Falcons survive Seattle rally in thriller

(Reuters) - The top-seeded Atlanta Falcons needed a last-minute field goal to claim a nerve-jangling 30-28 win over the Seattle Seahawks on Sunday despite squandering a 20-point lead in an exhilarating fourth quarter.
Atlanta will now host the San Francisco 49ers on January 20 in the National Football Conference championship game with a berth in the Super Bowl on the line.
Matt Bryant's 49-yard field goal with eight seconds to play put Atlanta ahead after the visiting Seahawks turned the game around in astonishing fashion with three touchdowns in the final quarter, almost pulling off one of the greatest National Football League playoff comebacks.
After trailing 27-7 at the end of the third, Seattle grabbed a one-point lead with 31 seconds left in the game but Bryant's kick undid all that work.
"All in all it was an extraordinary game," Seahawks coach Pete Carroll told reporters.
The Falcons had lost their last three playoff games and the tension at the end was too much for Atlanta's veteran tight-end Tony Gonzalez in his 16th season in the league and having never won a playoff encounter.
"I was on the ground sobbing like a baby," said Gonzalez, who had insisted this would be his final attempt to reach the Super Bowl.
"I thought it was over. I've played 16 years and I thought ‘here we go again,' especially with that big old lead, I guess it's just not meant to be," Gonzalez said.
It was a remarkable comeback attempt from Seattle, which would have been just the fourth time a team overcame a 20-point deficit in the post-season.
There was time for more drama as Atlanta botched the kickoff after Bryant's field goal, allowing Seattle possession on their 46 yard line but rookie quarterback Russell Wilson's Hail Mary throw to the end zone was intercepted as time expired.
WILD ONES
There were brows being wiped around the Georgia Dome at the end of the battle, which gave Atlanta their first playoff win in the era of head coach Mike Smith and quarterback Matt Ryan.
In the previous three attempts, Atlanta had crashed out of the playoffs without a win but for three quarters of Sunday's game they looked like a team determined to end that run.
Ryan, who threw for three touchdowns and 250 yards, found Gonzalez at the back of the end zone to make it 10-0 in the first quarter and then after another Bryant field goal, Roddy White superbly caught a 47-yard touchdown pass at full-stretch to extend the advantage to 20-0.
Wilson found Golden Tate with a 29-yard pass in the third to keep Seattle in the contest but Atlanta responded well with a superbly constructed 14-play, 80-yard drive ending in a smart five-yard Ryan pass to Jason Snelling.
At 27-7 a Falcons victory looked certain, but Wilson, who threw for 385 yards, ran in a touchdown himself and then after Ryan threw an interception, Zach Miller scored on a three-yard pass and the lead was grabbed with a two-yard run into the end-zone from Marshawn Lynch.
But Ryan was able to deliver crucial completions to Harry Douglas (22 yards) and then to trusted target Gonzalez (19 yards) to set up the game-winning kick and wild celebrations tinged with a good amount of relief.
"I have been in some wild ones but (not) at this time of year," said Ryan who finally broke his playoff duck at the fourth attempt.
"Our goal isn't to win one playoff game and to stop answering that question. Our goal is still in front of us and we have two more games to go," he said.

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Brady powers Patriots past Texans into AFC title game

(Reuters) - Tom Brady set a record for most playoff wins by a quarterback in leading the New England Patriots to a 41-28 win over the Houston Texans on Sunday to move one win away from a second consecutive trip to the Super Bowl.
Brady, who surpassed Hall of Famer Joe Montana with his 17th playoff win, completed 25-of-40 passes for 344 yards and three touchdowns in the divisional playoff, setting up a rematch of last year's AFC title game with the Baltimore Ravens.
Brady led a balanced attack that was lifted by the play of reserve running back Shane Vereen, who rushed for one touchdown and caught a pair of TD passes after filling in for injured Danny Woodhead.
The Patriots, who will host Baltimore on January 20, beat the Ravens 23-20 at home last year for the AFC title to earn their fifth berth in the Super Bowl since 2001.
New England tight end Rob Gronkowski, who was playing in his second game since breaking his forearm, broke his arm again on Sunday and is expected to miss the rest of the playoffs.
New England built a 38-13 lead early in the fourth quarter before Houston mounted a frantic comeback that produced a pair of touchdowns to draw within 10 points at 38-28 with just over five minutes to play.
The Patriots recovered an onside-kick and moved the ball into field goal range with kicker Stephen Gostkowski nailing his attempt from 38 yards to put the finishing touch on the victory.
Brady, winner of three Super Bowl rings with the Pats, kept Houston off balance with a hurry-up offense and quick snaps that froze the Texans in their defensive arrangement and caused some confusion at the line of scrimmage.
The Patriots, the league's highest-scoring team who routed the Texans 42-14 last month in a regular season game, got out to a 17-3 lead in the second quarter before the Texans rallied.
Houston, boosted throughout the game by long kickoff returns by Danieal Manning, stormed back with 10 points in the last 75 seconds before the intermission to make it 17-13 before the Pats put their stamp on the game with a dominant second half.
Houston quarterback Matt Schaub, playing catch-up in the second half, completed 34-of-51 for 343 yards with two touchdowns and one interception.
Running back Arian Foster was held to 90 yards on 22 carries, though he scored one touchdown on the ground and one on a pass from Schaub.

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PREVIEW-NFL-Texans' Schaub facing big test against Patriots

Jan 11 (Reuters) - Houston Texans quarterback Matt Schaub starts his first road playoff game, at the New England Patriots on Sunday, with the pressure on.
The Patriots, corning in from a bye week, loom as favorites in the American Football Conference (AFC) divisional round clash as they look to go one better than last season when they lost to the New York Giants in the Super Bowl.
New England crushed Houston 42-14 in week 14, a result which knocked the Texans off their perch and started a slump which also affected Schaub.
Although the Texans beat the Indianapolis Colts in week 15, they ended the regular season with successive losses and then were far from convincing in the 19-13 wild-card round win over the Cincinnati Bengals.
Schaub has thrown just one touchdown in those four games and has made three interceptions and given up 10 sacks.
The intense atmosphere of a road game in the playoffs will test all of the 31-year-old's character.
"I think he will be ready," said Texans wide receiver Andre Johnson.
"He's working his butt off like he's done every week. I think just getting his first (playoff) win probably got a monkey off his back because that is something people talked about," he said.
Schaub missed out on the playoffs last year due to injury but his opposite number Tom Brady has no shortage of post-season experience.
Brady has won 16 playoff games, a league record that he shares, for the moment, with Joe Montana.
He has also played in five Super Bowls, winning three of them, but he believes track records go out of the window when it comes to the playoffs.
"I played games early in my career when I had no experience and I did pretty well," he told reporters. "I think it always comes down to who is executing the best and not so much the experience."
The Texans must hope that their outstanding defensive end J.J. Watt can get to Brady and make life painfully uncomfortable.
"He's a force on every play, no matter what play you have called, he can run it," said Patriots head coach Bill Belch of Watt.
"He makes a lot of plays on the backside, disrupts the ball, strip-sacks, causes fumbles, batted balls. He's an excellent pass rusher, quick and powerful.

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Texans' Schaub facing big test against Patriots

(Reuters) - Houston Texans quarterback Matt Schaub starts his first road playoff game, at the New England Patriots on Sunday, with the pressure on.
The Patriots, corning in from a bye week, loom as favorites in the American Football Conference (AFC) divisional round clash as they look to go one better than last season when they lost to the New York Giants in the Super Bowl.
New England crushed Houston 42-14 in week 14, a result which knocked the Texans off their perch and started a slump which also affected Schaub.
Although the Texans beat the Indianapolis Colts in week 15, they ended the regular season with successive losses and then were far from convincing in the 19-13 wild-card round win over the Cincinnati Bengals.
Schaub has thrown just one touchdown in those four games and has made three interceptions and given up 10 sacks.
The intense atmosphere of a road game in the playoffs will test all of the 31-year-old's character.
"I think he will be ready," said Texans wide receiver Andre Johnson.
"He's working his butt off like he's done every week. I think just getting his first (playoff) win probably got a monkey off his back because that is something people talked about," he said.
Schaub missed out on the playoffs last year due to injury but his opposite number Tom Brady has no shortage of post-season experience.
Brady has won 16 playoff games, a league record that he shares, for the moment, with Joe Montana.
He has also played in five Super Bowls, winning three of them, but he believes track records go out of the window when it comes to the playoffs.
"I played games early in my career when I had no experience and I did pretty well," he told reporters. "I think it always comes down to who is executing the best and not so much the experience."
The Texans must hope that their outstanding defensive end J.J. Watt can get to Brady and make life painfully uncomfortable.
"He's a force on every play, no matter what play you have called, he can run it," said Patriots head coach Bill Belch of Watt.
"He makes a lot of plays on the backside, disrupts the ball, strip-sacks, causes fumbles, batted balls. He's an excellent pass rusher, quick and powerful.
"He is a tough match-up with good technique, well coached and he plays hard. He's a factor on every play.

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Chiefs announce coordinators, assistant coaches

KANSAS CITY, Mo. (AP) — Andy Reid is wasting about as much time putting together his first coaching staff in Kansas City as he did in finding his new job.
The Chiefs coach announced Friday that former Eagles coach Doug Pederson would be his offensive coordinator and longtime Jets assistant Bob Sutton the defensive coordinator, along with the majority of the staff Reid hopes will turn around a 2-14 franchise.
The moves come one week after Reid was hired by the Chiefs to replace the fired Romeo Crennel, and less than two weeks after he was dismissed following 14 seasons with the Eagles.
Reid announced that Matt Nagy will coach the Chiefs' quarterbacks after two seasons as the Eagles' offensive quality control coach. Eric Bieniemy will work with running backs, Tom Melvin the tight ends, and David Culley will be an assistant head coach and work with wide receivers.
Reid has not announced an offensive line coach. Tommy Brasher will work with the defensive line, but Reid has not announced coaches for linebackers, defensive backs or special teams.
"I'm pleased we were able to get all of these coaches on board," Reid said. "I have relationships with each of them, and I know their past experiences, work ethics and coaching styles. These are high-character coaches, and each one brings something different to the table."
Pederson spent 12 seasons playing quarterback in the NFL, most of them with Green Bay. But he started the first part of the 1999 season for Philadelphia, when Reid has just been hired. He then helped tutor Donovan McNabb, the Eagles' second overall pick in the draft.
Pederson retired in 2004 and began his coaching career, spending two years as Reid's quality control coach and the past two seasons working with the Eagles' quarterbacks.
"Doug has been around the game a long time, and he has great vision," Reid said. "As a former player in this league, he sees the game from a different perspective, and that will be a great benefit for our players. He has a knack for developing talent."
Pederson will inherit an offense that was among the NFL's worst last season with quarterbacks Matt Cassel and Brady Quinn. Pederson and Reid both said they'll examine the QB options already on the roster, but they'll also consider free agency, the trade market and using their No. 1 pick in the draft on upgrading the position.
"It's something I've studied the last few days, ever since Coach Reid and I talked about coming in," Pederson said on a conference call with reporters.
"It's a very talented group. It could be an explosive group," he said. "There's some weapons there on offense. Very similar to the circumstances we had this past year in Philadelphia."
Sutton will take over a defense that fared only slightly better than the Chiefs' offense.
A longtime college coach, Sutton spent nine seasons as the coach of Army before spending the past 13 seasons with the Jets. He was their linebackers coach from 2000-05, defensive coordinator for three years and senior defensive assistant and linebackers coach for two years. He spent the past season as Rex Ryan's assistant head coach.
"Bob is a creative coach that is going to give our defense a variety of looks and packages," Reid said. "He has a lot of experience and is well respected across the league."
Bieniemy has spent the past two seasons as offensive coordinator at his alma mater, Colorado. Melvin, Culley and Brasher all spent time with Reid in Philadelphia.
Reid also announced that Barry Rubin would serve as the Chiefs' head strength coach and Travis Crittenden would be his assistant. Reid's son, Britt Reid, and Corey Matthaei will be in charge of quality control, and Mike Frazier will be their statistical analysis coordinator.

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Analysis: In battle for the car, Sirius faces fight from Pandora

NEW YORK (Reuters) - Sirius XM Radio Inc's grip on drivers is under an increasing threat as the availability of Internet connections in more cars is helping Pandora Media Inc counter some of its rival's big selling points.
In a sign of how important drivers are to the two companies, each of their top executives made the trek to Las Vegas this week to court automakers at the annual Consumer Electronics Show.
Sirius XM, which has its satellite radios in 70 percent of new vehicles, generates the vast majority of its revenue through subscriptions and derives only a fraction from advertising dollars. Streaming service Pandora is just the opposite, collecting most of its revenue from advertising and operating only a nascent subscription business.
Right now, Sirius XM is the much bigger company, with almost 24 million subscribers and more than $3 billion in annual revenue. In the third quarter, it generated average revenue of $12.14 per subscriber.
Pandora, by contrast has 60 million users, about 1 million of whom are paid subscribers, and is on track to generate $424 million in revenue this year.
But the migration of music audiences to mobile devices threatens to upend a market that Sirius current dominates. The key to both companies' futures rests on winning the battle for the listener on the go, particularly people traveling by car.
With its presence in new vehicles, Sirius XM has a first-mover advantage over Pandora. But Pandora is making a huge push to get into the car, a move that dovetails with ubiquitous wireless access that makes it easier to listen to its service.
"Internet-enabled radio in the car has already begun," Pandora Chief Executive Officer Joe Kennedy said in an interview. "It will grow as a snowball, initially small but growing exponentially."
Sirius XM declined to make its executives available for interviews.
Of Pandora's 60 million total listeners, 77 percent have tuned in with a mobile device. The problem is, the revenue per 1,000 listener hours on mobile was only $26.96 in the third quarter, up from $23.60 a year earlier, but still less than half of the $56.40 the company generated from other listeners.
"They do have to continue their mobile monetization," said Cowen and Co analyst John Blackledge, who has a "neutral" rating on the stock.
Kennedy called the third quarter a "key milestone" since the mobile revenue increase outpaced mobile usage growth.
At Sirius XM, executives have said its customers are increasingly listening to its service on mobile devices, but it has never broken out figures on that usage. It costs Sirius XM car subscribers an extra $3.50 a month to stream the service over the Internet on devices.
"They don't really promote it, and it's not really a cornerstone of the product," Gabelli & Co analyst Brett Harriss said.
Sirius XM Chief Financial Officer David Frear said at an investor conference on Wednesday that the strategy was "to capture you in the car and then allow you to extend to other platforms."
DASH FOR THE DASHBOARD
While Sirius XM touts the ability of its satellites to deliver a strong signal and high audio quality, the importance of those attributes is likely to fade because of the widespread availability of faster and better Internet connections in cars.
"From the consumer standpoint, the reception advantages of satellite radio will be marginalized or go away over time," said a former Sirius XM executive familiar with the business models of the company and its competitors.
Indeed, Liberty Media Corp, which ranks as Sirius XM's largest shareholder and is close to gaining operating control of the company, has criticized its former longtime CEO, Mel Karmazin, for not adapting to changing technologies fast enough.
Critics say Sirius XM has relied too heavily on its position in the auto market and perceived programming advantage. About 50 million cars in the United States come equipped with the satellite radios, with just under half of their owners actually subscribing to the service.
For its part, Pandora is available in just 75 vehicle models, although it also has deals with automakers like General Motors Co, Ford Motor Co, BMW and most recently Chrysler Group LLC that allow drivers to plug in their Pandora-enabled mobile devices and use the car's dashboard to control the service.
More than 1 million people have used Pandora's dashboard integration, Pandora said.
Sirius XM also believes it has an edge with its programming from the likes of shock jock Howard Stern, talk show host Oprah Winfrey and major sports leagues. Access to this type of content, Sirius contends, justifies the subscription cost of at least $14.49 per month.
In the first three quarters of the year, Sirius XM's programming and content costs were $205.2 million, while it paid $409.4 million in revenue sharing and royalties, the company has reported. This represents roughly 25 percent of its revenue in the period.
On the other hand, Pandora spends roughly 55 percent its revenue on acquiring music.
"Having music is an important thing, but having the diversity of the content, the music, the news, the talk and the entertainment content is really what sets us apart," Sirius XM CFO Frear said at a December 3 investor conference.
But as Internet access becomes more readily available in cars, people will be able to listen to podcasts and other content.
"The value of commercial-free music on Sirius could decrease," said Gabelli analyst Harriss. "There is no doubt competition from Pandora will increase in the next two or three years."
RIHANNA VS. PANDORA
Still, Sirius XM has an unlikely ally in its battle with streaming music services: the U.S. government.
As it stands, Pandora and other streaming music services pay a much bigger percentage of revenue to license songs than Sirius XM does. Plus, the more popular these services become, the more they have to shell out for music royalties.
Based on rules that U.S. lawmakers set under the Digital Millennium Copyright Act, Pandora pays more than 50 percent of its revenue to an agency called SoundExchange to license songs on a per-performance basis.
Sirius XM pays 8 percent of its revenue for song licensing, and that will increase to just 11 percent by 2017 under a new deal struck with regulators. Traditional radio pays nothing at all to SoundExchange, although it pays composers to air their music.
Pandora and its brethren are pushing for changes in how royalties for online radio are collected and are backing the Internet Radio Fairness Act, a bill that would change regulation of royalties.
But they are up against big stars like Billy Joel, Rihanna and Missy Elliott, who are opposed to the bill because they believe their royalties would be cut drastically.
"Music is a poisonous area of investment because the royalty structures are so out of whack, it's impossible to be profitable," said David Packman, a veteran of the music industry and partner in venture capital firm Venrock.

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CES 2013: Shhh, don’t tell, but Las Vegas likes secrets, even at a trade show

LAS VEGAS—In a leather banquette in a sparkling Las Vegas club, a knockout blonde discreetly kicked the Louis Vuitton bag at her feet.
“It’s in there,” she whispered to me, conspiratorially. I followed this dame’s fishnet-clad legs down to her shoe’s pointed toe. Beautiful bag. “I call it the football,” she said. “I’m not going to bring it out yet.”
Leslie Bradshaw’s honey-colored Cali perfection brings to mind a young Cheryl Tiegs, but tonight she’s gone for broke in showgirl makeup, smoky eyes and red lipstick. I love her on sight.
'Til this moment on Wednesday night I knew only of Leslie, the co-founder and chief operating officer of JESS3, a brilliant and profitable data-visualization firm. I knew her from Twitter and tech blogs and magazines, where she’s forever featured as a top everything—woman, entrepreneur, kid genius—under 30. (She’s now 30.)
And now Leslie Bradshaw was hiding something. A new drug? A lap-dance voucher? We are in Vegas, after all.
But we’re here for the Consumer Electronics Show, the annual jamboree for the debut of new gadgets. Anyone with something to flog is flogging with gusto. Leslie is a cooler customer, raised on the idea of discretion when it comes to startups and venture capital. She’s not being a demented Qualcomm freak and overhyping stuff in a loony-bin, tone-deaf, tradeshow way. It’s all about stealth with her. A little film noir. The “football” in Leslie’s logo-spangled bag is the prototype for her latest venture.
At CES, the bellisima Leslie is not the only entrepreneur with something up her sleeveless sleeve. At the Las Vegas Convention Center, amid the neurotoxic audiovisuals of this vast trade show, I ran into two others—Sonaar Luthra, a TED global fellow, and Sarah Szalavitz, the ingenious philosopher queen of 7 Robot and the MIT Media Lab—who were keeping their most recent initiatives under wraps.
If you don’t pay up for a kissing booth or a speaking part at CES, as Qualcomm (disastrously) did this year, you mostly just stroll the floors testing stuff, exchanging gossip and being surprisingly generous about what looks cool. At nightfall you find friends and meet their friends. Cards are exchanged. Disorientation and dehydration are collectively experienced. Soft rock played loudly is heard; the clamor of slot machines and spastic LED light schemes are brooked. Oxygenated nicotine air is breathed.
It’s not bad for a day or two, but it’s extremely, extremely difficult to do business. You can’t be heard. You can’t find the right person to pitch, in a city where “adjacent” hotels can be a mile and a half apart. And there are no flat, vacant surfaces for showing off prototypes.
And that’s what Leslie Bradshaw meant. Though she doesn’t drink, or not much, she’s an expert cocktailer. She has a gift for making people feel comfortable, while also privately wowed. She could tell at a glance that the cocktail tables in front of us, jammed with cans of Red Bull and glasses of seltzer-lime on them, were not suitable for a full-dress presentation of her protoype. Which, I discovered later, is not a prototype at all—but a tablet cued up to demo the super-secret app she’s been working on, which launches on January 15.
I’ll say one thing I know about her elusive app: It transforms things into other things. Text into audio; audio into television. Text into television.
Sorry, folks. I can’t say more. Just as I can’t say more about Sonaar Luthra’s or Sarah Szalavitz’s projects, either. Though they might have something to do with Luthra’s inspiring Water Canary company, or Szalavitz’s seductive disbelief in “impossibility.”
But I promise that all three of these stealthy ideas are just as intriguing as the idea of stealth itself, right here at a circuslike trade show.

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Whitman says it will take five years to turn HP around

Whitman says it will take five years to turn HP around
To understand what an unholy mess HP (HPQ) is in right now, consider that CEO Meg Whitman says she needs more time to fix the company than she would have had to fix the entire California economy if she’d been elected governor. In a long Businessweek article about HP’s current turmoil, Whitman says that it will take her five years to execute her full plan to turn the company around. Whitman acknowledges that “some people don’t like that answer” when they ask her how long it will take, but she says it’s simply a reality at this point.
[More from BGR: ‘Apple is done’ and Surface tablet is cool, according to teens]
In the meantime, Whitman is trying to promote a new culture of thrift at the company by booting executives out of their plush office suites and forcing them to work in cubicles, Businessweek reports. Whitman tells the publication that she doesn’t want HP to be “a fancy pants kind of company” and that she aims to be more like the Marriott than the Four Seasons.
[More from BGR: Is BlackBerry back? Strong early BlackBerry 10 demand could signal RIM comeback]
Whitman also touches upon HP’s future plans for smartphones by saying the company will produce one in the future as soon as “we… figure out how to do it without losing a boatload of money.” And it’s not as though HP can simply acquire a struggling smartphone vendor like Nokia (NOK) or RIM (RIMM) at the moment since the company is woefully short on cash after writing off more than $17 billion last year related to past acquisitions.
But despite being completely clear-eyed about HP’s woes, Whitman still insists that she’s having more fun running the company than she’d had running for public office.
“Running for political office was the hardest thing I have ever done,” Whitman tells Businessweek. “When things seem challenging here, I go back to that.

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New York governor wants casinos to spur upstate economy

(Reuters) - New York Governor Andrew Cuomo proposed on Wednesday dozens of new initiatives for the state, including new casinos and other measures aimed at helping upstate areas regain their financial footing after decades of economic decline.
Cuomo, in his annual State of the State address, proposed locating up to three casinos upstate to increase tourism and provide some local property tax relief and education funds for struggling cities.
New York legislators agreed last year to legalize public casinos, saying they would amend the state constitution to expand gambling outside Native American resorts. They must still finalize the legislation.
Cuomo also said the state, with a population of nearly 20 million, would launch new marketing plans that include duty-free stores for New York-made products and a national white-water rafting competition.
Cuomo floated several ideas for supporting fledgling businesses, including the creation of a $50 million venture capital fund. He also proposed 10 high-tech incubator "hot spots" in which start-up companies would not have to pay business, property or sales taxes.
The plans were just a few of the dozens put forward by Cuomo in what he said was the most aggressive agenda he has proposed since taking office in January 2011. But he did not indicate in his speech how any of the proposed programs would be funded.
Speaking for more than an hour, Cuomo said he would focus on upgrading the state's fuel delivery system, subways, and other infrastructure to prevent multibillion-dollar damage from severe weather events like Superstorm Sandy, which slammed into the region on October 29.
He also proposed specific new restrictions on firearms in the wake of deadly shooting rampages in late 2012 in Newtown, Connecticut, and Webster, New York.
And he said the state's minimum wage should rise to $8.75 an hour from the current $7.25.
"We have daunting challenges," he said. "But these challenges also pose exciting opportunities."
Several of New York's local governments have faced severe financial struggles after the recession, including Nassau and Suffolk counties, both on Long Island to the east of New York City.
But several cities in the northern and western parts of the state, including Syracuse, Rochester and Buffalo, have been losing jobs for many years.
On Wednesday, Moody's Investors Service downgraded Niagara Falls to Baa1 from A2, warning that it could cut the credit rating further if the city loses a legal dispute with the Seneca Nation over gambling revenue.
Cuomo proposed creating a program that would advise local governments on how to restructure their finances.
The program would be run jointly by private consultants, the state's budget division, the attorney general and New York State Comptroller Thomas DiNapoli, whose program to monitor municipal fiscal distress went into effect this year.
He also said the state should consider spending $1 billion to create or preserve 14,000 units of affordable housing over the next five years.

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ECB to hold fire as euro zone economy shows glimmers of hope

FRANKFURT (Reuters) - The European Central Bank is expected to keep interest rates at a record low of 0.75 percent on Thursday, refraining from a cut as the euro zone economy shows some signs of stabilising and inflation still tops its target.
The 17-country euro zone is in recession, but recent data points to some stabilisation, and ECB President Mario Draghi could strike a slightly more positive tone in the news conference that follows the rate decision.
"Rates are definitely on hold. Nothing has been spectacular enough in recent data to force the ECB to any action," Deutsche Bank economist Gilles Moec said.
"There is a recession, but no further deterioration. Lending is weak, but also not deteriorating further, so the ECB is not compelled to act."
The 23-man Governing Council will find some comfort from improving business morale as well as a survey of purchasing managers, which gave tentative signs that the worst of the downturn may have passed.
"Since the December meeting key figures have generally surprised on the upside," Nordea analyst Anders Svendsen said in a note to investors.
While the ECB had, in Draghi's words, "a wide discussion" on reducing rates last month, the grounds for such a move have not grown and Executive Board members have argued against a cut.
Yves Mersch said last month he did not see the logic of a debate about the ECB cutting its main rate and Peter Praet said there was little room to cut.
Another cut of the refinancing rate would raise the question of whether the ECB would also lower its deposit rate - currently at zero - by the same amount, which would push it into negative territory, essentially charging a fee, for the first time.
Even though Draghi has said the bank was "operationally ready" for such a step, it has grown increasingly wary of the idea over the past couple of months, a source with knowledge of the ECB's thinking said.
Negative deposit rates could deal a hefty blow to money market funds, which have already seen cash outflows since the ECB cut the deposit rate to zero in July. The rate is a peg for short-dated money market rates and at zero it is already almost impossible for funds to generate a return for their investors.
Executive Board member Joerg Asmussen said last month he would be "very reluctant" about the ECB cutting the deposit rate any further, adding that "our (monetary) policy is very accommodative".
INFLATION STUBBORN
ECB staff projections published last month saw inflation at about 1.4 percent in 2014, which would usually justify another interest rate cut.
The central bank also sees inflation falling below 2 percent this year with underlying price pressures remaining moderate.
But inflation has eased more slowly than the ECB initially expected and as long as it misses the target - it has been above 2 percent for more than 2 years - a cut could be difficult to justify.
Furthermore, in the euro zone's largest economy, Germany, prices rose faster in December than in the previous month.
In addition to gauging whether the ECB is entertaining another cut or not, Draghi will be pressed on what other options the ECB has, especially to improve lacklustre bank lending.
ECB data showed last week that bank lending to the private sector fell at an annual rate of 0.8 percent in November.
At his December news conference, Draghi attributed the drop mainly to demand factors, but added that in a number of countries, credit supply is restricted.
A move by global regulators to give banks more time and flexibility to build up cash reserves is expected to do little to support a recovery in Europe, where recession-hit firms and households have scant appetite for more debt.
"One thing the ECB needs to engineer is recovery in lending," Rabobank economist Elwin de Groot said.

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