Daily News from New York, New York • 22

Migis DOW JONES NASDAQ 11.06 lW 99.28 16.91 8,088.84 1,342.18 858.54 U.S. CONSUMER CONFIDENCE 120 "155? Governors Island getting new boss 110 dd Governors Island to Randy Daniels' portfolio, i Daniels, secretary of state to Gov. Pataki, will run a city-state agency that will oversee the --9. former military base. 70 JFMAMJ JASONDJ Properties has signed another to move into Times Square Tower, its new 47-story building.

O'Melveny Myers, the Los Angeles-based law firm of former U.S. Secretary of State Warren Christopher, has agreed Daniels will take charge after the federal government turns the 172-acre island over to the city and state, expected within days, officials said. The transfer already has been delayed at least once. City University of New York will use IT! ft t. i 1 fc jyjfct ly- I to lease THE REAL THING 200,000 square feet in the tower.

O'Melve ny will pay rent starting in the part of the island. The State University of New York, of which Daniels is a trustee, VP A rm 7L1 rv-rv tkl i could also help turn it into an education hub. Daniels' current agency the Department of State handles a grab-bag of functions, from licensing businesses to training firefighters. He also has been Pataki's point-man on commercial development in Harlem. "If that's true, it's a good choice," said Kathryn Wylde, president of the Partnership for 3332233 By DANIEL DUNAIEF DAILY NEWS BUSINESS WRITER Stocks broke from their Iraq funk, rising after a report showed consumer confidence continued to fall but was better than expected.

After losing almost 380 points in two trading days, the Dow reversed course and climbed 99.28 yesterday to 8,088.84. The tech-heavy Nasdaq added 16.91 to 1,342.18. Pharmaceutical giant Merck, which reaffirmed its profit prospects for this year, led the gains, climbing $2.64 to $54.40. American Express also rose, helping to pace the Dow's gain, climbing $1.60 to $35.02. "Confidence wasn't down as much as we feared," said Stephen Gallagher, the chief economist at Societe Generate.

"It didn't offer the excuse for a sell-off." Still, consumer confidence fell to a nine-year low this month, with The Conference Board's index dropping to 79 from 80.7 in December. The closely watched index can sometimes predict the direction of the economy and the markets, because the consumer accounts for two thirds of economic growth. A confidence figure around 60 usually indicates a recession, economists said, while a figure of 1 10 suggests growth. "We're closer to a recession, but we're not quite there," said Ethan Harris, the co-chief economist at Lehman Brothers. In the mid-Atlantic region, which includes New York, the confidence index hovered close to that recession figure, plunging to 64.1, the worst in the country.

Some economists suggested New York has suffered from the effects of three straight years of market and Wall Street declines. Even Goldman Sachs CEO Henry Paulson seems to be lacking confidence these days. "I'm not calling an upturn this year," Paulson told a financial conference yesterday, and suggested more pain may lay ahead. "If we don't see the recovery, we'll take more people out of the business," said Paulson. 1 Still there were some signs of life in the economy, with sales of new, single-family homes climbing a greater-than-expected 3.5 to a record in December.

New home sales last year totaled 976,000, the highest since the Commerce Department began keeping records in 1963. Economists said new home sales were an en-' I couraging sign. "They still have enough confidence to put down a payment on a house," said Gallagher. To get those housing numbers, "it still requires a fair degree of confidence." But Gallagher said the confidence number itself wasn't strong enough to suggest the market has turned around yet "Confidence is very shaky right now," Gallagher said, adding it "could take a plunge at any $60-per-square foot range, a source said. It will take floors 27 through 33, and the third floor.

The rest of the building remains unleased. Robert Bundy of The Staubach Company represented O'Melveny, while John Powers and Peter Turchln of Insig-niaESG represented the developer. (Boston Properties chairman, Mortimer B. Zuckerman, also is chairman and co-publisher of the Daily News.) Another lawfirm, Clifford Chance, is considering leasing 400,000 square feet in the building, but also is exploring other sites. CUTTING THE DECK Apian to build a deck over West Street near Ground Zero is off the table, officials said.

Brookfield Properties, downtown's largest office landlord and owner of the World Financial Center, wants West Street buried from Chambers Street to the Brooklyn Battery Tunnel. Such a move would ease access to its office buildings and retail shopping. A deck would block the entrance to the Winter Garden and American Express' headquarters, Brook-field says. "Depressing West Street is a far better solution," a Brook-field spokesman said. Sources said the Lower Manhattan Development Corporation has put the kibosh on the deck idea because of Brook-field's objections.

"We take their concerns very seriously," said corporation spokesman Matt Higglns. Ehermanedit nydaifynews.com Mil rN EHilyn gas co. hot in cold weather Randy Daniels New York City. "If anybody can pull off a city-state partnership, it's Randy Daniels." Daniels' career has been varied. Few political operatives can say they've worked for David Dlnkins, Andrew Stein, George Pataki and the Prime Minister of the Bahamas.

Before politics, Daniels worked as a reporter for CBS News. Daniels did not return calls seeking comment. LAW LEASE After losing Arthur Andersen as its first tenant, Boston business, which includes commercial construction and home furnace service, earned $13.5 million in the quarter, reversing a loss from a year earlier. KeySpan sells gas to 2.5 million customers in New York, Massachusetts and Connecticut, after adding 57,000 clients in the past year, said Wallace Parker, president of KeySpan's energy-delivery business. In 2001, those states had their warmest winter on record.

The average temperature this past quarter was 5.5 degrees colder than the same period of '01. Brooklyn-based KeySpan, the largest distributor of natural gas in the Northeast, said its quarterly profit tripled as cold weather boosted heating demand and fuel prices rose. Its profit grew to $148.6 million, or $1.03 a share, from $41.2 million, or 28 cents, a year ago, beating expectations of 95 cents a share. CEO Robert Catell is focusing on persuading customers who use heating oil to switch to gas, and on selling more power. "They're in pretty solid shape," said Credit Lyonnais Se curities analyst Gordon Howald, who rates the stock "add." "They made the hard choice to sell equity to protect their credit rating and dividend, and what you want in this environment is a strong dividend," he said.

KeySpan intends to keep its $1.78 annual dividend. Gas prices surged 60 in the fourth quarter, helping reverse a year-earlier loss at Keyspan's production business. "They clearly benefited from colder weather and higher gas prices," Howald said. KeySpan's energy-services.