NEW YORK — The yield on the Treasury's 10-year note passed 5 percent Thursday, hitting a 10-month high as investors see their hopes for an interest rate cut evaporating.

The 10-year yield broke through 5 percent mark overnight and closed at 5.13. U.S. bond markets were following a trend toward lower prices and higher yields in trading abroad.

Some market experts say the 10-year yield is likely to climb higher as bond prices weaken — making it even harder for consumers to finance home purchases, and also for companies to borrow money.

Fixed mortgage rates, closely linked to the 10-year yield, have been advancing recently, adding to worries about sluggish home sales and faltering home prices.

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RETAIL SALES DISAPPOINTING IN MAY

NEW YORK — Americans shopped hesitantly in May, giving retailers some relief from a dismal showing in April but still raising questions about how strong consumer spending will be in the months ahead.

As the nation's merchants reported results Thursday, it was clear that higher gas prices and the slumping housing market are affecting how consumers spend. Sales were disappointing in a cross-section of the industry, including Wal-Mart Stores Inc., Macy's Inc. and Abercrombie & Fitch Co.

The ICSC-UBS sales tally of 51 stores rose 2.5 percent in May, less than the 4.5 percent of a year earlier but a sharp improvement from April's revised 1.9 percent drop. The tally is based on same-store sales, which reflect business at stores open at least a year and are considered a key indicator of a retailer's health.

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CELL PHONES WITH QUALCOMM CHIPS BANNED

WASHINGTON — A federal agency on Thursday barred the import of new models of cell phones that contain semiconductors made by Qualcomm Inc., because the chips violate a patent held by a rival, Broadcom Corp.

The U.S. International Trade Commission's decision represents a compromise between a ban on all phones with Qualcomm chips, as Broadcom requested, and a ban only on the chips themselves, as recommended by an ITC administrative law judge late last year.

The White House now has 60 days to approve or overturn the ruling. Qualcomm also could settle the patent dispute with Broadcom, based in Irvine, Calif., or appeal the decision to a federal court, analysts said.

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WEAK RISE SEEN IN CONSUMER BORROWING

WASHINGTON — Consumer borrowing posted the smallest increase in six months in April as Americans actually paid off some of their credit card debt.

The Federal Reserve reported Thursday that consumer borrowing rose at an annual rate of just 1.3 percent in April, down from a 7 percent rise in March. It was the weakest showing since consumer debt rose at a tiny 0.1 percent rate last October.

The slowdown was led by a 0.5 percent rate of decline in the category of debt that includes credit cards. That meant consumers were paying off more credit card debt than they incurred in April, something that has not occurred in 13 months.

The increase of $2.6 billion in total debt was far below the $6 billion increase that had been expected. Economists were looking for some slowdown given that debt rose by $14 billion in March, the biggest increase in four months.

The category of credit that includes auto loans posted a 2.3 percent rate of increase in April, down from a 5.7 percent rate of gain in March.

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OIL, GASOLINE FUTURES INCREASE

NEW YORK — Oil and gasoline futures jumped Thursday on concerns that U.S. refineries aren't making enough gasoline to meet domestic demand.

Those worries were fed by a government report Wednesday that showed refinery utilization fell 1.5 percent last week to 89.6 percent of capacity.

Light, sweet crude for July delivery rose 97 cents to settle at $66.93 a barrel after venturing above $67 earlier in the day on the New York Mercantile Exchange. That was the front-month contract's first intraday move into $67 territory since September.

Gasoline futures for July inched up 0.23 cent to settle at $2.1927 a gallon on the Nymex.

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JOBLESS CLAIMS CONTINUE TO FALL

WASHINGTON — Applications for unemployment benefits dipped for a second straight week, indicating the labor market remains healthy despite a yearlong slowdown in economic growth.

The Labor Department reported Thursday that the number of Americans filing claims for jobless benefits totaled 309,000 last week, down by 1,000 from the previous week. The small improvement pushed claims down to the lowest level in three weeks.

The drop was in line with analysts' expectations. Economists said that strength in the overall labor market has helped the economy withstand the blows from a serious slump in housing.

Overall economic growth slowed to a barely discernible 0.6 percent rate in the first three months of this year, the weakest showing in more than four years, as troubles in housing have deepened with growing problems with subprime mortgages, which were provided to borrowers with weak credit ratings.

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TOYOTA'S HYBRID SALES PASS 1 MILLION MARK

TOKYO — A decade after the first Prius went on sale, Toyota's global sales of hybrid vehicles have hit a landmark 1 million, underlining the Japanese automaker's lead in "green" technology that has changed the face of the auto industry.

Toyota Motor Corp.'s cumulative sales of gas-and-electric-powered vehicles totaled 1.047 million as of the end of May. Of those, nearly 345,000 hybrids were sold in Japan, while 702,000 were sold abroad, the company said in a statement Thursday.

Sales of Toyota hybrids have climbed from just 18,000 in 1998 to 312,500 last year, the company said.

Demand for hybrids, which deliver superior mileage by switching between a gasoline engine and electric motor, has soared amid higher fuel prices and greater consumer concern about pollution and global warming.

Toyota's dominance in the category has driven Detroit's automakers to follow with their own versions and to rely less on lower-mileage SUVs as the main engine for their profits.

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BIOMET GETS HIGHER TAKEOVER OFFER

INDIANAPOLIS — An improved offer to buy Biomet Inc. may provide enough incentive to seal a deal initially rejected by a major shareholder and a couple of shareholder-advisory firms.

The maker of orthopedic products announced Thursday that a private equity consortium had increased its bid by 4.5 percent from $10.9 billion to $11.4 billion. The new offer is for $46 a share, up from $44 a share.

The consortium includes Biomet founder and former chief executive Dane A. Miller and affiliates of the Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co. and TPG.

Shares of the Warsaw, Ind., company rose $1.36, or 3.1 percent, to end Thursday at $45.56.