NEW YORK — Oil futures spiked above $70 a barrel on Thursday for the first time since Sept. 1 on a government report that showed gasoline inventories dropped unexpectedly as the summer driving season neared its peak.

Retail gasoline prices, meanwhile, broke a monthlong decline and held steady overnight at a national average price of $2.975 a gallon, according to AAA and the Oil Price Information Service. Gas prices had been falling steadily since their May 24 peak of $3.227 a gallon.

Analysts warned that pump prices could start rising again if there's an imbalance between demand and supply.

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KB HOME SEES SECOND-QUARTER LOSS

LOS ANGELES — KB Home, one of the nation's biggest homebuilders, said Thursday it swung to a loss in its second quarter, as revenue declined amid weak home sales and lower home prices and the homebuilder booked a major charge to write down unsold inventory.

The Los Angeles-based company also declined to give future earnings estimates or project when the housing market would rebound.

KB reported a loss of $148.7 million, or $1.93 per share, for the period ended May 31. A year ago, the company posted net income of $205.4 million, or $2.45 per share.

The latest period included a pretax charge of $308.2 million to reflect the decreased value of unsold homes on its books and for walking away from deposits on land it no longer wants to buy.

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ECONOMY HAS SLUGGISH FIRST QUARTER

WASHINGTON — The economy limped ahead at just a 0.7 percent pace in the first quarter, the slowest in more than four years. Some businesses clamped down on spending, given the uncertainties about the severity of the housing slump.

The Commerce Department's new reading on gross domestic product for the January through March period, released Thursday, was a slight upgrade from the 0.6 percent growth rate estimated a month ago. But it fell short of economists' forecasts for a 0.8 percent pace and may turn out to be the weakest point for the economy this year.

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GM SHARES HIT TWO-YEAR HIGH

DETROIT — Shares of General Motors Corp. hit a two-year high Thursday after the automaker said it had agreed to sell its Allison Transmission commercial and military business to an investment conglomerate and a private equity firm.

The deal adds funds to GM's coffers as it gears up for crucial contract negotiations with unionized workers, although it also means losing a profitable division.

GM shares rose 74 cents, or 2 percent, to $38.15 Thursday after climbing as high as $38.66.

The sale to Onex Corp. and The Carlyle Group includes seven manufacturing plants in Indianapolis and its global distribution network and sales offices. A production facility in Baltimore, which makes conventional and hybrid transmissions for pickup trucks and sport utility vehicles, will remain with GM.

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RESEARCH IN MOTION SHARES SURGE 15%

TORONTO — Shares of Research In Motion Ltd. surged more than 15 percent in after-hours trading Thursday after the BlackBerry maker said its first-quarter earnings grew 73 percent on increased sales and subscriber additions.

For the quarter ended June 2, Waterloo, Ontario-based RIM earned $223.2 million, or $1.17 per share, up from $128.8 million, or 67 cents per share, in the year-ago quarter. Adjusted net income, which excludes a $5.3 million stock option expense, came to $228.5 million, or $1.20 per share, RIM said.

The company's sales totaled $1.08 billion, up 77 percent from $613.1 million last year. RIM said 76 percent of first-quarter revenue came from device sales.

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SEAFOOD JOINS LIST OF TAINTED PRODUCTS FROM CHINA

WASHINGTON — Farmed seafood has now joined tires, toothpaste and toy trains on the list of tainted and defective products from China that could be hazardous to a person's health.

Federal health officials said Thursday they were detaining three types of Chinese fish — catfish, basa and dace — as well as shrimp and eel after repeated testing turned up contamination with drugs unapproved in the United States for use in farmed seafood.

The officials said there have been no reports of illnesses nor do the products pose any immediate health risk. They stopped short of ordering a ban on the fresh and frozen seafood.

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RITE-AID PROFIT SOARS IN SECOND QUARTER

HARRISBURG, Pa. — Rite Aid Corp., the nation's third-largest drugstore chain, said Thursday its profit soared in the first quarter as sales rose in both the pharmacy and front sections of its stores.

For the quarter ended June 2, net income after preferred stock dividends climbed to $19.5 million, or 4 cents per share, from $3.2 million, or 1 cent per share, in the prior-year quarter.

The Camp Hill-based chain said revenue rose 3 percent to $4.46 billion from $4.34 billion in the first quarter of 2007.

Analysts polled by Thomson Financial expected a loss of 1 cent per share on revenue of $4.67 billion. Those estimates typically exclude one-time items.

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GENERAL MILLS EXPECTS HIGHER COSTS NEXT YEAR

MINNEAPOLIS — With the cost of grain and dairy soaring, food maker General Mills on Thursday reported a 1 percent fiscal fourth-quarter earnings increase and said it would look to streamlined operations and price hikes to stay profitable in 2008.

The maker of Wheaties and Cheerios cereals, Yoplait yogurt, and Progresso soup said it expected prices for raw materials to rise 5 percent next year, including a $260 million increase in the cost of corn, oats, natural oils and dairy.

Chief Executive Officer Steve Sanger said the company had hedged about half the cost of its commodities — and 70 percent of its energy costs — going into the year. The ethanol industry's demand for corn is expected to continue to drive up its price, however.

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HIGH COURT OKs MINIMUM PRICE AGREEMENTS AT STORES

WASHINGTON — Manufacturers will have more leeway to set minimum prices at the retail level without violating antitrust laws under a Supreme Court ruling that could hurt consumers and small merchants.

By allowing minimum price agreements, the court's 5-4 decision on Thursday could lead to higher prices, dissenting justices said. The ruling could also make it harder for new retailers to enter the market, according to consumer advocates, because most innovative retailers begin as lower-cost alternatives.