Consumer prices show first gains in several months

Consumer prices increased in January for the first time in several months, according to new figures from the Department of Labor.

The department's latest Consumer Price Index summary found a 0.3 percent increase in the cost of consumer goods, largely due to rising energy prices. The index had actually declined for three consecutive months prior to January following two months of zero percent change.

"A bit of inflation is encouraging. It means businesses aren’t completely giving up and slashing prices. The fact that they can at least hold the line on their price cuts is a positive," Mark Zandi of Moody's Economy was quoted as saying in a New York Times report.

In the Labor Department's report, transportation costs were up 1.3 percent while energy was up 1.7 percent. Other categories such as housing and food posted much smaller changes of less than 0.5 percent.

The latest figures may help calm some lingering fears among analysts about the possibility of deflation further impacting the recession, although much of this will depend on whether the recession continues to deepen in the coming months.

UPDATE: Citi, Bank Of America Fall Further On Nationalization Concern

By Alistair Barr

SAN FRANCISCO (Dow Jones) -- Bank of America Corp. shares hit a record low and Citigroup Corp.'s stock slumped to an 18-year low Friday, as the two financial giants faced investors' concerns they may be nationalized.

Citigroup shares dropped 33% to $1.68, their lowest level since early 1991. Bank of America fell 29% to $2.81, and earlier changed hands at a lowest-ever $ 2.53, according to FactSet Research data.

A Citigroup (C) spokesman highlighted the bank's high Tier 1 capital ratio, a measure of financial strength, and said it continues to cut assets on its balance sheet, reduce expenses and streamline its businesses for future " profitable growth." He declined to comment further.

Citi isn't having conversations with the U.S. government about nationalization, Reuters reported, citing two unidentified people close to the New York-based bank. However, those people also said the U.S. Treasury has not disclosed much more to Citigroup than it has to the broader public about its plans for the banking sector.

"We see no reason to nationalize a bank that is profitable, well capitalized and actively lending," said Scott Silvestri, a spokesman at Bank of America ( BAC).

LATIN AMERICAN MARKETS: Mexico's Rate Cut Falls Short Of Expectations; Vale Shares Drop

By Carla Mozee

Investors drove Mexico's equity market and its currency down Friday after the central bank's interest-rate cut wasn't as deep as expected.

After the rate decision, data released showed the first contraction in the Mexican economy since 2003.

Mexico's IPC posted its fourth loss in a row, finishing 1.9% lower at 18, 324.23.

Shares of interest-rate sensitive banks finished mixed. Grupo Financiero Banorte slumped 1% and Banco Compartamos fell 1.6%. Grupo Financiero Inbursa reversed declines and rose 1.9%.

The Bank of Mexico on Friday lowered its benchmark interest rate by 25 basis points to 7.5%. The decision was below the market estimate for a half-percentage point cut.

"Manufacturing in Mexico is really collapsing and, for that reason, they need as much monetary help that they can get. A 25 basis-points cut was really somewhat meaningless," said Doug Smith, head of Latin American research at Standard Chartered Bank, in a telephone interview.