Business Highlights

AP News
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Posted: Dec 14, 2009 5:52 PM

Exxon Mobil to buy XTO Energy for $29 billion

Exxon Mobil, the world's largest publicly traded oil company, is making a $29 billion bet that pressure to curb climate change will mean natural gas _ cleaner than coal and suddenly much easier to reach _ will become a crucial source of U.S. power.

Exxon agreed to buy XTO Energy in an all-stock deal at a 25 percent premium, showing how eagerly a company that is among the most conservative in a conservative industry is jumping into the market for natural gas.

As negotiators haggled in Copenhagen over a global plan to curb carbon emissions, the deal suggested Exxon sees change coming for an energy source best known now for heating homes.

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Dubai's $10B bailout by Abu Dhabi calms fears

DUBAI, United Arab Emirates (AP) _ Oil-rich Abu Dhabi pumped $10 billion into its indebted neighbor Monday, sending stocks soaring while sparing Dubai and the rest of the Emirates federation the humiliation of an imminent default by one of the struggling Arab boomtown's star companies.

The bailout was about more than petrodollar transfers from one United Arab Emirates sheikdom to the other. Dubai officials seized on the news to try to repair damage done by weeks of uncertainty stemming from their unwillingness to fully stand behind Dubai World as the conglomerate looked to restructure some of its $60 billion in debts.

Investors cheered Monday's news. Dubai's main index shot up 10.4 percent at the close and markets elsewhere rose modestly.

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Citigroup to repay $20 billion in bailout money

NEW YORK (AP) _ Citigroup said Monday it is repaying $20 billion in public bailout money, freeing the banking giant from the close scrutiny and pay restrictions that came with the rescue program. The government also will sell its one-third stake in the company.

Paying back the government gives an immediate lift to Citigroup's reputation and will save the bank $1.7 billion a year in dividend payments, but it comes at a heavy cost. Raising the new capital will significantly dilute current shareholders' stake in the company, and Citi's shares fell more than 6 percent.

The government gave Citi $45 billion in loans and agreed to protect losses on nearly $300 billion in risky investments.

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Stocks rise to 2009 highs after Dubai, Exxon deals

NEW YORK (AP) _ Easing concerns over global credit problems and more signs of corporate dealmaking nudged major stock indexes to new highs for the year.

Stock indicators rose but posted uneven advances Monday following news that Abu Dhabi had extended $10 billion to Dubai to help the Middle Eastern city-state stay afloat. Markets had been worried in recent weeks that debt problems in the former boomtown could send ripples through global credit markets. The Dow Jones industrial gained about 30 points to 10,501.05.

Despite the gain in stocks, investors were being cautious, refraining from making big bets in any one area of the market as they have for the past few weeks. Bond prices were little changed and commodities were just slightly higher.

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Obama to banks: ease lending to businesses

WASHINGTON (AP) _ President Barack Obama challenged top bankers Monday to explore "every responsible way" to increase lending, saying they were obliged to help after being rescued by taxpayers. He asked them to "take a third and fourth look" at their small-business lending.

US Bancorp CEO Richard Davis told the group meeting at the White House that his bank would be willing to take a second look at every loan it rejects. And he said he would present the idea to other members of the Financial Services Roundtable _ a group representing the largest financial companies, according to the Roundtable. Davis is its incoming chairman.

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Greek premier says country risks sinking in debt

ATHENS, Greece (AP) _ Greece's prime minister announced a barrage of spending cuts Monday, promising to control a ballooning government budget deficit and warning that the country risked drowning in debt.

George Papandreou called for unity during a speech to business and union leaders in Athens. He pledged that his new Socialist government, elected in October, would take steps over the next few months that are decades overdue.

The raft of measures included a reduction in defense spending in 2011 and 2012; slashing bonuses across the public sector; reducing social security and government operating expenditure by 10 percent each, and salary caps for public utility directors.

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Oil slumps for ninth straight day

NEW YORK (AP) _ Oil prices fell for the ninth straight day Monday, dipping below $68 per barrel on persistent concerns about high inventories and weak demand.

Retail gasoline prices have slipped for weeks as well, falling overnight by less than a penny to $2.603 per gallon.

The government is due to release its own gasoline price figures late Monday.

The supply of crude has moved back into the spotlight one week before the Organization of the Petroleum Exporting Countries meets in Angola to talk about production.

A number of member states have strayed from lower production quotas that OPEC put into place to help shore up collapsing oil prices earlier this year, analysts say.

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Bipartisan budget group says deficit curbs needed

WASHINGTON (AP) _ A bipartisan group of former lawmakers and budget officials called on Congress and President Barack Obama Monday to commit to reining in trillion-dollar plus budget deficits to avoid dragging down the economy.

Policymakers must take steps next year to enact policies to stabilize the debt at 60 percent of the size of the economy to avoid higher interest rates or crisis in global markets with disastrous implications for the U.S. economy, according to a report by the Peterson-Pew Commission on Budget Reform, a bipartisan group of deficit hawks.

The bipartisan group includes former lawmakers and directors of both the Congressional Budget Office and the White House budget office.

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Eurozone industrial output fell 0.6 percent in October

LONDON (AP) _ Industrial output in the 16 countries that use the euro fell in October after five months of expansion, official figures showed Monday, stoking fears that the recovery from recession in the eurozone will be muted.

Eurostat, the EU's statistics office, said industrial production fell by 0.6 percent in October from the previous month. The decline was in line with market expectations after figures last week showed German industrial output slid 1.8 percent during the month.

The main reason behind the monthly fall was a 1.4 percent drop in the production of consumer goods, which provided further evidence that the recovery in exports is not yet spreading to the household sector.

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Cadbury launches defense against Kraft offer

LONDON (AP) _ Britain's Cadbury PLC kicked off a robust defense against Kraft Foods Inc.'s 9.8 billion pound ($16.3 billion) hostile takeover offer on Monday, urging shareholders not to let the U.S. maker of cheese, cookies and macaroni dinners "steal your company with its derisory offer."

Cadbury also confirmed that it had received rival approaches from The Hershey Co. and Italy's Ferrero International SA, but said they were too preliminary to begin proper talks and warned that it would not accept a sub-par offer from any suitor.

Kraft said Monday that its offer stands and that it was reviewing Cadbury's response. Kraft could still raise the bid under British regulations.

By The Associated Press

The Dow Jones industrial average rose 29.55, or 0.3 percent, to 10,501.05, its highest close since Oct. 1, 2008.

The broader S&P 500 index rose 7.70, or 0.7 percent, to 1,114.11, its highest finish since Oct. 2, 2008. The Nasdaq composite index rose 21.79, or 1 percent, to 2,212.10.

Benchmark crude for January delivery fell 36 cents to settle at $69.51 on the New York Mercantile Exchange after falling as low as $68.59.

In other Nymex trading in January contracts, heating oil rose less than a cent to $1.9161 while gasoline fell 1.49 cents to settle at $1.8267. Natural gas rose 8.6 cents to $5.249 per 1,000 cubic feet.

In London, Brent crude for January delivery gained a penny to settle at $71.89 on the ICE Futures exchange.