BY CHARLES DUXBURY

As Sweden’s finance minister, Anders Borg has received much of the kudos for his country’s relatively easy passage through the financial storms following the 2008 crisis. But now as things seem to be looking up, Mr. Borg—with a reputation for fiscal prudence—isn’t going to loosen the purse strings. Rather, he is preparing for the next crisis.

“I have a very strong ambition to keep Sweden on the safe side,” Mr. Borg says. “I have never in my life seen anyone taking damage from having too large safety margins.”

Mr. Borg says his cautious approach stems from hard lessons learned during …

BY VLADIMIR GUEVARRA

LONDON—The optimism among finance chiefs of many of the U.K.’s biggest companies in the recent quarter has fallen at its fastest rate since the collapse of Lehman Brothers Holdings Inc. in late 2008, and a third of those surveyed expect the country to slip into a double-dip recession, accounting firm Deloitte Touche LLP said Monday.

In its latest quarterly survey of chief financial officers, Deloitte said these key executives have become more focused on cost control and managing cash flow, and some see an end to rising profit margins.

The results of the survey come after …

BY JOHN LYONS

SÃO PAULO—Backers of a controversial plan to merge Carrefour SA’s Brazilian operations with the country’s biggest retailer by revenue, Pão de Açúcar, are scrambling to bring A-list investment funds into the deal to improve its chances of succeeding, a person familiar with the matter said.

Bringing new investors into the mix would help get over two major obstacles to the plan to create one of Brazil’s biggest companies. The person didn’t name the funds that will be approached about joining the deal.

First, a …

BY DAVID FICKLING

SYDNEY—Macarthur Coal Ltd. said Monday it received a takeover offer from Peabody Energy Corp. and ArcelorMittal that values the Australian coal miner at 4.68 billion Australian dollars (US$5.03 billion).

Macarthur, the world’s largest producer of the pulverized coal used in some blast furnaces, said the companies had offered A$15.50 a share for the business through a jointly owned bid company, representing a premium of 40% to Macarthur’s Monday closing price of A$11.08 a share. Still, the per-share amount is less than the company’s final dividend this year.

“The board makes no recommendation in relation to the indicative proposal but will …

BY CAROLYN CUI

Oil is back on the upswing, flying in the face of international efforts to keep prices low.

After an initial drop, crude-oil futures are back above the levels seen before the International Energy Agency in late June announced a plan to release 60 million barrels of oil from emergency stockpiles, ending Friday at $96.20 a barrel on the New York Mercantile Exchange. The U.S. will release 30.6 million barrels toward that total.

That futures contract is up more than 6% from the lows hit after the announcement. U.S. gasoline futures prices are up 11%, suggesting more pain at the pump …

By SIOBHAN HUGHES

WASHINGTON—The U.S. labor market could stay sluggish for a while, with small-business executives reluctant to hire amid the murky economic outlook.

A survey of small business owners shows a lack of confidence in the U.S. economy. More than two-thirds indicated they do not plan to add payrolls in 2011 or 2012. WSJ’s Siobhan Hughes reports. Photo: Justin Sullivan/Getty Images

Almost two-thirds—64%—of small-business executives surveyed said they weren’t expecting to add to their payrolls in the next year and another 12% planned to cut jobs, according to a U.S. Chamber of Commerce report to be released Monday. Just 19% said they would expand their work forces.

This comes after a Labor Department report Friday showed employers added few jobs in June, and unemployment rose to 9.2%. The bleak figures joined other data showing the recovery losing momentum in recent months, which has caused many analysts and policy makers to lower their forecasts for economic growth in the second half of the year.

The Small Business Administration says small businesses, defined as companies with fewer than 500 workers, employ about half of the workers in the private sector. In the Chamber’s survey of 1,409 executives, conducted by Harris Interactive, small businesses were defined as firms with revenue of $25 million or less.

More than half of the small-business executives in the June 27-30 survey cited economic uncertainty as the main reason for holding back on hiring. About a third blamed lack of sales, while just 7% pointed to problems getting credit.

“I think it’s safer to stay on hold and not hire workers,” said Harold Jackson, chief executive of Buffalo Supply, a Lafayette, Colo., distributor of high-tech medical equipment used in operating rooms.

Mr. Jackson said he has halved his staff to 15 workers since 2009 and was unlikely to start hiring soon even if his business picked up. “I can handle a reasonably large increase in business without having to increase the staff.”

Many of the executives surveyed were gloomy about the economy’s prospects. About 41% see the business climate getting worse over the next two years, compared with 29% who expect the climate to improve.

The modest hiring plans of small businesses don’t make up for the job losses in the past year, when some 29% let go workers, far outpacing the numbers that now plan to hire.

The June survey was conducted while the White House and congressional leaders were working to reach a deficit-reduction agreement that would ease the way for Congress to raise the federal borrowing limit by Aug. 2, in time to prevent a government default on its obligations. Treasury officials have predicted a default could trigger another financial crisis, sending interest rates soaring and causing a recession.

Of the small-business executives who responded, 70% predicted a negative impact for their business in the case of a government default.

“Small-business owners are pretty savvy; they do understand the ramifications for credit,” said William Miller, a senior vice president at the Chamber, who owns restaurants in Washington, D.C.

The executives had more confidence in their own futures than in the future of the country. While just 29% said that America’s best days were ahead, 39% said their own business’s best days were ahead. Some 84% said the U.S. economy was headed in the wrong direction, but 61% thought their own business was headed the right way.

“I’m optimistic about the future, but you still have to find your way through all these issues,” Mr. Jackson said.

Write to Siobhan Hughes at siobhan.hughes@dowjones.com

BY GAVIN LOWER

MELBOURNE—Australian pay-TV companies Austar United Communications Ltd. and Foxtel said Monday they had reached agreement for Foxtel to take over Austar in a deal that values Austar at 2.5 billion Australian dollars (US$2.69 billion).

Austar said in a statement the proposed deal, which had the backing of U.S. cable company Liberty Global Inc., Austar’s majority shareholder, would result in its shareholders receiving A$1.52 per share. The takeover will be conducted through a series of transactions and a scheme of arrangement.

Foxtel made its bid …

BY VU TRONG KHANH

HANOI—Vietnam Oil and Gas Group and its partners are considering buying ConocoPhillips’s stakes in three oil and gas projects off the coast of Vietnam, according to the country’s state-run oil company, also known as PetroVietnam.

ConocoPhillips, the third-largest U.S. oil company by market value after Exxon Mobil Corp. and Chevron Corp., has stakes in oil fields located 180 kilometers southeast of Ho Chi Minh City.

“The reason why the firm [ConocoPhillips] is selling the stakes might be it is restructuring itself,” PetroVietnam Director General …

BY YASMINE CHINWALA

This year’s FN100, Financial News’s annual list of the 100 most influential people in European financial markets, for the first time has a regulator in the top slot: Mario Draghi. Not only is he going to be president of the European Central Bank starting in October, he will also become chairman of the European Systemic Risk Board, the umbrella body for the new structure of European regulation. Mr. Draghi is also chairman of the Financial Stability Board until his term ends next April.

Over the past three months, Financial News, a sister paper of The Wall Street Journal Europe, canvassed …

BY LYNN COWAN

Though many industries are hoping for better times for U.S. initial public offerings, young health-care companies, in particular, have a lot at stake.

The IPO market has been rocky since early May, and pharmaceutical, biopharmaceutical and medical-device firms have been completely absent from the roster since late April. The last deal seen, Sagent Pharmacueticals Inc., rose 24% on its first day of trading.

The Dow Jones Industrial Average slipped into six consecutive weeks of declines soon after, and IPO pricings became …

BY CHARLES DUXBURY

As Sweden’s finance minister, Anders Borg has received much of the kudos for his country’s relatively easy passage through the financial storms following the 2008 crisis. But now as things seem to be looking up, Mr. Borg—with a reputation for fiscal prudence—isn’t going to loosen the purse strings. Rather, he is preparing for the next crisis.

“I have a very strong ambition to keep Sweden on the safe side,” Mr. Borg says. “I have never in my life seen anyone taking damage from having too large safety margins.”

Mr. Borg says his cautious approach stems from hard lessons learned during …

BY ENDA CURRAN

CANBERRA—Australia plans to close some of the country’s biggest polluters and has pledged billions of dollars for renewable-energy projects as the government seeks to roll out one of the world’s largest national carbon-pricing plans.

Australia is one of the world’s largest polluters per capita due to its heavy use of coal-fired power, which accounts for some 75% of electricity output. The plan to price carbon comes less than two years after a global push to tackle climate change stalled in Copenhagen.

Only the European Union’s emissions-trading scheme will be of comparable size, and industry has criticized Canberra for pursuing the …

BY VLADIMIR GUEVARRA

LONDON—The optimism among finance chiefs of many of the U.K.’s biggest companies in the recent quarter has fallen at its fastest rate since the collapse of Lehman Brothers Holdings Inc. in late 2008, and a third of those surveyed expect the country to slip into a double-dip recession, accounting firm Deloitte Touche LLP said Monday.

In its latest quarterly survey of chief financial officers, Deloitte said these key executives have become more focused on cost control and managing cash flow, and some see an end to rising profit margins.

The results of the survey come after …

BY GABRIELE PARUSSINI AND WILLIAM HOROBIN

AIX-EN-PROVENCE, France—The global economy is still fragile and more work needs to be done in terms of strengthening economic governance in the European Union and coordinating policies among its 17 members to avoid future crises, European Central Bank President Jean-Claude Trichet said Sunday.

“The major revelation of the last four years was the fragility of the global economy,” Mr. Trichet told the Rencontres Economiques d’Aix-en-Provence conference. “Strengthening resilience is absolutely essential given the fragility exhibited by the global economy.”

Mr. Trichet’s remarks come as the European economic bloc faces increasing challenges, with some observers warning that it ultimately runs the …

BY JOHN LYONS

SÃO PAULO—Backers of a controversial plan to merge Carrefour SA’s Brazilian operations with the country’s biggest retailer by revenue, Pão de Açúcar, are scrambling to bring A-list investment funds into the deal to improve its chances of succeeding, a person familiar with the matter said.

Bringing new investors into the mix would help get over two major obstacles to the plan to create one of Brazil’s biggest companies. The person didn’t name the funds that will be approached about joining the deal.

First, a …

BY PAUL KIERNAN

SÃO PAULO, Brazil—To Brazilian sugarcane producers who have long wanted to export ethanol to the U.S., news that Congress may finally tear down trade barriers protecting U.S. fuel from competition comes at a bad time.

An agreement by senators this past week to end a tax of 54 cents a gallon on imported ethanol was cheered by the Brazilian sugarcane industry. For years, Brazil’s government and industry have chided the U.S. for protecting its corn-based ethanol producers from potential imports of Brazilian sugarcane-based ethanol, which is considered to be more energy-efficient.

But Brazil’s current sugarcane harvest is expected to decline …

BY ANDY PASZTOR

Seeking to improve in-flight communications, satellite-operator Iridium Communications Inc. is set to provide enhanced navigation and traffic-control services for jets flying across oceans and, eventually, over remote polar regions.

By obtaining regulatory approval to use digital data to keep track of jets on isolated, long-range routes, Iridium is expected to help carriers such as Continental Airlines, Delta Air Lines Inc. and various cargo operators save fuel, reduce emissions and make it easier for aircraft to maneuver around storms. The new services also will reduce pilot workload in the cockpit, according to the company.

Other U.S. and international carriers are likely …

BY MITSURU OBE AND KANA INAGAKI

TOKYO—A government-led panel looking into the future of Tokyo Electric Power Co. is keen to wrest monopoly power away from Japan’s largest utility, but it has for now put aside more radical proposals to break up the company and sell off key assets, panel members and government officials said.

The problem facing officials is how to ensure that Tokyo Electric remain for the long term a viable shareholder-owned company that is able to provide electricity at a reasonable cost while paying off the estimated trillions of yen in compensation to those affected by the disaster at its Fukushima Daiichi nuclear …

BY STACY MEICHTRY AND ALESSANDRA GALLONI

ROME—Europe’s sovereign-debt crisis washed up on Italy’s shores on Friday as concerns about the country’s banks and debt drove up the cost of insuring Italian debt against default and pummeled stocks.

Investors also fretted about the possibility of political instability after reports of tensions— which later in the day subsided— between Italy’s Economy Minister Giulio Tremonti and the country’s prime minister, Silvio Berlusconi.

The public spat, which played out on the front pages of Italian newspapers, prompted the spread between 10-year Italian and German bond yields to reach a record 2.47 percentage points and the Milan stock exchange to close …

BY LAURA STEVENS AND ULRIKE DAUER

FRANKFURT—Deutsche Bank AG could tap a successor to Chief Executive Josef Ackermann as early as this weekend, as the lender’s board scrambles to end months of uncertainty over who will next lead the bank.

The long-running search was thrown into disarray earlier this month after one leading candidate, former German Bundesbank head Axel Weber, accepted the job as chairman of Swiss bank UBS AG.

Now, Deutsche Bank’s London-based investment banking chief, Anshu Jain, is expected to be paired with a senior German executive in order to allay fears that the India-born banker would have difficulty navigating political waters in Deutsche …

By JACK NICAS And JEFFREY BALL

Associated Press

A worker cleans up oil from the Yellowstone River on Wednesday.

BILLINGS, Mont.—Exxon Mobil Corp. was given two months to clean up oil from a ruptured pipeline along the Yellowstone River as it faces mounting questions about its handling of the accident in one of the U.S.’s most pristine wilderness areas.

The Environmental Protection Agency on Friday ordered Exxon to complete cleanup of the estimated 1,000-barrel spill by Sept. 9. Exxon, which agreed to the EPA order, expects to have the spill cleaned up by the deadline, said Alan Jeffers, a company spokesman.

Committees in Congress are calling for hearings into why the Exxon pipeline ruptured July 1, sending oil into the river. Documents show the federal government last year criticized Exxon for failing to properly maintain a different part of the pipeline.

Oil Spill in the Yellowstone River

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Associated Press

Cleanup crews worked to clear oil. To broaden its search for the oil, Exxon planned to test whether the river was safe to navigate with a jet-powered boat.

Federal environmental officials said Friday the spill doesn’t threaten drinking or irrigation water from the Yellowstone and isn’t likely to hurt area crops in the long term. Pockets of oil have turned up as far as 50 miles downstream of the site where the underwater pipeline ruptured, but the rushing river will likely break up any oil that cleanup workers can’t reach, said Steve Merritt, an EPA official helping to coordinate the spill response.

That outlook didn’t quiet criticism of Exxon. Friday, a top state official in the spill response protested what he called the company’s rush to announce good news.

Under the system federal law has set up for oil-spill responses, government and oil-company officials are supposed to work together.

But Tom Livers, deputy director of the Montana Department of Environmental Quality, said in an interview that he began refusing a few days ago to sign off on press releases Exxon wrote on behalf of the response effort. Mr. Livers said they contained prematurely rosy statements.

In one, Mr. Livers said, Exxon said the spill wouldn’t harm people. In another, he said, Exxon said the ruptured section of the pipeline, which has since been sealed off from the rest of the pipeline, no longer contained any oil. Mr. Livers said that, in both cases, it remains too early to make such absolute statements.

Pius Rolheiser, an Exxon spokesman, declined to comment on the wording in the press releases.

The company says it is fully cooperating with the cleanup effort.

Thursday, Montana Gov. Brian Schweitzer pulled state officials from the official federal management of the spill, accusing Exxon of secrecy and overstating progress on the cleanup—charges Exxon disputes.

The pipeline that ruptured has raised concerns for more than year.

In July 2009, the Pipeline and Hazardous Materials Safety Administration ordered Exxon to correct corrosion problems on the pipe.

Exxon says the corrosion was minor, was above ground and wasn’t a factor in last week’s pipeline break.

Write to Jeffrey Ball at jeffrey.ball@wsj.com

BY YUKARI IWATANI KANE AND SPENCER E. ANTE

In Apple Inc.’s latest effort to control its U.S. trademark for the term “App Store,” a law firm representing the company sent a cease-and-desist letter to wireless-application store operator GetJar.

According to a letter reviewed by The Wall Street Journal dated June 22, lawyers from New York’s Kilpatrick Townsend Stockton LLP requested that San Mateo, Calif.-based GetJar stop using “App Store” on its website and elsewhere, and refrain from using the term in the future. The lawyers suggested that the company instead use the terms “mobile download service” or “application download service”.

The letter highlights the importance of Apple’s …

BY AMY OR

David Einhorn’s hedge fund Greenlight Capital Inc. said it has exited an investment in Yahoo Inc. made earlier this year with “a modest loss,” as the value of the Internet company’s Chinese assets came into doubt.

Losses related to investments in Yahoo—and bets that the Japanese yen would weaken and consumer cyclical stocks would fall—resulted in declines of between 2.1% and 2.5% among Greenlight funds in the second quarter, according to an investor letter. For the first half, the funds were 5% to 5.3% …

SHANGHAI—Citigroup Inc. plans to increase its number of outlets in China by 50% this year, as the U.S. bank looks to capitalize on the opportunities presented by China’s growing middle class.

Andrew Au, chief executive for Citigroup China, said in an interview that the bank will also explore more inland cities and populous rural areas to drive its China business.

“China is one of the most important markets for Citigroup globally,” he said. “Strategically, we have never made any change in good times or bad times, even at the height of the financial crisis. Our head office has …

BY PAUL MOZUR

TAIPEI—HTC Corp.’s chief financial officer on Thursday defended the company’s $300 million purchase of California-based S3 Graphics Inc., saying that acquiring patents will help the mobile handset maker generate revenue and defend itself against lawsuits in the increasingly litigious smartphone business.

The executive, Winston Yung, also said he expects the company to recoup investment from the acquisition in two to three years. The comments came as HTC’s stock plunged by the daily trading limit on Thursday despite a strong second-quarter earnings report on Wednesday. Analysts said the stock fell on concerns about intensifying competition in the smartphone market in addition …

BY JAMES HERRON

LONDON—Goldman Sachs Group Inc. said oil supplies will become “critically tight” in 2012, largely because production leader Saudi Arabia won’t be able to pump as much extra oil as many people believe.

Robust global economic growth will continue to drive oil demand that outstrips supply, so “it is only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices to restrain demand,” Goldman said.

The report amplified previous warnings of a supply-constrained oil market by the U.S. investment bank, which in recent months has repeatedly questioned the ability of Saudi “spare capacity” to …

BY NADIA POPOVA AND JACOB GRONHOLT-PEDERSEN

MOSCOW—OAO Gazprom agreed to combine its electricity assets with those of tycoon Viktor Vekselberg in an $8.8 billion deal that extends the Russian state-controlled company’s dominance beyond the gas sector.

“It will be a company that will stand in the same rank” as such large energy groups as Germany’s E.ON SA, Électricité de France SA and Spain’s Endesa SA, Gazprom Chief Executive Alexei Miller said at a news conference.

Under the deal, Mr. Vekselberg’s IES Holding Ltd. investment vehicle would get at least 25% of the merged company’s electricity unit. The combined company would later be listed on Russian and …

BY ANNA MARIJ VAN DER MEULEN AND CHRISTINA ZANDER

Swedish car maker Saab on Thursday delayed resuming production until Aug. 9 over continued parts shortages, having last week signaled it would restart auto manufacturing within two weeks after a three month lag.

The latest setback was due to some parts suppliers requiring longer lead times to produce adequate stocks, said Swedish Automobile, the company’s parent. Many suppliers needed more time due to workers’ summer vacations, but also because Saab’s negotiations with its suppliers over a restart are continuing, said Saab spokeswoman Gunilla Gustavs.

Production at Saab has been halted for most of the past three months due to unpaid …

BY TESS STYNES AND STU WOO

PayPal owner EBay Inc. agreed to acquire closely held Zong Inc. for about $240 million, as the e-commerce giant moves to strengthen its position in the fast-growing mobile payments and digital goods market.

Zong, based in Menlo Park, Calif., allows people to charge online purchases to their phone bill, from mobile carriers including ATT Inc. and Verizon Wireless.

With the deal, eBay’s electronic payments unit PayPal can allow its about 100 million users to pay for purchases using their mobile phone, an option they didn’t have before. Zong currently has connections with more than 250 mobile operators in 45 countries.

BY DAVID PEARSON AND SEBASTIAN MOFFETT

PARIS—French auto maker Renault SA will delay for two years, until 2014, the start of production at a car-battery plant, illustrating difficulties in its ambitious electric-vehicle program.

Its first three electric vehicles are to enter production this autumn, while the Zoe—a small car that is expected to account for the bulk of Renault’s EV sales—is slated for next year. The launches were supposed to be followed quickly by production at Renault’s Flins battery plant, west of Paris. But due to the delay there, the batteries on these initial vehicles will be equipped with imported components.

“The problem is with the …

BY CHRISTOPH RAUWALD

FRANKFURT—Germany’s luxury-car makers posted record sales in the first half of the year and expect growth to continue in coming months, fueled by booming demand in emerging markets.

“We have just achieved another record month in sales and the best six months in our company’s history,” BMW AG sales chief Ian Robertson said in a statement Thursday.

However, he said the growth may moderate, and auto analysts said investors should take caution given the sector’s high margins.

“Due to the model cycle and the year-on-year base effect, we do anticipate a somewhat slower rate of growth in the second half …

BY WILLIAM MAULDIN

MOSCOW—Concerned by a slow economic recovery and political change in Moscow, Russia’s wealthy business leaders are increasingly eyeing assets in Europe, focusing on prime real estate that is viewed as safer even than cash, a recent survey said.

The flight of personal and business assets has contributed to Russia’s net capital outflow of $31.2 billion this year, a figure that has weighed on the ruble and redoubled President Dmitry Medvedev’s and Prime Minister Vladimir Putin’s so-far unsuccessful efforts to seek foreign investment on the eve of the 2012 presidential elections.

Only 12% of wealthy Russian businessmen currently keep a substantial …

BY BERND RADOWITZ

BERLIN—German industrial output rose in May as the economic upturn in Europe’s biggest economy continues, data showed Thursday. But the expansion will probably lose steam in coming months, the government and economists said.

Industrial production rose a seasonally adjusted 1.2% in May and rose 7.6% compared with a year earlier, the economy ministry said. “The output in production keeps its trend of a quite pronounced upward dynamic,” the economy ministry said in a statement.

The …

By CHRISTOPHER LAWTON

Apple Inc. said Thursday it is working to resolve a security hole in its iPhone and other mobile products that German authorities warned could allow cyber criminals to access confidential information or intercept phone conversations.

Users are particularly vulnerable when they view Portable Document Format, or PDF, files, which give attackers an opportunity to infect the devices with malicious software, giving them administrative rights to the device, the German Federal Office for Information Security said Wednesday.

Apple is planning a fix for a security hole in its mobile OS that German authorities warned could allow others to access confidential data or intercept phone calls.

Once the device is infected, cyber criminals could read confidential information such as passwords, online-banking data, calendars, e-mails and other information, as well as intercept telephone conversations and the location of the user. The security hole is present in several versions of Apple’s iOS software on its iPhone, iPad and iPod Touch products, the agency added.

“Apple takes security very seriously, we’re aware of this reported issue and developing a fix that will be available to customers in an upcoming software update,” the company said in a statement.

An Apple spokeswoman declined to say when exactly the software update would be made available, or whether Apple was aware of the security hole before Wednesday.

Germany’s information-security agency said it hasn’t yet observed any attacks on Apple products, but warned that until the hole is closed, users should avoid opening PDF documents from unknown sources, and surf only trusted websites. It added that it was in contact with Apple about the problem. The German Federal Office for Information Security detected a similar security hole in Apple’s software last year, which the company promptly fixed.

Write to Christopher Lawton at christopher.lawton@wsj.com

BY JAMILA TRINDLE

WASHINGTON—Commodity regulators voted 5-0 to approve a rule that expands their ability to pursue fraud and manipulation in the derivatives markets they regulate, finishing the first major rule required by last year’s Dodd-Frank financial-regulatory overhaul.

“We will use these tools to be a more effective cop on the beat, to promote market integrity and to protect market participants,” CFTC Chairman Gary Gensler said.

With Thursday’s vote, the regulators will now only have to prove that a trader acted recklessly, instead of proving that the trader …

BY CAROLINE HENSHAW

LONDON—World food prices edged up in June to near their record highs as a sharp increase in sugar prices outweighed a slump in the grains complex, the United Nation’s food body said Thursday.

The Food and Agriculture Organization’s food price index, which covers prices of a basket of commodities, rose 1% to 234 points last month, up 39% compared with the same time last year and just below the record 238 points hit in February.

The main driver of the increase was a rise in the FAO’s sugar index, which increased by 14% on month to 359 points. Prices have …

BY JACOB BUNGE AND STEVEN RUSSOLILLO

NYSE Euronext shareholders approved the plan to merge with Deutsche Börse AG, though NYSE Chief Executive Duncan Niederauer said he was “a little disappointed” by the turnout for the vote.

The transatlantic exchange group won backing from two-thirds of its shareholders, receiving 96% of votes cast, according to preliminary results disclosed after a special meeting in New York.

The approval was expected, but the relatively low turnout poses a challenge. The German group must secure backing from 75% of its shareholders by next week to advance the plan to create the world’s largest exchange operator.

“We were hoping for a …

By MICHAEL ANEIRO

Standard Poor’s revised California’s ratings outlook to “stable” from “negative” Thursday, saying the state’s approach to balancing its budget was “largely realistic” but adding that the spending plan still doesn’t solve some longer-term imbalances.

SP’s move, by reducing the near-term likelihood of a cut in its rating of California’s creditworthiness, is likely to extend this year’s rally in the Golden State’s bonds, just as the state prepares to issue new debt for the first time this year.

“Even though it’s not a perfect budget, budget passage is much better than no budget passage since the state needs a budget to predict revenues and start issuing revenue-anticipation notes,” said Matt Fabian at Municipal Market Advisors.

Despite its well-publicized budget gaps and political discord, California has posted the best muni-bond returns of any state so far this year. Risk premiums for 10-year California bonds—the extra yield investors demand to own riskier bonds—dropped to 0.89 percentage point over an triple-A-rated bond benchmark from a high of 1.30 percentage points in January, according to Thompson Reuters Municipal Market Data.

Part of what’s driving the gains for California debt has been a lack of new supply, as the state has yet to issue any new bonds in 2011. As the new fiscal year begins, the state is likely to resume borrowing, but some municipal-bond fund managers still see an opportunity to make money on its existing bonds.

“California has been overwhelmingly our best-performing credit this year, and I think it’s still very attractive and still has room to run,” said Dan Genter, chief investment officer of RNC Genter Capital Management in Los Angeles. “The worst is really behind them and they’re seeing a significant return of revenue.”

Still, risk premiums on California debt remain higher than those for any state except Illinois. And California carries the lowest ratings of any state: A1 from Moody’s Investors Service and single-A-minus from Standard Poor’s. A ranking of state financial strength by BMO Capital Markets—using weighted levels for housing prices, budgetary gaps, state tax revenue and relative quality ratings—places California 49th, ahead only of Arizona.

The legislature passed a revised budget last week that state Treasurer Bill Lockyer said cuts borrowing needs by $2 billion and “makes substantial progress toward eliminating California’s large and chronic structural deficit.” The budget also was passed on time, before the start of the fiscal year, for only the second time in the past 25 years.

Now that the budget has passed, California is expected to start issuing debt again in the next few months, starting with short-term notes and progressing to longer-term bond debt. The increased supply could affect yields, which move inversely to prices, as well as risk premiums, also known as spreads, particularly in the second half of the calendar year.

“Typically in past years [California] state spreads have widened as the year went on just because more supply came out,” said Domenic Vonella, municipal market analyst at Thomson Reuters MMD. “This year since the budget has been passed a little bit earlier it could take a smoother path because the state has more time to figure out exactly what kind of debt they want to issue.”

But passage of the budget alone hasn’t sparked much renewed optimism in the muni market. “The market knows it’s going to be a five or 10-year project” for California to resolve its structural deficits for the long haul.

At least this year’s budget relies less on one-time revenue and accounting gimmicks than budgets enacted in prior years, according to Moody’s Investors Service. The budget solves a $10 billion gap for fiscal 2012 with cuts, fee increases and a heavy reliance on expectations of strong revenue growth, but with firm plans for further cuts if those expectations are not met.

Moody’s notes the budget is not fully structurally balanced as it includes roughly $4.5 billion of cash deferrals and one-time revenues. But Moody’s says the state’s cash position has improved materially because of a combination of cash-management tools the state has used and improved revenue.

Write to Michael Aneiro at michael.aneiro@dowjones.com

BY DAVID BENOIT AND JESSICA HOLZER

J.P. Morgan Chase Co. agreed to a $228 million settlement to charges it rigged nearly 100 transactions involving municipal-bond auctions, federal and state authorities said.

It is the third, and largest, settlement reached with a bank in a continuing investigation into an alleged nationwide conspiracy to rig municipal-bond bidding processes. Banks bid for the business to invest the proceeds municipalities raise by selling bonds. Last year, Bank of America Corp. agreed to pay $137 million and in May, UBS AG agreed to pay $160.2 million.

The Securities and Exchange Commission, in a civil lawsuit, alleged that J.P. Morgan, the …

BY DANA CIMILLUCA AND GINA CHON

Nokia Corp. and Siemens AG have shifted their focus to restructuring their joint venture in telecommunications-networking equipment, after failing to reach a deal with bidders for a controlling stake in the unprofitable business, people familiar with the matter said.

In the latest blow to beleaguered cellphone maker Nokia, which controls the venture, the company and Siemens now are exploring a “self-help” deal for the business, which is known as Nokia Siemens Networks. Under such a deal, each company might put more cash into the venture, the world’s No. 2 maker of wireless-networking gear, the people said.

Talks to sell a …