Business Highlights

AP News
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Posted: Aug 05, 2011 5:56 PM
Business Highlights

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Europe crisis revives '08 fears but risks are less

Wild gyrations in the stock market. Big banks holding risky bonds. Fear that toxic assets will contaminate banks and freeze up credit on both sides of the Atlantic.

Wall Street is having a flashback to the panicky days of September and October 2008, when Lehman Brothers collapsed and American International Group needed a bailout that became the biggest on Wall Street _ $182 billion.

But few analysts think the cause of the latest jitters _ Europe's debt crisis _ will do as much damage in the United States as the collapse in home prices and mortgage-backed securities did in 2008, when they caused a credit squeeze and banks feared lending to each other.

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117K jobs added in July ease fears of recession

Hiring picked up slightly in July, and the unemployment rate dipped to 9.1 percent. The modest improvement could ease fears of another recession, but it wasn't enough to prevent another wild day of trading on Wall Street.

Employers added 117,000 jobs last month, the Labor Department said Friday. The figure was the best in three months. And the job totals for May and June were revised up.

Retailers, factories and health care firms were among the many industries that added workers. Even another loss of government jobs wasn't too worrisome, after considering that most of them stemmed from the temporary shutdown in Minnesota, which has since ended.

The jobs report surpassed most economists' expectations. They had forecast a net gain of 90,000 jobs. But other recent data show the U.S. economy remains weak and isn't generating enough jobs to lower the unemployment rate.

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Stocks end a day of wild swings mostly down

NEW YORK (AP) _ If you looked away Friday, you might have missed a market rally. Or a plunge.

A soothing government report on employment in July eased concerns that the U.S. might slide back into a recession, and the Dow Jones industrial average rose as much as 171 points soon after trading began. But fears that Europe's growing debt crisis might threaten U.S. banks and the fragile economy ruled Friday.

After its early rise, the Dow fell more than 400 points and was down 243 just before noon. Then it rose nearly 400 points in less than an hour and was up 135 points. The rest of the day, the blue-chip stock index bounced up and down, sometimes by as much as 100 points in less than half an hour. The Dow Jones industrial average ended the day modestly higher, but the S&P 500 and the Nasdaq dropped.

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Investors looking for answers after wild week

A nerve-wracking week punctuated by the biggest stock market plunge in three years has left investors with more questions than answers _ and considerably less money in their portfolios.

Is the market correction that has sent the Dow Jones industrial average plummeting 10 percent since late July a short-term blip or a precursor of what's to come? Will investors who didn't flinch, even during Thursday's 513-point drop, be rewarded for their perseverance or punished for not selling before the market gets worse? Most importantly, what should they do now?

Many individual investors are unnerved.

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Italy to balance budget amid financial crisis

ROME (AP) _ Italy pledged on Friday to work swiftly for a constitutional amendment requiring the government to balance its budget, as Rome feverishly tried to assure domestic and foreign investors its finances are sound and calm nervous markets in Europe.

Premier Silvio Berlusconi told a hastily convened evening news conference the government would speed up measures in its budget law approved last month by Parliament.

At the start of Europe's debt crisis 21 months ago, Italy was rarely grouped with the weaker members of the single currency zone, such as Greece, Ireland and Portugal. But Italian politicians took action after the country's borrowing costs shot higher in the past few weeks.

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Gas prices expected to fall in coming weeks

NEW YORK (AP) _ This week's scary stock market plunge has a silver lining: Gasoline is about to get cheaper.

That's because the same fears that forced a sell-off on Wall Street also brought down the price of oil.

Gas prices usually fall in late summer as families take fewer road trips. But the recent drop in oil should lower them more. Forecasters say the national average of $3.70 per gallon could fall as much as 35 cents per gallon over the next month.

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Consumer borrowing up in June by most in 4 years

Americans borrowed more money in June than during any other month in nearly four years, relying on credit cards and loans to help get through a difficult economic stretch.

The Federal Reserve said Friday that consumers increased their borrowing by $15.5 billion in June. That's the largest one-month gain since August 2007. And it is three times the amount that consumers borrowed in May.

Borrowing is usually a sign of confidence in the economy. Consumers tend to take on more debt when they feel wealthier. But an increase in credit card debt could also signal that people are falling on harder times.

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Wells Fargo reaches $590M Wachovia settlement

NEW YORK (AP) _ Wells Fargo & Co. on Friday said that it has agreed to pay $590 million to settle a class-action lawsuit filed by investors in Wachovia securities.

The settlement would end a suit filed in 2008 in federal court in Manhattan, charging that Wachovia misled investors in its bonds and preferred securities by understating losses associated with risky mortgages. Wells Fargo bought Wachovia that year at the height of the financial crisis.

The San Francisco-based bank said in a regulatory filing with the Securities and Exchange Commission that the deal needs court approval before it takes effect.

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P&G 4Q profit rises; plans for slowing US sales

CINCINNATI (AP) _ Procter & Gamble Co. plans to seek out new consumers in emerging markets around the globe while giving shoppers in the U.S. and other developed markets more choices in products and prices as their countries' economies continue to sputter.

The maker of Gillette shavers, Tide detergent and Pamper diapers reported double-digit net income and revenue increases for its fourth quarter with sales gains in countries led by Brazil, India and China.

But it gave a cautious forecast for the year ahead because of expectations for little growth in the United States and other developed countries. P&G's guidance indicated slowing sales in this quarter, which began July 1.

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Fannie Mae loss widens; asking taxpayers for $2.8B

NEW YORK (AP) _ Government-controlled mortgage company Fannie Mae said Friday that its second-quarter loss widened as it continues to seek loan modifications to help reduce defaults amid the ongoing difficulties in the housing and mortgage markets.

Fannie Mae also made $2.3 billion in dividend payments to the U.S. Treasury during the period, which reduces the amount it will be asking taxpayers for to $2.8 billion from $5.1 billion.

Fannie's rescue has been one of the most expensive government bailouts. The amount of money it has received from the Treasury to stay afloat is set to rise to $104.8 billion when accounting for the latest request. Fannie has paid back $14.7 billion to the Treasury in dividends as of the end of June.

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By The Associated Press(equals)

The Dow Jones industrial average closed up 61 points, or 0.5 percent, at 11,445. The Dow had fallen 513 points Thursday, the biggest loss since 2008.

The S&P 500 closed down a point, or 0.1 percent, at 1,199. The Nasdaq composite index closed down 24, or 0.9 percent, at 2,532.

Benchmark West Texas Intermediate crude has declined $12.71, about 13 percent, in the last 10 days. Oil on Friday added 25 cents to settle at $86.88 per barrel on the New York Mercantile Exchange, a drop of $8.82 from the week before.

Brent crude, which is used to price many international varieties, climbed $2.12 to settle at $109.37 per barrel on the ICE Futures Exchange in London.

In other Nymex trading for September contracts, heating oil added 4.78 cents to $2.9417 per gallon and gasoline futures rose 6.8 cents to settle at $2.8052 per gallon. Natural gas was unchanged, settling at $3.941 per 1,000 cubic feet.