Business Highlights

AP News
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Posted: Jun 16, 2011 6:23 PM
Business Highlights

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Greek default could trigger chain reaction

FRANKFURT, Germany (AP) _ Greece's economy is small but the shock waves from a default on its debt could be amplified by links in the global financial system to hurt stocks, banks and entire economies far from the epicenter in Athens.

In Greece, banks could go bust, overwhelming the government's ability to bail them out, and lenders in France, Germany and elsewhere in Europe could suffer serious losses.

And the resulting market turmoil could strain the European Union's backstop fund, pushing European leaders to drum up yet more taxpayer financing, with voters already annoyed at funding other people's failed governments.

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Economy gets lift: Layoffs ease, home building up

WASHINGTON (AP) _ Fewer Americans applied for unemployment benefits last week and builders broke ground on more homes in May. The latest data offered some hope that the economy may be improving after hitting a slump in late spring.

Unemployment benefit applications fell to a seasonally adjusted 414,000, the Labor Department said. It was the second drop in three weeks and a positive sign that layoffs are slowing. Still, applications have been above 400,000 for 10 straight weeks, evidence that the job market is weak compared with earlier this year.

Home construction rose last month to a seasonally adjusted annual rate of 560,000 units per year, the Commerce Department said. Economists say the pace of construction is far below the 1.2 million homes per year that must be built to sustain a healthy housing market.

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Capital One to buy ING Direct USA for $9 billion

NEW YORK (AP) _ Capital One Financial says it's buying ING Direct USA in a deal valued at $9 billion.

Under the terms of the agreement, Netherlands-based ING Groep will receive $6.2 billion in cash and $2.8 billion in the form of about 56 million shares in Capital One, based on a share price of $50.07.

Capital One says the deal will make it the fifth-largest depository on the country.

ING Direct USA will hold onto the company's "orange ball" branding and use the ING Direct trademark for a transitional year.

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Research In Motion posts lower 1Q earnings

TORONTO (AP) _ BlackBerry smartphone maker Research In Motion said Thursday that its net income and revenue declined in the latest quarter, hurt by lower demand amid the economic slowdown and product delays.

RIM is also cutting an unspecified number of jobs to reduce costs. It gave an outlook well below Wall Street's expectations for the current quarter and the full year.

The company's stock fell sharply.

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Home building, jobs reports push Dow higher

NEW YORK (AP) _ Better-than-expected reports on home building and jobs pushed two of the three major stock indexes higher Thursday. The broader market ended mixed.

The pace of new home construction quickened last month and the number of people who applied for unemployment benefits fell last week to 414,000, more of an improvement than economists expected. Weekly applications for unemployment have been over 400,000 since April, a rate that suggests job growth is still slow.

Worries that Greece's debt troubles could spread continued to weigh on financial markets. The dollar and U.S government bonds rose as traders moved money into safer investments.

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Citigroup says 218,000 affected by hackers

HONG KONG (AP) _ Hackers stole information for 360,000 Citigroup Inc. U.S. credit card accounts in a recent data breach, although the actual number of customers affected was not much higher than originally reported, the bank said Wednesday.

In a statement posted late Wednesday on its website, the company said 217,657 people were sent new cards along with notification letters starting June 3.

Hackers gained access to a total of 360,083 accounts but because many of the accounts were duplicates or already closed, they weren't affected and did not need to be sent replacement cards, Citi said.

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Boeing: $4 trillion in new aircraft needed by 2030

PARIS (AP) _ Boeing Co. upped its forecast Thursday for aircraft demand over the next 20 years, saying airlines will need $4 trillion worth of new planes to meet a pickup in passenger numbers, particularly in the Asia-Pacific region.

Airlines will need 33,500 new jets from now through 2030, Boeing said in a statement.

Boeing executives released the new forecast ahead of next week's Paris Air Show, which highlights the planemaker's industry-dominating rivalry with Europe's Airbus.

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Energy Transfer buying Southern Union for $4.2B

NEW YORK (AP) _ Energy Transfer Equity LP said Thursday that it has agreed to acquire natural gas company Southern Union Co. for about $4.2 billion, creating one of the country's largest natural gas pipeline companies.

The combined company would have more than 44,000 miles of natural gas pipelines and about 30.7 billion cubic feet per day of natural gas transportation capacity.

It would be the second major acquisition for Dallas-based Energy Transfer in the past few months. In March, the company's subsidiaries formed a joint venture to acquire LDH Energy Asset Holdings LLC, a Wilton, Conn., energy marketing and transportation company, for about $1.93 billion in cash.

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Current account deficit increases in first quarter

WASHINGTON (AP) _ Americans bought more expensive foreign oil in the first three months of the year, increasing the deficit in the broadest measure of foreign trade.

The deficit in the current account increased 6.3 percent to $119.3 billion in the January-to-March period, the Commerce Department reported Thursday. The increase reflected a big spike in global oil prices that sent petroleum imports surging. The increase in imports offset strong sales by American companies of autos, computers and heavy machinery in foreign markets.

The current account is the broadest measure of foreign trade because it includes not only trade in goods and services but also investment flows between countries. It represents the bottom line in how much the United States must borrow from the rest of the world to finance its deficit.

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Report: Facebook users more trusting, engaged

NEW YORK (AP) _ Facebook, it turns out, isn't just a waste of time. People who use it have more close friends, get more social support and report being more politically engaged than those who don't, according to a new national study on Americans and social networks.

The report comes as Facebook, Twitter and even the buttoned-up, career-oriented LinkedIn continue to engrain themselves in our daily lives and change the way we interact with friends, co-workers and long-lost high school buddies.

Released Thursday by the Pew Internet and American Life Project, the report also found that Facebook users are more trusting than their non-networked counterparts.

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Greece wracked by political turmoil in debt crisis

ATHENS, Greece (AP) _ Greece was wracked by political turmoil Thursday as the embattled prime minister faced down a party revolt over new austerity measures, a bitter dispute that forced the EU to hint at new loans so Greece can fend off a summer default.

Prime Minister George Papandreou has struggled to garner support for a new package of euro28 billion ($39.5 billion) in spending cuts and tax hikes demanded by the European Union and the International Monetary Fund, which last year granted his debt-ridden nation euro110 billion in bailout loans.

But the measures have sparked riots on the streets of Athens and open criticism from his own Socialist lawmakers. Papandreou's desperate efforts to form a coalition government with the opposition conservatives collapsed Wednesday. A planned Cabinet reshuffle was delayed till Friday, after Papandreou chaired a seven-hour emergency meeting with Socialist lawmakers to try and ease the crisis.

The party feud heightened worldwide concern that a Greek financial collapse could trigger panic elsewhere in the 17-nation eurozone _ a fear that saw borrowing costs in vulnerable EU countries surge and stock markets come under pressure.

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By The Associated Press

The Dow Jones industrial average gained 64.25 points, or 0.5 percent, to close at 11,961.52. The Dow is now slightly higher for the week.

The S&P 500 rose 2.22, or 0.2 percent, to 1,267.64. The Nasdaq composite lost 7.76, or 0.3 percent, to 2,623.70. The two are less than 1 percent lower this week.

Benchmark West Texas Intermediate crude rose 14 cents to settle at $94.95 per barrel on the New York Mercantile Exchange. In London, Brent crude rose $1.01 to settle at $114.02 per barrel on the ICE Futures exchange.

Natural gas lost 16.5 cents, about 3.6 percent, to settle at $4.412 per 1,000 cubic feet on the Nymex.

In other Nymex trading for July contracts, heating oil added 1.9 cents to $3.0038 per gallon and gasoline futures gained 2.59 cents to settle at $2.9494 per gallon.