Business Highlights

AP News
Posted: Jul 23, 2012 6:00 PM
Business Highlights


2nd triple-digit loss for Dow in 2 days

NEW YORK (AP) — Fear that Spain may need a bailout sent its borrowing costs soaring, the euro to a two-year low against the dollar and stocks around the world tumbling as investors pulled back Monday from all manner of risk.

The Dow Jones industrial average, after falling 239 points earlier in the day, ended down 101.11 at 12,721.46. Yields for U.S. government bonds sank to record lows as traders sought the safety of American debt.

Borrowing costs rose sharply for Spain and Italy after news that the Spanish economy contracted by 0.4 percent in the second quarter. Falling economic output makes it more difficult for Spain to deal with its debts.


Europe shaken by fear Spain will need full bailout

FRANKFURT, Germany (AP) — Europe is on the brink again. The region's debt crisis flared on Monday as fears intensified that Spain would be next in line for a government bailout.

A recession is deepening in Spain, the fourth-largest economy that uses the euro currency, and a growing number of its regional governments are seeking financial lifelines to make ends meet. The interest rate on Spanish government bonds soared in a sign of waning market confidence in the country's ability to pay off its debts.

The prospect of bailing out Spain is worrisome for Europe because the potential cost far exceeds what's available in existing emergency funds. Financial markets are also growing uneasy about Italy, another major European economy with large debts and a feeble economy.


Global economy in worst shape since 2009

WASHINGTON (AP) — Mounting fears about Spain's financial health help illustrate why the global economy is in its worst shape since 2009.

Six of the 17 countries that use the euro currency are in recession. The U.S. economy is struggling again. And the economic superstars of the developing world — China, India and Brazil — are in no position to come to the rescue. They're slowing, too.

The lengthening shadow over the world's economy illustrates one of the consequences of globalization: There's nowhere to hide.


McDonald's showing signs of wear from economy

NEW YORK (AP) — Not even McDonald's Corp. has an iron stomach when it comes to the global economic downturn.

The world's largest hamburger chain has thrived in boom and bust times by selling cheap eats and constantly updating its menu with popular items such as fruit smoothies and snack wraps. But the company is starting to show signs of wear and tear from global economic pressures, intensifying competition and penny-pinching customers who are eating out less often in some hard-hit regions around the world.

The Oak Brook, Ill.-based company said Monday that its net income fell 4 percent in the second quarter as a strong dollar ate into results.


More airfare increases on the way

DALLAS (AP) — Get ready to spend more on travel. Airlines are raising ticket prices again after a long lull that coincided with falling fuel costs. Over the weekend several big airlines matched United Airlines' increase in base fares of up to $10 per round trip within the U.S.

Fare watchers said it was virtually certain that the new prices would stick, resulting in the fourth fare increase this year and the first since late March.


Oil giant CNOOC to buy Canada's Nexen for $15.1 billion

SHANGHAI (AP) — China moved Monday toward its biggest overseas energy acquisition as offshore oil and gas giant CNOOC Ltd. announced an agreement to buy Canadian producer Nexen Inc. for $15.1 billion.

The deal faces scrutiny from the Canadian government, which has rejected some foreign interest in the past over worries about the country's natural resources industry.

CNOOC and other big state-owned Chinese energy companies have increased purchases of oil and gas assets in the Americas as part of a global strategy to gain access to resources needed to fuel China's economy. The companies have moved more carefully since CNOOC tried seven years ago to buy Unocal but was rejected by U.S. lawmakers citing national security concerns.


Halliburton 2Q profit flat, still tops estimates

NEW YORK (AP) — Success has a downside for Halliburton.

Like other energy service firms, Halliburton has become so good at helping natural gas companies boost production that U.S. supplies are now larger than ever. That means lower prices, however, and Halliburton's business is now suffering as its customers cut back on new natural gas operations.

Halliburton Co. said Monday that second-quarter net income dipped slightly to $737 million, or 79 cents per share, from $739 million, or 80 cents per share, a year earlier. That was despite record revenue of $7.2 billion. It was Halliburton's first decline in quarterly net income since the first quarter of 2010.


Soft game sales weigh on Hasbro's 2Q earnings

PAWTUCKET, R.I. (AP) — Toy maker Hasbro Inc. said Monday its second-quarter net income dropped 25 percent on weak sales in most categories as revenue in major product categories including boys, girls and games declined.

But higher prices and cost-cutting helped the maker of Monopoly, Nerf and My Little Pony beat analysts' earnings expectations. Its shares rose more than 4 percent.

The second quarter is seasonally small for toy makers, which make the bulk of their sales during the second half of the year and the holiday season. But it can give indications about the strength of toy demand.

Revenue fell 11 percent in the latest quarter, missing Wall Street expectations.


Genesee & Wyoming to pay $1.39 billion for RailAmerica

GREENWICH, Conn. (AP) — Genesee & Wyoming said Monday that it will buy RailAmerica for about $1.39 billion in a deal that combines the two largest short-line and regional rail operators in North America.

The combined company will operate 108 railroads in the U.S. and abroad. The deal will diversify what the railroads carry, offering protection from prolonged weakness in certain shipments like coal, and make it less dependent on certain big customers. The combination will also allow the two companies to streamline their operations to save money.

Besides the U.S. and Canada, Genesee & Wyoming operates railroads in Australia, the Netherlands and Belgium.


Peet's Coffee & Tea going private for $977.6 million

EMERYVILLE, Calif. (AP) — Peet's Coffee & Tea is being taken private by a German conglomerate paying about $977.6 million for the company.

Privately held Joh. A. Benckiser, which invests in consumer goods brands, will pay $73.50 per share, a 29 percent premium to Peet's closing stock price of $57.16 on Friday.

Peet's was founded in 1966 in Berkeley, Calif., by Alfred Peet. The company gets more than half its revenue from its coffee shops and the rest from grocery sales, home delivery and sales to food service and offices.


By The Associated Press(equals)

The Dow Jones industrial average closed down 101.11 at 12,721.46. The Standard & Poor's 500 index fell 12.14 points to 1,350.52. The Nasdaq composite index dropped 35.15 points to 2,890.15.

Benchmark U.S. crude prices fell by $3.69, or 4 percent, to finish the day at $88.14 per barrel in New York. Brent crude, which sets the price for imported oil, lost $3.57, or 3.3 percent, to finish at $103.26 per barrel in London.

In other futures trading, heating oil fell by 10.54 cents, or 3.6 percent, to finish at $2.8189 per gallon, while wholesale gasoline lost 6 cents, or 2 percent, to end at $2.8829 per gallon. Natural gas rose 3.6 cents to end at $3.1170 per 1,000 cubic feet.