Oil fell to the lowest level in a
week in New York as concern that the European debt crisis will
spread to Italy caused the euro to tumble against the dollar and
after Chinese imports slumped.

Oil dropped as much as 2 percent after Austria’s Finance
Minister Maria Fekter said euro-area finance ministers would
discuss Italian debt issues. The euro fell to a six-week low
against the dollar. A 10 percent decline in Chinese imports and
rising unemployment in the U.S. may indicate fuel demand will
falter in the world’s biggest crude-consuming nations.

“There’s some pressure on oil from concerns in the euro
zone,” said Tom Bentz, a broker with BNP Paribas Commodity
Futures Inc. in New York. “The euro got hit pretty good. The
negative jobs data in the U.S. from last week has cast a
negative cloud over the market, and there continues to be some
signs of slowing in China.”

Crude for August delivery fell 50 cents, or 0.5 percent, to
$95.70 a barrel at 10:05 a.m. on the New York Mercantile
Exchange. Earlier, it touched $94.32, the lowest level since
July 1. Prices have risen 26 percent in the past year.

Brent oil for August settlement declined $1.86, or 1.6
percent, to $116.47 a barrel on the London-based ICE Futures
Europe exchange. The European benchmark contract was at a
premium of $20.77 a barrel to U.S. futures. It reached $22.13 on
July 8, just shy of a record $22.29 on June 15.

A meeting of European Union and European Commission chiefs
today was enlarged to include European Central Bank President
Jean-Claude Trichet, Luxembourg Prime Minister Jean-Claude Juncker and European Economic Commissioner Olli Rehn, amid
speculation Italy may be engulfed by the crisis and divisions on
how to structure aid for Greece.

Euro Tumbles

The euro dropped 1.5 percent to $1.4049. Earlier, it
touched $1.4026, the lowest intraday price since May 25.

Government reports in China showed net oil imports shrank
10 percent in June to the lowest level in eight months,
according to Bloomberg calculations, while inflation surged to a
three-year high. A U.S. Labor Department report July 8 showed
that the unemployment rate unexpectedly rose to the highest
level this year in June.

The U.S. and China are the two largest oil-consuming
countries.

China imported 19.7 million metric tons and exported
270,000 tons of crude, customs data showed. Net imports of fuel,
including gasoline and diesel, rose to 1.36 million tons in June
from 930,000 tons in May, according to the data. Net purchases
reached a 29-month high of 2.07 million tons in December.

U.S. equities also tumbled the most in two weeks on the
Italian concerns and Chinese inflation report.

The Standard Poor’s 500 Index fell 1.2 percent to
1,328.07. The Dow Jones Industrial Average dropped 114.50
points, or 0.9 percent, to 12,542.70.

To contact the reporter on this story:
Margot Habiby in Dallas at mhabiby@bloomberg.net.

To contact the editor responsible for this story:
Dan Stets at dstets@bloomberg.net.

Groupon is changing its privacy policies to allow it to collect more information as it offers more deals targeted to users based on their locations.

The Chicago-based deal site announced the changes in an email to its 83 million subscribers Sunday, saying that the new policies are part of an effort to provide greater transparency about the way it handles private information about users.
The announcements come as the company seeks to go public and on the heels of its launch of Groupon Now, a mobile service that provides instant deals based on a user’s location.

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“In short, if you use a Groupon mobile app and you allow sharing through your device, Groupon may collect geo-location information from the device and use it for marketing deals to you,” the company said.

The company broadened its definition of “personal information” to include “interests and habits” and said a partnership that provides travel deals with Expedia means that personal information can be shared with the travel site if users subscribe to receive travel deals.

Groupon said other information it collects and shares with Expedia and for use on Groupon Now could include relationship information, transaction information, financial account information and mobile location information.

The deal company said customers can control what is shared and collected by Groupon.

Consumers can manage their email preferences and subscriptions through their account setting, how cookies are handled through their browsers and can opt out of being targeted by certain third-party advertising companies by clicking links provided in the Groupon’s privacy policy. Users who wish to opt out of receiving offers from Groupon’s business partners can follow opt-out instructions that come in emails those companies send out. Users can also stop their mobile devices from sharing location information with Groupon by adjusting the privacy settings on their phones.

NEW YORK (TheStreet) — Shares of Arch Chemicals (NYSE:ARJ) were gapping up Monday morning with an open price 11.2% higher than Friday’s closing price. The stock closed at $42.17 Friday and opened today’s trading at $46.88.

The average volume for Arch has been 182,900 shares per day over the past 30 days. Arch has a market cap of $963.9 million and is part of the basic materials sector and chemicals industry. Shares are up 11.2% year to date as of the close of trading on Friday.

Arch Chemicals, Inc., a biocides company, provides chemistry-based and related solutions to destroy and control the growth of harmful microbes in the United States and internationally. The company has a P/E ratio of 13.8, above the average chemicals industry P/E ratio of 13.6 and below the SP 500 P/E ratio of 17.7.

TheStreet Ratings rates Arch as a buy. The company’s strengths can be seen in multiple areas, such as its increase in stock price during the past year, impressive record of earnings per share growth, revenue growth, reasonable valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins. You can view the full Arch Ratings Report.

Get more investment ideas from our investment research center.

Interested in other stocks that are gapping up? Get free SMS text alerts sent to you when the action happens by texting UP to 95370 or select from multiple alert options.

For more information on Arch Chemicals Inc. click any of the following:

Mon Jul 11, 2011 9:54am EDT

* Sees IPO of 22.3 mln shares at $16-$18/shr

* Key stockholders Bain Capital, Caryle, THL not selling
shares in IPO

* IPO to get better-than-anticipated reaction from investors
- analyst

(Rewrites throughout, adds analysts comments, details,
background)

By Brenton Cordeiro and Tanya Agrawal

BANGALORE, July 11 (Reuters) – Dunkin’ Brands Group Inc,
known for its Dunkin’ Donuts and Baskin Robbins ice cream, has
set a price range for its public offering, valuing the company
at as much as $2.3 billion, at a time when IPOs have had mixed
reception from investors.

The company, taken private in a $2.4 billion deal in 2005 by
a consortium including Bain Capital, Carlyle Group and
Thomas H. Lee Partners, said it was offering about 22.3 million
shares at a price band of $16-$18 apiece.

“Dunkin’ Brands has been transformed quite dramatically into
something new relative to the takeover. There are some very
smart people directing the company,” said David Menlow,
president of IPOfinancial.com. “I think it (the IPO) will get a
better-than-anticipated reaction from investors.”

While most tech offerings, including those from LinkedIn
Corp and Yandex , had strong trading debuts,
companies like Vanguard Health Systems priced its IPO
below its filed range, and Stewart Stevenson LLC postponed its
market debut.

The initial public offering of Toys R US , the
world’s largest toy retailer is now expected in 2012. It had
filed for an IPO in May last year.

“The Dunkin’ brand is not time sensitive. It has developed a
huge brand awareness with Dunkin’ Donuts and Baskin Robbins,”
said Scott Sweet, senior managing partner at IPO Boutique.

“Consumers will travel for miles to get to Dunkin’ Donuts.”

Dunkin’ Brands, with over 16,000 outlets in 57 countries,
earned $26.9 million on revenue of $577.1 million in the year
ended Dec. 25.

Previously part of Allied Domecq, it competes with Dairy
Queen, Cold Stone Creamery and Starbucks Corp . When
Pernod Ricard the world’s No.2 spirits maker, acquired
Allied Domecq in 2005, it ditched the Dunkin’ Brands businesses.

“Dunkin’ is probably recession resistant. They have a lot of
growth in their business,” said BGB Securities analyst Sam Yake.

Bain Capital, Carlyle and THL would collectively will own
about three-fourths of the company after the offering. None of
them are selling their shares in the IPO.

In a regulatory filing on Monday, Dunkin’ Brands said it
expects to receive net proceeds of about $348.4 million from the
offering.

Dunkin’ Brands, which expects to list on Nasdaq under the
symbol “DNKN,” plans to use the proceeds to repay debt and for
working capital.

In May, the company filed for an IPO of up to $400 million.

Post IPO, the company will have about 126.4 million shares
outstanding excluding the over-allotment option.

(Reporting by Brenton Cordeiro and Tanya Agrawal; Editing by
Don Sebastian and Gopakumar Warrier)

An economist would actually call the decision not to sell the ball a completely rational move

Over the weekend, New York Yankee Derek Jeter joined a small club of major leaguers to achieve 3,000 hits. But the hit came with a twist: Jeter crushed it deep over the left-field fence for a homer. So unlike most milestone hits that remain within the park, this one was caught by a fan, 23-year-old Christian Lopez. The real shocker: rather than cash in by auctioning off the ball, he gave it back to Jeter. Is he nuts? An economist would say that his decision was perfectly reasonable.

So how much money might the ball have fetched? According to one Bloomberg report, it almost certainly could have been sold for somewhere between $75,000 and $250,000 at auction. What did he get for giving it back to Jeter? The Yankees did show their appreciation. The New York Daily News reports:

In return for his big-hearted gift the Yanks have given the 6-foot-5, 300-pound Lopez, four luxury box seats for every game of the rest of the season, plus the playoffs.

He also got several signed bats, balls and jerseys and a meeting with Jeter – but the sweetest gift was the love Lopez felt from other Yankees boosters.

Business Insider estimates that the seats alone are probably worth about $40,000. But that’s still a ways off a possible $250,000 haul. Did Lopez make a huge mistake?

Criticizing Lopez’s decision as crazy misses the maxim that “money isn’t everything.” But more importantly, it ignores an important aspect of basic economics that supports that maxim: utility theory. It teaches that money isn’t a person’s ultimate goal. Instead, they seek to maximize their personal utility. Think of utility as happiness: while money certainly plays a role in happiness for many people, it isn’t all that matters.

Seeing this theory in practice isn’t difficult. Different people have different preferences. Imagine two people with precisely the same aptitude for math. One might go to Wall Street and happily make gobs of money. The other might choose to teach high school instead, giving up fortune for a job he or she feels is more rewarding or enjoyable. For some — if not most — people, money is only a small part of what defines their happiness.

In the case of Lopez, his personal utility prioritized whatever satisfaction that he would derive by giving the ball back above the monetary benefit that would result from auctioning it off. And that’s perfectly rational. In this case, the perks that the Yankees provided may have just been a bonus to Lopez.

To another person, however, giving the ball back might have been completely irrational. For example, a New York Mets fan might have sold the ball. Feeling less allegiance to Jeter and the Yankees, this person might have preferred the money. We can only imagine what a Boston Red Sox fan might have done with it. Perhaps a Yankee-hater would have destroyed the ball out of pure spite.

You could argue that Lopez didn’t realize how much the ball could have been sold for, so he might have behaved differently even to maximize his own utility had he known its value. But even now, after we can be certain that several people have informed him of how much money he gave up, he doesn’t appear to regret the decision. From the Daily News article:

“I would do it the same way if I had to do it all over again,” Lopez said, sipping a beer as he watched CC Sabathia hurl a 1-0 gem. “I’ve had no second thoughts. It was the right thing to do. I wouldn’t change anything.”

And why should he? His internal preferences dictated precisely the action he took.

Image: Lopez shakes hands with Jeter. Credit: REUTERS/Ray Stubblebine

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The White House meeting between President Obama and congressional leaders on a debt and deficit reduction deal ended with little progress on Sunday. The lawmakers plan to keep meeting daily until a deal is struck, officials said. (July 10)

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Debt ceiling doomsday scenario: What happens if Congress fails to raise the debt limit and the U.S. can no longer make payments on its obligations?

Click the chart for more market data.

NEW YORK (CNNMoney) — U.S. stocks sank Monday as investors were spooked by worries that Europe’s debt crisis could spread to Italy, one of Europe’s largest economies.

The Dow Jones industrial average (INDU) sank 146 points, or 1.2%, in the early going. The SP 500 (SPX) fell 19 points, or 1.5%, and the Nasdaq Composite (COMP) fell 36 points, or 1.3%.

The selling was broad-based, with only two Dow stocks in the black. Bank of America (BAC, Fortune 500) and JPMorgan (JPM, Fortune 500) were among the worst performers, while McDonalds (MCD, Fortune 500) and Home Depot (HD, Fortune 500) clung to modest gains.

In Europe, stocks fell sharply in London, Frankfurt and Paris on concerns about Italy’s banking sector and the nation’s debt load. European officials have called meetings Monday to discuss Greece and other debt-stricken members of the European Union.

Traders are concerned that the fiscal problems facing smaller EU members such as Greece, Portugal and Ireland may be spreading to larger members of the monetary union.

“Contagion fears are a negative for euroland,” said Peter Cardillo, chief market economist at Avalon Partners.

Investors flocked to assets that are seen as safer alternatives to stocks. The U.S. dollar gained 1.4% against the euro, while demand for U.S. Treasurys rose, driving yields lower. Gold prices rose near record levels and oil prices dropped.

In the United States, investors have been grappling with signs the nation’s economy is deteriorating, including a much weaker than expected report on the nation’s job market last week. The ongoing political impasse on the U.S. debt ceiling is also weighing on the market.

Job market stinks! Let’s buy U.S. bonds? – The Buzz

Meanwhile, the second quarter corporate reporting period gets underway this week, with results from Alcoa after the closing bell Monday.

The three major indexes posted modest gains last week as concerns about the U.S. economy continue to weigh on the market.

Economy: There are not major economic reports on the agenda Monday, but investors will keep a close eye on the deficit showdown in Washington.

Lawmakers will resume talks to raise the debt ceiling, and President Obama is scheduled to hold a news conference on the issue Monday morning.

Companies: News Corp. (NWSA, Fortune 500) sank 4.6% as the company continues to deal with the fallout stemming from the”News of the World” hacking scandal. Investors expressed concern that the hacking scandal may stop regulators from approving News Corp.’s bid to purchase British TV provider BSkyB.

Dow component Alcoa (AA, Fortune 500) will be the first major company to release quarterly results, due out after the closing bell Monday. Analysts polled by Thomson Reuters expect the aluminum maker to post earnings per share of 32 cents on revenue of $6.31 billion.

World markets: European stocks dipped in morning trading. Britain’s FTSE 100 fell 1%, the DAX in Germany lost 2% and France’s CAC 40 declined 2.4%.

Asian markets ended mostly lower. The Hang Seng in Hong Kong dropped 1.7% and Japan’s Nikkei lost 0.7%. The Shanghai Composite was the lone bright spot, increasing 0.2%

Currencies and commodities: The dollar strengthened against the euro, the Japanese yen and the British pound.

Oil for August delivery slipped $1.50 to $94.70 a barrel.

Gold futures for August delivery rose $12 to $1,553.60 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield down to 2.97% from 3.15% late Friday.  

By Dan Strumpf

Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–Oil futures declined Monday, weighed by worries of debt contagion spreading in Europe and signs of weak crude demand in the U.S. and China.

Light, sweet crude for August delivery fell $1.14, or 1.2%, to $95.06 a barrel on the New York Mercantile Exchange. Brent crude on ICE Futures Europe gave up $2.23, or 1.9%, to $116.10 a barrel.

Senior euro-zone officials prepared to meet Monday to discuss another round of aid for Greece. They are aiming forestall a spread of the region’s debt crisis …

By Dan Strumpf

Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–Oil futures declined Monday, weighed by worries of debt contagion spreading in Europe and signs of weak crude demand in the U.S. and China.

Light, sweet crude for August delivery fell $1.14, or 1.2%, to $95.06 a barrel on the New York Mercantile Exchange. Brent crude on ICE Futures Europe gave up $2.23, or 1.9%, to $116.10 a barrel.

Senior euro-zone officials prepared to meet Monday to discuss another round of aid for Greece. They are aiming forestall a spread of the region’s debt crisis …

(AFP)
–
1 hour ago

LONDON — Shares in BSkyB plunged on Monday amid a phone hacking scandal endangering a multi-billion-dollar bid by Rupert Murdoch’s News Corp. for control of the British pay-TV company.

BSkyB stock slumped to 693 pence from 750 pence at the close on Friday, a drop of 7.6 percent. It recovered slightly by mid-day to 705 pence, a drop of six percent.

Shares in the satellite broadcaster slumped below the 700-pence a share offer price made by News Corp. last year for the 61 percent of BSkyB it does not own.

BSkyB’s shares were tumbling on Monday as Britain’s Deputy Prime Minister Nick Clegg urged media baron Murdoch to scrap his bid for BSkyB amid the hacking scandal.

Culture Secretary Jeremy Hunt was due to address parliament on his decision to ask for new advice on BSkyB in a statement due at 1530 GMT.

Murdoch is in London to take personal charge of a situation that has caused the closure at the weekend of the News of the World tabloid newspaper, owned by News Corp.’s News International division.

Should the British government decide to wave through the deal, BSkyB still needs to agree on a price.

The broadcaster, which has a portfolio including live English Premier League football and blockbuster films, is holding out for more than the £7.8 billion ($12.5 billion, 8.6 billion euros) offered by News Corp. last year.

BSkyB wants an offer in excess of 800 pence a share, while the stock closed at 850 pence on July 4, mirroring the intraday level on June 30. The share price has thus dived by as much as 18 percent in just one week, in turn knocking £2.75 billion off the group’s value.

Analysts said the share price plunge reflected prospects that the deal may be scrapped.

“Investors hate uncertainty and with the markets racketing up BSkyB’s share price over the last few months on expectations of a successful bid coming through, that uncertainty is convincing investors to cash out their gains en masse in case that deal never comes through,” said Joshua Raymond, chief market strategist at City Index trading group.

The News of the World had been dogged by allegations of voicemail hacking for years. A royal reporter and a private investigator were jailed in 2007.

Claims last week that murdered schoolgirl Milly Dowler and the families of dead soldiers were targeted escalated the affair into a national scandal engulfing the government, the press and the police.

Copyright © 2011 AFP. All rights reserved.
More »

(AFP)
–
1 hour ago

LONDON — Shares in BSkyB plunged on Monday amid a phone hacking scandal endangering a multi-billion-dollar bid by Rupert Murdoch’s News Corp. for control of the British pay-TV company.

BSkyB stock slumped to 693 pence from 750 pence at the close on Friday, a drop of 7.6 percent. It recovered slightly by mid-day to 705 pence, a drop of six percent.

Shares in the satellite broadcaster slumped below the 700-pence a share offer price made by News Corp. last year for the 61 percent of BSkyB it does not own.

BSkyB’s shares were tumbling on Monday as Britain’s Deputy Prime Minister Nick Clegg urged media baron Murdoch to scrap his bid for BSkyB amid the hacking scandal.

Culture Secretary Jeremy Hunt was due to address parliament on his decision to ask for new advice on BSkyB in a statement due at 1530 GMT.

Murdoch is in London to take personal charge of a situation that has caused the closure at the weekend of the News of the World tabloid newspaper, owned by News Corp.’s News International division.

Should the British government decide to wave through the deal, BSkyB still needs to agree on a price.

The broadcaster, which has a portfolio including live English Premier League football and blockbuster films, is holding out for more than the £7.8 billion ($12.5 billion, 8.6 billion euros) offered by News Corp. last year.

BSkyB wants an offer in excess of 800 pence a share, while the stock closed at 850 pence on July 4, mirroring the intraday level on June 30. The share price has thus dived by as much as 18 percent in just one week, in turn knocking £2.75 billion off the group’s value.

Analysts said the share price plunge reflected prospects that the deal may be scrapped.

“Investors hate uncertainty and with the markets racketing up BSkyB’s share price over the last few months on expectations of a successful bid coming through, that uncertainty is convincing investors to cash out their gains en masse in case that deal never comes through,” said Joshua Raymond, chief market strategist at City Index trading group.

The News of the World had been dogged by allegations of voicemail hacking for years. A royal reporter and a private investigator were jailed in 2007.

Claims last week that murdered schoolgirl Milly Dowler and the families of dead soldiers were targeted escalated the affair into a national scandal engulfing the government, the press and the police.

Copyright © 2011 AFP. All rights reserved.
More »

Image: MLB.com

A 23-year-old Verizon customer service rep had history and a potential six-figure payday fall into his lap on Saturday.

And then he gave it back.

Christian Lopez caught Derek Jeter’s 3,000th hit — a homerun to right-center — but then returned the ball to the Yankee captain for a price well short of the $250,000 that Bloomberg reported the ball could be worth at auction.

Lopez has over $100,000 in student loans, but he told the New York Daily News, “I know I did the right thing. It never crossed my mind to not give it back. I’m only 23. I have plenty of time to make money.”

He did receive a little something for giving the ball back. The Yankees gave him four luxury box seats for all 32 remaining regular season games, as well as potential playoff and World Series games, worth about a total of $40,000.

Source: New York Daily News

Image: MLB.com

A 23-year-old Verizon customer service rep had history and a potential six-figure payday fall into his lap on Saturday.

And then he gave it back.

Christian Lopez caught Derek Jeter’s 3,000th hit — a homerun to right-center — but then returned the ball to the Yankee captain for a price well short of the $250,000 that Bloomberg reported the ball could be worth at auction.

Lopez has over $100,000 in student loans, but he told the New York Daily News, “I know I did the right thing. It never crossed my mind to not give it back. I’m only 23. I have plenty of time to make money.”

He did receive a little something for giving the ball back. The Yankees gave him four luxury box seats for all 32 remaining regular season games, as well as potential playoff and World Series games, worth about a total of $40,000.

Source: New York Daily News

July 11, 2011, 10:05 AM EDT

By Stephen Kirkland and Nikolaj Gammeltoft

July 11 (Bloomberg) — Stocks, the euro and Italian and Spanish bonds fell, sending borrowing costs for those nations to euro-era records relative to German bunds, amid concern Europe’s debt crisis will spread. Gold and U.S. Treasuries rallied.

The MSCI All-Country World Index lost 1.5 percent at 9:35 a.m. in New York, its biggest drop on a closing basis in almost a month, and the Standard Poor’s 500 Index slid 1.1 percent to extend its worst two-day plunge in five weeks. The Markit iTraxx SovX Western Europe Index of default swaps jumped 33 basis points to an all-time high. The euro sank 1.4 percent to $1.4065, the weakest since May. Oil fell 1.2 percent, while gold futures increased 0.8 percent.

A meeting of European officials today was enlarged amid speculation Italy may be engulfed by the crisis and divisions on how to structure aid for Greece. Alcoa Inc. will start the second-quarter earnings season today after markets close in the U.S., while investors also awaited a press conference from President Barack Obama after the White House and congressional leaders made little progress in debt-reduction talks.

“It’s a combination of a worsening of the debt crisis in Europe and deficit and debt uncertainty in the U.S.,” said Eric Teal, chief investment officer at First Citizens Bancshares Inc. in Raleigh, North Carolina, which manages $4 billion. “The markets will remain under pressure until the debt crisis in Europe is perceived to be better contained.”

Two-Week Rally

The SP 500 retreated after capping a 5.9 percent gain since June 24, its biggest two-week rally since October 2009. Alcoa slipped 2 percent as the largest U.S. aluminum producer prepares to report earnings after the close of New York trading, unofficially beginning the U.S. earnings season. Profits at companies in the SP 500 will rise 13 percent in the second quarter, according to analyst estimates compiled by Bloomberg, the smallest gain in two years.

Financial and energy companies led losses among all 10 industry groups in the SP 500, with JPMorgan Chase Co. down 2 percent and Exxon Mobil Corp. 1.2 percent lower.

The 10-year U.S. Treasury yield dropped to less than 3 percent for the first time since June 28. The dollar rallied versus 14 of 16 major peers, climbing the most against the Swedish krona, Norwegian krone and euro.

Crude oil in New York fell 1.2 percent to $95.09 a barrel and copper dropped 0.8 percent in New York. The SP GSCI index of 24 commodities retreated 1.1 percent, led by a 4.4 percent decline in cotton and 2.7 percent loss in Kansas wheat. Gold for August delivery rallied 0.8 percent to $1,554.20 an ounce.

Debt Ceiling

President Obama plans to hold a press conference at 11 a.m. in Washington today, his fifth public remarks on debt in a week, as he presses lawmakers to reach agreement on raising the $14.3 trillion borrowing ceiling before an Aug. 2 deadline.

The extra yield investors demand to hold Italian and Spanish 10-year bonds instead of bunds rose to the highest since the euro was introduced in 1999.

Credit-default swaps protecting Italian bonds rose 34 basis points to an all-time high of 283, while contracts on Spain jumped 26 basis points, CMA prices show. The yield on Italy’s two-year bond climbed 57 basis points to 4.07 percent, and Spanish yields increased 41 basis points to 4.18 percent. Greek yields jumped 73 basis points to 31.11 percent, and its default swaps climbed 124 basis points.

‘More Vulnerable’

“Both Italy and Spain are starting to look more vulnerable,” said Niels From, chief analyst at Nordea Bank AB in Copenhagen. “The fear is that this is going to continue as the market starts focusing on the larger euro-region nations.”

The yield on 10-year German bunds declined 13 basis points to 2.70 percent.

European leaders are prepared to accept that Greece should default on some of its bonds as part of a new bailout plan for the country that would put its debt levels on a sustainable footing, the Financial Times reported, citing unidentified senior officials. The European Central Bank is seeking advice from a private lender on what to do in the event of a default in the euro area, Handelsblatt said, without citing anyone.

The EU has “got to put an end to the uncertainty surrounding Greece and the contagion impact that that is having,” Andrew Bosomworth, a fund manager at Pacific Investment Management Co., which runs the world’s biggest bond fund, said in an interview with Owen Thomas and Francine Lacqua on Bloomberg Television’s “Countdown.”

The Stoxx Europe 600 Index fell 1.5 percent. Ageas, the insurer formerly known as Fortis, and EFG Eurobank Ergasias SA, Greece’s second-biggest bank, led losses among financial shares, sliding more than 6 percent. British Sky Broadcasting Group Plc sank 6.3 percent as the U.K. government asked regulators for additional advice on News Corp.’s takeover.

The MSCI Emerging Markets Index dropped 1.5 percent, set for the biggest decline in three weeks. The Hang Seng China Enterprises Index retreated 2 percent, while Russia’s Micex Index sank 1.2 percent and India’s Bombay Stock Exchange Sensitive Index slipped 0.7 percent. Turkey’s lira weakened 0.8 percent against the dollar after data showed the current-account deficit more than doubled in May from a year earlier.

–With assistance from Shiyin Chen in Singapore, Claudia Carpenter, Emma Charlton, Abigail Moses, Michael Patterson, Andrew Rummer and Dan Tilles in London. Editor: Michael P. Regan

To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net.

To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net

July 11, 2011, 10:05 AM EDT

By Stephen Kirkland and Nikolaj Gammeltoft

July 11 (Bloomberg) — Stocks, the euro and Italian and Spanish bonds fell, sending borrowing costs for those nations to euro-era records relative to German bunds, amid concern Europe’s debt crisis will spread. Gold and U.S. Treasuries rallied.

The MSCI All-Country World Index lost 1.5 percent at 9:35 a.m. in New York, its biggest drop on a closing basis in almost a month, and the Standard Poor’s 500 Index slid 1.1 percent to extend its worst two-day plunge in five weeks. The Markit iTraxx SovX Western Europe Index of default swaps jumped 33 basis points to an all-time high. The euro sank 1.4 percent to $1.4065, the weakest since May. Oil fell 1.2 percent, while gold futures increased 0.8 percent.

A meeting of European officials today was enlarged amid speculation Italy may be engulfed by the crisis and divisions on how to structure aid for Greece. Alcoa Inc. will start the second-quarter earnings season today after markets close in the U.S., while investors also awaited a press conference from President Barack Obama after the White House and congressional leaders made little progress in debt-reduction talks.

“It’s a combination of a worsening of the debt crisis in Europe and deficit and debt uncertainty in the U.S.,” said Eric Teal, chief investment officer at First Citizens Bancshares Inc. in Raleigh, North Carolina, which manages $4 billion. “The markets will remain under pressure until the debt crisis in Europe is perceived to be better contained.”

Two-Week Rally

The SP 500 retreated after capping a 5.9 percent gain since June 24, its biggest two-week rally since October 2009. Alcoa slipped 2 percent as the largest U.S. aluminum producer prepares to report earnings after the close of New York trading, unofficially beginning the U.S. earnings season. Profits at companies in the SP 500 will rise 13 percent in the second quarter, according to analyst estimates compiled by Bloomberg, the smallest gain in two years.

Financial and energy companies led losses among all 10 industry groups in the SP 500, with JPMorgan Chase Co. down 2 percent and Exxon Mobil Corp. 1.2 percent lower.

The 10-year U.S. Treasury yield dropped to less than 3 percent for the first time since June 28. The dollar rallied versus 14 of 16 major peers, climbing the most against the Swedish krona, Norwegian krone and euro.

Crude oil in New York fell 1.2 percent to $95.09 a barrel and copper dropped 0.8 percent in New York. The SP GSCI index of 24 commodities retreated 1.1 percent, led by a 4.4 percent decline in cotton and 2.7 percent loss in Kansas wheat. Gold for August delivery rallied 0.8 percent to $1,554.20 an ounce.

Debt Ceiling

President Obama plans to hold a press conference at 11 a.m. in Washington today, his fifth public remarks on debt in a week, as he presses lawmakers to reach agreement on raising the $14.3 trillion borrowing ceiling before an Aug. 2 deadline.

The extra yield investors demand to hold Italian and Spanish 10-year bonds instead of bunds rose to the highest since the euro was introduced in 1999.

Credit-default swaps protecting Italian bonds rose 34 basis points to an all-time high of 283, while contracts on Spain jumped 26 basis points, CMA prices show. The yield on Italy’s two-year bond climbed 57 basis points to 4.07 percent, and Spanish yields increased 41 basis points to 4.18 percent. Greek yields jumped 73 basis points to 31.11 percent, and its default swaps climbed 124 basis points.

‘More Vulnerable’

“Both Italy and Spain are starting to look more vulnerable,” said Niels From, chief analyst at Nordea Bank AB in Copenhagen. “The fear is that this is going to continue as the market starts focusing on the larger euro-region nations.”

The yield on 10-year German bunds declined 13 basis points to 2.70 percent.

European leaders are prepared to accept that Greece should default on some of its bonds as part of a new bailout plan for the country that would put its debt levels on a sustainable footing, the Financial Times reported, citing unidentified senior officials. The European Central Bank is seeking advice from a private lender on what to do in the event of a default in the euro area, Handelsblatt said, without citing anyone.

The EU has “got to put an end to the uncertainty surrounding Greece and the contagion impact that that is having,” Andrew Bosomworth, a fund manager at Pacific Investment Management Co., which runs the world’s biggest bond fund, said in an interview with Owen Thomas and Francine Lacqua on Bloomberg Television’s “Countdown.”

The Stoxx Europe 600 Index fell 1.5 percent. Ageas, the insurer formerly known as Fortis, and EFG Eurobank Ergasias SA, Greece’s second-biggest bank, led losses among financial shares, sliding more than 6 percent. British Sky Broadcasting Group Plc sank 6.3 percent as the U.K. government asked regulators for additional advice on News Corp.’s takeover.

The MSCI Emerging Markets Index dropped 1.5 percent, set for the biggest decline in three weeks. The Hang Seng China Enterprises Index retreated 2 percent, while Russia’s Micex Index sank 1.2 percent and India’s Bombay Stock Exchange Sensitive Index slipped 0.7 percent. Turkey’s lira weakened 0.8 percent against the dollar after data showed the current-account deficit more than doubled in May from a year earlier.

–With assistance from Shiyin Chen in Singapore, Claudia Carpenter, Emma Charlton, Abigail Moses, Michael Patterson, Andrew Rummer and Dan Tilles in London. Editor: Michael P. Regan

To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net.

To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net

Obama to Talk About Debt Negotiations With Lowered Expectations

“Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes. I believe the best approach may be to focus on producing a smaller measure, based on the cuts identified in the Biden-led negotiations, that still meets our call for spending reforms and cuts greater than the amount of any debt limit increase.”

– House Speaker John Boehner, R-Ohio, in a Saturday statement on debt ceiling negotiations.

After a weekend that saw hopes dashed for a mega-deal to cut $4 trillion from the federal budget while raising the nation’s debt ceiling, President Obama takes to the White House briefing room Monday ahead of yet another meeting with congressional leaders during which a smaller deficit deal is expected to be discussed.

Though the president proposed the larger deal and said he was ready to “make tough decisions,” House Speaker John Boehner claims Democrats were unwilling to do the larger deal without at least some tax increases and thus, there is no path to passage in the House. Congressional Republicans have long held that they won’t approve any plan to add to America’s credit line that includes adding revenues through tax increases while Democrats want a combination of spending cuts and higher taxes. Both Senate and House Democrats are staunchly opposed to tapping Medicare and Medicaid to find funds as well.

“This package must do no harm to the middle class or to economic growth,” House Minority Leader Nancy Pelosi, D-Calif., said in a statement after Sunday’s meeting. “It must also protect Medicare and Social Security beneficiaries, and we continue to have serious concerns about shifting billions in Medicaid costs to the states.”

Both sides are deeply divided on entitlements with Republicans saying there must be reforms to control deficit spending.

Moreover, Sen. Jim DeMint, R-S.C., said on Fox News Sunday he feels the president has been gaming Republicans by failing to send proposals of his own. “He has been talking about this for six months, and the only proposal he sent us is his budget to raise the debt $10 trillion,” DeMint said. “So it’s hard to take him seriously here.”

With talk having turned sour over the weekend, the president, Monday, will have to tamp down expectations many had for a big weekend deal. Talks are deadlocked with both sides holding firm to their ideological lines with only 21 days left until the Treasury Department says the U.S. hits its current debt limit.

With the $4 trillion mega plan now off Boehner’s agenda and a short, stop-gap debt limit increase off the president’s plate, the leaders get to work Monday on something in between. But, in a sense, they’ll come full circle, getting back to the heart of what has driven negotiations for weeks.

What negotiators are looking at is something akin to the $2 trillion plan Vice President had been travelling up and down Pennsylvania Avenue to negotiate with Congress. Those talks ultimately stalled, leading Obama to take the lead in negotiations and to talk more directly to Americans about them and to call for a the more ambitious $4 trillion plan.

Still, a Capitol Hill source tells Fox News that Monday’s 2 p.m. meeting at the White House will likely focus on numbers generated from the Biden talks.

But the president will get the first word when he holds the 11 a.m. news conference to update the progress of the crumbling talks. He’ll likely try to keep provide a positive spin while keeping expectations a bit lower than those many had on Friday.

Negotiators will now be forced to try to work out within days, a plan similar to the one that fell apart after being discussed for weeks.

Economy Hinges on Answers from Debt and Deficit Talks

“I think it’s going to take a long time still. This is a very tough economy. And I think for a lot of people, it’s going to feel very hard, harder than anything they’ve experienced in a lifetime now for some time to come. And that is because that is the tragic effects of a crisis this deep and this bad caused by a long period of lost opportunities to do things that made the country stronger.”

– Treasury Secretary Tim Geithner on NBC’s Meet The Press when asked when Americans would feel an economic recovery.

Treasury Secretary Tim Geithner doesn’t paint a rosy picture of the U.S. economy going forward, saying the effects of the economic downturn and meager recovery will be hard and long-felt by Americans. The Sunday comments come two days after a dreadful jobs report on Friday showed unemployment reached 9.2 percent.

And many agree debt ceiling indecision is dragging the economy down, placing yet another level of significance on the continuing but sputtering debt and deficit talks.

And with finger-pointing and blame-game playing surrounding Sunday night’s White House meeting, there will likely be more questions than answers as the U.S. inches ever closer to Treasury’s August 2 deadline for raising the debt limit.

With a combination of near-continuous poor economic indicators and the uncertainty coming out of Washington surrounding debt negotiations, Geithner’s prognosis takes on an especially bleak context. With Americans spending less in an effort to get their own fiscal houses in order, the mixed messages coming out of Washington as it tries to get its fiscal house in order aren’t inspiring confidence.

Geithner insists passing the August 2 deadline would be calamitous. But in the near-term, not creating certainty could continue many Americans down the long, hard path Geithner describes.

House Looking to Re-Light Incandescent Light Bulbs

“The unanticipated consequence of the ’07 act – Washington-mandated layoffs in the middle of a desperate recession – is one of many examples of what happens when politicians and activists think they know better than consumers and workers.”

– Rep. Joe Barton, R-Texas, on an incandescent light bulb ban that was part of a 2007 energy bill.

The House of Representatives will vote Monday on a bill introduced by Rep. Joe Barton, R-Texas, that reverses what he calls a de facto ban on incandescent light bulbs.

The Better Use of Light Bulbs Act, or BULB Act, will reverse the ban that has led some to hoard the older-style bulbs that were to be phased out in favor of newer, more energy efficient light bulbs.

Many argue the newer compact fluorescent light bulbs glow an unattractive green color and can expose people to dangerous chemicals if broken.

Under an energy bill signed by then-President George W. Bush, the federal government introduced new efficiency standards that all but prohibit the use of the light first perfected by Thomas Edison.

There is one hitch though. The measure is being considered under an expedited floor schedule that will require a two-thirds majority to pass.

The House will also vote on the energy and water spending bill for this year. The White House recently slammed the bill for making large cuts to renewable energy programs, but stopped short of a veto threat.

And Now, A Word From Charles

“It’s the overregulation, the Dodd/Frank financial regulation, EPA, and now the National Labor Relations Board. And of course the uncertainty over Obamacare and taxes. That’s why all the money is on the sideline. That’s why corporate profits are good and no one is hiring.”

– Charles Krauthammer on Special Report w/Bret Baier talking about private sector job creation.

________________________________________

Chris Stirewalt is taking some time away from Power Play this week but will return on Monday, July 18.

For the same period, Power Play, the Web show, will be helmed by a rotation of generous colleagues including Shannon Bream, Mike Emanuel, Carl Cameron, James Rosen and Juan Williams.

***Today on “Power Play w/ Chris Stirewalt”: Carl Cameron talks with Rep. Charlie Rangel, D-N.Y. and Sen. Jeff Sessions, R-Ala. Tune in at 11:30 am Eastern at http://live.foxnews.com/ ***

Obama to Talk About Debt Negotiations With Lowered Expectations

“Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes. I believe the best approach may be to focus on producing a smaller measure, based on the cuts identified in the Biden-led negotiations, that still meets our call for spending reforms and cuts greater than the amount of any debt limit increase.”

– House Speaker John Boehner, R-Ohio, in a Saturday statement on debt ceiling negotiations.

After a weekend that saw hopes dashed for a mega-deal to cut $4 trillion from the federal budget while raising the nation’s debt ceiling, President Obama takes to the White House briefing room Monday ahead of yet another meeting with congressional leaders during which a smaller deficit deal is expected to be discussed.

Though the president proposed the larger deal and said he was ready to “make tough decisions,” House Speaker John Boehner claims Democrats were unwilling to do the larger deal without at least some tax increases and thus, there is no path to passage in the House. Congressional Republicans have long held that they won’t approve any plan to add to America’s credit line that includes adding revenues through tax increases while Democrats want a combination of spending cuts and higher taxes. Both Senate and House Democrats are staunchly opposed to tapping Medicare and Medicaid to find funds as well.

“This package must do no harm to the middle class or to economic growth,” House Minority Leader Nancy Pelosi, D-Calif., said in a statement after Sunday’s meeting. “It must also protect Medicare and Social Security beneficiaries, and we continue to have serious concerns about shifting billions in Medicaid costs to the states.”

Both sides are deeply divided on entitlements with Republicans saying there must be reforms to control deficit spending.

Moreover, Sen. Jim DeMint, R-S.C., said on Fox News Sunday he feels the president has been gaming Republicans by failing to send proposals of his own. “He has been talking about this for six months, and the only proposal he sent us is his budget to raise the debt $10 trillion,” DeMint said. “So it’s hard to take him seriously here.”

With talk having turned sour over the weekend, the president, Monday, will have to tamp down expectations many had for a big weekend deal. Talks are deadlocked with both sides holding firm to their ideological lines with only 21 days left until the Treasury Department says the U.S. hits its current debt limit.

With the $4 trillion mega plan now off Boehner’s agenda and a short, stop-gap debt limit increase off the president’s plate, the leaders get to work Monday on something in between. But, in a sense, they’ll come full circle, getting back to the heart of what has driven negotiations for weeks.

What negotiators are looking at is something akin to the $2 trillion plan Vice President had been travelling up and down Pennsylvania Avenue to negotiate with Congress. Those talks ultimately stalled, leading Obama to take the lead in negotiations and to talk more directly to Americans about them and to call for a the more ambitious $4 trillion plan.

Still, a Capitol Hill source tells Fox News that Monday’s 2 p.m. meeting at the White House will likely focus on numbers generated from the Biden talks.

But the president will get the first word when he holds the 11 a.m. news conference to update the progress of the crumbling talks. He’ll likely try to keep provide a positive spin while keeping expectations a bit lower than those many had on Friday.

Negotiators will now be forced to try to work out within days, a plan similar to the one that fell apart after being discussed for weeks.

Economy Hinges on Answers from Debt and Deficit Talks

“I think it’s going to take a long time still. This is a very tough economy. And I think for a lot of people, it’s going to feel very hard, harder than anything they’ve experienced in a lifetime now for some time to come. And that is because that is the tragic effects of a crisis this deep and this bad caused by a long period of lost opportunities to do things that made the country stronger.”

– Treasury Secretary Tim Geithner on NBC’s Meet The Press when asked when Americans would feel an economic recovery.

Treasury Secretary Tim Geithner doesn’t paint a rosy picture of the U.S. economy going forward, saying the effects of the economic downturn and meager recovery will be hard and long-felt by Americans. The Sunday comments come two days after a dreadful jobs report on Friday showed unemployment reached 9.2 percent.

And many agree debt ceiling indecision is dragging the economy down, placing yet another level of significance on the continuing but sputtering debt and deficit talks.

And with finger-pointing and blame-game playing surrounding Sunday night’s White House meeting, there will likely be more questions than answers as the U.S. inches ever closer to Treasury’s August 2 deadline for raising the debt limit.

With a combination of near-continuous poor economic indicators and the uncertainty coming out of Washington surrounding debt negotiations, Geithner’s prognosis takes on an especially bleak context. With Americans spending less in an effort to get their own fiscal houses in order, the mixed messages coming out of Washington as it tries to get its fiscal house in order aren’t inspiring confidence.

Geithner insists passing the August 2 deadline would be calamitous. But in the near-term, not creating certainty could continue many Americans down the long, hard path Geithner describes.

House Looking to Re-Light Incandescent Light Bulbs

“The unanticipated consequence of the ’07 act – Washington-mandated layoffs in the middle of a desperate recession – is one of many examples of what happens when politicians and activists think they know better than consumers and workers.”

– Rep. Joe Barton, R-Texas, on an incandescent light bulb ban that was part of a 2007 energy bill.

The House of Representatives will vote Monday on a bill introduced by Rep. Joe Barton, R-Texas, that reverses what he calls a de facto ban on incandescent light bulbs.

The Better Use of Light Bulbs Act, or BULB Act, will reverse the ban that has led some to hoard the older-style bulbs that were to be phased out in favor of newer, more energy efficient light bulbs.

Many argue the newer compact fluorescent light bulbs glow an unattractive green color and can expose people to dangerous chemicals if broken.

Under an energy bill signed by then-President George W. Bush, the federal government introduced new efficiency standards that all but prohibit the use of the light first perfected by Thomas Edison.

There is one hitch though. The measure is being considered under an expedited floor schedule that will require a two-thirds majority to pass.

The House will also vote on the energy and water spending bill for this year. The White House recently slammed the bill for making large cuts to renewable energy programs, but stopped short of a veto threat.

And Now, A Word From Charles

“It’s the overregulation, the Dodd/Frank financial regulation, EPA, and now the National Labor Relations Board. And of course the uncertainty over Obamacare and taxes. That’s why all the money is on the sideline. That’s why corporate profits are good and no one is hiring.”

– Charles Krauthammer on Special Report w/Bret Baier talking about private sector job creation.

________________________________________

Chris Stirewalt is taking some time away from Power Play this week but will return on Monday, July 18.

For the same period, Power Play, the Web show, will be helmed by a rotation of generous colleagues including Shannon Bream, Mike Emanuel, Carl Cameron, James Rosen and Juan Williams.

***Today on “Power Play w/ Chris Stirewalt”: Carl Cameron talks with Rep. Charlie Rangel, D-N.Y. and Sen. Jeff Sessions, R-Ala. Tune in at 11:30 am Eastern at http://live.foxnews.com/ ***

Peabody and ArcelorMittal plan to bid A$4.7 billion ($5.1 billion) for Macarthur Coal Ltd . through a jointly owned company, Brisbane-based Macarthur said today. Source: Macarthur Coal Ltd. via Bloomberg

A joint offer by Peabody Energy
Corp. (BTU) and ArcelorMittal for an Australian coal exporter, Li Ka- shing’s bid for a U.K. water utility and a Malaysian oilfield
services merger have combined to set up July to become the
biggest month for deals in the industries for four years.

The $12.8 billion in transactions reported today take the
tally for July to $16.5 billion, compared with $28.9 billion in
coal, mining, water and oilfield services industries mergers and
acquisitions announced last month, according to data compiled by
Bloomberg. The figure for June was the highest since July 2007
when $57.4 billion in transactions was unveiled, the data show.

The deals show a “recognition that the large emerging
economies like China and India are driving demand for several
commodity items, therefore the profit margins are still quite
attractive,” said Alan Richardson, a Singapore-based fund
manager from Samsung Asset Management Co., which oversees about
$82 billion. “If growth continues over the next five years,
valuations could actually look quite cheap.”

Resources companies are reviving transactions after a two-
year commodities rally stalled, stemming a surge in prices for
projects. While Asian efforts to curb inflation stoked concerns
growth will slow, some forecasters are bullish
on raw materials. Goldman Sachs Group Inc., which correctly
predicted a slump in commodity prices in May, expects higher
prices in six months for 17 of the 21 materials it covers, a
June 14 report showed.

Cheung Kong, SupuraCrest

Peabody and ArcelorMittal (MT) plan to bid A$4.7 billion ($5.1
billion) for Macarthur Coal Ltd. (MCC) through a jointly owned
company, Brisbane-based Macarthur said today. Billionaire Li’s
Cheung Kong Infrastructure Holdings Ltd. (1038) proposed to buy
Northumbrian Water Group Plc (NWG) for 2.4 billion pounds ($3.8
billion). Malaysia’s SapuraCrest Petroleum Bhd. (SCRES) and Kencana
Petroleum Bhd. (KEPB) received an 11.9 billion ringgit ($3.9 billion)
merger offer.

ArcelorMittal, the world’s largest steelmaker, and Peabody,
the biggest U.S. coal producer, offered A$15.50 cash a share for
Macarthur, a 40 percent premium to today’s closing share price
in Sydney. The steelmaker, 41 percent-owned by Lakshmi Mittal,
who topped the latest Sunday Times list of the wealthiest people
in the U.K., said today it holds about 16 percent of Macarthur’s
stock.

Buying Macarthur would give ArcelorMittal and Peabody
ownership of mines producing steelmaking coal in Australia’s
Queensland state, the world’s biggest exporter of the fuel, as
prices trade near a record and suitors vie for targets.

‘Back as Targets’

The bid “puts the rest of the sector firmly back as
takeover targets,” Colin McLelland, resources analyst at
Investec Bank Australia Ltd. said by phone from Sydney.

Takeovers this month also include Jinchuan Group Co.’s
$1.36 billion offer for African copper producer Metorex Ltd. (MTX),
which topped a bid from Brazil’s Vale SA. (VALE3) Rio de Janeiro-based
Vale has decided not to increase its offer, Metorex said today.

“Companies are looking for producers of commodities that
have supply constraints such as coking coal and copper,” said
Ng Soo Nam, the Singapore-based chief investment officer at
Nikko Asset Management Co., which oversaw about $154 billion as
of March 31. “Demand for resources should continue to hold up
especially in places like China and India where economic
development is raw material intensive.”

China, Australia

Cheung Kong Infrastructure, or CKI, made a revised offer of
465 pence a share for Northumbrian, the Durham, England-based
company said today. The proposal is 9.1 percent higher than the
utility’s closing price on July 8. CKI has invested in
electricity, gas, water and road assets in New Zealand,
Australia, China, the U.K. and Canada and has been looking for
further acquisitions.

Integral Key Sdn., a special purpose vehicle, bid 4.60
ringgit per share in stock and cash for SapuraCrest and the
equivalent of 3 ringgit per share for Kencana, the companies
said in separate Kuala Lumpur exchange filings today. The deal
would create Malaysia’s second-largest listed oilfield services
company.

There has been $104 billion worth of deals in coal, mining,
water and oilfield services this year, down 9 percent on the
$114 billion of transactions announced in those industries for
the same period last year, Bloomberg data show.

Commodities prices slumped 11 percent in May and June, the
worst losing streak since the end of 2008 on concern of a
slowdown in economic growth. The last time the benchmark
Standard Poor’s GSCI index fell for two consecutive months,
the gauge surged 36 percent in the next six months.

To contact the reporters on this story:
Jesse Riseborough in London at
jriseborough@bloomberg.net;
Brett Foley in London at
bfoley8@bloomberg.net

To contact the editor responsible for this story:
John Viljoen at
jviljoen@bloomberg.net

July 11 (Bloomberg) — Stefan Borgas, chief executive officer of Lonza Group AG, discusses the company’s agreement to buy Arch Chemicals Inc. for $1.2 billion in cash.
He speaks from Zurich with Owen Thomas and Francine Lacqua on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

Lonza Group AG (LONN), the world’s biggest
maker of drug ingredients, agreed to buy Arch Chemicals Inc. (ARJ) for
$1.2 billion in cash to create the global leader in the business
of killing bacteria and fungi.

Lonza will pay $47.20 a share, 12 percent higher than the
closing price on July 8, the Basel, Switzerland-based company
said in an e-mailed statement today. Shares of Norwalk,
Connecticut-based Arch surged 11 percent on July 8, the most in
14 months.

Arch’s products are used to kill microbes in swimming
pools, protect wood from fungus, deter the growth of mold and
mildew in paint and treat dandruff. The deal will make Lonza the
leader in a market valued at $10 billion that’s growing as much
as 6 percent a year, and lessen the Swiss company’s dependence
on making pharmaceutical ingredients for drugmakers, Lonza said.

The acquisition has “a strong strategic rationale”
because it allows the two companies to combine complementary
businesses and increases Lonza’s sales in emerging markets,
Peter Welford, an analyst with Jefferies International Ltd. in
London, wrote in a note today.

Lonza fell 10 centimes, or 0.2 percent, to 66.70 Swiss
francs at 1:50S p.m. in Zurich. Before today, the stock had
fallen 8.2 percent this year, giving the company a market value
of 3.5 billion francs ($4.2 billion).

Earnings Boost

The purchase values Arch at as much as 17.2 times forecast
earnings per share for 2011, according to Bloomberg
calculations. Acquirers of specialty chemical companies paid a
median of 19.1 times earnings in the past two years, data
compiled by Bloomberg show. Including debt, the acquisition
values Arch at $1.4 billion.

The acquisition will create a unit with $1.4 billion in
sales, boosting earnings by at least 40 centimes a share in the
first year after it’s completed, Lonza said. The company expects
cost savings of at least $50 million annually by the second year
after the purchase, with $40 million of increased sales. The
purchase will result in one-time expenses of about $85 million
over the next two years, it said.

“This thing makes a hell of a lot of financial sense for
all of the people involved,” Lonza Chief Executive Officer
Stefan Borgas said at a briefing with analysts in Zurich. “We
can create the clear leader in microbial control in the world by
putting our two businesses together.”

The purchase will boost Lonza’s sales in China, India,
Brazil and South Africa to $249 million from $35 million now,
the company said. The two companies plan to sell Arch’s
performance products unit, a division that makes chemicals for
coatings, adhesives, antifreeze and cleaning products, Borgas
said on the briefing.

Deal Financing

Lonza plans to begin a tender offer for Arch by July 15,
and complete it this year, the companies said. Lonza said it
will use bridge loans from banks to pay for Arch, and then
refinance those loans using bonds and new loans. The deal was
recommended by the boards of both companies, Lonza said.

JPMorgan Chase Co. and the law firm Jenner Block LLP
advised Lonza. Morgan Stanley and Cravath Swaine Moore LLP
worked for Arch.

Arch rose $4.60, or 11 percent, to $46.77 in trading today
before the New York Stock Exchange opened. The stock’s July 8
surge occurred in trading of more than 1.1 million shares,
compared with average daily trading of 197,000 shares in the
past three months.

“It’s not up to us really to make any speculations about
it,” Borgas said of the stock price move on a telephone
briefing with reporters. “The fact is there was absolutely no
rumor about Arch anywhere, there was absolutely no rumor about
Lonza anywhere. We really at the end don’t know what happened.”

To contact the reporters on this story:
Simeon Bennett in Singapore at
sbennett9@bloomberg.net

To contact the editor responsible for this story:
Phil Serafino at pserafino@bloomberg.net

(Updates with more details on IPO and background throughout).

–22.25 million shares to be sold at $16 to $18

–no date set yet for initial trading

–proceeds to repay debt, for working capital

Doughnut chain Dunkin’ Brands Group Inc. came one step closer to throwing open its doors to a public offering Monday, setting the price terms for its deal.

The company wants to sell 22.25 million shares at a price between $16 and $18, for a …

Bloomberg
July 11, 2011 04:00 AM
Copyright Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Monday, July 11, 2011

NICOSIA |
Mon Jul 11, 2011 8:35am EDT

NICOSIA (Reuters) – Cyprus’s defense minister and army chief resigned after munitions dump blast that killed 12 people on Monday, government spokesman Stefanos Stefanou said.

The explosion happened at a military base where confiscated Iranian munitions were being held. It shut down the island’s largest power station, causing widespread power cuts.

“The explosion occurred in material held since 2009 by the Republic from an Iranian vessel which was sailing to Syria…there are 12 dead and 62 injured,” Stefanou said.

He said that defense minister Costas Papacostas and army chief Petros Tsalikidis had submitted their resignations, which were accepted by President Demetris Christofias.

There was no immediate word on the identity of those killed in the blast. Stefanou said the victims were all Cypriots.

The Iranian armaments were in the cargo of the Monchegorksk, a ship Cyprus intercepted in 2009 sailing from Iran to Syria in violation of U.N. sanctions on Iran.

Military sources said they believed all 98 containers of the Iranian arms, kept exposed in scorching temperatures, exploded.

Stefanou declined to give details on the storage conditions of the material, but said there had been a meeting on the issue last week.

(Writing by Michele Kambas; Editing by Louise Ireland)

By Melinda Peer, TheStreet

Updated at 9:52 a.m.

Stocks were headed sharply lower as disappointment regarding last week’s dismal June jobs report lingered, compounding concerns about the global economic recovery.

The Dow Jones Industrial Average ($INDU) was down by 104.3 points, or 0.8%, at 12,552. The SP 500 ($INX) was lower by 13.6 points, or 1%, at 1,330, and the Nasdaq ($COMPX) was off by 20.2 points, or 0.7%, at 2839.

Stocks fell Friday after a disappointing June jobs report left investors feeling less confident in the economic recovery.

The FTSE in London was shedding 0.5%, and the DAX in Frankfurt was declining by 1%. Hong Kong’s Hang Seng sank 1.7%, and Japan’s Nikkei lost 0.7%.

• Find a new broker and trade online

Data released Saturday showed inflation in China rose to a three-year high in June despite repeated attempts by the country’s central bank to curb it.

The eurozone’s bailout fund may have to be doubled to 1.5 trillion-euro, or $2.1 trillion, to support Italy, according to a Bloomberg report, which cited an article in the German newspaper Die Welt.

Chinese chemicals company Sinochem is in advanced discussions with Monsanto (MON) to ”deepen their ties significantly,” according to The Wall Street Journal.

Shares of Arch Chemicals (ARJ) were surging 11.2% to $46.90 on news that Swiss company Lonza agreed to buy it for $1.2 billion in cash, creating the world’s largest microbial control business.

Australian mining company Macarthur Coal said it received a takeover proposal from Peabody Energy (BTU) and ArcelorMittal (MT) valued at roughly $5 billion. Macarthur is the world’s largest producer of pulverized coal product that is used to make steel.

Earnings season unofficially kicks off after the close of trading with second-quarter results from Alcoa (AA). The market expects the aluminum producer to post a profit of 35 cents a share.

The August crude oil contract was shedding $1.59 to trade at $94.61 a barrel. Gold for August delivery was up by $12.50 at $1,554.10 an ounce.

The benchmark 10-year Treasury rose 15/32, diluting the yield to 2.975%. The dollar strengthened against a basket of currencies, with the dollar index up by 0.7%.

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By Chris Reidy, Globe Staff

Devotees of the slush drink might want to check this out: In honor of the chain’s 84th birthday, participating 7-Eleven stores are serving up free Slurpee frozen carbonated beverages today while supplies last.

Today, of course, is July 11 — a.k.a. 7-Eleven day. And the convenience store chain said it expects to hand out roughly 5 million free Slurpees today.

According to 7-Eleven lore, the convenience store pioneer got its start in 1927 when a Southland Ice Company employee started selling bread, milk, and eggs on an ice dock in a suburb of Dallas, Texas.

U.S. President Barack Obama. Photographer: Andrew Harrer/Bloomberg

July 11 (Bloomberg) — Brian Gardner, senior vice president for Washington research at Keefe Bruyette Woods Inc., discusses prospects for political compromise on reducing the U.S. federal deficit and raising the debt ceiling.
Gardner speaks with Deirdre Bolton and Erik Schatzker on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

July 11 (Bloomberg) — Mortimer Zuckerman, chief executive officer of Boston Properties Inc., discusses President Barack Obama’s role in federal deficit plan negotiations and the outlook for the U.S. economy.
Zuckerman, speaking with Betty Liu on Bloomberg Television’s “In the Loop,” also talks about News Corp.’s Rupert Murdoch discontinuing his News of the World newspaper following a phone-hacking scandal. (Source: Bloomberg)

U.S. President Barack Obama, center, sits with House Speaker John Boehner, second from left, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid, third from right, Senate Minority Leader Mitch McConnell, second from right, and Senator Richard Durbin, right, at the start of a meeting in the Cabinet Room of the White House in Washington, D.C. Photograph: Joshua Roberts/Bloomberg

President Barack Obama is
challenging Republican lawmakers to present a plan for a
smaller-scale deficit reduction program as he attempts to steer
them toward his $4 trillion goal, a Democratic aide said.

Obama plans to hold a press conference at 11 a.m. in
Washington today, his fifth public remarks on the debt in a
week, as he presses lawmakers to reach an agreement to raise the
$14.3 trillion U.S. borrowing ceiling before an Aug. 2 deadline.
The president and bipartisan congressional negotiators agreed to
meet every day until they reach a deal, said one legislative
aide on condition of anonymity.

They are divided over taxes and entitlements. Republicans
reject Democrats’ call for more tax revenue and instead are
pressing to cut entitlement programs such as Medicare and Social
Security. Democrats insist even the Republicans’ proposal for a
smaller deficit-cutting plan must include more taxes from
higher-income Americans. Obama has said he is willing to cut
entitlements in exchange for a Republican agreement to increase
taxes.

Democrats want to “enact an agreement that ensures America
pays its bills and reduces the deficit in a balanced way without
putting all of the burden on seniors and the middle class,”
Representative Steny Hoyer of Maryland, the second-ranking House
Democrat, said in a statement after a 75-minute negotiating
session yesterday at the White House.

Don Stewart, spokesman for Senate Minority Leader Mitch McConnell of Kentucky, underscored Republicans’ opposition to
any tax increases.

‘It’s Baffling’

“It’s baffling that the president and his party continue
to insist on massive tax hikes in the middle of a jobs crisis
while refusing to take significant action on spending reductions
at a time of record deficits,” Stewart said after the meeting.

Talks are scheduled to resume today at 2 p.m., Brendan
Buck, a spokesman for House Speaker John Boehner, said in an e-
mail.

U.S. stock futures declined, indicating that the benchmark
Standard Poor’s 500 Index will fall for a second day. Futures
on the SP 500 expiring in September fell 1.3 percent to 1,323.7
at 8:35 a.m. in New York. Futures on the Dow Jones Industrial
Average declined 122 points, or 1 percent, to 12,493.

Obama and congressional leaders are seeking a deal to pave
the way for a vote in Congress to increase the debt limit, a
move the Treasury Department says is needed by Aug. 2 to avert a
default on the nation’s financial obligations.

‘Catastrophic Consequences’

Treasury Secretary Tim Geithner said on “Face the Nation”
yesterday that the administration wants the most comprehensive
deficit-cutting deal possible. He reiterated that failing to
raise the debt limit could have “catastrophic” consequences
for the economy.

On July 9, Boehner, an Ohio Republican, said following a
phone conversation with Obama that, amid the stalemate over
taxes, all sides must settle for a smaller plan than the
president seeks. Before yesterday’s White House meeting, Obama
said “we need to” reach an agreement within the next 10 days.

During the meeting, Obama said he believed a bigger deal
might be politically easier, with both sides making
philosophically difficult concessions, said a Democrat familiar
with the discussions. The president asked Republicans to return
today with details of their proposal, including numbers, the
person said.

‘Huge Hit’

Christine Lagarde, managing director of the International
Monetary Fund, said on ABC’s “This Week” yesterday that the
unresolved situation with the debt ceiling could mean higher
interest rates, a higher burden on U.S. taxpayers and “stock
markets taking a huge hit and real nasty consequences not just
for the United States but for the entire global economy.”

Boehner and the president had both been aiming for a larger
compromise that would extend the debt ceiling through the next
election in 2012. House and Senate Republicans are insisting
that spending cuts exceed any increase in the debt ceiling.

Republicans including Majority Leader Eric Cantor of
Virginia, a participant in previous bipartisan debt talks led by
Vice President Joe Biden, say that group had identified between
$2 trillion and $2.5 trillion in spending cuts that could serve
as a framework for an agreement between Obama and congressional
leaders.

Democrats, including Maryland Representative Chris Van Hollen, who participated in the Biden effort, say Democrats
never agreed to that amount without new revenue in the mix.

“What we talked about was $1.1 trillion in cuts and
savings,” Van Hollen said today on “The Early Show” on CBS.
“We did not get close to $2 trillion in cuts. And again, the
gap there was closing these corporate tax loopholes.”

Doesn’t Get Easier

The conflicting accounts underscore the difficulty of
reaching a speedy resolution, said Robert Bixby, executive
director of the Arlington, Virginia-based Concord Coalition.

“It’s not a simple matter of going back to what everybody
agreed to in the Biden talks because everybody didn’t agree to
it,” said Bixby. “It doesn’t get any easier just to get a
short-term deal.”

McConnell said yesterday on “Fox News Sunday” that he
also favors “the biggest deal possible. We’re just not going to
raise taxes in the middle of this horrible situation.”

The Labor Department reported July 8 that the unemployment
rate in June unexpectedly climbed to 9.2 percent, the highest
this year. Employers added 18,000 jobs, the weakest growth since
September 2010. Payroll growth for May also was revised
downward, to 25,000.

Senate Majority Leader Harry Reid, a Nevada Democrat,
expressed frustration yesterday that Republicans had repeatedly
walked away from the table, according to one congressional aide.
Cantor left the Biden negotiations in a similar stalemate on
taxes.

To contact the reporters on this story:
Heidi Przybyla in Washington at
hprzybyla@bloomberg.net;
Margaret Talev in Washington at
mtalev@bloomberg.net

To contact the editor responsible for this story:
Mark Silva at msilva34@bloomberg.net

NEW YORK (CNNMoney) — World markets slumped Monday, as fears about debt crises plagued both Europe and the United States.

Italy in particular, was shoved into the spotlight, as public sparring last week between Italy’s prime minister, Silvio Berlusconi, and finance minister Giulio Tremonti heightened fears that the debt crisis in Greece and Portugal was spreading to the continent’s third-largest economy.

“Beware.” Tremonti was quoted as saying by Italian newspapers, in response to rumors that he might resign. “If I fall, then Italy falls. If Italy falls, then so falls the euro. It is a chain”

Global investors are concerned that Tremonti — credited with saving Italy from the worst of the euro zone’s debt crisis — will be forced out of the government, after his push for steep spending cuts was met with resistance from the prime minister and other cabinet members.

That raises fears that Italy’s government is not as committed to enacting necessary austerity measures, as Greece or other debt-stricken euro zone countries.

“What we need to see in Italy is some concrete and clear demonstration that they’re not going to be backsliding on austerity — and that Tremonti will not lose his job,” said Peter Westaway, chief European economist with Nomura.

Check world markets

In what Italian media dubbed “Black Friday,” Italian stocks and bond yields plummeted at the end of last week, and trading was suspended for some Italian bank stocks following sharp sell-offs.

“What we’re seeing over the last few days in Italy, is investors are already starting to speculate against Italy,” Westaway said. “I don’t think policymakers can sit on their hands any longer and just hope contagion doesn’t happen.”

The selling continued Monday amid fears that those banks won’t be able to pass eurozone stress tests — the results of which will be published Friday. Of the 91 European banks that will undergo the stress tests, about 15 are expected to fail.

Shares of Banco Bilbao Vizcaya Argentaria (BBVA) fell more than 5%, while shares of Bank of Ireland (IRE), Barclays (BCS) and Deutsche Bank (DB) all slumped about 4%.

Jitters about the debt crisis spilled over to Europe’s major stock indexes, sending Britain’s FTSE 100 (UKX) down 0.3%, Germany’s DAX (DAX) falling 1% and France’s CAC 40 (CAC40) tumbling 1.5%.

The European Council called an emergency meeting Monday to discuss the continent’s debt crisis, ahead of an already scheduled meeting of the eurozone’s 17 finance ministers.

Moody’s Investors Service downgraded Portugal’s debt last week, and two weeks ago, Greece agreed to implement painful austerity measures in exchange for another round of bailout funding.

Why a problematic Portugal matters

U.S. markets: American investors got little comfort from lawmakers, who failed to strike a deal on raising the government’s debt ceiling.

Ratings agencies have warned, If the ceiling isn’t raised by Aug. 2, the country’s pristine credit rating could fall, potentially sending shock waves rippling through the world economy.

Dow Jones industrial average (INDU), SP 500 (SPX) and Nasdaq (COMP) futures were all lower ahead of the opening bell, with shares of JPMorgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500) and Goldman Sachs (GS, Fortune 500) all down about 1% premarket.

President Obama is scheduled to discuss the debt ceiling at 11 a.m. ET.

Asian markets: Stocks ended the day mostly lower in Asia, as investors mulled over reports on China’s inflation rate and trade balance.

The Hang Seng (HSI) in Hong Kong tumbled 1.7% and Japan’s Nikkei 225 (NKY) fell 0.7%. But the Shanghai Composite (SHCOMP) in China inched up 0.2%. 

SHANGHAI –
U.S. and Chinese finance officials are meeting in Beijing this week hoping to make progress on long-standing differences over how to oversee the auditing of Chinese companies whose shares are listed in U.S. markets.

The meeting comes as questions over possible accounting problems at such companies overshadow fundraising efforts both in the U.S. and in China.

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American stock and auditing regulators will meet Monday with officials from China’s Securities Regulatory Commission and its Finance Ministry.

The chairman of the Public Company Accounting Oversight Board, James R. Doty, said he believed Chinese authorities shared the common goal of seeking to protect investors and ensure quality of audits.

“This meeting is the commencement of our accelerated efforts with the People’s Republic of China to forge a cooperative resolution to cross-border auditing oversight,” he said, speaking last week before leaving for China.

Beijing has balked at allowing inspections required by U.S. law of audit companies operating inside China, contending they would violate its sovereignty. But progress through high-level economic talks has raised the likelihood of an agreement, says Paul Gillis, a professor of accounting at Peking University’s Guanghua School of Management.

“They may let them in jointly, with a team from the Ministry of Finance,” he said.

Gillis noted that European officials had expressed concerns similar to the Chinese before agreements were worked out on oversight of auditors there.

Scrutiny of auditing has taken on greater urgency as U.S. stock regulators and exchanges have suspended trading in more than a dozen Chinese companies whose shares were listed publicly through so-called reverse mergers, which involve the purchase of an existing public shell company.

Though many of such companies use U.S.-based auditors, the U.S. side has cited as a chief concern a lack of current, accurate information about the companies and their finances.

“Given the potential risks, investors should be especially careful when considering investing in the stock of reverse merger companies,” Lori J. Schock, director of the SEC’s Office of Investor Education and Advocacy, said last month in a statement.

According to the accounting oversight board, as of March 31, 159 Chinese companies had listed shares in the U.S. using reverse mergers since Jan. 1, 2007. Meanwhile, 56 companies had issued shares using more rigorously regulated initial public offerings.

Questions over some Chinese companies whose shares are traded on U.S. markets gained attention as short-sellers began targeting such companies, driving their share prices sharply lower.

In some cases, the companies have fought back, complaining that the accusations of accounting fraud or other problems were unfounded. But in others regulators have seen fit to suspend or delist the companies or at least investigate.

“There is a growing amount of concern over Chinese companies listed in the U.S. through regulatory holes,” Gillis said. “It’s all coming together in a big storm now.”

Under the Sarbanes-Oxley Act of 2002, all public companies whose shares trade in the U.S. must use auditors registered with the board, regardless of where the companies and their auditors are located.

According to the auditing oversight board, 110 of the more than 900 non-U.S. auditing firms registered are based in Hong Kong or China.

At times in recent years, mainland Chinese companies’ shares have drawn intense interest among investors keen to tap into the country’s stunning growth but barred by Chinese regulators from trading directly in the mainland Chinese markets, which are mainly limited to domestic buyers.

China’s own share markets, barely 20 years old, are still dogged by complaints over insider trading, market manipulation and other abuses. China’s regulators have sought to beef up oversight, but the country lacks anything akin to the accountability standards of Sarbanes-Oxley, which was set up after scandals like those at Enron that causes billions of dollars in investor losses.

The pace of fundraising in China, meanwhile, has slowed to a trickle as both companies and regulators seek to avoid overwhelming investors with a deluge of share offerings. The controversy over Chinese companies has likewise cast a pall over Hong Kong trading.

The benchmark Shanghai Composite Index ended last week at 2,797.70, less than half the peak it attained in 2006, and down 7.7 percent in the past three months.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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China, the world’s biggest buyer of
iron ore, cut purchases by 4 percent in June from the previous
month as India’s wet season curbed shipments and as Chinese
mills sought supplies from domestic mines.

Imports were 51.09 million metric tons last month compared
with 53.3 million tons in May, according to China’s General
Administration of Customs. That’s 8 percent higher than 47.2
million tons a year earlier, according to data compiled by
Bloomberg.

India, the third-biggest iron-ore exporter after Australia
and Brazil, usually experiences heavy rain from June to
September that disrupts infrastructure and deliveries to ports.
China’s domestic iron ore output rose to a record in May as
smaller steelmakers sought supplies from local mines to cut
costs, said Xu Guangjian, a Beijing-based analyst with
researcher Custeel.com.

“India’s monsoon season is affecting China’s iron ore
purchases starting from June,” Xu said, “Steelmakers are also
trying to keep raw-material inventories at low levels to avoid
price volatility.”

China’s domestic iron-ore production climbed by 13 percent
to a record 102.5 million tons in May from a year ago, according
to Bloomberg data which uses figures provided by the National
Bureau of Statistics. Crude-steel output from the nation, the
world’s biggest producer, also rose to a record 60.25 million
tons in May, according to bureau.

The cash price of 62 percent-iron ore arriving at China’s
Tianjin port has fallen 11 percent to $171.2 a ton as of July 8
from a record $191.9 in February, according to the Steel Index.

Imports gained 8.1 percent to 334 million metric tons in
the first six months from a year earlier, the General Customs
office said today.

Steel-product exports dropped 10 percent to 4.3 million
tons last month from 4.76 million tons in May, according to the
data. The shipments were up 3 percent from a year earlier to
24.3 million tons in the first six months, customs said.

To contact the editor responsible for this story:
Andrew Hobbs at
ahobbs4@bloomberg.net

HOUSTON (Dow Jones)–Parts of Exxon Mobil Corp.’s (XOM) plan to clean up after its pipeline oil spill in Montana have not met federal muster, the U.S. Environmental Protection Agency said Sunday.

Exxon delivered a draft cleanup plan to the EPA in response …

SYDNEY, July 11 |
Sun Jul 10, 2011 8:56pm EDT

SYDNEY, July 11 (Reuters) – Australia’s top airline Qantas
said on Monday the carbon tax announced by the
government on Sunday will have a likely cost impact of A$110
million to A$115 million ($118 million to $123 million) and it
will pass on the full impact to customers.

It expects price on a single domestic flight sector to rise
by about A$3.50 in fiscal 2013.

Australia unveiled its most sweeping economic reform in
decades on Sunday with a plan to tax carbon emissions from the
nation’s worst polluters, reviving hopes of stronger global
climate action with the largest emissions trade scheme outside
Europe.

Prime Minister Julia Gillard said 500 companies including
steel and aluminium manufacturers would pay a A$23 ($24.70) per
tonne carbon tax from next year, rising by 2.5 percent a year,
moving to a market-based trading scheme in 2015.
($1 = 0.930 Australian Dollars)

(Reporting by Narayanan Somasundaram; Editing by Balazs
Koranyi)

But when the bank reports its second-quarter results this week, that hot streak will have come to an end. Analysts expect JPMorgan to count an almost 20 percent drop in its sales and trading revenues, reflecting a slowdown in investor activity and the dismal performance of its fixed-income and commodities groups.

Bank of America, Citigroup, Goldman Sachs and Morgan Stanley are expected to report similar news. After helping prop up Wall Street during the financial crisis, core trading revenue is projected to drop, on average, by as much as 25 percent from the first quarter, according to Credit Suisse research.

That will put further pressure on the banks’ growth prospects, which are already strained by stagnant loan growth and more stringent regulation. It is also prompting nearly every major Wall Street firm to contemplate another round of layoffs amid growing concerns that at least part of the weak results are permanent.

“We are undoubtedly being impacted by lower levels of activity,” said William Tanona, a financial services analyst with UBS. “There is a lot of uncertainty out there.”

Together, the five Wall Street banks are still going to take in more than $20 billion from their core trading operations, largely from business done on behalf of clients. For example, the banks routinely help airlines hedge oil prices or bring together buyers and sellers of stock, bonds and other complex securities — often putting their own money on the line to facilitate a trade. But during the second quarter, the business was particularly hard hit.

Trading volumes fell sharply as investors became unnerved by the running debt crisis in Europe, the political standoff over the debt ceiling in the United States, and lingering concerns over the anemic growth of the broader economy. Even when investors did place their bets, they were far more hesitant to take big risks — something known on Wall Street as lacking conviction. That meant the banks missed out on the lucrative fees they can generate by selling more high-octane products, like complex options and derivatives.

Fixed-income traders, among the biggest moneymakers for Wall Street, faced a bruising market. In the commodities business, for example, oil, gold and other metals prices had been rising quickly during the early part of the year as investors anticipated high demand for materials to keep the global economy humming. But as cracks in the recovery kept surfacing, prices headed south — and traders raced to the sidelines. That left most Wall Street desks, which had stocked up on inventory to facilitate trades, holding losing positions.

At JPMorgan, for instance, energy traders were having a gangbuster year, earning several hundred million dollars for its burgeoning commodities unit. Yet when the market turned in early May, they gave back some of those gains, according to market participants. Morgan Stanley, meanwhile, suffered tens of millions in losses on its interest rate desk when a bet on lower inflation turned against the bank’s position.

Mortgage trading did not fare much better. After rallying from highly depressed values for much the last two years, mortgage-backed securities prices fell sharply during the second quarter. The reason? The government started dumping into the market its vast portfolio of mortgage bonds acquired from its rescue of the American International Group, and investors believed the outsize supply would cause values to plummet. (Only recently, when the Treasury announced it was halting its auctions, did mortgage bond prices start to stabilize.)

Although the banks have slowed the spill of red ink from troubled mortgages and other bad loans, they are struggling to increase revenue in their more traditional banking businesses, too.

New financial regulations have chipped away at once-lucrative sources of income, like overdraft charges and credit card penalty fees. Starting this fall, banks are expecting to absorb a multibillion-dollar hit when they are forced to sharply lower the fees they charge each time consumers swipe their debit cards. Higher capital requirements, meanwhile, could further depress profits if some banks are forced to lighten their balance sheets or exit certain businesses altogether.

ROME (Dow Jones)–Italy’s market regulator, Consob, late Sunday approved new transparency measures aimed at fighting market speculation, after a selling wave hit Italian banks Friday.

The new measures, which oblige market operators to disclose short-selling moves above certain levels, will be effective starting Monday and remain in force until Sept. …

The slurp’s on them. But the goof may be on you.

• 

  AFP/Getty Images

AFP/Getty Images

Today 7-Eleven, the nation’s largest convenience store chain, expects to give away 5 million 7.11-ounce Slurpees on the chain’s unofficial birthday: 7/11. That’s roughly 1,000 freebie Slurpees per store.

No coupons. No catches. No questions asked.

Those 7-Eleven folks sure must be dumb — as foxes. When they handed out 4.5 million Slurpee’s last July 11, a funny thing happened: Slurpee sales for the day rocketed 38%, says Nancy Smith, vice president of marketing.

• STORY: Goofy drinks go into overdrive for summer at fast-food spots

• PHOTOS: See new goofy drinks coming this summer

• STORY: Sonic, Burger King, other fast-food chains selling alcohol

That’s right: Folks bought more Slurpees, even though they could grab as many free tiny ones as they wanted. “You get a taste of it,” says Slurpee senior brand director Laura Gordon, “and you choose to have more.”

Perhaps. But many folks seem to be so enamored of the word “free” that they’ll spend whatever it takes to cash in. In many cases, customers will spend more on gasoline just to get to 7-Eleven and wait in line for a free Slurpee than the estimated $1 retail value of the corn-syrup-laden drink that has virtually no nutritional value.

“Slurpee drinkers are some of the most loyal fans we have,” Smith says. “They come here to have fun.” And while they’re in the store, Smith says, many buy other stuff, too.

What is it that drives consumers to chase after — even spend more to get — freebies? Denny’s has seen record crowds when it’s given away breakfasts. Ditto for free chicken wings at KFC and free doughnuts at Dunkin’ Donuts. “Free is magic,” says Barry Schwartz, professor of psychology at Swarthmore College. “If you offer something for free, people will gladly spend money to get it.”

It gets sillier: People who go to Slurpee.com can download tiny hats and confetti to celebrate, photograph themselves, then post the picture on the Slurpee Facebook page for prizes.

Schwartz isn’t buying — so to speak. “Economists are wrong about almost everything,” he says. “But they’re right about one thing: There is no free lunch — or in this case, free Slurpee.”

Posted

Finance ministers in the euro zone had previously scheduled two days of talks to begin on Monday afternoon in Brussels, with an emphasis on how to resolve Greece’s troubles. Over the weekend, a meeting of more senior officials was set for Monday morning.

A spokesman for Herman Van Rompuy, president of the European Council, denied that senior officials would discuss the state of Italy’s finances, which many investors consider increasingly precarious. But another official, who requested anonymity because he was not authorized to speak publicly, said Italy would probably be on the agenda.

For Italy, the cost of financing its debt rose at the end of the week, though nowhere near the levels faced by Greece. The spread between the yield on the Italian 10-year bond and the German equivalent widened on Friday to 2.36 percentage points, the most since the introduction of the euro.

Italy’s cost of borrowing for 10 years is now about 5.27 percent. Meanwhile, its blue-chip stock market index, the FTSE MIB, fell 3.5 percent.

Investors were unnerved in part by evidence of a growing divide between the Italian prime minister, Silvio Berlusconi, and the finance minister, Giulio Tremonti, who has been praised for his handling of the economy during the financial crisis and for maintaining control of the budget deficit.

The euro zone has been shaken by the fiscal troubles of Greece, Portugal and Ireland, though their economies are relatively small. The Italian economy is more than twice the size of the combined economies of those three countries. If investors were to drive Italy’s borrowing costs to unsustainable levels, it could imperil the entire European monetary union.

Even without Italy, European officials have a big task in the coming days. They have reached an impasse of sorts on whether to include the private sector in a second Greek bailout, which is considered essential to controlling the crisis that has so far been limited to the smaller economies on the Continent.

Some officials now believe that any bailout plan involving a substantial but voluntary contribution from private investors in Greek debt would be declared a selective default by the bond rating agencies Moody’s, Standard Poor’s and Fitch. The officials’ objectives of achieving a private sector contribution that is voluntary and substantial — but which is not judged a selective default — may not be possible.

If voluntary steps would cause such an event, these officials say, then more radical options may as well be considered, including requiring banks and other private investors to take part.

Speaking on Sunday at a conference in Aix-en-Provence, France, the president of the European Central Bank, Jean-Claude Trichet, said Europe was at the “epicenter” of a debt crisis that had to be of concern to the entire developed world. He urged euro zone officials to do the “maximum” in terms of governance reforms, Bloomberg News reported. He has also been adamant about keeping debt reduction by private investors out of any bailout plan.

The special session of top European officials is to start about 8:30 a.m. Monday, when a scheduled meeting between Mr. Van Rompuy and the president of the European Commission, José Manuel Barroso, will be expanded to include Mr. Trichet; the European commissioner for economic and monetary affairs, Olli Rehn; and Jean-Claude Juncker, the finance minister for Luxembourg, who presides over meetings of the so-called Eurogroup of finance ministers from the 17 countries that use the euro as their official currency.

Vittorio Grilli, the director general of the Italian treasury, is also scheduled to attend. But Dirk De Backer, a spokesman for Mr. Van Rompuy, said Mr. Grilli would be there in his capacity as head of the euro zone’s Economic and Financial Committee and not to discuss his country’s economy.

Liz Alderman contributed reporting from Paris.

The News Corporation effort to buy the 61 percent of the cable company it does not already own had been in peril because of the phone-hacking scandal that led to the shutdown this weekend of The News of the World, the Sunday tabloid that was one of Mr. Murdoch’s biggest newspapers. Many commentators in Britain saw the closure of the paper as a move to cauterize the phone-hacking crisis and save the bid for the much more profitable cable company, which is known as BSkyB.

The Labour Party’s new move against the takeover came as the 80-year-old Mr. Murdoch landed at an airport outside London to take direct control of the crisis that has enveloped his company from executives of News International, News Corporation’s London-based subsidiary.

Company officials said he went into immediate talks with his son James, News International’s chairman, and Rebekah Brooks, a former News of the World editor who is News International’s chief executive. The two have been the focus of much of the public outrage that has been directed at the Murdoch empire in Britain since the long-running phone-hacking scandal re-erupted last week.

Ed Miliband, the Labour leader, announced his intention to force a Commons vote on the takeover on a BBC Sunday morning talk show, saying that he regretted having to take the step but believed that Prime Minister David Cameron had left no other option to opponents of the bid with his refusal to take steps to impede the takeover. Mr. Cameron has said that his governing coalition of Conservatives and Liberal Democrats is bound by law to allow the regulatory process in the British Sky Broadcasting case, which has already moved toward approving the deal, to go forward without political intervention.

Under questioning by Andrew Marr, the BBC host, Mr. Miliband denied that he had “declared war on Rupert Murdoch” — who is already Britain’s most powerful media magnate, with a daunting political influence over decades that has led all governments in Britain, whether Labour or Conservative, to seek his favor.

The reluctance by politicians to anger powerful media barons was acknowledged with unusual candor on Friday by Mr. Cameron, who told a news conference that The News of the World scandal showed the importance of ending what he called the “cozy” relationship in Britain between the media, politicians and the police.

Mr. Miliband mixed no words in demanding that Mr. Cameron reverse course on the British Sky Broadcasting takeover and instruct the cabinet minister responsible, Jeremy Hunt, the culture secretary, to refer the bid to Britain’s competitions commission, which has the power to kill the bid by ruling that it would lead to excessive concentration of ownership in Britain’s media.

This spring, Mr. Hunt issued an initial ruling that would spare the bid from scrutiny by the commission, but delayed a final decision pending a mandatory delay to allow for public submissions. On Friday, Mr. Hunt announced that he had received 156,000 submissions and a collective protest with another 100,000 signatures.

Mr. Cameron, Mr. Miliband said, “has got to understand that when the public have seen the disgusting revelations that we have seen this week, the idea that this organization, which has engaged in these terrible practices, should be allowed to take over BSkyB, to get that 100 percent stake, without the criminal investigation having being completed and on the basis of assurances from that self-same organization — frankly, that just won’t wash with the public.”

The Cameron government, with a majority in the Commons and the power to set the debating agenda, could seek to block the Miliband move for a vote on the proposed takeover. But with the phone-hacking scandal roiling the political landscape in Britain like no other event in years, blocking a vote would be a risky move by Mr. Cameron, who has demonstrated a keen sense of the public fury over the phone-hacking and the political price for failing to engage with it.

He has already approved plans for two public inquiries into the scandal: one into the hacking itself, and what the prime minister has called the “abysmal failure” of Scotland Yard to investigate it effectively over a five-year period until this year, and another into the “culture, practices and ethics” of British newspapers.

The prime minister’s calculations may be decisively influenced by his coalition partners, the Liberal Democrats, who have declared their own opposition to the takeover, at least until the criminal cases arising from the phone-hacking have been completed.

Nick Clegg, the Liberal Democrats’ leader, who is deputy prime minister, and Vince Cable, the Liberal Democrat who is business secretary in the Cameron cabinet, are said to have made their opposition to the bid known to Mr. Cameron in strong terms, and allowing it to go ahead would most likely add to the severe strains between the coalition partners on other issues that have raised doubts as to how long the coalition can survive.

WASHINGTON |
Sun Jul 10, 2011 9:35pm EDT

WASHINGTON (Reuters) – John Boehner, the top Republican in Congress, told White House talks on Sunday that budget cuts must exceed the amount by which the debt ceiling is raised and said any deal must exclude tax hikes.

An agreement that builds on the work of a group led by Vice President Joe Biden show most promise, an aide to Boehner said on Sunday after negotiations at the White House that lasted about 75 minutes.

“The Speaker told the group that he believes a package based on the work of the Biden group is the most viable option at this time for moving forward,” the aide said.

Boehner told Sunday’s session that Republicans consider as “fundamental principles” that spending cuts should exceed the amount they will agree raise the debt ceiling, and that any deal will restrain future spending and include “no tax hikes.”

(Reporting by Laura MacInnis and Caren Bohan)

SYDNEY — Prime Minister Julia Gillard of Australia announced a plan on Sunday that would tax the carbon dioxide emissions of the country’s 500 worst polluters and create the second-biggest emissions trading program in the world, after the European Union’s.

The plan is projected to cut 159 million tons of carbon dioxide from the atmosphere by 2020, the government said. In 2010, Australia produced 577 million tons of carbon emissions, according to the Department of Climate Change.

For the 500 companies — which would include mining giants with operations in Australia like BHP Billiton, Rio Tinto and Xstrata — the government has set a price of 23 Australian dollars, or $24.70, for each ton of carbon dioxide emitted starting July 1 of next year, rising 2.5 percent annually before shifting in 2015 to a market-driven trading program.

A similar proposal by Ms. Gillard’s predecessor, Kevin Rudd, was largely blamed for having led to his political downfall. Ms. Gillard argued, however, that Australia — one of the world’s largest polluters, per capita — could no longer ignore its global responsibilities.

“Scientific evidence has confirmed our planet is warming,” she said. “And after years of debate and deliberation, most Australians agree the time to act is now.

“Australians want to do the right thing by the environment. We are a confident, creative nation that’s up to the challenges of tackling climate change.”

Australia has been able to weather the global financial crisis better than most developed economies primarily because of Chinese demand for its natural resources, particularly coal and iron ore.

Critics of the emissions reduction plan have argued that putting a price on pollution would cripple Australia’s manufacturing and export industries, a point they were quick to make Sunday.

The opposition Liberal Party, which has opposed an emissions trading program under its leader, Tony Abbott, criticized the announcement on its Web site, arguing that the cost would be passed on to Australian families.

“Julia Gillard has betrayed the Australian people,” the Liberals said. “The carbon tax is not revenue neutral — another Labor broken promise. This means a bigger deficit this year, higher debt, more taxes, smaller forecast surpluses in the future and greater pressure on interest rates.”

The Minerals Council of Australia, an influential mining industry group, also criticized the plan. “With no other nation implementing an economywide carbon tax, this is a dangerous experiment with the Australian economy,” it said.

Qantas, the Australian national airline, joined the criticism, saying ticket prices would have to rise because of the plan. “While we are still modeling the cost impact, at 23 Australian dollars per ton, there will be some effect on passengers through higher domestic fares,” it said.

But Tim Jordan, a senior analyst at Deutsche Bank in Sydney, dismissed the bulk of those concerns as driven by political, not financial, orthodoxy.

He called the program a “solid start to reducing emissions,” but said the tremendous concessions given under the plan proved that, if anything, the government listened to businesses’ complaints.

“There’s a lot of extra spending in the form of targeted grant programs and specific funding for particular industries,” he said. “Almost every sector that’s complained about the impact of a carbon price has received some kind of new fund.”

The government’s Jobs and Competitiveness Program has set aside 9.2 billion dollars to shield high-polluting industries during the first three years of the plan.

The most emissions-intensive industries — aluminum smelting, flat-glass making, steel manufacturing, zinc smelting and most pulp and paper manufacturing — would initially receive free permits representing 94.5 percent of each industry’s average carbon costs. The permits will not be tradable for the first three years.

Industries that pollute less, including some plastics and chemical manufacturing, would be eligible for free permits to cover 66 percent of the industry average, while liquefied natural gas would receive an effective assistance rate of 50 percent.

John Connor, chief executive of the Climate Institute, an independent research group, praised the proposal and said he hoped it would lead not only to a brighter environmental future, but also to a break in the increasing acrimony surrounding Australian politics.

The US economy generated only 18,000 new jobs in June, so few that the Labor Department on Friday described the nation’s job count as “essentially unchanged.”

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  (Jeff Stahler)

Why is the job market so weak? Is the economy at risk of a new recession?

Those questions loom large as President Obama and congressional leaders seek a deal to raise the limit on federal debt, while also restraining future deficits. Their stated goal is to put the government’s own finances on sounder footing, but that issue is inextricably linked to the larger economy.

The Monitor’s weekly news quiz for July 3-8, 2011

“The economy has to support the government,” says Peter Schiff, who heads the investment firm Euro Pacific Capital in Westport, Conn. “If consumers are broke … then government is broke.”

At present, consumers aren’t quite broke, but they certainly aren’t feeling flush with cash either.

A few days ago, Discover Financial Services announced that its “spending monitor” survey for June showed a significant slide in consumer confidence. Nearly 56 percent of adults said the economy is getting worse, up from about 51 percent in May and 40 percent in January.

The survey also found a majority saying their own personal finances are worsening, although only 17 percent said they expect to reduce their spending in July.

The consensus view among professional forecasters is that the economy will pick up some speed in the second half of the year and avoid a recession. But some believe a recession is very possible, even probable, by next year.

“The problem with a slow-growth economy that is basically at stall speed is, if there is any type of … shock, the economy can easily tip over into recession,” investment adviser John Mauldin, president of Millennium Wave Advisors, wrote in a recent newsletter.

One worry, for example, is that a cooling in the European economy, linked to the burden of a public-debt crisis in nations like Greece, could have negative ripple effects worldwide.

For the US, the patch of economic weakness comes two years after a deep recession officially ended, leaving unemployment today at 9.2 percent of the work force.

The challenge involves a mix of forces.

Temporary factors include the Japanese earthquake and tsunami, which interrupted global supply chains for some important industries including autos.

Next

BEIJING — Chinese imports grew at the slowest pace in 20 months in June, government data showed Sunday, providing further evidence of the broad effect of monetary tightening on the economy.

The slowing rate of imports in June, which dropped to a 19.3 percent annual pace from 28.4 percent in May, is expected to heighten investors’ concerns about how swiftly the Chinese economy, the world’s second-largest after that of the United States, is slowing.

But coming a day after data showed that inflation in June had reached a three-year peak of 6.4 percent, analysts took the data showing a jump in the trade surplus as a sign that the Chinese central bank might have to raise interest rates further, to rein in prices and to discourage capital inflows.

Last week, the central bank raised interest rates for the third time this year, underlining the government’s confidence in the economy’s ability to cope with tighter monetary policy.

The data Sunday showed that June exports had risen 17.9 percent from the same period a year ago, slowing from a 19.4 percent rise in May and pointing to the weakness in overseas demand that has seen exports and new orders soften across most of Asia.

Exports reached a record of $162 billion in June, while imports for the month were $139.7 billion. That left the country with a trade surplus of $22.3 billion in June, compared with $13.1 billion in May.

The median forecast of economists polled by Reuters was for exports to rise 18.7 percent and imports to grow 25 percent, for a trade surplus of $16.3 billion.

“The big trade surplus means P.B.O.C. will continue to experience large capital inflows,” said Liu Li-gang, an economist with Australia New Zealand Banking, referring to the People’s Bank of China. “The P.B.O.C. will have to address this inflow problem.”

Beijing has repeatedly said it will restructure its economy, cutting its reliance on exports and investment, and promoting domestic consumption in their place. As a result, import growth has become a bellwether for the strength of Chinese demand.

A slowdown in Chinese export growth had been anticipated in response to the slowing U.S. economy and as factory growth in Asia and Europe slid in June.

A series of indicators in the past few weeks have pointed to a moderation in the heady pace of the Chinese economy, including data on Taiwan’s exports to the mainland and purchasing manager surveys of new orders.

The People’s Bank of China has made clear that inflation remains a priority. Most analysts say that the resultant economic growth from that policy mix will be slower than the near double-digit pace of the past few years but that there is little risk of a hard landing.

“Imports were below expectations,” said David Cohen of Action Economics in Singapore. “We are perhaps seeing some reflection of loss of momentum in China’s growth. After all, there has been tightening in policy. The numbers are consistent with decelerating growth, with the soft landing that many people are looking for.”

On a calendar-adjusted basis, exports expanded 16.4 percent in June from a year earlier, while imports jumped 19.2 percent, the Chinese Customs Department said.

Exports rose 3.1 percent in June from May, while imports fell 3 percent month-to-month. On a calendar-adjusted basis, June exports rose 4.2 percent from May, while imports fell 2.6 percent from May.

The trade surplus in June was the highest in seven months. Chinese trade surpluses have led to criticism from trade partners like the United States who accuse Beijing of giving its exporters an unfair advantage with an inexpensive currency.

Despite the latest data, the Chinese trade surplus is on track to narrow from the $183 billion of last year as the government tries to rebalance the economy.

“For the second half of the year, we expect exports to continue to fall due to the impact from the European debt crisis, Japan’s earthquake and other factors,” said Tang Jianwei, an economist at Bank of Communications in Shanghai.

“The trade surplus will be maintained in the second half of the year, but domestic demand is still relatively strong,” he said. “So we are expecting a full-year surplus of $100 billion.”

(AP)
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3 hours ago

LONDON (AP) — With the last edition of Britain’s News of the World tabloid in hand, Rupert Murdoch descended on the U.K. Sunday to face the growing phone-hacking scandal that prompted the paper’s closure.

TV footage showed the News Corp. CEO being driven into the east London offices of his U.K. newspaper division, News International. The 80-year-old Murdoch was seated in the front passenger seat of a red Range Rover with a copy of the last issue of the best-selling Sunday tabloid in his hands.

Britons, too, were snapping up the last edition of the News of the World, after the 168-year-old muckraking paper was brought down in a phone-hacking scandal.

The 8,674th edition apologizes for letting the paper’s readers down, but stops short of acknowledging recent allegations that its journalists paid police for information.

“We praised high standards, we demanded high standards but, as we are now only too painfully aware, for a period of a few years up to 2006 some who worked for us, or in our name, fell shamefully short of those standards,” read a full-page editorial in the paper. “Quite simply, we lost our way. Phones were hacked, and for that this newspaper is truly sorry.”

Allegations the paper’s journalists paid police for information and hacked into the voicemails of young murder victims and the grieving families of dead soldiers prompted Murdoch’s News International to shut down the tabloid.

The developments have turned up the heat on Britain’s media industry amid concerns a police investigation won’t stop with the News of the World, and cast new scrutiny on the cozy relationship between British politicians and the tabloid press.

Murdoch, who has long been considered a kingmaker in the British media establishment, is facing a maelstrom of criticism and outrage not just over the new allegations of impropriety at his tabloid, but also the decision to shut the paper and put 200 journalists out of work.

News International declined to comment on Murdoch’s movements or plans while in the U.K.

Closing down the News of the World, which was launched Oct. 1, 1843, was seen by some as a desperate attempt by the media conglomerate to stem negative fallout and thus save its 12 billion-pound ($19 billion) deal to take over satellite broadcaster British Sky Broadcasting.

The British government has signaled that deal will be delayed because of the crisis, and the scandal has continued to unfold at breakneck pace in the media, prompting broader questions about corruption at the newspaper and media regulation in the U.K.

Soul-searching has extended to the highest levels of government, with Prime Minister David Cameron conceding politicians developed too cozy a relationship with the tabloid press. Cameron’s former communications chief, Andy Coulson, is an ex-editor of the News of the World and was one of three men arrested this week as part of a police investigation into the phone-hacking and corruption allegations.

Cameron has called for a new media regulation system and pledged a public inquiry into what went wrong; the head of Murdoch’s U.K. newspaper operations has hinted that more revelations are to come.

As the News of the World’s final issue went to press, Assistant Police Commissioner John Yates expressed his “extreme regret” that he did not act to reopen police inquiries into phone hacking two years ago. In an interview with the Sunday Telegraph, he said “it’s clear I could have done more.”

On Sunday, opposition Labour Party leader Ed Miliband warned that a Murdoch takeover of BSkyB should not be allowed while the phone-hacking investigation is ongoing.

“When the public have seen the disgusting revelations that we have seen this week, the idea that this organization, which engaged in these terrible practices, should be allowed to take over BSkyB, to get that 100 percent stake, without the criminal investigation having been completed…frankly that just won’t wash with the public,” he told the BBC.

Buying the News of the World in 1969 gave the Australian-born Murdoch his first foothold in Britain’s media. He went on to snap up several other titles, gaining almost unparalleled influence in British politics through the far-reaching power of his papers’ headlines.

Murdoch has opted to remain largely silent amid the fallout, issuing one official statement describing the allegations as “deplorable and unacceptable.”

Many journalists and media watchers have expressed astonishment that Rebekah Brooks, who was editor of News of the World when some of the hacking allegedly occurred, was keeping her job as head of News Corp.’s U.K. newspaper operations while the paper’s employees were laid off.

Murdoch on Saturday told reporters in Sun Valley, Idaho, that Brooks had his “total” support.

The scandal exploded this week after it was reported that the News of the World had hacked the mobile phone of 13-year-old murder victim Milly Dowler in 2002 while her family and police were desperately searching for her. News of the World operatives reportedly deleted some messages from the phone’s voicemail, giving the girl’s parents false hope that she was still alive.

Brooks told lawmakers she had “no knowledge whatsoever” of the Milly Dowler hacking or any other case while she was editor, according to a letter published by Britain’s home affairs select committee on Saturday.

The News of the World’s last edition contained a 48-page souvenir pullout section highlighting the paper’s scoops and its coverage of big moments in history. Despite the recent scandal, many viewed the paper as a force for good, exposing numerous political, celebrity and sports scandals.

The paper has been praised for its role in getting a sex offender law passed in Britain. “Sarah’s Law” was named after 8-year-old British girl Sarah Payne, murdered in 2000 by a pedophile. It is modeled on “Megan’s Law,” the U.S. legislation named for Megan Kanka, a New Jersey child murdered by a repeat sex offender.

The last edition’s back page had 1946 quotes from British author George Orwell, an admirer of the paper.

“You put your feet up on the sofa, settle your spectacles on your nose and open the News of the World,” Orwell said.

The back page also had quotes running beside Orwell’s from Jeannie Hobson, a loyal reader from Lymington, England, which read as an epitaph.

“I cannot imagine Sundays without you,” the 68-year-old Hobson said. “I will always remember the News of the World for the good things you have brought to light. I’m sad to say goodbye to my Sunday favorite.”

Cassandra Vinograd can be reached at http://twitter.com/CassVinograd

Copyright © 2011 The Associated Press. All rights reserved.