Dollar access no long-term fix for Europe's crisis
LONDON (AP) _ Five central banks acted Thursday to shore up confidence in Europe's financial system by giving its banks far greater access to U.S. dollars.
The move buys time for banks that hold large amounts of debt issued by Greece and other financially troubled European countries. Some of these banks have had trouble paying for daily operations because other banks have refused to lend to them.
Under Thursday's action, the banks can borrow unlimited dollars for three months, up from the current one-week limit.
The European Central Bank said it will coordinate with the U.S. Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank to offer the loans through the end of this year. Their move to supply more dollars is similar to steps taken during the 2008 financial crisis and again in May 2010.
Concern about their access to dollars has been a key reason why European banking stocks have been beaten down. Investors have been particularly worried about big French banks Societe Generale and BNP Paribas. Thursday's news sent Societe Generale's stock soaring 8 percent and BNP Paribas' 13 percent.
Analysts cautioned that the expanded credit line for dollars isn't a long-term solution to Europe's debt crisis. Greece still appears likely to default on its debts. If it did, some banks could topple. Panic might spread among global investors.
Rogue trader suspected in $2 billion loss at UBS
LONDON (AP) _ One man armed with only a computer terminal humbled a venerable banking institution yet again. This time it was Swiss powerhouse UBS, which said Thursday that it had lost roughly $2 billion because of a renegade trader.
The arrest of 31-year-old equities trader Kweku Adoboli in London is one more headache for troubled international banks, and fresh proof that they remain vulnerable to untracked trading that can produce mind-boggling losses.
Adoboli would join a rogue's gallery that includes Jerome Kerviel, who gambled away $6.7 billion at a French bank until he was caught three years ago, and Nick Leeson, who made so many unauthorized trades that it caused the collapse of a British bank in 1995.
The scale of those frauds rocked world finance. Banks tightened oversight rules to make sure such large sums could not be traded under the radar. But the safeguards, designed to protect the public and shareholders alike, seem to have failed.
Higher Netflix prices equals fewer subscribers
SAN FRANCISCO (AP) _ Netflix's decision to raise prices by as much as 60 percent is turning into a horror show.
The customer backlash against the higher rates, kicking in this month, has been much harsher than Netflix Inc. anticipated. That prompted management to predict Thursday that the company _the largest U.S. video subscription service_ will end September with 600,000 fewer U.S. customers than it had in June.
It will mark just the second time in 12 years that Netflix has lost subscribers from one quarter to the next. The last downturn occurred during 2007 when Netflix lost a mere 55,000 from March through June.
Mrs. Obama applauds Olive Garden announcement
HYATTSVILLE, Md. (AP) _ Michelle Obama said Thursday that a pledge by the Olive Garden and Red Lobster restaurants and their sister chains to serve healthier meals is a "breakthrough moment" for the industry.
Darden Restaurants Inc. is pledging to cut calories and sodium in its meals by 10 percent by 2016, and 20 percent over a decade. Among promised changes for children: no more french fries. A fruit or vegetable side will become standard with kids' meals. One percent milk also will be served, including free refills, unless an alternative drink is ordered.
The kids' menu changes have begun and are to be in place by July at Darden's 1,900 restaurants in 49 states. Its other brands are LongHorn Steakhouse, The Capital Grille, Bahama Breeze and Seasons 52. The Capital Grille and Seasons 52 do not have children's menus.
Unemployment benefit requests jumped to 428,000
WASHINGTON (AP) _ The number of people applying for unemployment benefits jumped last week to the highest level in three months. It's a sign that the job market remains depressed.
The Labor Department said Thursday that weekly applications rose by 11,000 to a seasonally adjusted 428,000. The week included the Labor Day holiday.
Applications typically drop during short work weeks. In this case, applications didn't drop as much as the department expected, so the seasonally adjusted value rose. A Labor spokesman said the total wasn't affected by Hurricane Irene.
Still, applications appear to be trending up. The four-week average, a less volatile measure, rose for the fourth straight week to 419,500.
Consumers paid more for range of items in August
WASHINGTON (AP) _ Consumers paid more for a range of goods and services last month, pushing up inflation and squeezing Americans' purchasing power.
The Consumer Price Index rose 0.4 percent in August after jumping 0.5 percent in July. The core index, which excludes volatile food and energy prices, rose 0.2 percent.
For the 12 months that ended in August, the core index surged 2 percent, the biggest year-over-year increase in nearly three years. That's at the high end of the Federal Reserve's informal inflation target. It could limit the central bank's ability to take further steps to try to revive the economy.
Lagarde urges unified action against Europe crisis
WASHINGTON (AP) _ The head of the International Monetary Fund called Thursday for bold and collective action to combat a slowing global economy and a worsening European debt crisis.
IMF Managing Director Christine Lagarde also said she welcomed President Barack Obama's U.S. job-creation plan in light of the unemployment crisis in the United States.
Lagarde will preside at her first annual meeting of the 187-nation lending institution next week. A former French finance minister, she took over at the IMF in June, succeeding Dominique Strauss-Kahn, who resigned in May to fight attempted rape charges. The charges were later dismissed.
Phone rivalry drives down RIM earnings
TORONTO (AP) _ Shares of Research In Motion plummeted more than 16 percent after hours after the BlackBerry maker reported its net income and revenue declined in its fiscal second quarter.
The company continues to struggle to compete with the iPhone and smartphones running Google's Android system.
RIM said Thursday that its net income was 419 million, or 80 cents per share, in the three months that ended Aug. 27. That's down from $796.7 million, or $1.46 per share, a year ago. Analysts expected 90 cents per share, according to a poll by FactSet.
The Waterloo, Ontario-based company said revenue fell 15 percent to $4.2 billion.
Factory output mostly weak in August outside autos
WASHINGTON (AP) _ Manufacturing was mostly weak in August, a troubling sign for the economy. But auto production increased for the second straight month, as supply chains improved after months of delays caused by the Japan crisis.
Factory output rose 0.5 percent in August, after increasing 0.6 percent in July, the Federal Reserve said Thursday.
Nearly all of the gain came from a 2.6 percent rise in autos and related products, evidence that supply chain disruptions are easing. Still, the industry is producing less than it did before the March disaster.
Overall industrial production ticked up 0.2 percent. That was weaker than July's 0.9 percent increase.
Rate on 30-year mortgage falls to record 4.09 percent
WASHINGTON (AP) _ Fixed mortgage rates fell to the lowest level in six decades for the second straight week. But few Americans can take advantage of the historically low rates.
Freddie Mac said Thursday that the average rate on the 30-year fixed mortgage fell to 4.09 percent this week, down from 4.12 percent. That's the lowest rate seen since 1951.
The average rate on the 15-year mortgage, a popular refinancing option, fell to 3.30 percent from 3.33 percent. Economists say it is likely the lowest rate on the 15-year ever.
Mortgage rates tend to track the yield on the 10-year Treasury note. Worries over Europe's debt crisis are pushing investors to shift money into safe Treasurys, forcing the yield lower.
By The Associated Press(equals)
The Dow Jones industrial average rose 186.45 points, or 1.7 percent, to close at 11,433.18.
The Standard & Poor's 500 index rose 20.43 points, 1.7 percent, to 1,209.11. The Nasdaq rose 34.52 points, 1.3 percent, to 2,607.07.
Benchmark crude added 49 cents to end the day at $89.40 per barrel in New York while Brent crude jumped $2.65 to finish at $112.30 in London.
In other commodities trading, natural gas fell 16.1 cents, or 4 percent, to end at $3.878 per 1,000 cubic feet.
Heating oil rose 7.96 cents to end at $3.0246 per gallon and gasoline futures increased 5.7 cents to finish at $2.7828 per gallon.