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Electric, hybrid and small cars will grab center stage at the Detroit auto show this week, as the industry adapts to a world reshaped by the Great Recession and environmental worries.

The event will demonstrate just how automakers are responding to this new reality. Ford wants to build on its success in midsize sedans and re-ignite its small car sales, while Hyundai aims to extend last year’s triumph in budget-conscious models. GM and Chrysler will start fresh with electric vehicles but also try to boost their small-car credibility. Toyota hopes to solidify its dominance in hybrids.

The new crop of models must be successful if automakers are to reverse last year’s 21 percent sales plunge. Mounting job losses, GM and Chrysler’s bankruptcy filings and the death of several iconic brands sent sales skidding to their lowest level since 1982.

Americans feel less wealthy — and more certain that the trend toward higher fuel prices remains a threat. It’s a change U.S. automakers were slow to embrace — and it cost them the last two years as gas prices surged and consumers stopped spending. Most Japanese and European car makers were also caught in the sales downdraft, even though they depended less on pickup trucks.

In 2010, with frugality embedded in drivers’ minds, automakers want to show off new versions of smaller, less expensive cars, many of which get 40 mpg on highways. That also appeals to motorists concerned about climate change.

The show isn’t exclusively about small cars. Detroit automakers also will try to revive 1960s-style car passion with muscle cars, a niche that’s doing well.

Compared with last year’s stripped-down down affair, the show will offer more glitter. GM will have an elevated floor for new cars, a change from 2009’s carpet-over-concrete that was just about everywhere.

One big display is a 37,000-square-foot “Electric Avenue” on the main floor, featuring 20 vehicles that run on kilowatts instead of gasoline. Electrics were shown last year, but shared the spotlight with cars powered by conventional engines.

“Last year we had that ’sky-is-falling’ mentality, and everybody was running for cover,” says Doug Fox, an Ann Arbor, Mich., car dealer and chairman of this year’s show, officially called the North American International Auto Show. “We are seeing a little more investment made in the actual exhibits than last year.”

Although auto sales improved at the end of 2009, the 41 new vehicles to be unveiled at this year’s show will be down from last year’s 50, Fox says.

That’s because Chrysler LLC, which normally shows five or six new vehicles, has no debuts, and GM has fewer new vehicles because it is shedding the Pontiac, Hummer, Saturn and Saab brands, Fox says.

Here are some key trends to watch at this year’s Detroit auto show:

SMALL IS BIG

Small cars and smaller SUVs — called crossovers — made up only 21 percent of U.S. sales in 2003. But last year, they rose to 32 percent and are expected to grow to 36 percent in 2013. Buyers will see that trend reflected at the show.

General Motors Co. will show off the new Chevrolet Aveo subcompact. The Aveo has been given a more powerful engine, and a lower grille and 19-inch tires for a tougher appearance. The four-door Aveo, along with Ford Motor Co.’s new Focus and Chevrolet Spark minicar, will be part of a small-car blitz. All three will get near 40 mpg on the highway.

“The new paradigm of the American passenger car is no longer great, big rear-wheel-drive luxobarges,” says Aaron Bragman, an auto analyst for the consulting firm IHS Global Insight in Troy, Mich. “It’s small, efficient and upscale.”

ELECTRIC BUZZ GETS LOUDER

Much of the show’s buzz is expected to come from electric vehicles, which have jumped off the drawing board and onto the convention floor. Several big automakers plan to sell them in late 2010, giving the broader public its first chance to buy cars that rely more on electrical outlets than gas pumps.

The big draw is the chance to stop burning gas and drive a more environmentally friendly car, but the cars are expensive.

Nissan Motor Co.’s rechargeable Leaf, due in showrooms late this year, will make its first appearance inside a U.S. auto show. The Leaf is purely electric, using just a rechargeable battery for power. But its expected cost is about $30,000. Chevrolet’s Volt, unveiled three years ago and for sale this fall, will make a reappearance at the show. It costs about $40,000, although there are up to $7,500 in tax credits available.

China’s BYD Co. LTD, which has the backing of billionaire investor Warren Buffett, plans to show the F3DM plug-in hybrid compact sedan and the new e6 that could come to the U.S. late this year.

Among the Europeans, BMW AG will unveil an electric concept car.

Toyota, whose Prius has dominated gas-electric hybrid sales across the globe, plans to show a new hybrid car.

Unlike the last few years, Chinese automakers largely will skip the show, perhaps because they’re focusing on their own country’s explosive sales growth. Still, any car maker that wants to grow must focus on the U.S., where Asian manufacturers collectively grabbed a bigger chunk of the market than Detroit manufacturers for the first time last year.

One floor below the main level, people can ride with a professional driver in electric cars on a tree-lined course, another sign of the dramatic transition from internal combustion engines to electric.

SWING BACK TO 60s MUSCLE

Muscle cars, while a small part of the market, sold relatively well last year with the Mustang outdueling the Camaro for the top sales spot. Each automaker sold more than 60,000 of the cars.

Ford will put a bigger, more powerful V-8 into the Mustang, while GM plans to show a Chevrolet Camaro convertible muscle car and a sporty GS version of the Buick Regal midsize sedan.

New designs for both small and performance cars generally are following trends toward smaller windows and higher door lines that rise from the hood to rear. Side and hood creases in the sheet metal are designed to make cars appear as they are moving even while still.

Already the biggest auto market and steel maker, China edged past Germany in 2009 to become the top exporter, yet another sign of its rapid rise and the spread of economic power from West to East.

Total 2009 exports were more than $1.2 trillion, China’s customs agency said Sunday. That was ahead of the 816 billion euros ($1.17 trillion) forecast for Germany by its foreign trade organization, BGA.

China’s new status is mostly symbolic but highlights its growing presence as an industrial power, major buyer of oil, iron ore and other commodities and, increasingly, as an investor and key voice in managing the global economy.

Its ability to unseat longtime export leader Germany reflects the ability of agile, low-cost Chinese manufacturers to keep selling abroad even as other exporters have been hammered by a slump in global demand.

China overtook Germany in 2007 as the third-largest economy and is expected to unseat Japan as No. 2 behind the United States as early as this year. Its trade boom has helped Beijing pile up the world’s biggest foreign currency reserves at more than $2 trillion.

The global crisis speeded China’s rise up the ranks as a 4 trillion yuan ($586 billion) government stimulus kept its economy and consumption growing while the U.S. and other markets struggled with recession. Chinese economic growth rose to 8.9 percent in the third quarter of 2009 and the government is forecasting a full-year expansion of 8.3 percent.

On Friday, data released by an industry group showed China topped the slumping United States in auto sales in 2009 — a status industry analysts a few years ago did not expect it to achieve until as late as 2020.

Economists and Germany’s national chamber of commerce said earlier the country was likely to lose its longtime crown as top exporter.

China’s exports per person are still much lower than those of Germany, which has a much smaller population of 80 million people. China sells low-tech goods such as shoes, toys and furniture, while Germany exports machinery and other higher-value products. German commentators note their country supplies the factory equipment used by top Chinese manufacturers.

“If China grows, this pushes the world’s economy — and that’s good for export-oriented Germany as well,” an economist for the German Chamber of Industry and Commerce, Volker Treier, said last month.

Of course, with 1.3 billion people, China is still one of the world’s poorest countries. It ranked 130th among economies in per capita income in 2008, according to the World Bank.

China’s trade ended 2009 with exports rebounding in December, jumping 17.7 percent after 13 months of declines, the customs agency said.

The upturn was an “important turning point” for exporters, a customs agency economist, Huang Guohua, said on state television, CCTV.

“We can say that China’s export enterprises have completely emerged from their all-time low in exports,” Huang said.

Plunging demand in 2008 forced thousands of factories to close and threw millions of laborers out of work.

China’s trade surplus shrank by 34.2 percent in 2009 to $196.07 billion, the customs agency said. That reflected China’s stronger demand for imported raw materials and consumer goods.

Iron ore imports rose 41.6 percent to 630 million tons, while oil imports rose 13.9 percent to 1.4 billion barrels, the agency said. Economists say the buying binge has been driven in part by a Chinese effort to build up stockpiles while global prices are low.

The United States and other governments complain that part of China’s export success is based on currency controls and improper subsidies that give its exporters an unfair advantage against foreign rivals.

Washington has imposed anti-dumping duties on imports of Chinese-made steel pipes and some other goods, while the European Union has imposed curbs on Chinese shoes.

The U.S. and other governments also complain that Beijing keeps its currency, the yuan, undervalued. Beijing broke the yuan’s link to the dollar in 2005 and it rose gradually until late 2008, but has been frozen since then against the U.S. currency in what economists say is an effort by Beijing to keep its exporters competitive.

The dollar’s weakness against the euro and some other currencies pulls down the yuan in markets that use them and makes Chinese goods even more attractive there, adding to China’s trade surplus.

China’s government will likely spend the full amount of its planned stimulus in 2010, the finance minister said Sunday, despite improvements in its economy and efforts to control bank lending.

Separately, China’s Cabinet announced measures to curb speculation in the property market.

Finance Minister Xie Xuren’s comments could help to reassure companies and investors that Beijing will keep spending to shore up growth.

Xie said Beijing plans to spend 992.7 billion yuan ($145.3 billion) on public investment in 2010, Xinhua News Agency reported, including 572.2 billion yuan of stimulus funds.

The state-run news agency gave no indication whether Xie’s comments included whether the rest of the stimulus due to come from other levels of government also would be fully spent.

China’s stimulus calls for pumping 4 trillion yuan ($586 billion) into the economy in 2009 and 2010 through higher spending on public works and aid to industry. Some 1.18 trillion yuan of that is coming from Beijing and the rest from local governments, state companies and lending by government-owned banks.

Xie’s comments add to a string of assurances that official aid will continue, especially to private companies, which missed out on the first year of the stimulus. Most funds last year went to state-owned construction companies and suppliers of steel and cement to build airports and other public works facilities.

China’s economic growth accelerated to 8.9 percent in the third quarter of 2009, which prompted some economists to say Beijing should start thinking about how to wind down its stimulus. But Premier Wen Jiabao and other officials say the recovery is still not firmly established and have warned against complacency.

The government has ordered banks to control lending following a stimulus-driven credit surge in mid-2009 and is trying to prevent over-investment in steel, cement and some other industries. That has stirred unease among some investors that Chinese leaders might be winding down the stimulus and cutting access to credit.

Meanwhile, the minister also said Beijing’s central government revenues rose 11.7 percent in 2009 despite the global financial crisis.

That could help to reinforce confidence that Beijing can continue stimulus spending without straining its finances. Economists say China can afford more stimulus because its debt is low compared with other major economies and tax revenues are still strong.

Xie did not give a deficit figure but said it was within the budget approved by the national legislature last March. The government projected then that it would run a deficit of 951 billion yuan ($138 billion) in 2009, equal to about 3 percent of China’s $3.5 trillion economy.

The State Council, China’s Cabinet, stepped up measures Sunday to curb unauthorized investment in real estate, a move aimed at countering speculation.

Communist leaders have been trying for three years to cool a boom in housing costs that they worry could ignite a backlash if the poor are priced out of the market. But credit limits and curbs meant to discourage speculation and increase the supply of low-cost housing have failed to slow price rises.

Housing prices rose 5.7 percent year-on-year in November to a 16-month high and new construction rocketed almost 200 percent, while sales nearly doubled.

“With the recovery of the real estate market, such problems as excessively rising house prices have recently emerged in some cities, which call for great attention,” the State Council said in a notice.

The notice called for strengthening the monitoring of capital flow and foreign investment to prevent credit from entering the real estate sector illegally and “stop overseas speculative funds from jeopardizing China’s property market.”

It said families applying to buy second homes backed by loans should foot a minimum down-payment of at least 40 percent.

Governments at all levels should increase the supply of affordable homes to help resolve the housing difficulties of 15.4 million low-income households by the end of 2012, it said.

If the stock market holds to a pattern it has followed for most of the past 40 years, 2010 could be a big year for investors.

Since 1973, a big advance on the first trading day of January has been a strong sign stocks will post robust gains for the rest of the year.

On Monday, upbeat news about manufacturing lifted the Dow Jones industrial average 155 points, or 1.5 percent. The Standard & Poor’s 500 index rose 17 points, or 1.6 percent.

When the S&P 500 has gained more than 1 percent on the first day of trading, the index has ended the year higher 86 percent of the time, according to Schaeffer’s Investment Research.

After a big first day, the average yearly gain in the S&P 500 index has been 14.7 percent. That’s important because the index is the yardstick for the overall market and for many investments such as mutual funds.

Still, trying to predict the year based on the first day of trading is dicey. Over the past 20 years, the S&P 500’s first-day move regardless of its size correlated with how the index finished the year just 11 times. Six of those years saw the market advance, while five saw it slide.

And as investors are well aware, there are plenty of potential obstacles that could pull the market back down, including Friday’s December employment report from the Labor Department. Other threats include the struggling real estate market and expectations of rising interest rates.

Analysts agree that the huge gains of 2009 — when the S&P 500 index jumped 64.8 percent in nine months to end the year with a gain of 23.5 percent — have almost no chance of being repeated this year.

After such a huge run in 2009, some market watchers believe lingering questions about the economy could trigger a correction, which is generally considered a drop of at least 10 percent.

But for those who believe “as January goes in the stock market, so goes the rest of the year,” the first trading day of 2010 is a good omen.

China’s manufacturing industry posted the fastest growth in 20 months for December, while a trade group of purchasing executives said demand at U.S. factories was increasing. The Institute for Supply Management’s index of manufacturing activity rose to 55.9 from 53.6 in November, a bigger improvement than analysts predicted.

The market may also have rallied Monday based on what’s known as the “January effect,” the buying spurt that often occurs with the start of a new tax year. Investors who sold stock before the end of the old year to claim a tax loss reinvest that money when trading begins again.

According to the “Stock Trader’s Almanac,” a book that tracks market trends, there have been only five times since 1950 when the January effect turned out to be a poor indicator of the rest of the year.

The Dow industrials rose 155.91, or 1.5 percent, to 10,583.96. The Standard & Poor’s 500 index rose 17.89, or 1.6 percent, to 1,132.99, while the Nasdaq composite index rose 39.27, or 1.7 percent, to 2,308.42.

The stock market barreled higher in 2009 in part because the big banks at the heart of the 2008 financial crisis started making money again. But much of their ability to do so was dependent on the Federal Reserve, which helped them out with ultra-low borrowing costs.

Investors are uncertain how banks and the rest of the economy will fare as policymakers begin to withdraw some of those emergency supports from the economy this year.

David Kelly, chief market strategist at J.P. Morgan Funds, is looking first at jobs, not statistics, to determine whether the market can hold and even build on the steep advance of 2009.

“The crucial last checkmark on the clipboard of economic recovery is employment,” Kelly said.

If unemployment remains at 10 percent, it will be hard for consumer spending to increase and that’s what drives the economy.

“Jobs, from an economic psychology point of view, are kind of the holy grail. A lot of people in America don’t believe the economy is recovering,” Kelly said.

The next major snapshot of the job market comes Friday, when the Labor Department is scheduled to release its employment figures for December. It is already the biggest report on investors’ calendar each month but this one will set the tone for trading in 2010.

Economists forecast that employers cut 23,000 jobs in December, according to a survey by Thomson Reuters. In November, the number of jobs lost came to 11,000 jobs, far fewer than anticipated.

Kelly said a gain in jobs, when it occurs, could send a jolt through the markets.

“That will deal a body-blow to pessimism,” he said.

Beyond the worries about the economy, there is a danger that greed could lead the market astray, as it did when the S&P 500 and the Dow reached their peak in October 2007. The S&P 500 index is still down by 27.6 percent from its high, while the Dow is still down 25.3 percent.

Jeffrey Frankel, president of Stuart Frankel & Co. in New York, is concerned that everyday investors who missed the strong run in 2009 are now charging into the market.

“People sat around the holiday table and those that had money in cash and those that had money in bonds had to listen to people that had money in funds,” Frankel said. “Unfortunately that leads to people kind of following the crowd.”

Google Inc.’s vision for how a mobile phone should be made and sold will likely raise the stakes in the Internet search leader’s bid to gain more control over how people surf the Web while they’re on the go.

The catalyst in Google’s latest attempt to shake up the mobile market apparently will be the Nexus One, the first smart phone designed by the company’s own engineers.

Google has said little about the phone except to confirm that its workers received the handsets three weeks ago for a final round of internal testing. Google is expected to provide the first concrete details about the phone, along with the company’s vision for how such devices should be made and sold, during a press conference on Tuesday at Google’s headquarters in Mountain View, Calif.

In its invitation to the event, Google said the wireless market had only seen “the beginning of what’s possible” with the free Android operating system that it introduced for mobile phones in late 2007.

Android was designed to make it easier to interact on a mobile phone with Web sites and services, including Google’s, while providing an egalitarian platform to run applications developed by outside programmers.

The applications don’t have to go through an extensive review before they can be distributed to Android-powered devices, a contrast from the control that Apple Inc. holds on its hot-selling iPhone.

Until now, Google has been content to let other companies design the devices relying on Android. And those devices thus far have largely been distributed like most other mobile phones, tethered to major wireless carriers that typically require buyers to lock into two-year contracts in return for discounts on the handsets.

But Google now appears to be ready to push its operating system in a new direction while trying to give consumers more flexibility to connect a mobile phone with the wireless carrier of their choice.

Google intends to stamp its own brand on the Nexus One and sell it directly to consumers over the Web, leaving it up to the buyers to pick their own carriers, according to reports published in technology blogs and major newspapers. That could open new possibilities while igniting new tensions in the mobile phone market.

Just how much Nexus One shakes things up will likely hinge on the phone’s price.

Most smart phones designed for Web access sell for $50 to $200, thanks to subsidies provided by wireless carriers in return for commitments to service plans that cost $800 to $1,000 a year. Without the financial aid, the phones would sell for $400 to $600 — a range that most consumers have been unwilling to pay, especially in a shaky economy.

T-Mobile has agreed to provide a subsidy for a Nexus One that works on its wireless network, according to published reports. Such an agreement wouldn’t represent a substantial change from the status quo.

Yet Google appears to be betting that the Nexus One will make a big enough splash to persuade other major U.S. wireless carriers — AT&T Inc., Verizon Wireless and Sprint Nextel Corp. — to subsidize the device, too, said technology analyst Rob Enderle.

“If enough customers want this phone, the carriers will have no choice but to follow,” he predicted.

That would also break the traditional practice of giving carriers the right to sell specific models exclusively for a certain period.

Google conceivably could offer a sharp discount on the Nexus One without carriers’ help, hoping to recoup some of the costs by selling more ads on the devices. But the mobile advertising market is unlikely to grow quickly enough to offset the costs of the discounts for several years, so pursuing that strategy would likely crimp Google’s profits — something that could drive down the company’s stock price.

Another option is for Google to simply sell the phone at the full price, banking that it’ll be attractive enough for buyers looking for the freedom to choose their own carrier.

A smart phone that empowers consumers to choose from a variety of carriers could post a threat to the iPhone, which is tied exclusively to AT&T in the United States. That tie-in has spurred complaints from some iPhone users who say AT&T’s network bogs down amid heavy Web traffic, particularly in big cities such as New York and San Francisco.

With the competition between the two companies heating up, Google Chief Executive Eric Schmidt resigned from Apple’s board five months ago.

Selling its own phone also could foster more resentment toward Google among the business partners that have been backing Android as a viable alternative to the mobile operating systems made by Apple, BlackBerry manufacturer Research in Motion Ltd. and Microsoft Corp.

Verizon, for instance, has raised consumer awareness about Android during the past two months by bankrolling a marketing blitz for the Droid phone made by Motorola Inc.

In an effort to keep the peace, Google probably will try to position the Nexus One as a way to encourage even more innovation with its Android system, said Forrester Research analyst Charles Golvin.

“They might tell everyone in the Android ecosystem, ‘We applaud you for what you have done so far, we just want to take things even further and think we can help light the way,’” Golvin said.

Easing concerns about debt problems overseas and a $29 billion takeover deal by Exxon Mobil Corp. nudged major stock indexes to new highs for the year.

The market climbed Monday after the Middle Eastern city-state of Abu Dhabi extended $10 billion to nearby Dubai to help the emirate make debt payments. Analysts have been concerned since last month that a cash crunch in the former boomtown could send ripples through global credit markets.

The market’s advance was uneven after Exxon Mobil said it would acquire XTO Energy Inc. The move will help Exxon tap into the growing supply of natural gas in the U.S. and could signal that more deals are afoot in the energy industry.

A 4.3 percent drop in shares of Exxon held the Dow Jones industrial average to more modest gains than other indexes, and shaved about $2 billion off the value of Exxon’s all-stock bid for XTO. The Dow added 0.3 percent, while the broader Standard & Poor’s 500 index rose 0.7 percent.

Financial stocks rose after Citigroup Inc. said it would repay the $20 billion it received last year from the government’s financial rescue program. The government also will sell its 34 percent stake in the company. The news came just days after Bank of America Corp. repaid the $45 billion in bailout money it owed taxpayers.

The day’s advance was orderly and signaled that traders remain cautious, as they have for weeks. A big run in stocks that began in March has slowed in the past month as investors look to lock in some of their gains from 2009 and determine how to position themselves for the new year. The S&P 500 index is up 1.7 percent so far this month, after a 5.7 percent gain in November and a 64.7 percent jump since early March.

“Most people, for the most part, have wrapped up the year,” said Blaze Tankersley, chief market strategist at brokerage Bay Crest Partners.

The Dow rose 29.55, or 0.3 percent, to 10,501.05, its highest close since Oct. 1, 2008. The S&P 500 index rose 7.70, or 0.7 percent, to 1,114.11, its highest finish since Oct. 2, 2008. The Nasdaq composite index rose 21.79, or 1 percent, to 2,212.10.

The yield on the benchmark 10-year Treasury note edged up to 3.56 percent from 3.55 percent late Friday as prices fell.

The dollar fell against other currencies, helping to lift most commodities prices. Commodities are priced in dollars and become cheaper for foreign buyers when the greenback falls.

Gold rose, while oil fell 36 cents to settle at $69.51 a barrel on the New York Mercantile Exchange.

Analysts said stocks are likely to drift as investors await comments about the economy and interest rates from the Federal Reserve, which wraps up its last policy meeting of the year on Wednesday.

Investors expect the central bank to keep its benchmark interest rate at a historic low level of near zero. But there is some concern that rates could rise sooner than previously thought as the economy improves.

“People simply want to know if we are going to keep this low-interest-rate environment,” said Michael Feser, president of Zecco Trading in Pasadena, Calif. “That has really been fuel for this market.”

The Russell 2000 index of smaller companies rose 9.42, or 1.6 percent, to 609.79.

Three stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 4.5 billion shares compared with 3.9 billion Friday.

Britain’s FTSE 100 rose 1 percent, Germany’s DAX index rose 0.8 percent, and France’s CAC-40 gained 0.7 percent. Japan’s Nikkei stock average fell less than 0.1 percent.

Oil-rich Abu Dhabi pumped $10 billion into its indebted neighbor Monday, sending stocks soaring while sparing Dubai and the rest of the Emirates federation the humiliation of an imminent default by one of the struggling Arab boomtown’s star companies.

The bailout was about more than petrodollar transfers from one United Arab Emirates sheikdom to the other. Dubai officials seized on the news to try to repair damage done by weeks of uncertainty stemming from their unwillingness to fully stand behind Dubai World as the conglomerate looked to restructure some of its $60 billion in debts.

Investors cheered Monday’s news. Dubai’s main index shot up 10.4 percent at the close and markets elsewhere rose modestly.

Prior to the crisis, most investors had assumed the Dubai government itself, possibly with Abu Dhabi’s help, would guarantee debts amassed by its chief growth engine.

Dubai authorities are scrambling to reshape the business hub’s battered image, vowing that the city-state is committed to “transparency, good governance and market principles.” Officials outlined a new legal framework that promised to increase openness and protect creditors in future dealings with the conglomerate, offering lenders succor in a country where formal bankruptcy proceedings are largely untested.

“We are here today to reassure investors, financial and trade creditors, employees and our citizens that our government will act at all times in accordance with market principles and internationally accepted business practices,” Sheik Ahmed bin Saeed Al Maktoum, chairman of the Dubai supreme fiscal committee, said in a statement.

Some $4.1 billion of the funds released Monday will go toward meeting a deadline to repay Islamic bonds issued by Dubai World’s Nakheel property arm. The conglomerate, whose sprawling holdings range from the oceanliner Queen Elizabeth 2 to luxury retailer Barney’s New York, will use the rest.

The move, however, carries broader implications as UAE officials have looked to assure the market the country’s economy was on solid ground. Their assurances gave voice to a silent concern that the whole country would be hit by the same investor mistrust that Dubai now faces.

The bailout bought Dubai, itself saddled with more than $80 billion in debts including Dubai World’s, time it desperately needs.

“This is a very significant development,” said Marios Maratheftis, head of regional research at Standard Chartered Bank. “It shows once again there is a one-country approach in dealing with the crisis, which is positive.”

But it was unclear if the news — assurances and funding alike — would prove to be more than a temporary salve.

Standard & Poor’s, which along with other credit rating agencies has aggressively cut its outlook on Dubai state-run companies, called Monday’s move “a step towards rebuilding confidence.” But it warned that the government’s ability to bail out other firms remains uncertain.

Fitch Ratings, another credit agency, also urged caution, saying Abu Dhabi’s bailout was “tactical in nature as opposed to a reversal of recent rhetoric regarding state support.”

Abu Dhabi, which controls the UAE’s presidency, has directly and indirectly provided Dubai with $25 billion over the past year, mostly by buying Dubai bonds. In all, Dubai’s known debts are roughly equal to its total economic output last year. The full extent of its liabilities is uncertain, however, with some analysts putting the total at $100 billion or more.

The aid package is key for Dubai, which despite its international celebrity has little of the oil wealth held by Abu Dhabi. Dubai’s ruler is the UAE’s vice president and prime minister.

Dubai created Dubai World — which has interests in seaports, real estate, tourism and retail — to diversify its economy and boost its international clout. Much of the growth was fueled by easy credit. As the bills came due, the emirate struggled to repay as its economy was battered by the global economic downturn.

Nakheel, a property developer and hotel operator best known for building manmade islands in the shape of palm trees and a map of the world off Dubai’s coast, was among those Dubai World companies that relied heavily on that easy money.

Plenty of questions remain, especially as Dubai works to salvage its reputation and the conglomerate tries to deal with the rest of its debts.

Dubai World, while welcoming the financial support, said it was nonetheless pushing ahead with talks to convince lenders to agree to a “standstill” — effectively a delay — on repaying part of its debt.

“This announcement constitutes a specific bailout of Nakheel, suggesting that as an entity (it) was deemed to be ‘too big to fail,’” said Fahd Iqbal, a Dubai-based analyst at Middle East investment bank EFG-Hermes. “It does not, however, constitute a bailout of Dubai Inc. or Dubai World as a whole and this is important to highlight.”

Officials introduced a reorganization law that could be used in case Dubai World is “unable to achieve an acceptable restructuring of its remaining obligations.”

A person close to the Dubai government said the new law provided a legal framework for addressing corporate debt, though it did not mean a bankruptcy filing by state-owned companies was certain.

“The current bankruptcy law is untested,” the person said, insisting on anonymity as a condition for briefing reporters on a conference call. “Dubai World needed a legal process to go through. The government was very focused on creating something that would be fair and transparent to everybody.”

It was not immediately clear what, if anything, Abu Dhabi would expect in exchange for Monday’s funding. Analysts had said an Abu Dhabi bailout could result in it exerting greater influence on its high profile neighbor going forward.

But the individual close to the Dubai government said the money came with no strings attached.

“Let me be clear: Dubai has not given anything up. There have been no conditions on the funding,” he said.

The Senate on Sunday passed a $1.1 trillion spending bill with increased budgets for vast areas of the federal government, including health, education, law enforcement and veterans’ programs.

The more-than-1,000-page package, one of the last essential chores of Congress this year, passed 57-35 and now goes to President Barack Obama for his signature.

The weekend action underlined the legislative crush faced by Congress as it tries to wind up the year. After the vote, the Senate immediately returned to the debate on health care legislation that has consumed its time and energy for weeks. Senate Democrats hope to reach a consensus in the coming days on Obama’s chief domestic priority.

The spending bill combines six of the 12 annual appropriation bills for the 2010 budget year that began Oct. 1. Obama has signed into law five others.

The final one, a $626 billion defense bill, will be used as the base bill for another catch-all package of measures that Congress must deal with in the coming days. Those include action to raise the $12.1 trillion debt ceiling and proposals to stimulate the job market.

The spending bill passed Sunday includes $447 billion for departments’ operating budgets and about $650 billion in mandatory payments for federal benefit programs such as Medicare and Medicaid. Those programs under immediate control of Congress would see increases of about 10 percent.

The FBI gets $7.9 billion, a $680 million increase over 2009; the Veterans Health Administration budget goes from $41 billion to $45.1 billion; and the National Institutes of Health receives $31 billion, a $692 million increase.

All but three Democrats voted for the bill, while all but three Republicans opposed it. Democrats said the spending was critical to meet the needs of a recession-battered economy. “Every bill that is passed, every project that is funded and every job that is created helps America take another step forward on the road of economic recovery,” Senate Majority Leader Harry Reid, D-Nev., said after the vote.

Republicans decried what they called out-of control spending and pointed to an estimated $3.9 billion in the bill for more than 5,000 local projects sought by individual lawmakers from both parties.

The Citizens Against Government Waste said those projects included construction of a county farmer’s market in Kentucky, renovation of a historic theater in New York and restoration of a mill in Rhode Island.

Sen. John McCain, R-Ariz., a longtime critic of such projects, said it was “shameful” that so many had found their way into the legislation. Most Americans, he said, were watching football and not the Senate debate, adding, “If they knew what we are about to pass ….”

The legislation also contains numerous items not directly related to spending. It provides help for auto dealers facing closure, ends a ban on funding by the District of Columbia government for abortions and allows the district to permit medical marijuana, lets Amtrak passengers carry unloaded handguns in their checked baggage and permits detainees held at Guantanamo Bay to be transferred to the United States to stand trial, but not to be released.

The bill also approves a 2 percent pay increase for federal workers.

With the Senate concentrating on health care, attention on the upcoming jobs plan shifts to the House.

The defense bill that will be the basis for the package normally enjoys wide bipartisan support, but Republicans, and some fiscally conservative Democrats, are unhappy with the prospect of another jolt of deficit-swelling spending.

Congress must soon raise the debt ceiling, now at $12.1 trillion, so the Treasury can continue to borrow, and Democratic leaders are eyeing a new figure close to $14 trillion, pushing the issue past next November’s election.

But a bipartisan group in the Senate says a higher ceiling should be tied to creation of a task force on deficit reduction, and House Democratic moderates say their votes could depend on winning a “pay-as-you-go” law requiring that new tax cuts or spending programs don’t add to the deficit.

Sen. Mark Warner, D-Va., on CNN’s “State of the Union,” favored a deficit task force. He said he didn’t “see how this process where everybody kind of lards on is going to actually ever come to an end unless we finally have the discipline to do a straight up-or-down vote across the board on revenues and spending cuts.”

Proposals to put people back to work include tax breaks for new company hires, small business tax breaks, public works spending and federal aid to states.

Congress is also likely to extend measures, included in the $787 billion stimulus act last February, that provide jobless payments and health insurance subsidies for the unemployed.

Kuwait’s oil minister said Sunday OPEC probably won’t change its production levels when it meets next week.

Sheik Ahmed al-Abdullah al-Sabah made the comments to state news agency KUNA, which paraphrased him as saying “it was unlikely the bloc would change output strategy” when it meets in Angola on Dec. 22.

The 12-member Organization of the Petroleum Exporting Countries, which includes Kuwait, has not changed its output targets since it cut production at the end of last year to buoy collapsing oil prices. The bloc supplies roughly 35 percent of the world’s crude.

The oil minister of OPEC heavyweight Saudi Arabia said earlier this month he thought current global oil prices were “perfect.”

Al-Sabah also said Kuwait plans to spend nearly 25 billion dinars ($87.64 billion) on new capital projects in the oil sector through 2030, according to KUNA.

Few details were provided, though al-Sabah said the country wanted to build a new refinery to accommodate increased demand and “cover for the other older refineries in case of failure or need for maintenance work.”

Kuwait’s development minister said in October the government planned to revive the $14 billion refinery project to build its fourth oil refinery, which was scrapped in March amid corruption allegations. Japanese and South Korean companies were going to build the 615,000 barrel a day refinery. It was to come on line 2012.

Iraq’s oil minister began counting the money Saturday even before the first wells were drilled, dubbing the country’s second postwar oil auction a triumph even as international oil companies largely snubbed the most violent regions in the Middle East’s last major oil bonanza.

The two days of bidding produced deals on only seven of the 15 fields on offer. Of those, four were in the stable southern Shiite heartland while two in the north went to the only company that expressed interest: Angola’s Sonogal. The last was in central Iraq, in a province where violence has remained low.

The auction was key for Iraq. Its oil bidding in June — the first in over three decades — largely failed, with only one giant field awarded out of eight offered. The hope was for a better showing this time. The deals are critical for boosting Iraq’s oil exports — and bringing in revenue to help rebuild after the 2003 U.S.-led war and decades of neglect and international sanctions under Saddam Hussein.

Iraq has not been able to raise output to even close to pre-2003 levels and is limping along at roughly 2.5 million barrels per day using technology desperately needing an overhaul. That’s well short of Iraq’s goal of joining the ranks of other OPEC heavyweights and reaching 12 million barrels a day in six years.

On Saturday, Russian private oil giant Lukoil teamed up with Norway’s Statoil ASA to snatch the crown jewel of the auction, the 12.88 billion barrel West Qurna Phase 2 field in southern Iraq. It was something of a coup for Lukoil, which won the contract in 1997 under Saddam, only to see the dictator rescind the deal five years later.

The U.S. companies at the auction, including Exxon Mobil Corp., stayed on the sidelines except for one failed bid by Occidental over the two days at the heavily fortified Oil Ministry.

The auction came after bombings Tuesday around Baghdad killed at least 127 people in a sobering reminder of the challenges the Baghdad government faces with the looming withdrawal of U.S. forces.

“It is a big victory for Iraq,” Oil Minister Hussain al-Shahristani told reporters after the final field was auctioned. “It is a big achievement for Iraq to win such contracts at the current prices.”

He estimated the two bidding rounds could eventually bring in $200 billion per year — more than three times Iraq’s current annual budget, which is 90 percent built on oil revenue. Al-Shahristani and Prime Minister Nouri al-Maliki have both staked their political futures on promises of boosting oil output and improving security.

The size of the windfall, however, may be a case of wishful thinking.

Iraq exports between 1.8 million and 2 million barrels a day in any given month, and is not even included in the output restrictions on members of the Organization of the Petroleum Exporting Countries.

None of the U.S. supermajors like Exxon Mobil Corp. or Chevron submitted bids.

“We just decided not to bid,” Richard C. Vierbuchen, president of Exxon Mobil Upstream Ventures (West) Ltd., told The Associated Press. He did not elaborate.

Companies such as Exxon Mobil and Britain’s BP PLC are crucial for their technical know-how, which analysts say trumps that of some Russian or Chinese companies that have made aggressive inroads in Iraq.

The auction offered oil companies their biggest slice of Iraq’s oil yet, roughly one-third of its 115 billion barrels in reserves.

With a lesson learned from the June event, Iraq appeared to be more flexible in its terms. The government offered companies more operational control over the fields while still focusing heavily on the price it was willing to pay them for each barrel produced.

Companies must accept 20-year service contracts and receive a flat fee per barrel produced for their services instead of production-sharing contracts, which are much more lucrative.

Success is vital for Iraq’s leaders.

Political infighting has not only delayed passage of a national oil law, it has also meant that the Baghdad government can’t even agree with the provincial government in the semiautonomous Kurdistan region over who controls oil rights there. Similarly, with elections coming up in March, al-Maliki and al-Shahristani, who is on the same ticket, need some political capital to ward off challenges from other top Shiite political leaders.

Debate on the oil law — which Washington had called a “benchmark” for political progress in Iraq — has been delayed until the new parliament is seated after the election.

The latest auction may, at best, be a step in the right direction — a face-saving event that officials can say saw the two biggest fields snapped up.

The Lukoil-Statoil consortium beat out three other groups led by BP, France’s Total SA and Malaysia’s state-run Petronas, nabbing the field with an offer to accept $1.15 per barrel of oil produced and to raise output to 1.8 million barrels per day in 13 years. That is more than twice the targeted daily output set by Iraq.

“We are very happy today,” said Lukoil representative Andrey Kuzyaev.

Deals were also reached on Gharraf, a small southern field that went to a Petronas-led consortium that included Japex. Russia’s Gazprom claimed a small central Iraqi field. The final field, in the north, went to Sonogal, which earlier in the day made an about-face and accepted Iraq’s terms on another small neighboring field near restive Mosul.

Even Gharraf’s winners appeared concerned despite its location in the relatively calm south.

“It depends on the security situation,” Katsuo Suzuki, Japex’s vice president, said when asked when the companies would begin work. “We are in contact with several security companies to discuss the security situations and analyze carefully the situation to decide our program.”

Three other central Iraqi fields were withdrawn from the bidding and Iraq said it would develop those alone.

A day earlier, a consortium led by Shell and Petronas won the rights to develop Majnoon, a 12.5 billion barrel southern field on which Total had bid. The French supermajor Total had eyed the field hungrily, also on the back of an earlier contract under Saddam that was also canceled.

A second major southern field was awarded Friday. Afterward, however, bidding tapered off and companies showed no interest in five fields offered in volatile eastern Iraq or near Baghdad.

Those fields were also withdrawn, and will have to be developed by Iraq.

AP Business Writer Tarek El-Tablawy contributed to this report from Cairo.