Car-buying fuels increase in consumer borrowing
WASHINGTON (AP) _ Consumers borrowed more in January to purchase new cars but were once again frugal with their credit cards, offering a mixed sign of their confidence in the economy.
Borrowing rose 2.5 percent, or by $5 billion, the Federal Reserve said Monday. It was the fourth consecutive monthly gain and it increased total consumer debt to $2.41 trillion.
Strong car sales drove the increase. The category that includes auto loans rose 6.9 percent.
But credit card debt fell 6.4 percent in January _ the 28th decline in 29 months _ to the lowest level since September 2004. Americans had increased their use of plastic in December for the first time since the financial crisis. But they cut back the following month, even though a Social Security tax cut is giving most households an extra $1,000 to 2,000 this year.
Consumer debt is 0.7 percent above a three-year low hit in September. It is 6.6 percent below the peak hit in July 2008.
Analysts are predicting that consumers will borrow more in the months ahead, responding to the strengthening economy, a brighter outlook for jobs and the tax cut. But they said the increases will likely be gradual.
Oil settles above $105 a barrel, gas above $3.50
NEW YORK (AP) _ Oil prices continued to set new post-recession highs Monday as forces loyal to Moammar Gadhafi pounded rebels near a key oil port in Libya. It's unclear how long the country's oil exports will be cut off, and traders prepared for a worst-case scenario in which world supplies would be under pressure for months.
Benchmark West Texas Intermediate crude for April delivery gained $1.02 to settle at $105.44 per barrel on the New York Mercantile Exchange. The price almost hit $107 per barrel earlier in electronic trading, the highest level since Sept. 26, 2008.
The rise in oil is driving U.S. gasoline prices to levels that weren't expected for at least another month. Pump prices have jumped an average of 39 cents per gallon since the Libyan uprising began in mid-February, forcing motorists to pay an additional $146 million per day for the same amount of fuel. The national average hit $3.509 per gallon on Monday, according to AAA, Wright Express and Oil Price Information Service.
Libya, which sits on the largest oil reserves in Africa, has been engulfed in a four-week rebellion as militants try to oust Gadhafi after 41 years in power. Officials in the country say oil fields continue to operate, but daily exports of 1.5 million barrels could be cut off for some time
Honda, Toyota and Chrysler issue recalls
WASHINGTON (AP) _ Honda recalled more than 35,000 Civic hybrids in the United States on Monday to fix a problem with the electrical system that could cause the headlights to turn off or the engine to stall.
Separately, Toyota recalled about 22,000 SUVs and trucks to address faulty tire pressure monitoring systems and Chrysler recalled about 20,000 Jeep Wranglers over steering issues.
Honda Motor Co. told the government its recall would cover 2006-2007 model year Civic hybrids. The company said the voltage converter that relays power from the motor assist system to the vehicle's electrical components could fail.
Honda has received seven reports of stalling engines and 82 warranty claims connected to the problem. Dealers will replace the voltage converter at no charge.
Toyota Motor Corp.'s recall includes some versions of the 2008-2011 Toyota FJ Cruiser, Land Cruiser, Sequoia, Tacoma and Tundra.
The systems that monitor the vehicles' tire pressure did not comply with federal safety standards. Toyota said the systems didn't illuminate on the dashboard at the minimum activation pressure and needed to be recalibrated.
Western Digital pulls away with hard drive deal
SAN FRANCISCO (AP) _ Western Digital Corp. is trying to pull further away in its neck-and-neck race with Seagate Technology PLC to be the world's biggest maker of hard drives.
Western Digital announced Monday that it's paying $4.3 billion in cash and stock to acquire Hitachi Global Storage Technologies.
The deal is one of the largest in an industry that's been consolidating for decades, and gives the combined companies about half of the worldwide hard drive market. Seagate owns less than a third of that market.
A hard drive is a key data-storage technology for computers, and in picking up the Hitachi business, Western Digital is picking off one of the last key players. It's also giving itself a foothold in the market for drives that go into servers and corporate-level storage arrays. That's been a weakness for a company mostly known for selling hard drives that go into consumer PCs.
Western Digital is the No. 1 hard drive maker, just ahead of Seagate in terms of units sold. Hitachi is No. 3.
Moody's downgrades Greece's debt rating again
LONDON (AP) _ Moody's Investor Services has downgraded Greece's debt rating even further below junk status amid worries that the bailed-out euro country will end up having to restructure its massive debts.
The agency said Monday it is lowering its rating by three notches to B1 from Ba1, citing three main reasons for the downgrade.
As well as warning of major implementation risks associated with the government's economic program, Moody's noted the considerable difficulties Greece has in raising revenues and highlighted the risk of more onerous conditions when the current bailout package ends in 2013.
Greece was saved from effective bankruptcy last May after accepting a 110 billion euros bailout from partners in the EU and the International Monetary Fund.
Skippy peanut butter recalled due to salmonella
WASHINGTON (AP) _ The company that makes Skippy peanut butter is recalling two of its spreads that may be contaminated with salmonella.
No illnesses have been linked to the recall of the Skippy reduced fat creamy and reduced fat chunky brands.
Unilever United States Inc. did not specify how many jars have been recalled. They are packaged in 16.3 oz. plastic jars with used-by dates of May 16-21, 2012.
Unilever detected possible salmonella through its own testing. The recalled jars were distributed to retail outlets in Arkansas, Connecticut, Delaware, Illinois, Iowa, Maine, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, North Dakota, Pennsylvania, Virginia and Wisconsin, the company said.
Salmonella can cause serious and sometimes fatal infections in those with weakened immune systems.
Luxury's LVMH gobbles up Italian jeweler Bulgari
PARIS (AP) _ French fashion colossus LVMH Moet Hennessy Louis Vuitton is adding another jewel to its crown: Italy's Bulgari.
The unexpected tie-up generated new buzz during an already frenzied Paris Fashion Week. And it puts LVMH, run by France's richest man, in an even better position to woo nouveau riche consumers in countries like China and Russia who are clambering for old-world status markers, like Louis Vuitton leather bags and Bulgari's diamond and emerald encrusted jewelry.
LVMH, the Paris-based holding company behind luxury Christian Dior gowns, Dom Perignon champagne and Guerlain perfume, said Monday it has agreed to buy Italian jeweler-to-the-stars Bulgari SpA in a cash-and-shares deal worth 4.3 billion euros ($6 billion).
LVMH managing director Antonio Belloni said Bulgari was the biggest acquisition in LVMH's more than 20-year history of snapping up luxury brands, from Kenzo to Givenchy and Marc Jacobs.
Both companies presented the deal as a way to quickly bulk up LVMH's luxury watch and jewelry business, to achieve critical mass and accelerate its growth into hot developing markets.
Southwest joins other US airlines in raising fares
DALLAS (AP) _ Southwest Airlines Co. has joined a sweeping increase of $10 in the price of many domestic round-trip airfares, citing the need to offset high fuel prices.
Southwest's action over the weekend may have ensured success for a price hike by major airlines that seemed to be faltering. Southwest carries more U.S. passengers than any airline and wields great influence over prices.
It's the sixth time airlines have raised fares already this year. FareCompare.com CEO Rick Seaney says leisure travelers may now have to pay $260 for a ticket that cost $200 back on Jan. 1.
NEW YORK (AP) _ Internet phone company Skype says it is launching advertising on its service for the first time.
The Luxembourg-based company, which is still 30 percent owned by online auction house eBay Inc., also announced Monday its first advertisers: Groupon Inc., Nokia Corp., Comcast Corp.'s Universal Pictures and Visa Inc.
Skype said its platform, with 145 million users a month and 29 million at peak times, is attractive for brands to market their products. The platform will support large-format, rich interactive ads.
Display ads can also feature a "Click & Call" button so users can act on impulse. Ads can be shared on Facebook and Twitter.
Skype said it is partnering with advertising sales companies such as Meebo in the U.S., Ad2One in the U.K., and Stroer Interactive in Germany.
By The Associated Press
The Dow Jones industrial average fell 79.85 points, or 0.7 percent, to close at 12,090.03.
The Standard & Poor's 500 index fell 11.02 points, or 0.8 percent, to 1,310.13. The Nasdaq fell 39.04 points, or 1.4 percent, to 2,745.63
Benchmark West Texas Intermediate crude for April delivery gained $1.02 to settle at $105.44 per barrel on the New York Mercantile Exchange.
In London, Brent crude fell 93 cents to settle at $115.04 per barrel.
In other Nymex trading on Monday for April contracts, heating oil lost 2.36 cents to settle at $3.0657 per gallon, while gasoline futures lost 4.25 cents to settle at $3.0039 per gallon. Natural gas rose 11.8 cents to settle at $3.927 per 1,000 cubic feet.