Business Highlights

AP News
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Posted: Jan 05, 2010 5:59 PM

Contracts down: Is housing headed for double-dip?

WASHINGTON (AP) _ The number of people preparing to buy a home fell sharply in November, an unsettling new sign that the housing market may be headed for a "double-dip" downturn over the winter.

The figures Tuesday came after a similarly discouraging report on new home sales, illustrating how heavily the housing market depends right now on government help.

In October, buyers raced to get contracts signed in time to take advantage of a tax credit for first-time homeowners that was set to expire. It has since been extended into spring _ and now prospective buyers are taking their time. The National Association of Realtors said its seasonally adjusted index of sales contracts fell 16 percent from October to November, ending nine months of gains. Economists surveyed by Thomson Reuters had expected only a 2 percent drop.

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Big carmakers report 2009 sales declines

DETROIT (AP) _ Big automakers are glad to see the end of 2009, the worst year for U.S. sales in nearly 30 years.

Detroit's three automakers and the top Japanese manufacturers _ Honda Motor Co. Nissan Motor Co., and Toyota Motor Corp. _ all saw sharp declines last year, but saw momentum going into 2010.

Last year was brutal for most of the industry as credit froze, the economy and consumer confidence faltered and unemployment rose. U.S. sales haven't been so bad since 1982.

Sales of smaller, cheaper vehicles, however, helped drive gains. Hyundai continued its surge with an 8-percent yearly gain, while its low-cost Kia brand reported 2009 sales gains of nearly 10 percent and a 44-percent gain in December.

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Mixed economic data, higher dollar press stocks

NEW YORK (AP) _ Investors turned cautious on the second trading day of the year as a pair of economic reports gave mixed signals about how the recovery was going.

Major stock indexes ended little changed a day after the Dow Jones industrials soared more than 150 points on upbeat manufacturing reports in the U.S. and China. Uncertainty over key reports this week on employment and the service industry also kept buyers at bay.

The Commerce Department reported that factory orders rose by more than twice what had been expected in November, reflecting demand in the steel, computer and chemical industries. Meanwhile, the number of buyers who agreed to purchase previously occupied homes fell sharply in November, an indication that sales will fall this winter.

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Kraft ups Cadbury bid; Buffett opposes share issue

LONDON (AP) _ Kraft Foods Inc.'s hostile bid for Cadbury PLC grew more contentious Tuesday as Warren Buffett's Berkshire Hathaway sternly warned against the deal, even as Kraft sweetened its offer.

Kraft plans to sell its North American frozen pizza business, whose brands include Tombstone and DiGiorno, to Nestle SA for $3.7 billion. It plans to use the proceeds to raise the cash share of its bid for British candy maker Cadbury.

Berkshire Hathaway, Kraft's largest shareholder, said later Tuesday morning that it voted against Kraft's proposal to issue shares to finance part of the $16.5 billion bid, saying it was worried it gave Kraft a "blank check" to raise the bid even higher. Buffett previously has said Kraft's prior offers were adequate for Cadbury.

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Netbooks popularity expected to continue in 2010

Small and inexpensive "netbooks" were some of the most popular computers in the recession, wooing consumers with their portability and prices that were often below $400. Now with the economy improving, consumers will be asked to open their wallets to new styles of computers, including some costing a bit more.

Among the new offerings being unveiled at this week's International Consumer Electronics Show in Las Vegas: lightweight, medium-sized laptops meant as a step above netbooks in price and performance. There also will be at least one "smartbook" _ a tiny computer that combines elements of netbooks and so-called smart phones.

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Pump prices on pace to top 2009 high by weekend

The cost of filling up the car is rising in the wake of soaring crude and by this weekend, pump prices will race past the highs for all of 2009.

Tracing the ascension of crude, up 14 percent since mid-December, energy prices across the board are catching up. On Tuesday, benchmark crude prices closed higher than they had on any day last year.

Huge surpluses have been falling in recent weeks, contributing to prices already driven higher by the falling dollar.

Crude prices closed up 26 cents at $$81.77 a barrel Tuesday, the highest settlement price on the New York Mercantile Exchange since Oct. 9, 2008.

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Mesa Air files for Ch. 11 bankruptcy protection

ATLANTA (AP) _ In May, Mesa Air Group Inc. warned it would file for bankruptcy if Delta Air Lines Inc. succeeded in canceling a flying contract with the regional carrier that operates flights for major airlines. More than seven months later, despite blocking the move in court, Mesa filed for Chapter 11 anyway on Tuesday, hoping to shed planes it no longer needs.

Mesa's filing is part of broader problems the airline has been experiencing with its operations as demand for air travel fell over the last year due to the economic downturn.

Contract carriers like Mesa have traditionally been able to maneuver through tough economic times because they have guaranteed revenue through deals with major airlines for whom they feed passengers and handle connecting flights. But during the recession, Mesa struggled operationally and faced friction with key partner Delta.

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Iceland's president blocks UK, Dutch compensation

REYKJAVIK, Iceland (AP) _ Iceland's president on Tuesday blocked a bill to pay Britain and the Netherlands $5.7 billion for losses from the collapse of one of its banks, potentially undermining the crippled nation's attempts to repair international relations.

Olafur Ragnar Grimsson vetoed the legislation, which was passed last month by the country's parliament, after receiving a petition signed by a quarter of Iceland's population of 320,000.

The narrowly passed legislation would have repaid the British and Dutch governments for the funds they have already paid out to their citizens who lost money when Internet bank Icesave collapsed. The bill was widely viewed as assisting Iceland's entry to the European Union _ talks formally opened last month _ and aiding its economic recovery by smoothing international relations.

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FDA drug approvals mostly flat in 2009

WASHINGTON (AP) _ New drugs cleared by the Food and Drug Administration last year kept pace with 2008, suggesting a much-touted push for drug safety has not slowed down approvals.

The FDA's new leaders did step up early warnings about potential drug safety issues and citations to companies that violate safety regulations.

Drug approvals inched higher to 26 first-of-a-kind prescription medicines last year, from 25 in 2008, according to figures from Washington Analysis, an investment research group. New drugs cleared in 2009 included Novartis' kidney cancer drug Afinitor and Bausch and Lomb's pink eye medicine Besivance.

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Google confirms plans to sell own mobile phone

MOUNTAIN VIEW, Calif. (AP) _ It's official: Google Inc. will sell its own mobile phone in an effort to protect its online advertising empire as people increasingly surf the Web on handsets instead of personal computers.

The phone announced Tuesday had been widely anticipated since Google handed out the device, called the Nexus One, to its own employees three weeks ago.

Consumers will be able to buy the Nexus One for $179 if they commit to a two-year service contract with T-Mobile USA. The phone is going on sale Tuesday online.

By The Associated Press

The Dow industrials slipped 11.94, or 0.1 percent, to 10,572.02.

The broader Standard & Poor's 500 index rose 3.53, or 0.3 percent, to 1,136.52, its highest close since Oct. 1, 2008. The Nasdaq composite index edged up 0.29, or less than 0.1 percent, to 2,308.71.

Crude prices closed up 26 cents at $$81.77 a barrel Tuesday, the highest settlement price on the New York Mercantile Exchange since Oct. 9, 2008.

Heating oil futures settled up less than a cent at $2.1941, well beyond the highest prices of 2009. Gasoline futures closed more than 2 cents higher at $2.125, the highest since Oct. 3, 2008.

Also on Nymex, after a meteorologists predicted a thawing out around the Chicago area by the end of the month, natural gas futures fell 24.7 cents to settle at $5.639. Natural gas is used more prominently in the Midwest to heat homes than in the East.

In London, Brent crude for February delivery rose 47 cents to settle at $80.59 a barrel on the ICE Futures exchange.