Stocks drop as earnings disappoint; Fed upcoming

NEW YORK — Stocks fell Wednesday as investors reacted to disappointing earnings from Yahoo and other companies and awaited news from the Federal Reserve, which wraps up its two-day policy meeting later in the day. Emerging markets were also unsettling investors again.

KEEPING SCORE: The Dow Jones industrial average fell 99 points, or 0.6 percent, to 15,829 as of 11:04 a.m. Eastern Time. The Standard & Poor's 500 index lost nine points, or 0.5 percent, to 1,783. The Nasdaq composite fell 21 points, or 0.7 percent, to 4,070.

VOLATILITY RISING: The S&P 500 index is down 3.6 percent this month, putting it on track for its biggest monthly decline since May 2012. That's a big contrast from last year, when the index rose almost 30 percent, its best year since 1997.

FED DAY: The Federal Reserve wraps up a two-day policy meeting later Wednesday and is expected to announce that it will continue to reduce, or "taper," its bond purchases to $65 billion a month from $75 billion a month. The policy is intended to hold down long-term interest rates and stimulate the economy by encouraging borrowing and hiring.

The recent volatility in global stock markets is unlikely to deter policy makers from cutting their stimulus, said Lawrence Creatura, a portfolio manager at Federated Investors.

"It's not the Fed's responsibility to take care of the stock market," said Creatura. "Employment and inflation are their only focus."

LIRA TODAY, GONE TOMORROW: The Turkish lira gave up much of its gain against the dollar after surging late Tuesday when the nation's central bank raised its benchmark lending rate to hold down inflation. The currency's slump has been at the center of an emerging-market sell-off that prompted jitters in global stock markets over the past week.

The lira traded at 2.25 per dollar on Wednesday, about where it was before the Turkish central bank raised interest rates late Tuesday Eastern time.

NOT GOOGLE: Yahoo fell $2.48, or 7 percent, to $35.75 after the company reported a drop in fourth-quarter revenue late Tuesday, highlighting its trouble in bringing in online advertising dollars. Yahoo reported a 6 percent decline in revenue, the same rate of decline for all of 2013.

PLANE DISAPPOINTEMENT: Boeing fell $6.35, or 4.6 percent, to $130.79 after the plane maker said that 2014 revenue and profit would be lower than analysts have been expecting as the pace of orders slows.

PHONING IT IN: AT&T, the nation's biggest telecommunications company, fell 92 cents, or 2.7 percent, to $32.78 after its outlook for the year disappointed investors. The phone company said its forecast "assumes no lift from the economy," and predicted earnings to be in the mid-single digit range.

TREASURYS AND COMMODITIES: Bond prices rose. The yield on the 10-year Treasury note fell to 2.72 percent from 2.75 percent. The price of oil fell 52 cents, or 0.5 percent, to $96.91 a barrel. Gold rose $13.10, or 1.1 percent, to $1,263.90 an ounce.

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Pistorius murder trial to have own TV channel

CAPE TOWN, South Africa — Oscar Pistorius' murder trial will have a dedicated 24-hour television channel in South Africa, the country's top cable provider said Wednesday, promising "round-the-clock" coverage of one of the blockbuster stories of the year.

MultiChoice said in a statement the temporary "pop-up" channel will launch on March 2, the day before the double-amputee Olympian goes on trial in a high court in the capital, Pretoria, for killing his girlfriend in his home on Valentine's Day last year.

It is the first time it has launched a channel of this kind to cover "a major news event," MultiChoice said. The provider has only had temporary channels on its DSTV network for versions of reality entertainment shows like "Idols" and "Big Brother." DSTV is also available in other African countries.

The female judge who will preside over Pistorius' trial hasn't yet ruled if television cameras will be allowed to record images of court proceedings or if the trial at North Gauteng High Court can be carried live.

Even so, MultiChoice will still tap into South Africa's and the world's fascination with Pistorius' remarkable story, which has taken a dramatic turn after he was celebrated as a sporting hero in 2012 as the first double amputee to compete on the track at the Olympics.

MultiChoice said the channel would give "inside information on the most talked-about and controversial subject in recent South African history." Its head of content, Aletta Alberts, said there would also be "a rich variety of content and social media integration" around the trial.

Pistorius killed 29-year-old girlfriend Reeva Steenkamp by shooting the model — herself a reality TV star — through a toilet cubicle door in the pre-dawn hours of Feb. 14, unleashing a frenzy of media interest around the 27-year-old athlete as he was charged with murder. Pistorius said he mistook Steenkamp for a dangerous intruder and fired four shots in self-defense, but prosecutors allege the couple argued and Pistorius killed her intentionally and in a rage.

The world-famous runner faces life imprisonment with a minimum of 25 years before parole if convicted on the main charge of premeditated murder. South Africa does not have the death penalty. Pistorius also faces additional charges of possession of illegal ammunition and will likely be indicted on the first day of his trial on two more charges for allegedly recklessly shooting guns in public.

Television coverage was restricted in Pistorius' previous court appearances, when cameras were allowed to record in court only before proceedings began and after they ended, and had to be switched off when the court was in session. With television cameras off, Pistorius often broke down in tears during his bail hearing. Courtrooms during that weeklong hearing and subsequent appearances were packed out by reporters, photographers and television camera operators.

Permission to film or take photographs in court in South Africa can be given only by the presiding judge. Judge Thokozile Masipa will preside over Pistorius' trial and ultimately pronounce him innocent or guilty of murder. The country doesn't have trial by jury.

The TV channel, branded "The Oscar Pistorius Trial: A Carte Blanche Channel," will be put together by the producers of a weekly investigative journalism show in South Africa called "Carte Blanche," which also airs on MultiChoice's DSTV.

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Gerald Imray is on Twitter at www.twitter.com/GeraldImrayAP

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World markets slide anew on emerging markets

AMSTERDAM — After a strong Asian session and positive European open, world markets shifted course and fell Wednesday as jitters over the prospects for emerging economies resurfaced.

Turkey's central bank hiked its lending rates overnight by more than expected to stabilize the Turkish lira and keep inflation under control. That gave an initial boost to its currency and to world markets.

But the effect gradually faded, and a surprise move by South Africa's central bank to raise rates in the early afternoon only strengthened its currency for a half-hour.

The shook confidence in markets more broadly, pushing stocks lower.

"I guess the biggest reason for this volatility is that we've seen the impact of a major intervention by Turkey fade so quickly," said IG market analyst Alastair McCaig. "Now South Africa has done the same thing and it only boosted the rand for about a half hour."

In the background, investors are anticipating a decision by the U.S. Federal Reserve to further "taper," or reduce, its mortgage and long-term bond purchases later Wednesday.

Although the Fed insists tapering is not equivalent to monetary tightening, if markets interpret it as even a prelude to tightening, it has the potential to again weaken emerging currencies as investors prefer to hold dollars.

"It's not so much that people think there will be instant ramifications if the taper proceeds as expected, it's just part of a more general worry about what it may mean for global stability," McCaig said.

Stocks began a sell-off last week, initially on fears about the Chinese economy. The slide continued as currencies in emerging economies including Argentina and Turkey slumped.

After Turkey's action Wednesday night, Asian stocks gained strongly.

Japan's Nikkei 225 jumped 2.1 percent to 15,294.54 and Hong Kong's Hang Seng rose 1.1 percent to 22,191.20. China's Shanghai Composite was up 0.3 percent at 2,044.93. South Korea's Kospi added 1.2 percent. Indonesia's benchmark climbed 1.7 percent.

In Europe, indexes initially gained sharply and then slid, turning negative before the open of U.S. trading.

Germany's DAX was 0.2 percent lower at 9,388.22. Britain's FTSE was down 0.3 percent to 6,551.21, while France's CAC 40 was off 0.6 percent at 4,160.34

Dow Jones Industrial Average index futures, which had initially indicated gains, plunged 126 points to 15,750. S&P 500 index futures were off 13.75 points to 1774.5.

Benchmark oil for March delivery was down 24 cents to $97.17 per barrel in electronic trading on the New York Mercantile Exchange.

In currencies, which were highly volatile, the euro fell 0.4 percent to $1.3618. The dollar erased early gains and fell sharply against the yen, down 0.6 percent to 102.34 yen

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AP reporter Teresa Cerojano contributed to this story from Manila, Philippines

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Bank of England chief wades into Scottish debate

LONDON — The governor of the Bank of England on Wednesday waded into the delicate question of whether Scotland would be able to use the pound should it become independent, saying a successful currency union would require giving up some sovereignty.

Independence advocates say they want to continue to use the pound as the country's currency if the Scottish people vote for separation this year.

Mark Carney warned that successful currency unions still require some level of common fiscal policy and bank supervision. The recent debt crisis in the countries sharing the euro shows the risks of what can happen if those measures aren't put into place, he said.

"In short, a durable, successful currency union requires some ceding of national sovereignty," Carney said at a meeting in Edinburgh of the Scottish Council for Development and Industry.

Carney stressed it was up to the parliaments of Britain and Scotland to decide whether Scotland continues to use the pound in the case of independence. The Bank of England would implement whatever policy they chose.

"Decisions that cede sovereignty and limit autonomy are rightly choices for elected governments and involve considerations beyond mere economics," he said.

Carney's remarks are important because independence leader Alex Salmond, Scotland's first minister, has repeatedly stressed that the pound would remain the country's currency — a selling point to his movement. While Scotland is part of the U.K., it has had its own Parliament since 1999 and makes its own laws in many areas — but it is considering a full break.

Salmond's governing Scottish National Party supports independence, but the opposition Labour and Conservative parties oppose it. The U.K. would have to agree to a currency union for it to become reality.

Carney stressed, however, he was not taking a position on the vote and that he was simply offering information.

"This is a technocratic assessment of what makes an effective currency union between independent nations," he said.

The Scottish National Party quickly praised Carney's "serious and sensible analysis of how a currency union can work in practice.

"Ultimately, as Mr. Carney makes clear, a Sterling area is a matter for the two governments to agree," Scottish Finance Secretary John Swinney said. "Such a shared currency area is the common sense position as it is in the overwhelming interests of both Scotland and the rest of the U.K."

Such an agreement would not be simple, said Monique Ebell, an economist at the National Institute of Economic and Social Research who is working on the economic issues of Scottish independence. Countries in a monetary union agree to support each other — and the U.K. economy would dwarf that of Scotland.

"Would a country the size of Scotland really be able to bail out the rest of the U.K.?," she said. "In theory, the insurance is a two-way street. In practice, it would likely be a one-way street."

Scotland votes on Sept. 18, and political battles in the run-up to the referendum have come in many ways other than straightforward pocketbook politics. British Prime Minister David Cameron has argued fiercely against it, saying among other things that people living in Scotland would pay an extra 1,000 ($1,600) a year in taxes. Salmond said Scots would actually pay less than they pay now.

Polls have consistently put support for independence at between 25 percent and 30 percent over the past three years, with support for remaining in the union at between 45 percent and 50 percent. But the number of undecided voters is significant.

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House to vote on final farm bill, food stamp cuts

WASHINGTON — The House is rushing to complete work on a nearly $100 billion-a-year farm bill that would make small cuts to food stamps and continue generous subsidies for the nation's farmers.

Conservative Republicans in the House helped defeat an earlier version of the bill last summer, and some of those lawmakers hoped to do so again Wednesday, saying the $800 million in annual cuts to food stamps isn't enough. But the final version of the five-year bill has solid backing from the House GOP leadership, even though it makes smaller cuts to food stamps than they would have liked.

Leaders scheduled a quick vote after the nearly 1,000-page bill was introduced Monday, giving opponents little time to build opposition.

The House Agriculture Committee chairman, Rep. Frank Lucas, R-Okla., who has been working on the bill since 2011, urged his colleagues to come together and support the bill as debate began Wednesday morning.

Earlier, he was cautiously optimistic about passage, after several years of setbacks.

"Can we create in the House a majority that is a coalition of the middle?" Lucas said Tuesday. "My gut feeling is, my reading of my colleagues, is yes."

Senate Agriculture Chairwoman Debbie Stabenow, D-Mich., was more certain, saying she was confident the votes were there in the Democratic-led Senate. That chamber was expected to take up the bill shortly after the House.

Lucas and Stabenow have spent the past two years crafting a bill to appeal to members from all regions of the country, including a boost in money for crop insurance popular in the Midwest; higher rice and peanut subsidies for Southern farmers; and renewal of federal land payments for Western states. The cuts to food stamps — around 1 percent of the $80 billion-a-year program — are small enough that some Democrats will support them.

The final food stamp savings are generated by ending a practice in some states of boosting individual food stamp benefits by giving people a minimal amount of federal heating assistance they don't need. The cuts were brought down to $800 million a year to come closer to the Senate version of the bill, which had $400 million in annual food stamp cuts. A House bill passed in September would have cut $4 billion a year.

Still, many liberal Democrats were also expected to vote against the bill, saying the food stamp cuts were too great.

The legislation would eliminate a $4.5 billion-a-year farm subsidy called direct payments, which are paid to farmers whether they farm or not. The bill would continue to heavily subsidize major crops — corn, soybeans, wheat, rice and cotton — while shifting many of those subsidies toward more politically defensible insurance programs. That means farmers would have to incur losses before they received a payout.

The bill would save around $1.65 billion annually overall, according to the Congressional Budget Office. The amount was less than the $2.3 billion annual savings the agriculture committees originally projected for the bill.

An aide to Lucas said the difference was due to how the CBO calculated budget savings from recent automatic across-the-board spending cuts, known as sequestration.

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Follow Mary Clare Jalonick on Twitter: http://twitter.com/mcjalonick

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Insurer WellPoint's 4Q profit drops 68 percent

INDIANAPOLIS — WellPoint's fourth-quarter earnings tumbled 68 percent, as customers of the nation's second largest health insurer raced to use their coverage last fall before it lapsed due to the health care overhaul.

The Indianapolis company said Wednesday that its medical expenses spiked 18 percent to $14.58 billion due in part to higher use of individual policies in advance of the overhaul's coverage expansions, which unfolded this year.

Insurers typically see a rise in use at the end of each year as patients pay up their deductible, or the out of pocket cost before most coverage starts, and then use their coverage before that deductible renews in the new year. But WellPoint said it also saw a jump in use from patients who wanted to take advantage of their policies while they still had them.

At least 4.7 million customers nationwide received notices from their insurers last fall that their plans were being canceled because they didn't meet coverage requirements established under the overhaul, the federal law that aims to cover millions of uninsured people. The actual number is likely much higher because officials in nearly 20 states said they were unable to provide information on cancellation notices or were not tracking it.

The overhaul also provided help to many with canceled coverage by offering income-based tax credits that customers can use to buy a new plan on state-based insurance exchanges that started last fall.

But complaints over the cancellation notices eventually led President Obama to announce that people could keep their individual policies if state regulators approved.

WellPoint spokeswoman Kristin Binns said health care use started climbing after customers received their notices and before the president's November announcement. The insurer runs Blue Cross Blue Shield plans in 14 states, and its biggest market, California, did not allow plans to be continued.

WellPoint provides individual insurance coverage for about 1.8 million people, or 5 percent of its total medical enrollment of 35.7 million. It did not say how many of its customers received cancellation notices.

In its financial report for the last three months of 2013, WellPoint said it earned $148.2 million, or 49 cents per share, down from $464.2 million, or $1.51 per share, a year earlier.

Earnings excluding one-time items totaled 87 cents per share for the latest quarter. Analysts expected 86 cents per share, according to FactSet.

Operating revenue jumped 16 percent to $17.65 billion, helped by the insurer's acquisition of Medicaid coverage provider Amerigroup. That excludes investment gains or losses. Analysts expected $17.8 billion.

WellPoint said results also were affected by a charge it booked for unloading its 1-800-Contacts business and by an income tax expense that soared to $161 million from $16.8 million in the 2012 quarter, when the insurer recorded a favorable tax settlement.

For 2014, WellPoint expects earnings of more than $8 per share, which is what Chief Financial Officer Wayne DeVeydt said in October that they hoped to forecast. Analysts expect, on average, earnings of $8.35 per share.

The insurer also said Wednesday that its board voted to raise WellPoint's quarterly dividend to 43.75 cents per share from 37.5 cents.

WellPoint's stock fell 74 cents to $83.56 in morning trading Wednesday. Its stock price soared about 52 percent last year and set several new, all-time high marks before closing 2013 at $92.39.

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US stocks slide as emerging market worries return

NEW YORK — Stocks are lower in early trading as weak earnings from several U.S. companies dented investors' confidence.

Worries about emerging markets were also coming back after relief faded over an effort by Turkey to shore up its struggling currency.

The Dow Jones industrial average fell 129 points, or 0.8 percent, to 15,798 points in the first few minutes of trading Wednesday.

The Standard & Poor's 500 index declined 11 points, or 0.6 percent, to 1,781. The Nasdaq composite fell 26 points, or 0.6 percent, to 4,071.

Yahoo fell 8 percent, the most the in S&P 500, after reporting a drop in revenue late Tuesday that disappointed investors.

Boeing and AT&T also fell after reporting their results.

Later Wednesday the Fed will conclude a two-day policy meeting.

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EU seeks to make mega-banks less risky

BRUSSELS — The European Union's executive arm presented a long-awaited financial market reform Wednesday to defuse risk-taking by the largest banks and protect taxpayers from the potential costs of rescuing them.

The proposal — which echoes the United States' Volcker Rule — is a key part of the 28-nation bloc's efforts to overhaul its financial system to avoid a repeat of the crisis that forced governments to bail out banks in 2008 and 2009.

The regulation proposes barring the region's largest banks — those considered "too big to fail," whose collapse would threaten the stability of the financial system — from trading exclusively for their own profit, as opposed to a client's. So-called proprietary trading has become hugely lucrative for banks, but regulators contend it neither serves clients nor the wider economy.

"This legislation deals with the small number of very large banks which otherwise might still be too-big-to-fail, too-costly-to save, too-complex-to-resolve," said Michel Barnier, the EU Commissioner in charge of financial market reform.

"The proposed measures will further strengthen financial stability and ensure taxpayers don't end up paying for the mistakes of banks," he added.

The regulation would cover the continent's 30 largest banks, which hold assets worth approximately 23.4 trillion euros ($32 trillion), according to EU Commission figures.

The legislation still needs to be approved by EU governments and the European Parliament and is likely to be subject to fierce lobbying over its fine print. It is not expected to take full effect before 2017 — almost a decade after the collapse of Lehman Brothers in 2008 triggered the worst phase of the financial crisis.

The reform also aims to give regulators the power to separate banks' riskier trading activities from their deposit-taking business. The Commission said it had no estimate on how many banks would have to create such subsidiaries, which will require their own capital buffers.

European governments have injected about 1.6 trillion euros ($2.2 trillion) into their banks since the beginning of the financial crisis, or the equivalent of about 13 percent of the bloc's economic output, Barnier said.

The proprietary trading, which will be banned with only a few exceptions, represented up to 15 percent of banks' balance sheets before the financial crisis. It is now down to an estimated 4 percent of balance sheets, or about 940 billion euros, according to the Commission.

"There is a risk it will increase again once growth picks up," Barnier said.

One of the big challenges for regulators will be to distinguish proprietary trading, which will be banned, from other banking activities.

Europe's bank lobby group deplored the proposal, saying it might have "far-reaching consequences on banks' structure, daily business and organization" that could undermine lending and harm Europe's nascent economic recovery.

The rules would introduce "a prolonged uncertainty" that will weigh on the lenders' competitiveness and attractiveness to investors, the European Banking Federation said.

Center-left European Parliament lawmakers, in turn, argue the plan does "too little, too late" to curtail excessive risk-taking. They say all trading activities should be completely separated from retail operations.

The focus on the few largest banks means letting all small and mid-size banks, who make up the bulk of Europe's lenders, continue to "gamble with their client's money," said center-left caucus leader Hannes Swoboda.

Nations like France and Germany have sought to protect their biggest banks like Societe Generale and Deutsche Bank. They pressured the Commission to better isolate risky trading activities, but not force banks into being split in two separate entities, one for speculative trading operations and the other their retail business.

Banks in Britain, which is home to Europe's biggest financial hub, London, won't have to split off their riskier trading operations into subsidiaries since they already face equally tough national legislation called the Vickers rules, the Commission said.

The U.S. Volcker Rule is named for Paul Volcker, a former Federal Reserve chairman who advised President Barack Obama during the financial crisis.

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Follow Juergen Baetz on Twitter at http://www.twitter.com/jbaetz

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Waltham data security co. raises $16.5 million

CloudLock, a Waltham-based cloud data security company, has raised $16.5 Million in venture financing, the company said today.

"The cloud transformation has only just begun. We have big plans to execute from here that will see investments in building out our world class sales, marketing, and engineering organizations to bring even more value, across more platforms, to a fast growing market," said Gil Zimmermann, CEO & Co-founder of CloudLock.

CloudLock provides security services for enterprise data stored in the cloud. 

"As corporate data begins to live on the cloud, the question of managing and securing data has become one of paramount concern. IT departments now struggle to gain the visibility and control they had when data and applications lived on-premise. That's where CloudLock comes in." said Bob Goodman, partner at Bessemer Venture Partners, one of the investors. "We think they have the right product at the right time and the right people to make Cloudlock a success."

Cloudlock will use the money to expand to new markets, increase and improve product lines "grow its operations." The company launched in 2011, and has more than 600 customers.

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Fiat Chrysler Automobiles to be company's new name

DETROIT — Chrysler and Fiat will be known as Fiat Chrysler Automobiles NV as they move forward together as a single company.

Fiat's board of directors agreed on the new name Wednesday, with headquarters for tax purposes in the United Kingdom. But the board sidestepped the thorny political issue of whether the true headquarters would be in the United States or Italy.

The announcement came on the same day that both Fiat and Chrysler announced fourth-quarter and full-year earnings. Chrysler once again propped up its parent company, which would have lost money without the U.S. automaker's strong profits.

Shares of the combined company will trade jointly on the New York Stock Exchange and in Milan, Italy. For each share of Fiat, shareholders will get one share in the new company, which will trade with a symbol of FCA starting by Oct. 1. A new logo calls the company FCA. It now includes the Jeep, Ram, Dodge and Chrysler brands as well as Fiat, Maserati, Ferrari and Lancia and Alfa Romeo.

The new company will maintain significant research, engineering and financial operations in Fiat's hometown of Turin, Italy, and on Chrysler's sprawling office complex in Auburn Hills, Mich. This avoids political controversies in Italy, where Fiat is the largest private employer, and in the U.S., where the government saved Chrysler by funding its 2009 bankruptcy.

The corporate line on the headquarters location is that it's on an airplane. Currently many of its 22-member leadership team have multiple offices in Auburn Hills, Turin and other parts of the world. Like Sergio Marchionne, CEO of both companies, they spend hours on corporate jets flying to meetings and to visit factories and other operations.

Little is expected to change in the way the company works. Already Chrysler and Fiat have joined to design three vehicles, the Dodge Dart compact, Jeep Cherokee SUV and the upcoming Chrysler 200 midsize car. All three models share engines, transmissions and other technologies developed in both places. The location of the corporate brain could change over time, but nothing about that was revealed Wednesday.

"They're not going to be moving people wholesale," between Michigan and Turin, said Morningstar analyst Richard Hilgert. For at least three years, the amount of time Marchionne has committed to leading the new company, "the brains are going to be flying back and forth between Auburn (Hills) and Italy," Hilgert said.

Fiat Chrysler said it remained committed to its manufacturing base in Italy, promising "no impact on headcount."

Marchionne has pinned the future of the Italian manufacturing plants on transitioning to higher-margin sports luxury brands Alfa Romeo and Maserati.

He said on a conference call that Fiat and Chrysler leaders are now working in unison. "I think we can move on execution at the speed of light," Marchionne said. Consolidation of the companies, he said, makes him more confident that FCA can reach a goal of selling 1 million Jeeps worldwide this year.

Marchionne said the new logo is a break from symbols now associated with each company. "It was designed effectively to provide the linkage between the two houses, as opposed to retention of one organization over another," he said.

Chrysler, in its final earnings release as a separate company, said its net income more than quadrupled to $1.62 billion in the fourth quarter, boosted by strong U.S. sales and a $962 million one-time tax gain.

Without the tax benefit, the company still earned $659 million, a 74 percent increase over a year earlier.

Chrysler's strong quarterly and full-year performance helped to prop up Fiat, which has struggled as auto sales sputter in Europe. Fiat earned 252 million euros ($345 million) for the quarter, excluding one-time items. Without earnings from Chrysler, Fiat would have lost 235 million euros ($321 million). That's nearly double the loss from a year ago.

Fiat owned 58.5 percent of Chrysler last year. It has since bought the rest from a trust fund that pays health care bills for union retirees in order to combine the companies.

Chrysler's 10th-straight profitable quarter came because of strong U.S. sales of Ram pickups and Jeep Grand Cherokees. Chrysler's U.S. sales, where it does 75 percent of its business, rose 9 percent last year to just over 1.8 million cars and trucks. Its average price per vehicle also rose by 2 percent in the fourth quarter to $32,309, according to Kelley Blue Book. The company sold 2.4 million vehicles worldwide for the year, also up 9 percent from a year ago.

For the full year, Chrysler earned $1.8 billion excluding tax benefits, its best performance since leaving bankruptcy in 2009.

Marchionne told Chrysler employees in an email that they would get performance awards based on last year's earnings. Under the United Auto Workers contract, 37,200 blue-collar workers will get about $2,500 in profit-sharing checks perhaps as early as next month.

Chrysler also announced plans to take on up to $4.7 billion in term loans and notes. The money would pay for buying the trust's stake.

Fiat posted a profit of 943 million euro ($1.29 billion) for the year without one-time items, but it would have lost 911 million euros ($1.25 billion) without profits from Chrysler.

The Italian automaker's board of directors decided to scrap the company's dividend to maintain liquidity after buying the trust's stake in Chrysler for $1.75 billion (about 1.35 billion euros) in cash and another $1.9 billion in extraordinary dividends. The deal closed on Jan. 21.

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AP Business Writers Dee-Ann Durbin in Detroit and Colleen Barry in Florence, Italy, contributed to this report.

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