Citigroup will cut between 500 and 600 U.S. jobs in its consumer-lending arm to make the company more attractive to prospective buyers, officials said Tuesday. 

CitiFinancial will close 330 branches in 48 states and shut down 46 branches, cutting another 120 jobs in Canada, about 6.4 percent of the unit's staffs in the two countries, Mary McDowell, CEO of the division, said in an interview. 

The U.S. businesses of CitiFinancial will be renamed after a reorganization that will split CitiFinancial in two, one for personal, home equity and refinancing loans and the other for expanded support including loan modifications and restructuring. The new brand will be unveiled later this year, McDowell said. 

The branch cuts “should provide a lot more clarity in terms of potential buyers looking at the full-service network branches, and being able to grow that segment,” she said in a release Tuesday. “We think it does increase the salability and eventually the fundability, because whoever buys CitiFinancial will need to fund it.”

Manufacturing grew for the 10th straight month, outpacing forecasts in May, signaling a strengthening economy, according to a report released Tuesday. 

The Institute for Supply Management's gauge fell to 59.7 last month from 60.4 in April but still exceeded most forecasts. Readings greater than 50 reflect economic expansion. 

The demand for exports caused factories to ramp up hiring as 12 of 18 industries reported growth and the employment index rose 1.3 percentage points to 59.8 percent in May, the sixth consecutive month of growth in manufacturing employment. An employment index above 49.8 percent represents growth.

Improved manufacturing and construction numbers didn't provide enough of a boost for stocks Tuesday, as the Dow Jones industrials tumbled late in the day, finishing down 112 points, or 1.11 percent to 10,024.

Free trade agreements (FTAs) could boost U.S. exports and the nation's gross domestic product by billions, sixteen Senate Republicans argued in a letter to the White House on Tuesday. 

Led by Utah Sen. Orrin Hatch, lawmakers are pushing for completion of trade agreements with Korea, Panama and Colombia they say would "be the catalyst for significant economic growth and job creation in the United States," in the letter sent to President Barack Obama. 

A trade agreement with Korea would help the nation's economy grow by up to $11.9 billion, with exports growing from $9.7 billion to $10.9 billion in agriculture, machinery, electronics and transportation equipment, according to International Trade Commission figures cited by the lawmakers. 

Additionally, an agreement with Panama would boost GDP by $2.5 billion, the letter said. 

The group of 16 is asking the Obama administration to provide the three countries — Korea, Colombia and Panama — with a "well-defined and finite list" of outstanding issues, and provide a timeline to Congress for enactment of the free trade agreements, according to the letter.

As BP tries to stop oil from leaking into Gulf waters, the company's costs have soared to nearly $1 billion, including paid claims to coastal businesses. 

More than $40 million — $25 million for damages and $15 million to promote tourism — has been spent on 15,000 claims for damages as the spill's costs soared to $990 million, the company announced Tuesday on its website. About 30,000 damages claims have been submitted and the oil giant has received more than 110,000 calls to its help lines. 

The total cost in the Gulf of Mexico efforts includes spill response, containment, relief well drilling, grants to Gulf states, claims paid and federal costs.

The "top kill" procedure to stop oil flow failed over the Memorial Day weekend, BP officials announced Saturday. They will now attempt to place a cap on the pipe to stem the flow. If it works, it is not expected to completely stop oil from leaking into the water. 

BP is working on two relief wells — one started May 2 and a second May 16 — that probably won't be finished until August but would provide the best chance for stopping the gushing oil. 

Construction spending rose in April by the largest amount in nearly 10 years, possibly signaling that the nation's hardest-hit sector could finally be recovering from the protracted recession. 

Construction activity jumped 2.7 percent in April, bringing spending to $869 billion compared to a revised 0.4 percent gain in March, the biggest single-month surge since August 2000, according to figures released Tuesday by the Commerce Department. 

March figures were revised up from an initial 0.2 percent, providing additional evidence of improving sector strength. 

Residential construction rose 4.4 percent to a seasonally adjusted annual pace of $263 billion, as home building was bolstered by tax incentives of up to $8,000 for purchases through April 30. Economists have expressed concern that building and sales could drop, hurting the housing recovery, with the expiration of the tax credits. 

The world's biggest PC manufacturer Hewlett-Packard will cut 9,000 jobs and invest $1 billion to develop the next generation of cloud-based services, according to a statement Tuesday.

HP said it will invest $1 billion to create fully automated commercial data centers and expand its enterprise services unit over a multiyear period. The cuts are due to productivity gains and automation, though HP said it will replace 6,000 of the jobs by expanding its global sales and delivery staff.

The moves are part of HP's push to expand its cloud computing offerings, which allow users to access applications and services remotely. HP made a splash in the IT services market in 2008 by purchasing Electronic Data Systems, a merger that is now largely complete according to the HP Enterprise Services general manager Tom Iannotti.

White House Budget Director Peter Orszag urged new college graduates entering a tough labor market to be resilient.

"The labor market, though recovering, is still not strong," Orszag said Saturday in a commencement speech at Rensselaer Polytechnic Institute in upstate New York. "Too many of you despite the world-class educations you have and the skills you've acquired here at RPI are headed back home without a job, or back to school out of necessity without a choice."

Orszag urged the graduates to embrace risk and learn to adapt, telling them that the "adversity quotient" matters more than IQ, the intelligence quotient.

"Ultimately, it is that stubborn refusal not to be deterred that has built America," he added.

Orszag, who graduated from Princeton and has a doctorate in economics from the London School of Economics, also called on graduates to "be empirical," using actual evidence and not just theory as they made decisions in life.

He knocked a central tenet of classical economics holding that each person behaved like a "rational supercomputer" that would take the path that best furthers self-interest when all of the information is available.

"I think most of you would agree that this rational assessment of costs and benefits is not quite how you wound up with a cap and gown today," Orszag said. "Instead, there were a host of factors including the norms of those around you that excited you about computer engineering and science, who made it clear that doing well academically was not just a necessity but actually cool."

Orszag has boosted ideas favored by behavioral economists in the Obama administration, including in budget proposals a plan to require firms to automatically enroll employees in 401k accounts as a way to increase retirement savings.

"The bottom line is that as you pursue whatever field you will from this day forward, always try to square the theory with actual observation," Orszag said. "Ask the tough questions about conventional wisdom. Often the result will be to go down unexpected paths and even bigger rewards."

The New Democrats on Friday urged House leaders to extend bonus depreciation through 2010 in legislation aimed at small businesses. 

"We believe that an extension of bonus depreciation, which will allow U.S. employers to expense up to 50 percent of the cost of business equipment in the first year of its purchase, will help stimulate economic growth and encourage  investment," the group wrote in a letter to Speaker Nancy Pelosi (D-Calif.) and Majority Leader Steny Hoyer (D-Md.). 

The House has already advanced a small business package to the Senate that zeroes out capital gains taxes for smaller C corporations.

But with the passage of the so-called tax extender bill earlier today, tax-writers in both chambers are expected to re-focus on legislation that helps small businesses over the Memorial Day recess.  

Earlier this week, President Obama called on Congress to pass legislation granting small businesses greater access to capital and providing tax incentives. Bonus depreciation is usually a part of the arsenal lawmakers use when providing relief to small businesses.

"New Dems called for an extension of bonus depreciation in 2009, and it was included in the American Recovery and Reinvestment Act," the letter states. "Without an new extension for 2010, American companies will face additional burdens in retaining workers and making key capital investments." 

Senate Finance Chairman Max Baucus (D-Mont.) intends on moving a small business bill through his chamber, but the matter is complicated. Lawmakers there want some assurance that an agreement on the estate tax is within reach before moving forward on a small business bill. Last week, a possible deal on the estate tax fell through and key negotiators are not sure when another deal will be within reach.

The Committee for a Responsible Federal Budget on Friday criticized House Democratic leaders for not fully offsetting the cost of the so-called tax extenders bill.