Editors: Bloomberg News moves a combined business/general news budget at 13:30 New York time each business day. Graphics and photos can be found at www.bloomberg.com/photos or www.bloomberg.com/newsfeed.
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U.S. Stocks Erase Gains as Technology, Consumer Shares Slide U.S. stocks erased gains, a day after the Standard & Poor’s 500 Index fell 2.1 percent, as consumer and technology companies pulled benchmark indexes lower. Developing. US-STOCKS-FINAL to move by 17:00. By Nikolaj Gammeltoft. Also see GLOBAL-MARKETS- WRAP, US-OIL-MARKET.
U.S. Economy: Comfort Index Drops to Second-Weakest on Record
Consumer confidence slumped last week to the second-lowest level on record as Americans grew more concerned with their financial situation and the buying climate worsened.
The Bloomberg Consumer Comfort Index dropped to minus 53 in the period ended Sept. 25 from minus 52.1 the prior week. Another report showed the economy grew at a faster pace in the second quarter than previously estimated.
Company executives have also turned less optimistic. The Business Roundtable’s survey of chief executive officers showed its economic outlook index fell to 77.6 in the third quarter, the lowest reading since the last three months of 2009, from 109.9 in the previous three months, the Washington-based group said today. 930. Moved at 11:15.By Alex Kowalski.
Other reports today showed fewer workers filed claims for jobless benefits last week and the number of signed contracts to buy existing homes fell in August. Also see ECONOMY-GDP, CEO- SURVEY, ECONOMY-CLAIMS, ECONOMY-PENDING-HOMES.
Merkel’s Rescue Fund Victory Sets Stage for Next Crisis Steps
German lawmakers’ approval of an expansion of the euro-area rescue fund’s firepower handed Chancellor Angela Merkel a victory that paves the way for additional steps to stem the European debt crisis.
The next moves may include leveraging the 440 billion-euro ($599 billion) European Financial Stability Facility, said Holger Schmieding, chief economist at Joh. Berenberg Gossler & Co. in London. In addition, there may be “an orderly Greek default later this year, with a haircut on Greek debt, an immediate recapitalization of Greek banks, European guarantees for restructured Greek debt and conditional fiscal support” for Greece, he said. 900. Moved at 9By Tony Czuczka and Patrick Donahue.
World Slump Seen Triggered by European Breakdown in Global Poll
International investors expect the world economy to relapse into a recession, with more than one in three forecasting a global economic meltdown within the next year, according to a Bloomberg poll.
About two-thirds of those surveyed say the international economy is deteriorating, up from just 18 percent who felt that way in the last poll, in May. The increased gloom is centered on the 17 countries that share the euro currency: Almost nine in 10 say the euro zone economy is worsening, according to the quarterly Bloomberg Global Poll conducted Sept. 26 of 1,031 investors, analysts and traders who are Bloomberg subscribers. 1220. Moved at midnight. By Rich Miller.
Europe Meltdown Seen Converging With Recession in Survey
Global investors anticipate Europe’s debt crisis leading to an economic slump, a financial meltdown and social unrest in the next year with 72 percent predicting a country abandoning the euro as a shared currency within five years, a Bloomberg survey found.
About three-quarters of those questioned this week said the euro-area economy will fall into recession during the next 12 months and 53 percent said turmoil will worsen in a banking sector laden with government bonds, according to the quarterly Global Poll of 1,031 investors, analysts and traders who are Bloomberg subscribers. Forty percent see the 17-nation currency bloc losing at least one member in the next year. 1440. Moved at 7:40. By Simon Kennedy.
GRAPHIC: EUROPE_GLOBAL_POLL_092911. Graphic shows select results from the latest Bloomberg Global Poll. Size: 2C X 3.5in. (96.0 mm X 88.9 mm) Available now.
China Growth Rate Seen Less Than 5% by 2016 in Global Poll
Most global investors predict Chinese growth will slow to less than half the pace sustained since the government began dismantling Mao Zedong’s communist economy three decades ago, a Bloomberg poll indicated.
Fifty-nine percent of respondents said China’s gross domestic product, which rose 9.5 percent last quarter, will gain less than 5 percent annually by 2016. Twelve percent see such a slowdown within a year, and 47 percent said it will occur in two to five years, the quarterly Bloomberg Global Poll of investors, analysts and traders who are Bloomberg subscribers showed. 1250. Moved at 4:05. By David J. Lynch. Also see COACH-TIFFANY-MOVER.
U.S. Knew Solyndra Violating Loan Before New Deal, Official Says
The Energy Department knew Solyndra LLC was violating terms of its U.S. loan by December and agreed to keep providing taxpayer support for the solar- panel maker that filed for court protection nine months later.
Damien LaVera, a spokesman for the Department of Energy, said officials were aware that Solyndra had failed to set aside $5 million, due in December, as the first of six payments under the loan-guarantee agreement.
“In the fall of 2010, Solyndra informed DoE that it was having major cash flow problems and would face bankruptcy in early 2011 if new capital could not be raised,” LaVera said in an e-mail today. 350. Moved at 12:55. By Jim Snyder.
IPOs Shelved at Record Pace as Offer Pipeline Balloons
Companies canceled or postponed $8.9 billion in initial public offerings in the third quarter as stocks plunged, putting the market on pace to set a record for pulled deals.
The value of withdrawn and delayed IPOs so far this year rose to $34 billion, approaching the $40 billion pulled in 2010, the most since Bloomberg began compiling data. Siemens AG suspended an IPO of its Osram lighting unit, while U.S. defense equipment maker ADS Tactical Inc. and Shanghai-based Xiao Nan Guo Restaurants Holdings Ltd. abandoned offerings. 1050. Moved at 10:00. By Lee Spears and Zijing Wu.
BofA Plans to Charge $5 Monthly Fee to Some Debit-Card Users
Bank of America Corp., the biggest U.S. lender by assets, plans to announce a $5 monthly charge for some debit-card users to recoup revenue lost after new federal rules capped so-called swipe fees.
Some bank customers with basic checking accounts who use debit-cards for purchases may start getting assessed the fee in January, said Anne Pace, a spokeswoman for Bank of America. Users won’t be charged for cash-machine withdrawals, and clients with premium accounts, including those linked to the Merrill Lynch brokerage, won’t be affected, she said. 290. Moved at 11:50. By Hugh Son.
Family Dollar Shareholder Peltz Withdraws $7.7 Billion Offer
Family Dollar Stores Inc. shareholder Nelson Peltz withdrew his $7.7 billion offer to buy the discount retailer and instead placed an ally on its board to work on increasing the company’s value.
Edward P. Garden, chief investment officer of Peltz’s Trian Fund Management LP, will join Family Dollar’s board, which has been expanded to 11 directors, the Matthews, North Carolina- based retailer said today in a statement. 300. Moved at 10:25. By Chris Burritt.
Nationwide to Buy Harleysville for at Least $1.6 Billion
Nationwide Mutual Insurance Co., the eighth-largest U.S. personal auto insurer, agreed to buy Pennsylvania-based rival Harleysville Group Inc. for at least $1.6 billion to expand in the U.S. East and Midwest.
Nationwide Chief Executive Officer Stephen Rasmussen, who took the job in 2009, is making his first large acquisition for the Columbus, Ohio-based carrier. With the deal, he’s adding clients with home, auto and business-insurance policies. 310. Moved at 13:20. By Andrew Frye.
HP Said to Have Been Concerned Over Oracle When Switching CEOs
Hewlett-Packard Co. directors were concerned that plummeting shares would make the company vulnerable to a bid from Oracle Corp. when they replaced Leo Apotheker with Meg Whitman, two people close to the board said.
While Oracle has considered informally whether to approach Hewlett-Packard, it’s unlikely to make a bid any time soon, three people close to the software company said. After speaking with several financial advisers, Hewlett-Packard has hired Goldman Sachs Group Inc. to help it prepare for any possible moves by activist investors, one person said. 560. Moved at 13:40. By Jeffrey McCracken, Carol Hymowitz and Aaron Ricadela.
Nokia to Cut 3,500 Jobs, Inject Cash Into Siemens Venture
Nokia Oyj will eliminate 3,500 jobs, shut a mobile-phone factory in Romania and inject 1 billion euros ($1.4 billion) with Siemens AG into their unprofitable network-equipment venture.
The closure of the plant in Cluj, which only began production in 2008, along with adjustments with suppliers will take out 2,200 positions, Nokia said today. The company will also reorganize its map business, cutting 1,300 jobs, and review the future of its handset plants in Finland, Hungary and Mexico. 700. Moved at 6:10. By Diana ben-Aaron.
DreamWorks Animation Weighs Forming Film Distribution Arm
DreamWorks Animation SKG Inc., producer of the “Shrek” films, may take over distribution of its movies when an accord with Paramount Pictures ends next year, three people with knowledge of the situation said.
The studio is considering delivering films to theaters electronically, said the people, who declined to speak publicly. Glendale, California-based DreamWorks Animation may also distribute movies for other producers, one person said. 460. Moved at 12:10. By Ronald Grover and Michael White.
Microsoft Said to Add Comcast, Verizon Pay TV to Xbox Live
Microsoft Corp. plans to offer online pay television service from Comcast Corp. and Verizon Communications Inc. through Xbox Live, in an bid to channel more entertainment to its video-game console, people with knowledge of the situation said.
Microsoft, based in Redmond, Washington, is in talks with almost two dozen providers of music, sports, movies and TV shows in the U.S. and Europe, and may announce an expanded Xbox Live streaming service as soon as next week, said one of the people, who weren’t authorized to speak publicly. 580. Moved at 9:50. By Cliff Edwards, Alex Sherman and Dina Bass.
RIM Developer-Relations Head Lessard Latest to Leave
Research In Motion Ltd.’s head of developer relations is leaving the company, adding to a spate of executive departures at the maker of BlackBerry smartphones.
Tyler Lessard, vice-president, global alliances and developer relations, will leave in the coming weeks, RIM spokeswoman Marisa Conway said in an e-mail today. He will be replaced by Alec Saunders, a former executive at QNX Software Systems, the company RIM bought in April 2010 to provide the core of its new smartphone operating system, she said.
RIM is overhauling its operating system to help reverse two years of market share losses to Apple Inc. and Google Inc. Lessard is at least the fifth executive to leave RIM in as many months. 350. Moved at 12:15. By Hugo Miller.
U.S. Mortgage Rates Fall to Record as 30-Year Reaches 4.01%
Mortgage rates in the U.S. fell to the lowest level in Freddie Mac records after the Federal Reserve announced a plan to reduce borrowing costs even further.
The average rate for a 30-year fixed loan dropped to 4.01 percent in the week ended today from 4.09 percent, Freddie Mac said in a statement. That’s the lowest in the McLean, Virginia- based company’s records dating back to 1971. The average 15-year rate declined to 3.28 percent from 3.29 percent last week. 500. Moved at 10:15. By Prashant Gopal.
One in Five Modified Loans Default Again, U.S. Comptroller Says
One in five homeowners whose mortgages were modified under a program aimed at reducing foreclosures defaulted again within a year after their payments were cut, the U.S. Comptroller of the Currency reported today.
Twenty percent of modified loans were at least 90 days delinquent within a year in the second quarter, according to the Comptroller’s “Mortgage Metrics Report.” Delinquencies for loans 30 to 59 days late increased 0.4 percentage points to 3 percent from the previous quarter. 250. Moved at 12:35. By John Gittelsohn.
TOP GENERAL NEWS
Libya’s Leaders Seek Interpol Help in Hunt for Qaddafi Sons
Libya’s interim government asked Interpol to issue an international arrest warrant for Muammar Qaddafi’s son Saadi as it seeks to round up former officials and create stability in the North African nation.
The National Transitional Council asked Interpol to issue the warrant for Saadi, who fled to Niger this month, on suspicion of “misappropriating properties through force and armed intimidation” when he headed the Libyan Football Federation, Interpol said today in a statement on its website. 540. Moved at 11:35. By Caroline Alexander and Robert Tuttle.
Men-Only Election Shows Limits of Saudi Reply to Arab Spring
Saudi Arabia excluded most adult citizens from today’s municipal elections, betting that a limited ballot coupled with $130 billion of extra spending will be enough to halt Arab unrest at the kingdom’s borders.
Women weren’t entitled to stand as candidates or cast votes in the ballot, which closed at 5 p.m. local time, and the councilors chosen by Saudi men age 21 and over who aren’t in the military will enjoy few powers. Still, the fact that the ballot took place is an advance from two years ago, when the election was first due and King Abdullah postponed it. 1050. Moved at 10:30. By Glen Carey.
Typhoon Nesat Shuts Hong Kong, Slams Hainan on Path to Vietnam
Typhoon Nesat, the strongest to hit China this year, forced the evacuation of 300,000 people, grounded flights and closed markets as it swept past Hong Kong, slammed into the Chinese island of Hainan and headed to Vietnam.
The typhoon, which killed at least 39 people in the Philippines earlier this week, made landfall in Hainan province at 2:30 p.m. local time yesterday with winds as fast as 151 kilometers (94 miles) an hour, the China Meteorological Administration said. In Hong Kong, the storm felled trees, ripped bamboo scaffolding from buildings and forced the city’s stock exchange to halt trading after the highest storm warning in two years was issued. 700. Moved at 12:00. By Stephanie Tong and Michelle Yun.
U.S. Decries Excessive Salaries, Staffing in New UN Budget
The Obama administration told the United Nations that too few of its 10,307 workers are being cut and average salaries, currently $119,000 a year, have risen “dramatically.”
The U.S. ambassador for UN management and reform, Joseph M. Torsella, said today that the proposed $5.2 billion UN budget for the next two years would scrap only 44 jobs, a 0.4 percent reduction. After an “onslaught” of add-ons, the 2012-13 budget would rise more than 2 percent to $5.5 billion, he said. 560. Moved at 11:40. By Bill Varner and Flavia Krause-Jackson.
BUSINSES NEWS FEATURES
Peugeot Worst Casualty of Europe Crisis With Shares Fading: Cars
PSA Peugeot Citroen’s sliding share price has left the French carmaker trading at a record discount to Volkswagen AG on investor expectations it will be the worst automotive casualty of the region’s sovereign debt crisis.
Paris-based Peugeot has declined 41 percent this year, the steepest drop among European automakers, expanding the gap to Volkswagen’s shares to 91 euros from a 10-year average of 16 euros. Its 3.8 billion-euro ($5.2 billion) market value is less than one-tenth of 2010 annual revenue of 56 billion euros.
Chief Executive Officer Philippe Varin’s efforts to reduce dependence on Europe through emerging-market expansion may be too late to prevent Peugeot, Europe’s second-largest automaker after VW, from taking the brunt of a downturn, investors said. The first-half operating margin at Peugeot’s automotive division fell to 1.8 percent from 2.5 percent. 950. Moved at 13:50. By Laurence Frost.
-0- Sep/29/2011 17:59 GMT