Wall Street sinks after election as "fiscal cliff" eyed

NEW YORK (Reuters) - The Dow industrials lost more than 300 points in a sell-off on Wednesday that drove all major stock indexes down over 2 percent in the wake of the presidential election as investors' focus shifted to the looming "fiscal cliff" debate and Europe's economic troubles.
The Standard & Poor's 500 Index posted its biggest daily percentage drop since June, with all 10 S&P sectors solidly lower and about 80 percent of stocks on both the New York Stock Exchange and the Nasdaq ending in negative territory. Both the Dow and the S&P 500 closed at their lowest levels since early August.
Financial stocks and energy shares, two sectors that could face increased regulation after President Barack Obama's re-election, were the weakest on the day. The S&P financial index (.GSPF) lost 3.5 percent, while the S&P energy index (REU:^GSPEI) fell 3.1 percent. An S&P index of technology shares (.GSPT) slid 2.8 percent as the stock of Apple Inc (AAPL) entered bear market territory.
Obama's victory had been anticipated, though many polls indicated a close race between the president and Mitt Romney, his Republican challenger, going into election day.
The election was considered a major source of uncertainty for the market, but now the focus turns to the fiscal cliff, with investors worrying that if no deal is reached over some $600 billion in spending cuts and tax increases due to kick in early next year, it could derail the economic recovery.
The Republican Party retained control of the U.S. House of Representatives, while the Senate remained under Democratic control.
David Joy, chief market strategist at Ameriprise Financial in Boston, said this kind of divided government was disappointing "since that configuration has resulted in gridlock and there's no clear path towards unlocking that.
"It holds implications for how quickly we resolve the fiscal cliff issue, or whether it gets resolved at all," said Joy, who helps oversee $571 billion in assets.
The market's losses were broad, with pessimism exacerbated by overseas concerns after the European Commission said the region would barely grow next year, dashing hopes for improvement in the short term.
Still, some viewed the day's slide as a buying opportunity, saying it was unlikely that no deal would be reached on the fiscal cliff and arguing that Europe's troubles were already priced into markets.
"There's no question that Europe is lagging the rest of the developed and emerging world, but stocks will find a base soon, when investors start seeing through some of the smoke over the region and cliff," said Richard Weiss, who helps oversee about $120 billion in assets as a senior money manager at American Century Investments in Mountain View, California.
The Dow Jones industrial average (^DJI) slid 312.95 points, or 2.36 percent, to close at 12,932.73. The Standard & Poor's 500 Index (^GSPC) fell 33.86 points, or 2.37 percent, to 1,394.53. The Nasdaq Composite Index (^IXIC) lost 74.64 points, or 2.48 percent, to close at 2,937.29.
The S&P 500 closed below the key 1,400 level for the first time since August 30, while the Dow ended under 13,000 for the first time since August 2.
About 7.81 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, slightly below last year's daily average of 7.84 billion, though Wednesday's volume did surpass that of many recent sessions.
Contributing to the Nasdaq's decline, Apple shares fell 3.8 percent to $558, off 20.8 percent from an all-time intraday high of $705.07 set on September 21. That slump puts the stock of the world's most valuable publicly traded company in bear market territory.
Despite Wednesday's sell-off, all three major U.S. stock indexes were still up for the year. At Wednesday's close, the Dow was up 5.9 percent for 2012 so far, while the S&P 500 was up 10.9 percent and the Nasdaq was up 12.8 percent.
Wednesday's plunge was a reversal from Tuesday's rally when voting was under way. Defense and energy shares were among the market leaders that day, causing speculation that some investors were betting on a Romney win.
On Wednesday, an index of defense shares (.DFX) fell 2.9 percent, its biggest one-day drop in a year. Shares of United Technologies (UTX) dropped 2.9 percent to $77.68 while Lockheed Martin (LMT) sank 3.9 percent to $91.15.
Energy shares fell as investors bet that the industry may see increased regulation in Obama's second term, with less access to federal lands and water. Crude oil shed more than 4 percent while an index of coal companies (.DJUSCL) plunged 8.8 percent. Coal firms Peabody Energy (BTU) lost 9.6 percent to $26.24 and Arch Coal (ACI) sank 12.5 percent to $7.58.
Among financials, JPMorgan Chase & Co (JPM) fell 5.6 percent to $40.46 and Goldman Sachs (GS) dropped 6.6 percent to $117.98.
"The notion that you may have gotten a respite on the financial services side (with regulation) if Romney had been elected is obviously being unwound," said Mike Ryan, chief investment strategist at UBS Wealth Management Americas in New York.
Healthcare stocks were mixed as President Obama's re-election rules out the possibility of a wholesale repeal of his healthcare reform law, though questions remain as to what parts of the domestic policy will be implemented. The S&P health care index (REU:^GSPAI) shed 1.9 percent. In contrast, Tenet Healthcare (THC) was the S&P 500's biggest percentage gainer, up 9.6 percent at $27.34.
In 2008, stocks also rallied on election day, but then fell by the largest margin on record for a day following the vote, with each of the three major U.S. stock indexes posting losses ranging from 5 percent to 5.5 percent.
After the bell, both Qualcomm Inc (QCOM) and Whole Foods Market Inc (WFM) reported results. Qualcom's revenue beat expectations, sending shares up 8 percent to $62.75 in extended trading, while Whole Foods dropped 3.3 percent to $92.75 after the bell. In the regular session, Qualcomm slid 3.7 percent to close at $58.12, while Whole Foods dropped 2.1 percent to $95.93.

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Coal company announces layoffs in response to Obama win

A coal company headed by a prominent Mitt Romney donor has laid off more than 160 workers in response to President Obama's election victory.
Murray Energy said Friday that it had been "forced" to make the layoffs in response to the bleak prospects for the coal industry during Obama's second term. In a prayer circulated by the company, CEO Robert Murray said Americans had voted "in favor of redistribution, national weakness and reduced standard of living and lower and lower levels of personal freedom."
"The American people have made their choice. They have decided that America must change its course, away from the principals of our Founders," Murray said in the prayer, which was delivered in a meeting with staff members earlier this week.
"Lord, please forgive me and anyone with me in Murray Energy Corporation for the decisions that we are now forced to make to preserve the very existence of any of the enterprises that you have helped us build."
Murray cited pending regulations from the Environmental Protection Agency and the possibility of a carbon tax as factors that could lead to the "total destruction of the coal industry by as early as 2030."
In August, Murray shuttered an operation in Ohio, again blaming the Obama Administration and its alleged "war on coal."
Mitt Romney echoed this line on the campaign trail, accusing Obama of undermining the country's energy security.
Administration officials responded to these attacks by affirming that Obama supports "clean coal." They also pointed out that more coal miners were on the job in the U.S. this year than at any time since 1997, and that U.S. coal exports have risen 31%.
Domestically, however, coal production has dropped sharply, falling roughly 15% in 2011 versus years prior, according to the National Mining Association.
But the industry's woes go way beyond Obama's policies.
Utility companies are increasingly ditching coal in favor of cheaper, cleaner natural gas. In addition, the recession and improved energy efficiency have crimped demand for power.
Looking ahead, the coal industry faces a rule going into effect in 2015 that tightens the amount of mercury coal plants can emit, as well as regulations on mountain-top mining. Both will make coal production and coal-fired power plants more expensive.
The rules themselves are not Obama's doing, although he has implemented them fairly quickly. Most stem from the Clean Air Act, which was signed by Richard Nixon and strengthened during the first Bush presidency.
CNNMoney's Steve Hargreaves contributed reporting.

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U.S. to Pass Saudi Arabia in Energy Production, IEA Says: Huge Foreign Policy, Economic Implications

A new report by the International Energy Association says the U.S. will become the world's largest oil producer by 2017, overtaking current leaders Saudi Arabia and Russia. U.S. energy policies initiated by the George W. Bush administration and implemented by President Barack Obama have moved the U.S. toward energy independence and away from Middle East energy sources. U.S. oil production has risen rapidly since 2008 and oil imports are at their lowest level in two decades.
"North America is at the forefront of a sweeping transformation in oil and gas production that will affect all regions of the world, yet the potential also exists for a similarly transformative shift in global energy efficiency," says IEA Executive Director Marian von der Hoeven in a statement.
The IEA also says the U.S. could become self-sufficient in energy by 2035 and a net exporter of natural gas by 2020. The Obama administration's push to develop and grow domestic natural gas capabilities has led to a natural gas drilling boom. Production has jumped 15% in four years but the glut in natural gas supplies have also caused the price of natural gas to plummet. According to the White House, the U.S. holds a 100-year supply of natural gas and domestic production is at an all-time high. The Daily Ticker's Aaron Task and Henry Blodget both agree that the explosion in domestic energy production could alter the geopolitical landscape and U.S. labor market.
"The foreign policy implications are maybe even bigger than the economic ones," says Task.
"For 50 years or more we have been just addicted and coupled to a region of the world where so many people hate us," Blodget adds.
Oil and petroleum imports have fallen an average of more than 1.5 million barrels per day and domestic crude oil production has increased by an average of more than 720,000 barrels per day since 2008. As domestic drilling has expanded so has the number of oil and gas production jobs. According to the Federal Reserve Bank of St. Louis, job growth in these industries has risen 25% since January 2010.
Related: The Fracking Revolution: More Jobs and Cheaper Energy Are Worth the "Manageable" Risks, Yergin Says
President Obama says natural gas production could support 600,000 jobs by the end of the decade. Most of these positions are highly desirable from a financial standpoint. Drilling and support jobs pay about $34.50 an hour, 50% more than the national average according to The New York Times.
Cheap natural gas and the administration's eagerness to expand U.S. energy production has shifted resources away from green energy technologies like solar and wind.
Related: Robert F. Kennedy Jr.: Renewable Energy Is Key to U.S. Growth
The method of extracting natural gas from shale rock formations has come under intense scrutiny. Many local cities and communities have already banned the practice. Hydraulic fracturing, more commonly referred to as hydrofracking or fracking, involves injecting large amounts of sand, water and chemicals into the ground at high pressures. Critics of fracking say this process produces millions of gallons of wastewater that contain highly corrosive salts and carcinogens. These radioactive elements could pollute water sources such as rivers and underground aquifers and pose serious dangers to the environment and individuals.

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Eurozone back in recession in Q3

LONDON (AP) -- The 17-country eurozone has bowed to the inevitable and fallen back into recession for the first time in three years as a sprawling debt crisis took its toll on the region's stronger economies.
And with surveys pointing to increasingly depressed conditions across the eurozone at a time of high unemployment in many countries, there are fears that the recession will deepen, and make the debt crisis even more difficult to handle.
Official figures Thursday showed that the eurozone contracted by 0.1 percent in the July to September period from the quarter before as economies including Germany and the Netherlands suffer from falling demand.
The decline reported by Eurostat, the EU's statistics office, was in line with market expectations and follows on from the 0.2 percent fall recorded in the second quarter. As a result, the eurozone is officially in recession, commonly defined as two straight quarters of falling output.
"We can dispense with the euphemisms and equivocation, and openly proclaim that the euro area economy is indeed in technical recession," said James Ashley, senior European economist at RBC Capital Markets.
Because of the eurozone's grueling three-year debt crisis, the region has the focus of concern for the world economy. The eurozone's economy is worth around €9.5 trillion, or $12.1 trillion, which puts it on a par with the U.S. economy. The region, with its 332 million population, is the U.S.'s largest export customer, and any fall-off in demand will hit order books.
While the U.S has managed to bounce back from its own savage recession in 2008-09, albeit inconsistently, and China continues to post still-strong growth, Europe's economies have been on a downward spiral — and there is little sign of any improvement in the near-term.
The eurozone has managed to avoid returning to recession for the first time since the financial crisis following the collapse of U.S. investment bank Lehman Brothers, mainly thanks to the strength of its largest single economy, Germany.
But even that country is struggling now as confidence wanes and exports drain in light of the debt problems afflicting large chunks of the eurozone.
Germany's economy grew a muted 0.2 percent in the third quarter, down from a 0.3 percent increase in the previous quarter. Over the past year, Germany's annual growth rate has more than halved to 0.9 percent from 1.9 percent.
Perhaps the most dramatic decline among the eurozone's members was seen in the Netherlands, whose economy shrank 1.1 percent on the previous quarter.
Five eurozone countries are in recession — Greece, Spain, Italy, Portugal and Cyprus. Those five are also at the center of Europe's debt crisis and are imposing austerity measures, such as cuts to pensions and increases to taxes, in an attempt to stay afloat.
As well as hitting workers' incomes and living standards, these measures have also led to a decline in economic output and a sharp increase in unemployment.
Spain and Greece have unemployment rates of over 25 percent. Their young people are faring even worse with every other person out of work. As well as being a cost to governments who have to pay out more for benefits, it carries a huge social and human cost.
Protests across Europe on Wednesday highlighted the scale of discontent and with economic surveys pointing to the downturn getting worse, the voices of anger may well get louder still.
"The likelihood is that this anger will continue to grow unless European leaders and policymakers start to act as if they have a clue as to how to resolve the crisis starting to unravel before their eyes," said Michael Hewson, markets analyst at CMC Markets.
The wider 27-nation EU, which includes non-euro countries, avoided the same fate. It saw output rise 0.1 percent during the quarter, largely on the back of an Olympics-related boost in Britain.
The EU's output as a whole is greater than the U.S. It is also a major source of sales for the world's leading companies. Forty percent of McDonald's global revenue comes from Europe - more than it generates in the U.S. General Motors, meanwhile, sold 1.7 million vehicles in Europe last year, a fifth of its worldwide sales.

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Are We Regulating Ourselves Back Into Recession?

"Let us put an end to self-inflicted wounds," President Gerald Ford told Congress in 1975. "And let us remember that our national unity is a most priceless asset." While Ford was talking about the scars from the Vietnam War, his words seem relevant today. Our nation grapples with not one divisive issue, but a basket of them, each pulling and undermining our already battered confidence, while testing our resolve and straining the limits of logic.
What are we doing to ourselves, America?
In just two short weeks, instead of closing the books after a bruising election, we've not only kept the rancor alive but have doubled down on it. In this morning's papers alone, I easily counted a dozen different areas of discourse before growing tired of it all. As my colleague Mike Santoli and I discuss in the attached video, with so much going on — and with so much wrong — is it any wonder stocks are moving in reverse at a fast clip since the second quarter correction.
"It feels like a particularly heavy round of one of these anti-business — or at least calling business to task — moments," Santoli says in the face of my long and growing list of negatives, which include higher taxes, the fiscal cliff, the Benghazi aftermath, turnover at the CIA, federal probes of FedEx and UPS over mail-order medicine, BP's record fine, further investigation into banks for money laundering, as well as another round of mandatory stress testing.
Before you go off and call me some kind of zero-regulation advocate or pessimist, all I am saying is that it strikes me as slightly counterproductive to be building up and and tearing down the banks at the same time. And Santoli seems to agree, saying that it is alarming to see how much banks have to spend on compliance, legal and regulatory issues, calling it a "massive weight."
As much as we had recently been gaining some degree of comfort over the economy, housing and jobs, it suddenly seems as if we're doing everything wrong.
''Is it ever going to be a good time to cinch up tax rates?" Santoli questions. Obviously the answer is no, and yet the markets cling to the belief that our elected officials will break ranks and reach some sort of last-minute grand bargain solution.
Maybe I am just being cynical, but I am of the mind that no major changes will emerge without first going through a period of calamity. Santoli is a smidge more optimistic, however, clinging to a ''residual hope'' that the President has a ''Nixon-to-China moment" and that his second term is not about fighting individual, ideological fight. "That is the distant hope you have to hold," he says.
How about you? Have you given up hope in the face of so much negativity?

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"The Black Box" debuts at top of U.S. bestseller list

NEW YORK (Reuters) - "The Black Box" debuted at the top of the Publishers Weekly's bestseller list on Thursday.

The list is compiled using data from independent and chain bookstores, book wholesalers and independent distributors nationwide.

Hardcover Fiction Last Week

1. "The Black Box" by Michael Connelly (Little, Brown, $27.99) -

2. "Notorious Nineteen" by Janet Evanovich (Bantam, $28.00) 1

3. "Cold Days" by Jim Butcher (Roc, $27. 95) -

4. "The Forgotten" by David Baldacci (Grand Central, $27.99) 3

5. "The Racketeer" by John Grisham (Doubleday, $28.95) 5

6. "Agenda 21" by Glenn Beck (Threshold, $26.00) 2

7. "Merry Christmas, Alex Cross" by James Patterson (Little, Brown, $28.99) 4

8. "The Last Man" by Vince Flynn (Atria, $27.99) 6

9. "Gone Girl" by Gillian Flynn (Crown, $25.00) 8

10. "The Casual Vacancy" by J. K. Rowling (Little, Brown, $35.00) 7

Hardcover Nonfiction

1. "Killing Kennedy" by Bill O'Reilly (Henry Holt, $28.00) 1

2. "Barefoot Contessa Foolproof" by Ina Garten (Clarkson Potter, $35.00) 2

3. "Thomas Jefferson" by Jon Meacham (Random House, $35.00) 4

4. "Guinness World Records 2013" (Guinness World Records) 5

5. "No Easy Day" by Mark Owen (Dutton, $26.95) 6

6. "The Virgin Diet" by J.J. Virgin (Harlequin, $25.95) -

7. "The 4-Hour Chef" by Timothy Ferris (New Harvest, $35.00) 3

8. "America Again" by Stephen Colbert (Grand Central, $28.99) 10

9. (tied) "The Smitten Kitchen Cookbook" by Deb Perelman (Knopf, $35.00) 9

9. (tied) "I Declare: 31 Promises to Speak" by Joel Osteen (FaithWords, $21.99) 9

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Father's shadow looms over Australian billionaire's book launch

SYDNEY (Reuters) - Australian mining magnate Gina Rinehart, one of the world's wealthiest people, has displayed a trait rarely revealed publicly among the super-rich: insecurity.

Rinehart's first book was eagerly awaited by an Australian public enthralled and sometimes appalled by her story of big business, family feuds and almost unimaginable wealth.

But the 58-year-old widow with a fortune estimated by Forbes at $18 billion, played it safe at the launch of the book, 'Northern Australia and Then Some: Changes we need to make our country rich'.

Media were hand-picked for events around the country and Rinehart surrounded herself with hundreds of supporters mostly from the mining fraternity, where she is revered for transforming her late father's debt-ridden iron ore business into a multi-billion dollar enterprise.

There were no advance copies of the book and no questions over a fractured family life that has left Rinehart wrestling with three of her four grown children over control of a family trust that rakes in hundreds of millions of year in royalties.

Nor was there mention of her contentious plan to hire nearly 2,000 foreign workers to help build a $10 billion outback iron ore mine, at a time when Australians by the thousands are losing their jobs across the sector.

"The way she went about controlling the launch of her book shows a deep insecurity on her part given these types of things are typically designed as promotional media events," said David McKnight, an associate professor in Journalism and Media at the University of New South Wales.

"This was Gina Rinehart controlling the media in order to display her over-developed sense of hero worship for her father."

SHADOW OF LANG

Rinehart's book Northern Australia, a collection of essays, speeches, and poems, calls on politicians, environmentalists and the public to support Australia's miners, the nation's main growth engine, or face the consequences of economic decline.

The book displays Rinehart's adoration of her larger-than-life father, Lang Hancock, which can be touching, but echoes much of Hancock's famed right-wing utterings.

Rinehart has spent much of her life in the shadow of her mining magnate father, who also pressured Australian governments to better support the mining sector.

It was Hancock, a prospector and one-time "jackaroo" or Australian cowboy, who was credited with discovering the vast iron ore deposits of far west Australia's "Pilbara" in 1952 while he was piloting his own plane though a storm.

Anxious to exploit his find, Hancock lobbied for years to get a ban on iron exports over-turned and made a fortune when it was. He also proposed using small nuclear bombs to help mine the Pilbara, advocated secession for Western Australia state and had business dealings with the brutal Romanian dictator Nicolae Ceausescu. His disparaging comments on the unemployed and Aborigines outraged many Australians.

A mountain range and a rail line hauling tens of millions of tons of iron ore across the outback, destined for Asia's steel mills, now bears the Hancock name, as does the private company Rinehart now oversees.

Hancock often referred to his softly spoken daughter, his only child, as his "right-hand man" or simply "young fella".

"I think he would probably have preferred a son," Debi Marshall quoted Rinehart as saying in her 2012 biography: 'The House of Hancock. The Rise and Rise of Gina Rinehart'.

Twenty years after Hancock's death, Rinehart heads a mining empire hundreds of times bigger than her father's, but she still appears fixated on gaining his approval.

"Thank you for doing this for Australia, Gina, and once again you have outdone your dad," wrote John Singleton, a well-known advertising executive and a family friend, in a publicity flyer for the book.

One invited guest said the book showed "her lifelong desire to meet and beat" the achievements of her late father, once Australia's richest man.

"This will prove once and for all that she listened to her father all those years ago and took his achievements a step further," said the guest, requesting anonymity.

WAKE UP AUSTRALIA

Rinehart's relationship with her father deteriorated when he married his Filipino housekeeper after the death of her mother but was reconciled before his death in 1992. Rinehart has since been engaged in a gloves-off war with three of her children over a trust set up by Hancock.

She has described them as lazy and spoiled and warned their security would be at risk if they persisted with the action. Her daughter Ginia, the only one of her four children not suing her, was seated beside her at the book launch, along with her fiancé Ryan Johnston, son of Beach Boys performer Bruce Johnston.

For hours at the book launch, giant movie screens rained down recurring grainy images of a younger Rinehart courting politicians and business people in 1979 aboard a chartered Qantas 747 dubbed "Wake up Australia".

The trip was an early expression of the views of father and daughter -- the need for recognition of the importance of the mining industry, lower taxes and less red tape.

"We don't want to see Australia continue on a course with too many heads buried in the sand, critical investors discouraged by bad policies -- even hated -- too few understanding the problems while Australia moves towards being another Greece, Spain or Portugal," Rinehart said at her Sydney launch,

Rinehart's poetry in the book reinforces the message, in one verse she writes: "Through such unfortunate ignorance, too much abuse is hurled. Against miners, workers and related industries who strive to build the world."

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Jackson's Hobbit: the journey begins

WELLINGTON (Reuters) - Film maker Peter Jackson wants to scare children with his latest movie - and perhaps even a few grown ups.

The first of the Hobbit movie trilogy - "The Hobbit: An Unexpected Journey" - is about to hit theatres, and Jackson says he's tried to hold true to its roots as a children's fantasy story, with scary bits.

"If they're scared of the trolls great, if they're scared of the goblins great, they know there are no goblins, they know there are no trolls, it's a safe kind of danger," he says.

The film, produced by MGM and Time Warner Inc, is the fourth in the Oscar-winning Jackson's blockbuster "Lord of the Rings" film franchise, based on the books of author J.R.R. Tolkien.

It follows the journey of hobbit Bilbo Baggins, reluctantly pushed into travelling with 13 dwarves to steal treasure from a dragon and regain their homeland. During his travels, he comes by the ring that he later passes onto kinsman Frodo Baggins, which was at the core of the "Rings" trilogy.

Jackson says he's worked to keep distance between the Hobbit, published in 1937, and the much darker Lord of the Rings, which came out nearly 20 years later.

"The Lord of the Rings has an apocalyptic sort of heavy themic end-of-the world quality to it, which the Hobbit doesn't, which is one of the delights of it," he said.

POMPOUS AND SMALL MINDED

The pointy eared, hairy footed hobbit Bilbo is played by British actor Martin Freeman, who says he's tried to make Bilbo his own creation, a character audiences can root for despite his initial pomposity and small mindedness.

"You have to be able to follow him for the duration of the film, but I wanted him to be open and changeable and ready to be surprised," Freeman said.

A key scene is an encounter in a cave between Bilbo and the creature Gollum, reprised in full computer generated splendor by Andy Serkis with the distinctive throaty whisper.

"It was a very rich experience," he said, adding that playing Gollum again was "an absolute thrill".

Such is the affection for the creature, who calls the magic ring "Precious", that a 13 meter (42 feet) sculpture of Gollum hangs in the airport terminal at Wellington, which regards itself as the spiritual home of the Tolkien films and terms itself the "Middle of Middle Earth".

Returning actors from the Rings trilogy, many of whom have only passing mention in the book, were no less enthusiastic. Ian McKellen returns for a leading role as the wispy-haired, grey bearded wizard, Gandalf, while Cate Blanchett is the elven queen Galadriel and Elijah Wood appears as Frodo Baggins.

"You couldn't not come back, you had to come back," says Hugo Weaving, the leader of the elves, Elrond.

HOBBIT - A FRAUGHT JOURNEY

The Hobbit film journey has not been without its setbacks.

Metro-Goldwyn-Mayer, owners of the film rights to the Tolkien books, had financial woes, prompting original director Guillermo del Toro to pull out and Jackson, already script writer and executive producer, to step in.

A major labor dispute prompted threats to move production out of New Zealand, and was solved by changing labor laws, while Jackson suffered a perforated ulcer and underwent surgery, delaying the film still further.

Though only two films were planned originally, Jackson has tapped Tolkien's appendices to the Rings to make it into three.

Audiences are also getting more visual bangs for their buck, with the movies filmed in 3D and at 48 frames per second (fps), double the industry standard.

This delivers clearer pictures, but opinion is divided, with some critics calling it cartoon-like and jarring.

Jackson says he wants to drag the iPad generation back into theatres and the romance, excitement and mystery they offer.

"It's more realistic, it's more immersive. I almost feel a responsibility as a film maker to try to do my part at encouraging people to come to the movies, to watch the film in a cinema," he said.

The second film "The Hobbit: The Desolation of Smaug" will be released in December next year, with the third "The Hobbit: There and Back Again" is due in mid-July 2014.

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Book Talk: Writer completes Churchill bio for late friend

NEW YORK (Reuters) - In the late 1990s, Paul Reid, then a journalist with The Palm Beach Post, became close friends with acclaimed author and historian William Manchester after covering a reunion of Manchester's Marine friends from World War Two.

Manchester was struggling to get the third and final volume of his Winston Churchill biography off the ground. The first two installments, released in the 1980s and coming in at close to 1,000 pages each, were critical and commercial successes.

In 2003, Manchester who was in failing health, grappling with writer's block and unable to find a collaborator to his liking, gave Reid the toughest assignment of his life: write the final volume, with Manchester editing.

But less than a year later, Manchester died, leaving Reid with more than 5,000 pages of often opaque notes and an almost impossible legacy to fulfill.

Finally, on November 6 - almost 30 years after the first installment - the final volume was published, with Reid sharing credit on the book jacket with his late collaborator.

Reid, 63, spoke with Reuters about the book, "The Last Lion: Winston Spencer Churchill, Defender of the Realm, 1940-1965":

Q: What did you think when Manchester asked you to write the final volume?

A: "I knew Bill for about five years and he had mentioned some people had auditioned ... he didn't like talking about it and I didn't push him. I just wanted to be a friend to an old ill man. I never saw it coming at all. When he asked me in October 2003, for a couple seconds I didn't know what he was talking about. I thought, 'Maybe he wants me to read (novelist) Elmore Leonard to him,' because he was reading (his book) 'Maximum Bob.' I was flabbergasted when he asked me."

Q: Did you try to mimic his writing style?

A: "No. Bill's writing style was formed in mid-20th Century. Like Stephen Ambrose or the official naval historian Samuel Eliot Morison, they saw black hats and white hats and heroes and villains and we tried to do something different. If someone said that I did a good job it would be on the storytelling, I hope. That's what Bill Manchester did beautifully. But the style, the pace, cadence - no, I didn't try to imitate him."

Q: Did you feel prepared and did you find anything out about Churchill that previous biographers had not?

A: "Well, my old man went to the Naval Academy, so I felt comfortable with that and World War Two. If Bill Manchester had written two volumes of a three-volume biography of Mozart, I'm not the guy. When I started I realized, however, that it was like an onion, peeling the layers away. I had felt pretty knowledgeable, but realized quickly that I wasn't.

"As to the second question, there are no earth-shattering revelations. I did develop perspectives that are not new, but I realized they were worth articulating. The first is that Churchill never believed the Germans were going to invade. He wanted to keep Britons on their toes and he wanted to convince the Americans that the Germans were coming."

Q: Churchill was danger-prone and made many military mistakes. How does he compare to modern statesmen in terms of leadership, courage and recklessness?

A: "He wanted to be in all places at all times and nothing went right. Try to imagine a modern statesman who gets the big picture and messes up the small picture over and over again. He would put on his tin hat and get in his armored car and drive around London during the blitz, which was really reckless.

"I don't think modern leaders can indulge those inclinations. The president or the UK prime minister might fly into Afghanistan unannounced with about a dozen F-16s hovering around. Churchill would've flown in and then got in an armored car and gone out to Kandahar. Churchill was reckless, but in his recklessness he inspired his country. I'll stop there because I'm certainly not advocating recklessness."

Q: Would you like to write more historical biographies?

A: "I definitely would. Who? I don't know. I have nothing definitive in the near future, but people have said the story of the story - of how the book came about and the story of the writing - for younger writers, might be worth writing about. I hate to say memoir, but a book about the book. It was a real honor. Bill Manchester entrusted me with a mandate to not let him down, don't let Churchill readers and fans down, and that's what I tried to do over the last eight years, because if I didn't get it done, it wouldn't get done. I just tried to do my duty."

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World Chefs: Keller shares memories, spotlight in latest book

NEW YORK (Reuters) - Thomas Keller, one of America's most respected chefs, shares the food memories of his childhood and his time in France in his new book "Bouchon Bakery," which is also the name of his chain of pastry shops in the United States.

Keller is the only American chef who owns two three-Michelin-star restaurants - Per Se in New York City and The French Laundry in the Napa Valley wine region in California.

Earlier this year, Britain's Restaurant Magazine named Per Se, which opened in 2004, the world's sixth best restaurant. Keller also earned the magazine's lifetime achievement award.

Like his four other books, his latest effort is a collaboration. He co-wrote it with his top pastry chefs Sebastien Rouxel and Matthew McDonald along with food writers Susie Heller, Michael Ruhlman and Amy Vogler.

The 57-year-old spoke to Reuters about the book, his pastry chefs and his place in the culinary world.

Q: Why did you collaborate with the leaders of your pastry team with this book?

A: "If you look at my other cookbooks, it's always been a point with me to share these opportunities with those who share their skills and expertise with the general public. That was the reason why I did the book. Sebastien is one of the best pastry chefs in America. His techniques are unparalleled. I'm not trying to pretend that I'm a pastry chef by writing a book about baking and pastries. Nor am I trying to be a bread baker. I have Matthew McDonald, who is one of the best bakers in America. To be able to highlight his skills in the bread section was very important as well."

Q: How did your time in France change your view about pastry and bread-making?

A: "When you are in France, especially in Paris, there were three or four boulangeries of different significance just on the block where I lived because they had pastry chefs with different levels of skills. You went to different ones for different things. To have a fresh baked baguette everyday was extraordinary. Anyone who lived in Paris for any length of time would say eating a fresh baguette is pretty special. Bread plays a real important part in the experience of the diners. To make sure we have the opportunity to significantly impact the experience by controlling the production and style of the bread was very important to me."

Q: Do you have a favorite dessert?

A: "It depends on the day ... There are so many things I love. I think anything that's done really, really well. For me, that's really something I really appreciate. I think one of the things that really resonate with the individual is that idea that eating, and eating through that experience, they have a memory. We are always trying to do something that's good. Why put something on the menu that's not very good?"

Q: The book emphasizes weighing ingredients over measuring with cups and spoons. Could that be difficult for home cooks?

A: "One of the things about pastry ... it's such an exact process. The most exact thing you practice is with weighing. There is an exactness to the execution, which gives you every opportunity to be successful."

Q: French Laundry and Per Se are among two of the best restaurants in the country. Bouchon Bakery is a success. What more would you like to accomplish in the culinary world?

A: "I have accomplished today everything I wanted to accomplish, more than I ever dreamed was possible. Right now, I'm just focused on the restaurants we have and the book I just wrote. Let me enjoy this moment before you ask me what I'll be doing tomorrow."

Pecan Sandies for my mom (Makes 1-1/2 dozen cookies)

1 ¾ cups + 1 ½ teaspoons all-purpose flour (250 grams)

¾ cup coarsely chopped pecans (80 grams)

4 ounces unsalted butter, at room temperature (170 grams)

¾ cup + 1 ¾ teaspoons powdered sugar (90 grams)

Additional powdered sugar for dusting (optional)

1. Position the racks in the upper and lower thirds of the oven and preheat the oven to 325°F (convection) or 350°F (standard). Line two sheet pans with Silpats or parchment paper.

2. Toss the flour and pecans together in a medium bowl.

3. Place the butter in the bowl of a stand mixer fitted with the paddle attachment and mix on medium-low speed until smooth. Add the 90 grams/¾ cup plus 1¾ teaspoons powdered sugar and mix for about 2 minutes, until fluffy. Scrape down the sides and bottom of the bowl. Add the flour mixture and mix on low speed for about 30 seconds, until just combined. Scrape the bottom of the bowl to incorporate any dry ingredients that have settled there.

4. Divide the dough into 30-gram/1½-tablespoon portions, roll into balls, and arrange on the sheet pans, leaving about 1½ inches between them. Press the cookies into 2-inch disks.

5. Bake until pale golden brown, 15 to 18 minutes if using a convection oven, 22 to 25 minutes if using a standard oven, reversing the positions of the pans halfway through. (Sandies baked in a convection oven will not spread as much as those baked in a standard oven and will have a more even color.)

6. Set the pans on a cooling rack and cool for 5 to 10 minutes. Using a metal spatula, transfer the cookies to the rack to cool completely. If desired, dust with powdered sugar.

Note: The cookies can be stored in a covered container for up to 3 days.

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