stronger-than-expected jobs creation and tame wage inflation in March would lead to growing profits.