" Sept. 9 (Bloomberg) -- The Federal Reserve said 11 of its 12 regional banks reported signs of a stable or improving economy in July and August, adding anecdotal evidence that the worst U.S. recession in seven decades is over.

Five districts, including San Francisco, home to the biggest regional economy, "mentioned signs of improvement," the Fed said today in its Beige Book business survey, published two weeks before officials meet to set monetary policy. The exception was the St. Louis district, which said the contraction's pace "appeared to be moderating."

The central bank survey indicates that while the worst of the downturn may be past, the economy has yet to show broader growth. The Fed reported "flat" retail sales and "weak" labor markets, and cited some auto-industry contacts as saying the sales increases from government "cash-for-clunkers" subsidies may be temporary.

"We are slowly on the road to recovery," former Fed Governor Robert Heller said in an interview with Bloomberg Television. The Beige Book "confirms that we have turned the corner," he said.

The Standard & Poor's 500 Index increased 0.5 percent to 1,030.20 at 2:40 p.m. in New York after rising as much as 1.1 percent.

The outlook among many business contacts was "cautiously positive," the Fed said. "Loan demand was described as weak, and many districts reported that credit standards remained tight." ..."