DETROIT — Americans bought more cars in May than in any other month this year, drawn by fire-sale prices that pushed sales at General Motors and Chrysler above expectations despite those companies' forays into bankruptcy protection.

Overall sales were still 34 percent lower than a year ago. But low gas prices encouraged the sale of bigger vehicles while small cars stacked up on dealer lots. That could be a problem for the Obama administration, if the demand for more fuel-efficient vehicles drops as the government is forcing the U.S. auto industry to produce more of them.

"The great migration away from fuel efficiency is once again under way," said Mike Jackson, chief executive of AutoNation Inc., the nation's largest automotive retailer. "The price of gasoline determines the type of vehicles consumers buy. Period."

All major automakers, including Toyota and Honda, posted sales drops from last year, with Ford Motor Co. benefiting from the financial woes of its Detroit competitors and recording the smallest decline at 24 percent.

Almost every small-car model saw significant drops in sales compared with May of last year, which was a record month for many models as gas headed for $4 a gallon. Honda's Civic was off 61 percent, Ford saw Focus sales drop 54 percent, and GM's Chevrolet Cobalt was down 52 percent. Even Toyota's Corolla, the perennial small-car leader, saw sales drop 55 percent.

U.S. WORKING WITH CHINA ON ECONOMY

BEIJING — The global economy is showing "early signs of stabilization" because of action by the United States and China to end the worst slump in decades, U.S. Treasury Secretary Timothy Geithner said yesterday as he wrapped up a visit to China.

The two governments announced they will launch new high-level talks the week of July 27, reviving a dialogue held under the former U.S. administration and broadening the agenda to include foreign policy concerns. Geithner said that in the two days of talks he just attended, Chinese officials recognized the U.S. need to move aggressively to revive growth and stabilize the banking system, even at the cost of higher U.S. budget deficits.

"I think we've already demonstrated the capacity of our two countries to work together on the global stage to lay a foundation for economic recovery," Geithner said in a meeting with President Hu Jintao as he wrapped up his visit.

BANKS NEARLY READY TO PAY BACK BAILOUT

NEW YORK — Morgan Stanley, JPMorgan Chase & Co. and American Express Co. have moved closer to repaying government bailout money, announcing a series of new stock sales.

The stock offers disclosed late Monday and yesterday are a precondition for the financial companies to pay back loans received under the Troubled Asset Relief Program last fall. The Treasury Department is expected to announce next week the first group of banks that will be allowed to repay the money.

Banks have chafed against rules imposed by Congress after they took the bailout money, including limits on executive compensation.

U.S. THRIFTS' LOSSES DOWN IN 1ST QUARTER

WASHINGTON — Losses at U.S. thrifts narrowed considerably in the first quarter, but the number of institutions in trouble increased, the Office of Thrift Supervision said yesterday.

Thrifts lost $47 million in the quarter ending March 31. That compared with losses of $5.4 billion in the fourth quarter and $617 million in the year-ago period.

But the number of "problem thrifts" increased to 31 from 26 in the previous quarter.

"The numbers are decidedly mixed," said OTS acting director John Bowman. "It's too early to say we've hit bottom."