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Wall Street closed mixed Friday after playing out a now familiar scenario: Upbeat sentiment about falling oil prices flagged amid ongoing concerns about weak credit markets and the economy. The major indexes also turned in a mixed performance after another volatile week.

Investors were encouraged early in the session as oil’s pullback lifted the outlook for consumer companies and eased concerns that record-high energy prices would force Americans to curb spending. Light, sweet crude dropped $1.24 to settle at $113.77 a barrel on the New York Mercantile Exchange, and earlier traded as low as $111.34, its lowest level in more than three months.

Oil fell on a growing sense that economies around the world are joining the U.S. in a slowdown. The rising dollar, which is gaining strength on economic concerns, contributed to the sell-off in crude and other commodities. Crude is down more than $35 from its July 11 record of $147.27; meanwhile, gold prices that swept past $1,000 an ounce earlier this year are now below $800.

While the decline in oil was placating investors this week, it still did not offset their ever-present anxiety over the slumping housing and credit markets. Concerns about more write-downs at investment banks continued, causing major market indexes to fluctuate over the course of the week; the Dow Jones industrials continued a volatile streak, dropping more than 100 points two days in a row amid intensifying fears about the health of the financial sector.

“With some of this sharp price collapse in commodities you would think the market would be up a lot more,” said Greg Church, chief investment officer of Church Capital Management. “The underlying factor is that credit continues to appear to be very weak.”

The Dow rose 43.97, or 0.38 percent, to 11,659.90.

Broader indexes were narrowly mixed. The Standard & Poor’s 500 index rose 5.26, or 0.41 percent, to 1,298.20, while the Nasdaq composite index fell 1.15, or 0.05 percent, to 2,452.52.

Volume remained extremely light, exaggerating moves in the major indexes. On the New York Stock Exchange, advancing issues were relatively even with decliners; consolidated volume came to 3.99 billion, about even with Thursday.

For the week, the Dow finished down 0.63 percent and the S&P 500 rose a modest 0.15 percent. The tech-focused Nasdaq, however, logged its fifth-straight weekly gain by finishing up 1.59 percent; it has risen 8.5 percent since mid-July.

The market has been trying to sort through a number of different factors, including the price of oil and other commodities, ongoing concerns about the state of the credit markets and varying economic data. Investors seem to be grabbing on to any piece of news that might signal a turnaround for the economy.

The Nasdaq’s performance this week indicates that investors are rotating back into technology stocks. However, the market has had little motivation to move into other sectors — and analysts said many traders are simply buying into the dips.

The uncertainty in the market has increased demand for the safety of government debt, which rose modestly Friday. In late trading, the yield on the benchmark 10-year Treasury note, which moves opposite its price, slid to 3.84 percent from 3.90 percent late Thursday.

The dollar rose against other major currencies, contributing to Friday’s pullback in oil and other commodities.

The day brought somewhat disappointing news about consumers. The University of Michigan reported a slightly smaller-than-expected rise in consumer sentiment in early August compared with July, evidence that the consumer remains under pressure.

Moreover, earnings outlooks from retailers J.C. Penney Co. and Abercrombie & Fitch Co. on Friday came in below forecasts.

“At the beginning of this year, earnings expectations started to drop precipitously, and the stock market dropped with them,” said Scott Bleier, founder of market advisory service CreateCapital.com. “Those expectations got built into the stock market and to an excess. A lot of stocks discounted all of the bad news that was out there.”

New York Attorney General Andrew Cuomo said Friday he plans to take legal action against Merrill Lynch & Co. as part of an ongoing investigation into the failure of the auction-rate securities market. Wachovia Corp., meanwhile, became the fifth bank in recent weeks to agree to repurchase billions of the investments as part of a settlement with regulators.

Merrill Lynch shares rose 4 cents to $26.33. Wachovia fell 24 cents, or 2.5 percent, to $15.57.

Airline stocks rose on the drop in oil. AMR Corp., the parent company of American Airlines, gained 46 cents, or 4.1 percent, to $11.74. However, shares of major oil companies declined, with ConocoPhillips down $1.71, or 2.1 percent, at $77.66.

The Russell 2000 index, which tracks small-cap stocks, fell 1.01, or 0.13 percent, to 753.37.

Overseas, Japan’s Nikkei stock average rose 0.48 percent. Britain’s FTSE 100 fell 0.66 percent, Germany’s DAX index rose 0.06 percent, and France’s CAC-40 rose 0.60 percent.

The Dow Jones industrial average ended the week down 74.42, or 0.63 percent, at 11,659.90. The Standard & Poor’s 500 index finished up 1.88, or 0.15 percent, at 1,298.20. The Nasdaq composite index ended the week up 38.42, or 1.59 percent, at 2,452.52.

The Russell 2000 index finished the week up 19.07, or 2.60 percent, at 753.37.

The Dow Jones Wilshire 5000 Composite Index — a free-float weighted index that measures 5,000 U.S. based companies — ended Friday at 13,271.88, up 74.75 points, or 0.57 percent, for the week. A year ago, the index was at 14,531.52.

Intel Corp. is unveiling new technology that will let computers wake up from their power-saving sleep state when they receive a phone call over the Internet.
Current computers have to be fully on to receive a call, making them impractical and energy-wasters as replacements for the telephone.

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The new component Intel is announcing Thursday will let computers automatically return to a normal, full-powered state when a call comes in. The computer can activate its microphone and loudspeaker to alert the user, then connect the call.

“This certainly helps the PC become a much better center of communications in the home,” said Trevor Healy, chief executive of Jajah, which will be the first Internet telephone company to utilize the feature.

The first Intel motherboards with the Remote Wake capability will be shipping in the next month, said Joe Van De Water, director of consumer product marketing for Intel.

These components, which are at the heart of every computer, will most likely be used by smaller computer manufacturers. Bigger names like Dell Inc. and Hewlett-Packard Co. use their own motherboard solutions, but Intel is working to supply them with the technology as well.

The four initial Remote Wake motherboards will be for desktop computers and will need an Internet connection via Ethernet cable, as Wi-Fi doesn’t work in sleep mode.

Van De Water said the computer will know to wake up only for calls from services to which the user has subscribed, so computer-waking prank calls should be impossible.

Mountain View, Calif.-based Jajah is setting itself up as a link between Web companies and the phone system. In April, it signed a deal to become the phone service provider for Yahoo Inc.’s Messenger. Jajah intends to offer the ability to wake up computers to other instant-messaging and Internet voice services, like Google Inc.’s Talk and Microsoft Corp.’s Windows Live Messenger, Healy said. It will be able to wake up subscriber computers both for calls dialed with a number and for those that are directed at a user name.

A fully on desktop PC usually consumes more than 60 watts of power, with many models ranging into the hundreds of watts. In the so-called S3 sleep state, they consume around 10 watts.

Korean Air Lines Co. posted a second-quarter net loss amid soaring fuel costs and a weak South Korean currency, it said Thursday.
Korean Air, South Korea’s biggest airline and the world’s largest international cargo carrier, recorded a net loss of 289 billion won ($279 million) in the three months ended June 30, the company said in a statement. It lost 214.4 billion won in the same period a year ago. The most recent loss was the airline’s third straight on a quarterly basis.

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Sales during the quarter rose 18 percent to 2.48 trillion won ($2.4 billion), compared with 2.11 trillion won last year.

Korean Air said fuel expenses during the quarter increased 79.4 percent and were exacerbated by weakness in the South Korean won against the U.S. dollar. Fuel expenses are denominated in dollars.

The weak won also hurt Korean Air in terms of its mostly US dollar-denominated foreign currency debt. The airline booked a foreign exchange translation loss of 273.2 billion won ($263.2 million) during the quarter.

The airline, which had about $5.3 billion in foreign currency debt, books the amount in South Korean won at the end-of-quarter exchange rate. The U.S. dollar traded at 1,043.4 won on June 30, compared with 991.7 won three months earlier, it said.

The airline has struggled with soaring fuel costs amid a sharp run-up in crude oil prices that has battered the global aviation industry.

Conversely, the weak currency boosted cargo revenue by 28.4 percent as Korean exporters shipped more products overseas.

“The weakening Korean won continues to trigger additional air cargo demand from Korean exporters,” Korean Air said.

Cathay Pacific Airways Ltd. of Hong Kong last week reported its first half-year loss since 2003, while Japan’s All Nippon Airways Co. said last month its most recent quarterly profit fell by over 90 percent due to soaring fuel costs.

Japan Airlines Corp. also last week reported a loss for its most recent quarter, but managed to reduce the flow of red ink compared with the previous year.

Despite the net loss, Korean Air pointed to gains in passenger and cargo revenue as bright spots during the second quarter.

Korean Air said international passenger sales rose 16.5 percent, while revenue from first and business class, on international routes rose 17 percent.

Korean Air, which operates nearly 400 passenger flights daily to 115 cities in 38 countries, has been trying to raise its international profile with a sleek global advertising blitz stressing service and sophistication.

Korean Air said it opened new routes during the second quarter to Munich, Germany and Sao Paulo, Brazil. The airline said this week that it would begin regular passenger service to Tashkent, Uzbekistan, next month.

Shares in Korean Air fell 3.7 percent to 43,750 won ($42) in early afternoon trading.

Old China hands have maintained for years that the country’s economy would stay strong through the Olympics. Well, now the Olympics are almost done, the stock market has crashed, and inflation is out of control. So is this the end?

My guest Philip Pan, former Beijing bureau chief for the Washington Post and author of the new book Out of Mao’s Shadow, knows better than to make pinpoint economic predictions. But he wisely observes that no economy can sustain momentous growth forever, and that without political reforms China’s bust could be a violent one.

See part one of my discussion with Pan, where he argues that free-market capitalism won’t necessarily lead to democracy in China.

Russian tanks roared deep into Georgia on Monday, launching a new western front in the conflict, and Russian planes staged air raids that sent people screaming and fleeing for cover in some towns.

The escalating warfare brought sharp words from President Bush, who pressed Moscow to accept an immediate cease-fire and pull its troops out to avert a “dramatic and brutal escalation” of violence in the former Soviet republic.

Russian forces for the first time moved well outside the two restive, pro-Russian provinces claimed by Georgia that lie at the heart of the dispute. An Associated Press reporter saw Russian troops in control of government buildings in this town just miles from the frontier and Russian troops were reported in nearby Senaki.

Georgia’s president said his country had been sliced in half with the capture of a critical highway crossroads near the central city of Gori, and Russian warplanes launched new air raids across the country.

The Russian Defense Ministry, through news agencies, denied it had captured Gori and also denied any intentions to advance on the Georgian capital of Tbilisi.

In New York, the United Nations Security Council held an emergency session at Georgia’s request, the fifth meeting on the fighting in as many days.

The western assault expanded the days-old war beyond the central breakaway region of South Ossetia, where a crackdown by Georgia last week drew a military response from Russia.

While most Georgian forces were still busy fighting there, Russian troops opened the western attack by invading from a second separatist province, Abkhazia, that occupies Georgia’s coastal northwest arm.

Russian forces moved into Senaki, 20 miles inland from the Black Sea, and seized police stations in Zugdidi, just outside the southern fringe of Abkhazia. Abkhazian allies took control of the nearby village of Kurga, according to witnesses and Georgian officials.

By late Monday, Russian news agencies, citing the Defense Ministry, said troops had left Senaki, 20 miles inland from the Black Sea port of Poti, “after liquidating the danger,” but did not give details.

The new assault came despite a claim earlier in the day by a top Russian general that Russia had no plans to enter undisputed Georgian territory.

The Georgian president, Mikhail Saakashvili, told a national security meeting Russia had also taken central Gori, which its on Georgia’s only east-west highway, cutting off the eastern half of the nation from the western Black Sea coast.

But the news agency Interfax cited a Russian Defense Ministry official as denying Gori was captured. Attempts to reach Gori residents by telephone late Monday did not go through.

Fighting also raged Monday around Tskhinvali, the capital of the separatist province of South Ossetia.

Even as Saakashvili signed a cease-fire pledge Monday with European mediators, Russia flexed its military muscle and appeared determined to subdue the small U.S. ally, which has been pressing for NATO membership.

Russia’s massive and multi-pronged offensive has drawn wide criticism from the West, but Russia has rejected calls for a cease-fire and said it was acted to protect its citizens. Most residents of the separatist regions have Russian passports.

In Zugdidi, an AP reporter saw five or six Russian soldiers posted outside an Interior Ministry building. Several tanks and other armored vehicles were moving through the town but the streets were nearly deserted. Shops, restaurants and banks were shut down.

In the city of Gori, an AP reporter heard artillery fire and Georgian soldiers warned locals to get out because Russian tanks were approaching. Hundreds of terrified residents fled toward Tbilisi, many trying to flag down passing cars.

An AP film crew saw Georgian tanks and military vehicles speeding along the road from Gori to Tbilisi. Firing began and people ran for cover. Cars could be seen in flames along the side of the road.

Georgia borders the Black Sea between Turkey and Russia and was ruled by Moscow for most of the two centuries preceding the 1991 breakup of the Soviet Union.

Both provinces of South Ossetia and Abkhazia have run their own affairs without international recognition since fighting to split from Georgia in the early 1990, and both have close ties with Moscow.

When Georgia began its offensive to regain control over South Ossetia, the Russian response was swift and overpowering — thousands of troops and tanks poured in.

Georgia had pledged a cease-fire, but it rang hollow Monday. An AP reporter saw a small group of Georgian fighters open fire on a column of Russian and Ossetian military vehicles outside Tskhinvali, triggering a 30-minute battle. The Russians later said all the Georgians were killed.

Another AP reporter was in the village of Tkviavi, 7 1/2 miles south of Tskhinvali inside undisputed Georgian territory, when a bomb from a Russian warplane struck a house. The walls of neighboring buildings fell as screaming residents ran for cover. Eighteen people were wounded.

Hundreds of Georgian troops headed north Monday along the road toward Tskhinvali, pocked with tank regiments creeping up the highway into South Ossetia. Hundreds of other soldiers traveled in trucks in the opposite direction, towing light artillery weapons.

In a statement in the Rose Garden, Bush said there was an apparent attempt by Russia to unseat the pro-Western Saakashvili. He said further Russian action would conflict with Russian assurance its actions were meant to restore peace in the pro-Russian separatist areas.

Bush and other Western leaders have also complained that Russian warplanes — buzzing over Georgia since Friday — have bombed Georgian oil sites and factories far from the conflict zone.

The world’s seven largest economic powers urged Russia to accept an immediate cease-fire agree to international mediation. Secretary of State Condoleezza Rice and her colleagues from the Group of Seven leading industrialized nations spoke by telephone and pledged their support for a negotiated solution to the conflict.

“I’ve expressed my grave concern about the disproportionate response of Russia and that we strongly condemn the bombing outside of South Ossetia,” Bush told NBC Sports.

Putin criticized the United States for viewing Georgia as the victim instead of the aggressor, and for airlifting Georgian troops back home from Iraq on Sunday.

“Of course, Saddam Hussein ought to have been hanged for destroying several Shiite villages,” Putin said in Moscow. “And the incumbent Georgian leaders who razed ten Ossetian villages at once, who ran elderly people and children with tanks, who burned civilian alive in their sheds — these leaders must be taken under protection.”

The U.S. military was informing Russia about the flights from Iraq to avoid mishaps, one military official said Monday on condition of anonymity because he was not authorized to speak about the subject on the record.

A Defense Department spokesman said the U.S. expected to have all Georgian troops out of Iraq by day’s end.

Pentagon officials said Monday that U.S. military was assessing the fighting every day to determine whether to pull the fewer than 100 remaining American trainers out of the country.

Saakashvili’s cease-fire pledge had been proposed by the French and Finnish foreign ministers. The EU envoys headed to Moscow to try to persuade Russia to accept it.

Saakashvili voiced concern Russia’s true goal was to undermine his pro-Western government. “It’s all about the independence and democracy of Georgia,” he said.

The Georgian president said Russia had sent 20,000 troops and 500 tanks into Georgia. He said Russian warplanes were bombing roads and bridges, destroying radar systems and targeting Tbilisi’s civilian airport. One Russian bombing raid struck the Tbilisi airport area only a half-hour before EU envoys arrived, he said.

Another hit near key Baku-Tbilisi-Ceyhan oil pipeline, which carries Caspian crude to the West. No supply interruptions have been reported.

At least 9,000 Russian troops and 350 armored vehicles were in Abkhazia, according to a Russian military commander.

Abkhazia’s separatists declared Sunday they would push Georgian forces out of the northern part of the Kodori Gorge, the only area of Abkhazia still under Georgian control.

Before invading western Georgia, Russia’s deputy chief of General Staff Col.-Gen. Anatoly Nogovitsyn demanded Monday that Georgia disarm its police in Zugdidi, a town just outside Abkhazia. Still he insisted “We are not planning any offensive.”

Russia’s Deputy Foreign Minister Grigory Karasin said more than 2,000 people have been killed in South Ossetia since Friday, most of them Ossetians with Russian passports. The figures could not be independently confirmed, but refugees who fled Tskhinvali over the weekend said hundreds had been killed.

Many found shelter in the Russian province of North Ossetia.

“The Georgians burned all of our homes,” said one elderly woman, as she sat on a bench under a tree with three other white-haired survivors. “The Georgians say it is their land. Where is our land, then?”

On his way out of the game, Yao Ming thrust his fist through the air, and soon made that long, wobbly walk to the Chinese bench. The end of a brilliant and historic night for basketball, the end of responsibility for Yao. His work is done. Let him rest.

“The game was a treasure,” Yao said, “and it will be a treasure for the rest of my life.”

Here was a surreal sight on Sunday night in these Olympic Games. Here was the embodiment of Yao Ming’s legacy: His heart, his determination, his immensity. He made possible a billion people worldwide watching a basketball game on television. He made possible these blistering ovations and rock-star treatment the U.S. players receive here. He made possible the hundreds of millions of dollars that David Stern can generate here.

Yao leaving to an ovation.
(Getty Images)And above all, Yao gave China its Olympic flag-bearer and iconic athlete to frame the most important engagement it’s ever had with the world.

“Yao built the bridge for all of us,” Kobe Bryant said.

To watch Yao limp and flail and double over to breathe was to understand the reasons with which his sense of obligation brought him back so soon from another broken foot, another surgery. For Yao, this is his life’s lot. For his own preservation, his own crack at a career undiminished, he needs to tell a most unrelenting Chinese sports machine that its days of running him into the ground are gone.

No more summers with the national team in non-Olympic years, no more of the treatment that’s breaking down his body. The sport’s never seen an athlete of his size who is so skilled, so agile. His lower body has crumbled under the burden, with two broken feet, a broken leg and an infected toe. It breaks your heart to watch what has happened to him. As much as anyone, his body needs rest and recovery. The pounding has taken a terrible toll on him.

“They will continue to pressure him,” one high-ranking international basketball official said of Chinese officials. “The one thing they do with all of their athletes is drive them into the ground with training. The strongest survive. If you don’t, they’ll find another to come and do it.

“I mean, they don’t do little things like block out good airline seats for them when they travel. They can all be in middle seats in coach for all they care, and that’s how Yao travels with them. Whatever happens with his injuries, they’re going to insist that he keeps playing for them.”

The Chinese government had monitored his birth because of the perfect physical and athletic genes of his parents, forever treating him as something of a science project. Yet there’s nothing robotic, nothing programmed, about him. He has such humanity, such a sense of grace and honor. Over time, you can slowly see him assimilating into more of a Western mindset. He has things on his mind. Yes, he has plenty of opinions. It just isn’t his culture’s way to share them.

Poor Yao. The Rockets traded for the tempestuous Ron Artest and Yao’s reaction was perfectly appropriate. What he wanted to know, he said, was if Artest was done pummeling fans in the stands. Essentially, it was his way of asking: Will this clown ever get it right? Fair question, but the surprising bite to his words created a reaction that immediately sent Yao scurrying to make public and private apologies.

Yao showed a little edge, and he needs to do it again. After these Games, he needs to use the leverage of his popularity, his earning power in China and tell the regime that he’s done with the grinding national team calendar. Tell them that they’ll see him in 2012 in London, and that if they leave him alone, maybe he’ll make it there as an elite player.

When Yao crumbled with a stress fracture, necessitating the fourth surgery on his lower body in the past two years, his old Houston Rockets coach Jeff Van Gundy pleaded that Yao – or someone close with a willingness to be the bad guy – has to learn the word “No.”

Grabbing a breath.
(Getty Images)Still, Yao gives China its biggest star in these Olympics. Here, everything is about saving face, and the under-manned Chinese did that with a respectable showing. Yao missed seven of 10 shots and spent so much of his night crumpled over, holding his shorts, gasping for breath. He gave them one moment, though. Before the U.S. turned its Pool B game into a dunking line, Yao started it all. Of all things, he backed behind the three-point line and delivered the game’s first basket. Such a roar in this jammed building, such a poetic moment. After all, Yao has always defied range and reach.

“I felt honored to be there watching that,” U.S. point guard Chris Paul said. “It felt like a storybook when he hit that shot.’

So yes, everybody has made a killing on Yao Ming and he is tired and beaten and owed something here. Owed big. No one ever came to the NBA with his hype and pressure, with so many people openly pulling for him to be a flop. He was a mysterious figure out of the Far East and he felt like a threat. Now, everyone understands: The NBA needs Yao, the way China does. Only, he counted on them looking out for his best interests. They’ve bled him dry. His time, his turn now.

For once in his life, Yao needs it to be about him. He’s never going to lose face, but he could have his career cut far too short. Whatever’s happened, Yao must tell China’s government: Enough is enough – we’re even.

In San Jose, Calif., home to Silicon Valley and some of the highest home values in the country, a bumper sticker reads, “Dear God, one more bubble before I die.”

Chances are the car’s driver lives in Willow Glen, a neighborhood with a small-town feel, Spanish-style single family homes and a main street with sidewalk cafes and locally owned shops.

To live there, residents are paying the city’s highest prices relative to what they could pay to rent similar properties in the same area. When you compare mortgage payments to the value of a similar home on the rental market, the price to buy is 26.1 times higher, one of the biggest differences in the country.

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Willow Glen is one example of a neighborhood where homeowners are still taking chances on future appreciation–and paying a premium above and beyond their neighbors for that confidence.

Still, it’s not as overpriced as New York’s TriBeCa (10013) or Boston’s Chinatown (02111), where demand for high-end condos, new development and proximity to downtowns have pumped up prices.

Behind the Numbers

While real estate markets may be slumping across the country, there are plenty of neighborhoods with similar characteristics. These include downtown Seattle (98104), Mission Hills, San Diego (92103) and Coronado, Phoenix (85006).

Boston

To find them, we used data from Hotpads.com, an aggregator of rental listings from brokerages and real estate investment trusts, as well as home sales offerings from multiple listing services and individual brokers.

In a report for Forbes.com, Hotpads.com produced a price-to-earnings spread for each ZIP code in the nation’s 40 largest cities by comparing rental costs with buying costs for similar properties, based on number of bedrooms, location and price per square foot.

Price-to-earnings, or P/E, expresses how much one has to pay for each dollar of return. A neighborhood with a high P/E is overvalued because a buyer is getting a low return based on costs–and paying a huge premium to live in area relative to how much it would cost to rent a similar property there. In TriBeCa, for example, which is No. 1 on our list, the P/E of the measured property is 36.3.

San Francisco

A high P/E can be a sign of an investment being overpriced, but a rock bottom P/E doesn’t mean a bargain. In fact, when you get into the single digits, you’re usually buying a weak investment in an area few are interested in.

Detroit’s 48235, around 7 Mile Road, for example, has a P/E of 3. It is inundated with foreclosed properties and houses going for as little as $25,000. It’s hard to put an exact epicenter on Detroit’s real estate crash, but this neighborhood is in contention.

High-Priced Properties

Instead, mini-bubbles are created when buyers invest in robust areas where they expect homes will continue to rise in value. If their gamble pays off and the neighborhood appreciates further, today’s overpriced buyer is tomorrow’s smart investor.

A neighborhood with a very high P/E, like West Hollywood, Calif., where rents trail prices by 30 times, has an expectation of future price increases baked into the cost of buying. It’s not prime West Hollywood, but since it’s on the edge of nicer parts of town and of affluent neighborhood Los Feliz, it’s been attractive to speculators, despite the cost.

But expensive does not mean always mean overpriced.

New York City

Limestone townhouses on the Upper East Side of Manhattan, for example, are listed for ever-dizzying prices. Financier J. Christopher Flowers bought a $53 million townhouse on East 75th Street in 2006, and sold a smaller East 73rd Street townhouse undergoing renovation for $23 million in 2007.

Expensive? Yes. Overpriced? Not so much.

Consider that a five-bedroom mansion on East 74th Street that once belonged to Eleanor Roosevelt is currently listed for $60,000 a month. Prices may be tops in the city, but prime rental prices are peerless as well.

Instead, the country’s most overpriced areas are ZIP codes like San Francisco’s Outer Sunset neighborhood, 94122, which, given its location near the Pacific Ocean and on the south side of Golden Gate Park, was during the most recent boom widely thought to be up-and-coming.

Median prices surged from $560,000 in June of 2003 to a peak of $771,000 in March of 2008, based on Trulia.com price data drawn from California’s multiple-listing service.

Sometimes, however, betting on price appreciation doesn’t quite work out, and when markets start to soften, speculative areas are often the first to take a hit.

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San Francisco as a whole has declined 6% over the last year, but prices in the Outer Sunset have declined 10%, dropping to $692,000. Based on asking prices and asking rents, though, the market still has a way to fall before reaching equilibrium.

Investors and homeowners in the other nine neighborhoods on our list are likely hoping for immunity from this trend.

You can’t call them “good investments,” because they inevitably depreciate. But the models in our ranking of the top 10 vehicles with highest resale value do amount to sensible purchases for the way they minimize the dollar losses associated with owning and maintaining a vehicle.

The models on our list retain a higher percentage of their original purchase price than any other car you can buy. But high gas prices are having a dramatic effect on prices — so much so that in just a matter of weeks, the list of the top 10 vehicles with the highest resale values will look different.

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“Economy cars are improving,” says John Blair, chief executive officer of Automotive Lease Guides (ALG), a market research firm headquartered in Santa Barbara, Calif. “The outlook for small, fuel-efficient vehicles is much brighter today versus a year ago. And the outlook on SUVs has changed dramatically in the other direction.”

Basically, fuel efficient vehicles are gaining value and non-fuel-efficient vehicles are losing value.

Sensible but Fun

So it’s no surprise that the car that tops this ranking, the playful Mini Cooper, is one of the most fuel-efficient models on sale in the United States. It will hold more than 60 percent of its value after three years of ownership.

Audi S5

None of the models on our resale honor roll give up more than 15 percent of their purchase price per year through their first three years, based on data from ALG. And as automobile depreciation goes, that’s as good as gold. Go to the accompanying slideshow for the full list of vehicles with the highest resale values.

Some express youthful nonconformity, like the Scion xB, Nissan Rogue and Volkswagen New Beetle Convertible , numbers 7, 9 and 10, respectively. The Infiniti G37 Coupe, BMW 1 Series and Audi S5, which rank second, third and tenth, combine sophistication with spirited energy.

Even the two top-10 finishers that appear purely practical, Honda’s CR-V and Civic Hybrid, are far from pedestrian. They’re smartly styled, well engineered and have a refined driving experience. The Civic Hybrid adds technological charm to those attributes.

Hey, Good-Lookin’

Smart styling contributes a lot to a vehicle’s resale value, says John Blair, chief executive officer of ALG. That’s due to fundamental market dynamics: supply and demand.

A model that is uniquely attractive will generate more demand from people shopping for used cars. Naturally, that greater demand pumps up its resale price. Thus, ALG puts a heavy weight on appearance when it estimates the residual value of new vehicles.

Residual value is analogous to resale value, but it’s not the same thing: It’s the price that a model in average condition is expected to take in when eventually it is sold at a wholesale used-car auction. The retail value of a vehicle — the price a consumer pays to buy it — varies a little from model to model but generally runs about 15 percent above the ALG residual value, Blair says.

The firm’s estimates are used by automotive lease writers to determine how much a model will be worth when its lease expires. Our top 10 vehicles with the highest resale value — there are actually 11 models on the list, thanks to one tie — are based on ALG residual values expressed as a percent of the original purchase price. All are current, 2008 models. The ranking excludes specialty cars produced in low numbers.

All About Perceptions

In addition to a vehicle’s styling, its manufacturer’s reputation for quality has a big impact on how much value it retains, Blair says.

“The No. 1 influence is certainly a vehicle brand and the perception of the brand,” he says. “The used-car buyer is looking for a vehicle that’s not going to be a maintenance headache for them. If you have a strong brand, that has a real positive influence on the residual value.”

Of the vehicles on our list, the Honda Civic Hybrid, Honda CR-V, Infiniti G37 and Scion xB all have better-than-average predicted reliability, according to Consumer Reports. “Honda is at the top of that list,” in terms of having a sterling reputation for vehicle longevity, Blair says.

Volkswagen New Beetle Convertible

Manufacturers affect their vehicle’s residual values by carefully managing the supply side of the supply/demand equation. The aim is to meet demand without over-producing, so that discounts aren’t needed to sell the excess, Blair says. Honda does a good job of this.

“You need to balance the supply with the demand and have a lot of discipline with the pricing,” he says. “Producing too many cars and creating an environment where you have to discount the vehicles is the single biggest thing that’s going to erode your residual values.”

All of those precepts of value retention apply very clearly in our ranking.

None of the top 10 models are overproduced. In fact, quite a few are offbeat, unique and even limited in supply. For instance, the Volkswagen R32 is a limited edition of the Rabbit, of which only 5,000 will be sold in the United States for 2008.

Even less exotic models on our list, like the, Mini Cooper, Jeep Wrangler, Scion xB and Volkswagen New Beetle Convertible are specialty models in their own right. They might not be scorching performers or ultra-rare, but they are offbeat enough to be in shorter supply than the average vehicle. The same goes for the Honda Civic Hybrid, which is produced in far fewer numbers than the conventional Civic.

Cars like the BMW 1 Series, Infiniti G37 and Mini Cooper reach their pinnacle positions by a combination of brand reputation and desirability, Blair says. “The 1 Series is another example of a nicely styled vehicle with good driving characteristics.”

For the little Cooper, fuel-efficiency currently gives a boost to resale value, says Andrew Cutler, a spokesman for Mini. The Environmental Protection Agency rates the base Mini Cooper at 28 miles per gallon in the city and 37 mpg on the highway.

What’s more, Mini tries to create an engaging brand experience that makes owners feel like members of a special club. Cutler calls it “an expressive brand personality.”

“They then tell their friends how cool it is and invite them to join the club,” he says. “This brand experience, coupled with the car’s performance, safety and efficiency, keeps customers engaged for a longer period of time than has been seen with other niche vehicles.”

Wall Street ended an arduous first half quietly Monday, closing mixed as investors again based their trades on what has become the dominant force in the market: the price of oil. The major indexes closed out the first six months of 2008 with double digit declines, and are perilously close to the levels of a bear market.

Stocks pulled back in the early going as oil reached yet another record, this time, above $143 a barrel. The market then gathered some strength as crude lost momentum and allowed some investors to consider buying equities that have been turned into bargains by months of volatility.

There is little expectation on the Street that the chaos of the first half will soon end. Besides the punishing effect of higher oil, which threatens the stifle consumer spending and in turn, an economy still struggling to grow, the stock market is still contending with warnings of losses at financial companies — the continuing fallout of the housing slump and the credit crisis that began nearly a year ago.

These problems that show little sign of being resolved soon left Wall Street in tatters as the first half ended. The Dow Jones industrials are down nearly 20 percent from their record high of 14,198.09, set in October, putting the blue chips on the threshold of a bear market. The market did have a spring recovery, which began in March, but it foundered in May as the combination of credit problems and higher oil rattled investors.

Financial stocks, which were leading the market higher before the credit crisis struck, ended the half with even steeper losses than anyone expected — just a few months ago, there were predictions that the credit crisis would soon end. Airline stocks have been devastated by the rising price of oil. Detroit automotive stocks, as ever battling competition from overseas makers, are also being pummeled by the sagging economy and higher energy prices.

Investors wondering how the markets will fare will likely devote unusual scrutiny to parsing reports on the economy and corporate earnings, which will arrive in force in the coming weeks. And right now, there appears to be little optimism.

“We’ve seen year-over-year estimates decline,” said Christopher Johnson, president of Johnson Research Group in Cincinnati. “It’ll be a critical season.”

Investors made relatively small bets ahead of the coming earnings and as the quarter moved toward a close. According to preliminary calculations, the Dow rose 3.50, or 0.03 percent, to 11,350.01.

Broader stock indicators were mixed. The Standard & Poor’s 500 index rose 1.62, or 0.13 percent, to 1,280.00, and the technology-laden Nasdaq composite index fell 22.65, or 1.21 percent, to 2,292.98.

The day’s modest moves stood in contrast to the heavy losses the market has suffered:

–In just the month of June, the Dow dropped 10.19 percent; the S&P fell 8.60 percent, and the Nasdaq lost 9.10 percent.

–For the quarter, the Dow fell 7.44 percent; the S&P lost 3.23 percent, while the Nasdaq had an anemic 0.61 percent gain.

–For the first half, the Dow is down 14.44 percent; the S&P lost 12.83 percent; and the Nasdaq has fallen 13.55 percent.

–Since their high point last October, the Dow gave up 19.87 percent; the S&P dropped 18.22 percent; and the Nasdaq is down 19.80 percent. A 20 percent drop from a market peak is considered the start of a bear market — although many analysts say Wall Street already has a bear market mentality.

Light, sweet crude, which began the year at $96 a barrel, fell 21 cents Monday to settle at $140.00 on the New York Mercantile Exchange while retail gasoline set a new national average of $4.086 a gallon, according to a survey of stations by AAA, the Oil Price Information Service and Wright Express.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which tends to move opposite its price, rose to 3.98 percent from 3.97 percent late Friday.

The dollar was mixed against other major currencies, while gold prices fell.

Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc., contends that the market must first see nervous investors pull more money from the stock market before Wall Street will begin to show meaningful signs of stabilizing. He said the coming earnings reports for the second quarter could indicate that while some parts of the economy, like the financial sector, are struggling, others might show decent earnings.

“With the Dow nearing bear market territory it’s going to keep investors on edge,” he said. He’s looking at economic data due this week on manufacturing and employment as possibly offering some reassurance to investors.

“I think the economic data is going to indicate an economy that is not slipping into a full-blown recession but one that is just limping along,” Cardillo said.

Monday’s economic news confirmed that the country is still struggling. The Chicago Purchasing Managers’ report on manufacturing, which tracks business conditions across Illinois, Michigan and Indiana, rose to 49.6 for June from 49.1 in May. However, a reading below 50 signals economic contraction.

Other important readings are due this week. The Labor Department is expected to release a June employment report Thursday that is expected to show the sixth straight month of jobs losses and only a modest improvement in the unemployment rate. The Institute for Supply Management is expected to release its June readings on the manufacturing and service sector, and the Commerce Department will report on construction spending in May.

Johnson said the S&P is flirting with new lows for the year but that investors don’t seem as fearful as they did when the market fell sharply in March. He said that indicates that the market likely has more room to fall before stocks can begin to sustain sizable upward moves.

The Chicago Board Options Exchange’s volatility index, known as the VIX, and often referred to as the “fear index,” has risen in recent weeks but stands only at about 24, well below the high of nearly 38 it logged earlier this year.

Johnson said Wall Street was finally seeing the pullback that many had expected earlier this year when investors grew nervous about massive write-downs at financial companies.

“Most people did not expect the stock market to rally as well as it did from March to May,” he said. “Everybody thought that the market rally in March would be a little bit of a fake-out.”

But investors fears about the financial sector remain, even if they are not as pronounced as at the start of the quarter. Financial stocks led broader indexes lower during the second quarter, and have been especially troubled since the near collapse of Bear Stearns in March. The investment bank was spared after the Federal Reserve orchestrated its sale to JPMorgan Chase & Co., but that did little to assuage fears about the industry.

Since last summer, banks and brokerages have written down more than $300 billion of mortgage-backed securities and other risky investments. And later this month even more losses are expected when companies like Citigroup Inc. and Merrill Lynch & Co. report second-quarter results.

Investors have turned away from the sector, waiting to see when the hemorrhaging might stop. The KBW Bank index, which tracks 24 financial institutions, is down 32 percent this year alone as most of its components trade near 52-week lows.

Declining issues outpaced advancers by about 8 to 7 on the New York Stock Exchange, where volume came to 1.61 billion shares.

The Russell 2000 index of smaller companies fell 8.48, or 1.21 percent, to 689.66.

Overseas, Japan’s Nikkei stock average fell 0.46 percent. Britain’s FTSE 100 rose 1.74 percent, Germany’s DAX index fell 0.06 percent, and France’s CAC-40 rose 0.85 percent.

AP Business Writer Joe Bel Bruno in New York contributed to this story.

The U.S. corporate profit outlook is deteriorating rapidly, with S&P 500 earnings for the second quarter now seen falling at a double-digit pace from a year earlier, according to Thomson Reuters Proprietary Research released on Tuesday.

Second quarter profits are expected to fall at a rate of 10.2 percent, compared with the Monday estimate for a drop of 9.6 percent. At the end of May, analysts expected a 7.3 percent drop.

A worsening outlook for consumer discretionary and financials was behind the bleaker earnings view.

Soaring gasoline prices and a limping economy have hampered the outlook for consumer discretionary companies such as General Motors (NYSE:GM - News) and electronics retailer Circuit City an Stores (NYSE:CC - News). Among the most recent of major victims reporting impact from soaring crude oil, United Parcel Service Inc(NYSE:UPS - News), the world’s largest package-delivery company cut its second-quarter profit outlook citing high fuel costs and a slack U.S. economy.

At the same time, the credit crisis brought on by subprime mortgage failures has left the banking sector searching for new ways to create revenues now that several of their most profitable businesses have been all but shutdown.

The financial sector was hit by heavy selling most recently as Goldman Sachs & Co strategists told investors it had changed its previously positive view to “underweight” for U.S. financial, while also giving a negative outlook for consumer shares, saying weakening consumer demand and deterioration in the credit markets will weigh on profitability.

UPS’s announcement came just a week after main rival Memphis-based FedEx Corp (NYSE:FDX - News) posted a quarterly loss and gave a weak profit outlook for its fiscal 2009. The two companies are seen as bellwethers of the U.S. economy due to the large volume of commercial and consumer goods they transport.

Raz Elraz, for the first time, will be able to take his 14-month-old son to a playground in this rocket-scarred Israeli town. A few miles away in Gaza, Palestinian teenagers ride their bicycles, and Hamas guards play pingpong.

The six-month truce that took effect Thursday was welcomed by both sides, although the Palestinian economy is still being held in check by a closed border.

The cease-fire is meant to end Palestinian rocket barrages and Israeli reprisals in Gaza that have killed more than 400 Palestinians — many of them civilians — and seven Israelis in fighting since the Islamic Hamas seized control of the Gaza Strip a year ago.

Halting all violence is the first step of the deal. If it holds, succeeding stages will see Israel easing its blockade on Gaza and negotiations will resume on the release of an Israeli soldier held for two years by Hamas-linked forces and on opening the Rafah crossing between Gaza and Egypt.

Israeli Prime Minister Ehud Olmert will fly to Egypt next week for talks with Egyptian President Hosni Mubarak, Olmert’s office said. The statement indicated the talks were not linked with a prisoner exchange, but Israel’s chief negotiator on the prisoner issue is also due in Egypt on Tuesday.

Much is at stake. If the truce fails, Israel has warned it will launch a large- scale invasion of Gaza, despite warnings of high casualties on both sides. That could prompt the moderate West Bank government of Palestinian President Mahmoud Abbas to call off U.S.-backed peace talks with Israel.

While Abbas has little control over the daily life of the 1.4 million Palestinians in Gaza since Hamas overran the territory and ousted his security forces, he wants to strengthen his image in both territories as he tries to negotiate with Israel.

As the sun set on the first day of the truce, there were no reports of fighting. The last truce, in November 2006, lasted only weeks.

On the Israeli side of the Kissufim crossing, Israeli soldiers played soccer near their tanks. In the southern Gaza town of Rafah, grinning Hamas security men in camouflage uniforms played pingpong while their colleagues sat nearby, their guns resting on their laps.

Along Gaza’s border fence with Israel, Palestinian teenagers celebrated the truce by riding bicycles in the area that just a day earlier was a combat zone. Palestinian children flew kites on the beach in Deir el-Balah, central Gaza Strip.

In Sderot, Elraz said he didn’t trust the truce enough yet to let his son, Itai, play outside.

“It will take a very long time to persuade Sderot residents that there is calm,” said Elraz, 30, from the bar of his pizza restaurant. “We need peace. As long as there is no peace, there is no quiet and there’s still war.”

Other Israelis were similarly skeptical.

“I give it a week at the most.” said David Cohen, 38, as he sold cigarettes and soft drinks at his kiosk. “I pray that it will last longer, but I consider each day more a bonus.”

Even so, Cohen said he hoped to take his children out for a bike ride on Saturday for the first time in years.

In Gaza, Palestinian Ahmad al-Smari also wasn’t ready to be too hopeful.

“We want a real end to all violence, to feel like we are human, to sleep without fear and to farm without fear, to eat, drink, study, travel,” said al-Smari, 38. “I don’t think that Israel is ready to give that to us now.”

Sderot, less than a mile from Gaza, has borne the brunt of Palestinian rocket attacks in the past seven years, killing 13 people, wounding dozens, causing millions of dollars in damage, and disrupting daily life and ruining the economy. More than 1,000 projectiles have exploded in the town of about 20,000 people in the past year alone.

For many Palestinians, the key was opening the crossings. Israel’s deputy defense minister said more trucks would bring vital supplies to Gaza starting Sunday, and a week later, building supplies would be let through.

“I don’t want to have too much hope until I see something really coming through the crossing,” Issa Ali, 55, said as he smoked a water pipe outside his idle cement block factory near the Karni crossing with Israel.

“Life has stopped in Gaza for the past year. … Will Gaza rise again? I do not know. You can ask them,” he said, pointing his finger to the Israeli side.

The yearlong international boycott of the Hamas regime has plunged crowded Gaza ever deeper into poverty. About 80 percent of its 1.4 million residents depend on food aid, according to U.N. figures.

U.N. Secretary-General Ban Ki-moon expressed hope the truce would “provide security and an easing of the humanitarian situation in Gaza and end rocket and mortar attacks against Israeli targets.”

Officials on both sides mirrored their citizens’ skepticism.

Israeli government spokesman Mark Regev said Israel would “fully implement all its commitments” but added, “Our eyes are open, we are closely following what the other side is doing.”

In Paris, Israeli Defense Minister Ehud Barak said the truce might last only days or weeks. “It is a very fragile cease-fire, but we think that before we enter a major (military) operation, we should give it a chance,” he said.

Hamas does not recognize Israel and refuses to renounce violence. Israel, the U.S. and the European Union regard Hamas as a terror organization and do not deal with it, so Egypt had to act as a mediator, working for months on the unsigned truce accord.

In an e-mail message to reporters, the Hamas military wing declared itself “completely and comprehensively” committed to the truce. But it added that Hamas gunmen were ready to “launch a military strike that will shake the Zionist entity state” if Israel did not abide by all its commitments.

British Prime Minister Gordon Brown handed President Bush good news on two fronts Monday: a modest increase in Britain’s troops for the tough Afghanistan fight and a fresh European effort to squeeze Iran’s nuclear ambitions.

The deeply unpopular prime minister seemed to calculate he had more to gain politically by being hawkish than he risked losing by appearing at the side of the also unpopular Bush. Brown’s predecessor, Tony Blair, was wounded by the impression he did too much of Bush’s bidding.

But there’s no greater platform for publicity than a joint appearance with the U.S. president. So Brown talked tough on Iran, Afghanistan, Zimbabwe and other issues when the two leaders addressed reporters in an ornate Foreign Office hall after two days of meetings.

The announcements by Brown, combined with earlier pledges by other allies, allowed the White House to crow that Bush was returning home from his weeklong European trip with new commitments, although aides had said beforehand there would be none. At every stop, Bush heard the kind of tough talk and promises on Iran that he wanted, and Italy announced welcome changes to its Afghanistan military presence.

Brown notably showed no daylight with Bush on Iraq, the issue that most got Blair into political trouble. Brown said he would not reduce the 4,000-strong British force level any further for any reason other than success in training Iraqi forces, speeding up development and seeing local elections through.

“I’m determined that we continue to do that job,” Brown said.

London’s new commitment to Afghanistan would bring the British presence there to its highest level yet. The deployment of about 230 engineers, logistical staff and military trainers will boost the number of British forces to more than 8,000, most based in a volatile, front-line southern province.

Eager to claim leadership on a tough stance toward Iran, Brown also revealed that the European Union would agree to freeze assets of Iran’s largest bank, Bank Melli, which is accused of having links to Iran’s nuclear and ballistic missile programs. A third round of U.N. sanctions passed in March introduced financial monitoring of Bank Melli and Bank Saderat, another institution the U.S. accuses of suspect activities.

Brown said European nations also will start the process of new sanctions aimed at Iran’s wealthy oil and gas sector, if Tehran continues to refuse to halt enriching uranium.

“We will take any necessary action so that Iran is aware of the choice it needs to make,” Brown said.

His disclosure of stronger financial sanctions from Europe was later confirmed in Luxembourg, where EU foreign ministers were meeting. EU spokeswoman Cristina Gallach said the decision isn’t formalized, but will be.

The three mild rounds of U.N. sanctions and a mostly solo U.S. effort to crimp Iran’s vast overseas financial operations have had little appreciable impact. Iran has not only continued enriching uranium, but expanded and improved its program. Tehran says it seeks only civilian nuclear energy, not nuclear weapons.

One of the main goals of Bush’s trip was more support against Iran from Europe, which, with far larger business dealings with Tehran, can pinch the major energy supplier in ways the U.S. cannot.

Bush was clearly grateful at Brown’s announcements. Despite talk early in Brown’s tenure about a stiffness between them, the two men traded much warm praise. Bush paid Brown one of his highest compliments. “He’s tough on terror, and I appreciate it — and so should the people of Great Britain and the world,” he said.

Andrew Roberts, a historian who joined a dinner at 10 Downing Street on Sunday night, told British Broadcasting Corp. radio that they “were about as friendly as I have ever seen two politicians be.”

But Bush also held a private meeting with Brown’s political nemesis, the leader of the opposition Conservative Party. The charismatic David Cameron could be Britain’s next prime minister after national elections expected in the next two years, as he is favored by huge margins in polling over Brown.

Over a private breakfast, the president also conferred with Blair, in a get-together between old allies who formed a bond in the face of staunch critics.

Bush flew to Belfast before returning to Washington, a stop meant to celebrate Northern Ireland’s power-sharing administration between Catholics and Protestants but which was rife with wrinkles.

Bush and Brown encouraged the overdue transfer of police and justice responsibilities from Britain to Northern Ireland authorities, which has been blocked by the major Protestant party, the Democratic Unionists. They are angry that the major Catholic party, Sinn Fein, wants to make an infamous Irish Republican Army figure the new justice minister.

Because of Bush’s visit, First Minister Peter Robinson, the newly elected Protestant, and Deputy First Minister Martin McGuinness, a former IRA chief, broke their staunch refusal to appear in public together. Still, they kept Bush between them at all times, and Robinson continued to refuse to shake McGuinness’ hand.

Security meant that the legislature was shut down on what would typically be its busiest day. “It’s a police state whereas normally it’s full of the energy that comes from democracy in action,” moderate Catholic politician Tommy Gallagher said.

Bush also visited a religiously integrated elementary school. In a snub, Northern Ireland Education Minister Caitriona Ruane, a Bush critic, declined to accompany the president.

About 100 demonstrators amassed at Stormont’s gate, while other protesters had constructed a giant “NO BUSH” message on a mountainside out of cloth.

In a historic speech, Prime Minister Stephen Harper apologized Wednesday to Canada’s native peoples for a former government policy of forcing their children to attend state-funded schools aimed at assimilating them.

The treatment of children at the schools where they were often physically and sexually abused was a sad chapter in the country’s history, he said from the House of Commons in an address carried live across Canada.

“Today, we recognize that this policy of assimilation was wrong, has caused great harm and has no place in our country,” he said, as 11 aboriginal leaders looked on just feet away.

Indians packed into the public galleries and gathered on the lawn of Parliament Hill.

From the 19th century until the 1970s, more than 150,000 Indian children were required to attend state-funded Christian schools as part of a program to assimilate them into Canadian society.

Hundreds of former students came to the House of Commons and saw what native leaders call a pivotal moment for Canada’s more than 1 million Indians, who remain the country’s poorest and most disadvantaged group. There are more than 80,000 surviving students. Among those attending was the oldest school survivor, 104-year-old Marguerite Wabano.

“The government of Canada now recognizes that it was wrong to forcibly remove children from their homes and we apologize,” Harper said.

“We now recognize that it was wrong to separate children from rich and vibrant cultures and traditions, and that it created a void in many lives and communities and we apologize,” Harper said.

Harper also apologized for failing to prevent the children from being physically and sexually abused at the schools.

Phil Fontaine, the national chief of the Assembly of First Nations and one of the leaders seated near Harper, wore a traditional native headdress and he and other Indian leaders were allowed to speak from the floor after opposition parties demanded it. One man banged his drum inside the House of Commons during ovations after the day’s speeches.

“Finally, we heard Canada say it is sorry,” Fontaine said.

“Never again will this House consider us an Indian problem for just being who we are,” Fontaine said. “We heard the government of Canada take full responsibility.”

He said the apology will go a long way toward repairing the relationship between aboriginals and the rest of Canada.

The federal government earlier admitted that physical and sexual abuse in the schools was rampant. Many students recall being beaten for speaking their native languages and losing touch with their parents and customs.

In 1998, Canada’s former Indian affairs minister Jane Stewart expressed “profound regret” for the establishment of the schools, but some Indian leaders didn’t consider that apology sufficient.

The First Nations Leadership Council said earlier this week that there had still been debate over whether Stewart’s statement constituted a full apology. Fontaine has said that it didn’t come from the nation’s top leader. And Michael Cachagee, president of the National Residential School Survivors’ Society, has complained that statement lacked detail on “children being ripped from their parents.”

That legacy of abuse and isolation has been cited by Indian leaders as the root cause of epidemic rates of alcoholism and drug addiction on reservations.

Fontaine was one of the first to go public with his past experiences of physical and sexual abuse.

Willie Blackwater, who said he was repeatedly raped and beaten by a dorm supervisor when he was 9 years old, called the apology a pivotal moment in his life.

“I think this is a start of a long healing relationship,” Blackwater said.

Cachagee, who was 4 years old when he was placed in a school where he was abused, said it was a sincere apology. “It was a good day for Canada.”

The apology comes months after Australian Prime Minister Kevin Rudd made a similar gesture to the so-called Stolen Generations — thousands of Aborigines forcibly taken from their families as children under assimilation policies that lasted from 1910 to 1970.

But Canada has gone a step farther, offering those who were taken from their families compensation for the years they attended the residential schools. The offer was part of a lawsuit settlement.

A truth and reconciliation commission will also examine government policy and take testimony from survivors. The goal is to give survivors a forum to tell their stories and educate Canadians about a grim period in the country’s history.

Action/Adventure and Sequel

May 22nd, 2008 (wide)

MPAA Rating:
Not Yet Rated
STARRING
Harrison Ford, Cate Blanchett,
Karen Allen, Ray Winstone, John Hurt,
Jim Broadbent, and Shia LaBeouf
DIRECTED BY
Steven Spielberg
PRODUCED BY
Frank Marshall
EXECUTIVE PRODUCERS
George Lucas and Kathleen Kennedy
SCREENPLAY BY
David Koepp
STORY BY
George Lucas and Jeff Nathanson

NEW YORK - A New York City college student has sued Lindsay Lohan, claiming the “Mean Girls” star took her mink coat without permission and kept it for more than two weeks.

Maria Markova said in a lawsuit filed Monday that Lohan, 21, took the $12,000 golden sheared mink coat while in the nightclub 1 Oak on Jan. 26.

The 22-year-old Markova’s lawyer, Merrill Cohen, said Lohan had been sitting next to her client. Cohen said Markova next saw her coat on Lohan in a photo in OK! magazine.

Cohen said she called Lohan’s representatives and demanded the return of the coat. She said Markova got the coat back Feb. 14.

Lohan’s lawyer, Blair Berk, said it would be inappropriate to comment on the case.

Cohen said the lawsuit, filed in Manhattan’s state Supreme Court, asks unspecified damages.