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TOP BUSINESS NEWS
S&P 500 Trims Longest Weekly Advance Since January on Europe
U.S. stocks fell, trimming the longest weekly rally since January in the Standard & Poor’s 500 Index, amid concern that yesterday’s rally on Europe’s latest measures to contain the region’s sovereign debt crisis went too far. Developing. US- STOCKS-FINAL to move by 17:00. By Rita Nazareth. Also see GLOBAL-MARKETS-WRAP, US-OIL-MARKET.
EU May Struggle to Keep Euphoria as Post-Summit Scrutiny Deepens
European leaders may struggle to maintain the euphoria that drove the euro to its biggest one-day gain in more than a year as scrutiny deepens on their latest attempt to stem the region’s turmoil.
The weaknesses of Europe’s common currency area, ranging from its design to a persisting dearth of bank funding and anemic economic growth, weren’t properly addressed in the measures revealed yesterday to stem investor panic, said Harvard University economist Kenneth Rogoff and Jonathan Loynes at Capital Economics Ltd. in London.
“My read of this is that the markets are cheered that they’re still alive,” Rogoff, a former International Monetary Fund chief economist, said as a compensated speaker at the Bloomberg FX11 Summit in New York yesterday. “Even in a fairly short period, doubts will start to grow again.” 820. Moved at 6:55. By Svenja O’Donnell. Also see BASEL-HEAD-SEES-EU- RULES-ADEQUATE.
Whirlpool Falls Most Since 2008 on Jobs Cuts and Lower Forecast
Whirlpool Corp., the world’s largest maker of appliances, sank the most since 2008 after saying it will cut 5,000 jobs and lowering an annual profit forecast by as much as 36 percent as consumers rein in spending.
The shares dropped 12 percent to $53.14 at 10:19 a.m. in New York after earlier touching $52.03 for the largest intraday decline since Oct. 28, 2008. The stock had declined 32 percent this year before today.
The plan, which also includes reducing factory capacity by 6 million units, will cost $500 million and $160 million will be booked in 2011, Whirlpool said in a statement today. Profit this year will be in a range of $4.75 to $5.25 a share, down from a previous forecast of $7.25 to $8.25, the company said. 420. Moved at 10:25. By Benedikt Kammel and Matt Townsend.
Credit Rating Companies Favoring Borrowers Paying Most
Credit-rating companies routinely award higher rankings to debt issued by banks and corporations that pay them the most, a conflict of interest that may escape Congressional efforts to change the way they do business.
Bonds from countries and cities that pay about half as much as issuers of less creditworthy debt are “rated more harshly,” according to a study by scholars at Indiana University in Bloomington, Washington, D.C.-based American University and Rice University in Houston. Sovereigns rated A had no defaults over a 30-year period, compared with 1.8 percent of corporate bonds and 27.2 percent of securities backed by debt such as mortgages and loans assigned that ranking, the study of Moody’s Investors Service data said. 1770. Moved at 8:55. By John Detrixhe.
Groupon Propped Up With Lowest Internet Float in a Decade
Groupon Inc. is selling fewer shares in its initial public offering than any U.S. Internet company in the past decade, creating a higher valuation than some investors say the online- coupon provider deserves.
The Chicago-based company is offering 4.7 percent of its stock, less than any U.S. Internet-company IPO of more $200 million since at least 2000, according to data compiled by Bloomberg. Google Inc. sold a 7.2 percent stake in its 2004 IPO. LinkedIn Corp. offered 8.3 percent of its shares in May.
“What Groupon is doing is way outside what should be acceptable,” said Josef Schuster, founder of Chicago-based IPOX Schuster LLC, who oversees $2.5 billion and is weighing whether to order the stock. “They’re using a low float to keep up the valuation, but it’s really outside what you historically have had in U.S. IPOs.” 1040. Moved at 11:45. By Lee Spears.
Consumer Spending in U.S. Increased 0.6% in September
Consumer spending in the U.S. accelerated in September, helping the world’s largest economy skirt a recession.
Purchases increased 0.6 percent, matching the median estimate of 81 economists surveyed by Bloomberg News, after a 0.2 percent gain the prior month, Commerce Department figures showed today in Washington. Incomes rose less than projected, sending the savings rate down to the lowest level in almost four years. 870. Moved at 8:50. By Alex Kowalski. Also see ECONOMY- SENTIMENT.
Samsung Overtakes Apple as World’s Biggest Smartphone Seller
Samsung Electronics Co. overtook Apple Inc. in the last quarter to become the world’s largest smartphone vendor amid a widening technology and legal battle between the two companies.
Samsung shipped 27.8 million smartphones in the last quarter, taking 23.8 percent of the market, Milton Keynes, U.K.- based Strategy Analytics said in an e-mailed statement today. Apple’s 17.1 million shipments, comprising 14.6 percent of the market, pushed the Cupertino, California-based company to second place. Nokia Oyj maintained its third position, it said. 600. Moved at 3:10. By Tim Culpan.
MF Global Draws Down on Credit Lines as Moody’s Cuts to Junk
MF Global Holdings Ltd., the futures broker run by Jon Corzine, drew down on its revolving credit lines this week as the firm reported its biggest quarterly loss and Moody’s Investors Service and Fitch Ratings cut its ratings to junk.
The company tapped the entirety of two bank lines, said three people with knowledge of the matter, speaking on condition of anonymity because the move wasn’t disclosed. New York-based MF Global said in an Oct. 25 investor presentation that it had $1.3 billion in unused credit facilities, without giving a date for the tally. 1100. Moved at 9:45. By Matthew Leising and Zachary R. Mider.
Avon’s Jung Under Scrutiny as SEC Starts New Investigation
With the U.S. Securities and Exchange Commission probing Avon Products Inc.’s dealings with analysts, Andrea Jung may be facing the toughest challenge of her 12-year tenure as chief executive officer.
The investigation increases scrutiny of the world’s largest door-to-door cosmetics company, which has trailed Wall Street’s forecasts and earlier this year fired four executives amid a probe involving possible bribes to Chinese officials.
“Any sensible board would have to look at management from head to toe and try to figure out whether these are the right people to turn around the company,” Ali Dibadj, an analyst at Sanford C. Bernstein & Co. in New York, said in an interview. 620. Moved at 9:55. By Lauren Coleman-Lochner.
Restaurants Lift Prices to Catch Food-at-Home Inflation: Retail
Restaurants are poised to raise prices as Americans become accustomed to more expensive food at grocery stores.
U.S. consumers paid 2.6 percent more at eateries in September than last year, while food prices at supermarkets were 6.2 percent higher, according to the Bureau of Labor Statistics’ monthly consumer-price index. Inflation for eating at home has accelerated faster than dining out during the past year, reaching its widest gap since 1990 last month.
Restaurants monitor this differential because they don’t want to appear too aggressive with menu pricing relative to the cost of food at home, said Jeffrey Bernstein, an analyst with Barclays Capital in New York. This gives companies “more credibility” in adjusting prices, particularly as commodity inflation puts pressure on margins, he said. 1060. Moved at midnight. By Anna-Louise Jackson and Anthony Feld.
Honda Weighs Civic Revisions After Consumer Reports’ Criticism
Honda Motor Co. said it’s studying modifications to its Civic small car after a revamped version of the model fared poorly in a review by Consumer Reports, failing to win the magazine’s coveted “Recommended” status.
The 2012 Civic’s score in testing by the magazine fell to 61 points from 78 for the previous model. The latest version of Tokyo-based Honda’s best-selling compact declined in agility and interior quality, had a choppier ride, longer stopping distances, and more road noise compared with the previous generation, Consumer Reports said in August.
“One of Honda’s strengths has always been the ability to quickly react and recover fast,” John Mendel, the carmaker’s U.S. executive vice president, said in an interview in Carlsbad, California yesterday. “That’s what you’re going to see us do. I think you’ll see us take appropriate actions,” he said, without elaborating. 290. Moved at 12:55. By Alan Ohnsman.
Chevron Profit More Than Doubles on Refinery Sale, Oil Price
Chevron Corp. reported its biggest quarterly profit in three years, outperforming other major oil companies, as rising crude prices and proceeds from the sale of a refinery made up for a slump in production.
Third-quarter net income more than doubled to $7.83 billion, or $3.92 a share, from $3.77 billion, or $1.87, a year earlier, the San Ramon, California-based company said in a statement today. The company was expected to report per-share profit of $3.47, based on the average of 19 analysts’ estimates compiled by Bloomberg. 400. Moved at 10:05. By Joe Carroll.
FBR Cuts Leveraged Finance, Junk-Debt Trading Team After Loss
FBR Capital Markets Corp. fired leveraged finance bankers Chris Cunningham and Glenn Medwar, and more than half of its credit trading and sales team this week after reporting a $26.1 million loss in the third quarter.
Cuts included Frank Ferrantelli, head of high-yield debt trading, according to people familiar with the matter who declined to be identified because the moves at the Arlington, Virginia-based firm haven’t been publicly announced. 500. Moved at 12:45. By Lisa Abramowicz.
TOP GENERAL NEWS
Thai Floods Swamp Grand Palace as Bangkok River Reaches Record
Bangkok’s Chao Phraya river swelled to a record high, swamping nearby tourist spots including the Grand Palace as Prime Minister Yingluck Shinawatra called for fresh ideas to stem the country’s worst floods since 1942.
The government is considering cutting channels through five major Bangkok roads to drain floodwaters seeping into northern parts of the capital as a high tide threatens riverside communities. The roads, in the city’s east, are blocking water from reaching canals that drain into the Gulf of Thailand, Transport Minister Sukumpol Suwannatat said.
Uncertainty over the severity of flooding has fueled panic in the capital, leading to shortages of bottled water, eggs and baby formula as the worst floods in more than half a century reach Bangkok. 910. Moved at 4:00. By Daniel Ten Kate and Supunnabul Suwannakij.
Saudi King Abdullah Names Interior Minister as Crown Prince
Saudi Arabia’s King Abdullah named his interior minister and half brother as crown prince, putting a conservative chief of police next in line to lead the world’s largest oil exporter.
The appointment of Nayef bin Abdulaziz Al Saud, 78 this year, was announced by state television, citing a royal decree. Saudi princes pledged their allegiance to Nayef, it said.
Head of the Interior Ministry since 1975, Nayef becomes the most powerful prince in the kingdom at a time of turmoil in the Middle East and high unemployment at home. He backed the religious police and clamped down on the Shiite minority, according to Jane Kinninmont at Chatham House in London. 1280. Moved at 11:45. By Glen Carey.
SEC Enforcers Frozen as Watchdog Unleashes ‘Chilling’ Probes
The U.S. Securities and Exchange Commission’s internal watchdog has castigated the agency for missing the Bernard Madoff fraud, spotlighted employees who viewed online pornography and called for a criminal probe into the ethics of the SEC’s former top lawyer.
His blunt reports have won Inspector General H. David Kotz admiration on Capitol Hill, where lawmakers summon him to testify about his efforts to improve what they have criticized as flawed management and oversight at the regulator.
At the SEC, it’s a different story. While inspectors general are rarely beloved, a backlash against Kotz among staff and managers has grown in intensity and spread to the legal community outside the agency. Now critics led by former SEC Chairman Harvey Pitt say Kotz is undermining the market regulator’s effectiveness. 3050. Moved at midnight. By Robert Schmidt and Joshua Gallu.
NYC Police Remove Gasoline, Generators From Protest Site
New York police and fire personnel removed dozens of gasoline cans and six generators today from Zuccotti Park, where Occupy Wall Street protesters have camped for almost six weeks, Mayor Michael Bloomberg said.
The equipment, which has helped the protesters power computers and mobile phones and keep warm as temperatures dipped near freezing, are safety hazards and unlawful, Bloomberg said today on his weekly radio show on WOR. Forecasts call for rain and snow in the metropolitan area tomorrow.
The material won’t be allowed back into the park in Lower Manhattan, Bloomberg said. The occupants cooperated with law enforcement and the sweep produced no violence, he said. 380. Moved at 10:40. By Esmé E. Deprez.
Aspirin Reduces Bowel Cancer Risk by 63 Percent in Study
Two aspirin pills a day may keep the oncologist away, according to a study spanning more than a decade published today in The Lancet medical journal.
Participants who took 600 milligrams of the common painkiller daily for at least two years had a 63 percent lower rate of colorectal cancer than those who took a placebo, according to the study led by John Burn, a professor of clinical genetics at Newcastle University in England. The participants all were carriers of Lynch Syndrome, a genetic condition that predisposes a person to developing certain cancers. 400. Moved at 4:55. By Makiko Kitamura.
BUSINESS NEWS FEATURES
Let Good Times Roll Becomes Refrain for Jobs at Automakers: Cars
Toyota Motor Corp.’s Mississippi plant opens this month to build the Corollas that the Japanese automaker needs to get its U.S. sales growing. It’s part of a surge of hiring among car companies that’s a bright spot in the slow U.S. recovery.
Among the 1,500 people Toyota is hiring for the Blue Springs plant is Karen Bowen, 39, a single mother. Her job with the quality-assurance team “means a better life for my family,” said Bowen. Along with a $15 hourly starting wage, more than she was earning in her previous job at a chiropractor’s office, Bowen now has health insurance, a retirement plan and job stability, she said.
“I aim to work here until I retire -- about 25 years,” Bowen said.
U.S. and international carmakers plan to hire or rehire at least 25,000 workers between now and 2015. That includes 4,000 jobs in the fourth quarter alone from Toyota’s $1.3 billion plant, a new assembly shift at Honda Motor Co.’s Civic factory in Indiana, a third shift at Kia Motors Corp.’s Georgia assembly plant and an expansion at Hyundai Motor Co.’s Alabama plant. 1200. Moved at midnight. By Alan Ohnsman.
-0- Oct/28/2011 17:38 GMT