WASHINGTON — Jobseekers had a harder time finding work last month as the economy cooled and wary employers added the fewest positions in two and a half years. The jobless rate edged up to 4.5 percent.

The fresh employment picture provided by the Labor Department on Friday showed that payrolls grew by just 88,000 as job losses spread beyond the struggling manufacturing and construction sectors and into retailing and financial services. Workers' paychecks also grew more slowly.

The new count of jobs added to the economy was the fewest since 65,000 in November 2004. The rise in the unemployment rate, however, was slight compared with March's 4.4 percent rate — which had matched a five-year low.

Taken together, the figures suggest the employment situation is weakening a bit — but not collapsing — as the nation's economy makes its way through a soft patch. Economists do predict the unemployment rate will climb in the coming months and approach 5 percent by year end, still relatively low by historic standards.

SKEPTICISM GREETS POSSIBLE MICROSOFT-YAHOO MERGER

NEW YORK — Speculation about a possible Microsoft-Yahoo tie-up met with skepticism Friday from analysts who believe services from the two companies have too much in common.

Yahoo shares surged nearly 10 percent following published reports Friday that Microsoft Corp. is resuming its pursuit of Yahoo Inc. in an attempt to better compete with Web search and advertising leader Google Inc.

The New York Post reported that Microsoft has asked Yahoo to enter formal negotiations for an acquisition that could be worth $50 billion. Yahoo's market capitalization was about $38 billion on Thursday.

Both companies declined comment on the reports, each of which cited unidentified people familiar with the situation.

The Wall Street Journal said executives of the two companies are looking at a merger or some other kind of matchup and said the talks appear to be in the early stages.

BID FOR REUTERS SIGNALS SHOWDOWN AHEAD

LONDON — Thomson Corp.'s reported bid Friday to acquire Reuters signals that it wants to go head to head with Bloomberg in the lucrative market of delivering real-time financial data and news to customers like investment banks.

Shares of the British news and financial information company soared 25 percent after it disclosed it had received a takeover offer. That drove its market capitalization to more than $15 billion — higher than the Financial Times said Stamford, Conn.-based Thomson was willing to pay.

Thomson, Reuters Group PLC and Bloomberg LP all compete aggressively in what is known as the "terminal" market, for the data terminals on desks at the world's major banks and brokerages. Reuters was the market leader for many years, though it has steadily lost ground to Bloomberg. An April report from Inside Market Data Reference said Bloomberg has 33 percent of the market share, with Reuters at 23 percent and Thomson at 11 percent.

AVERAGE PRICE OF GAS TOPS $3 A GALLON

NEW YORK — The average price of gasoline topped $3 a gallon at the pump Friday, amid growing concerns that refineries are simply not making enough gas to meet peak summer demand.

But oil and gasoline futures fell on light volume Friday. Analysts said traders had little news to drive buying or selling, but may have sensed that the gasoline market has topped out.

According to the Oil Price Information Service and AAA, the national average price of a gallon of gasoline hit $3.012 Friday, up 2.1 cents overnight. Prices at the pump generally lag the futures markets, so consumers can end up paying more for gas even as futures prices drop.

Gasoline futures for June delivery fell 3.12 cents to settle at $2.2164 a gallon on the New York Mercantile Exchange.

SHAREHOLDERS REJECT BID TO BUY QANTAS

SYDNEY, Australia — Shareholders apparently rejected an $8.9 billion bid to buy Qantas on Friday, the bidders said, scuttling one of Australia's biggest corporate takeover attempts.

Airline Partners Australia, led by Australia's Macquarie Bank and Fort Worth, Texas-based TPG Inc., formerly the Texas Pacific Group, said it appeared to have fallen short of the minimum number of shares it needed by a deadline of Friday evening to keep the deal alive.

APA needed 50 percent acceptances by the Friday deadline to get a two-week extension on its offer of 5.45 Australian dollars a share for the iconic company known as the Flying Kangaroo.

It needed 70 percent acceptances for its financial package of loans to kick in and the deal to go ahead.

APA did not disclose the level of acceptances reached Friday, but Dow Jones Newswires cited an unnamed person close to the deal as saying it was 46 percent.

BERKSHIRE HATHAWAY SEES JUMP IN INCOME

OMAHA, Neb. — Billionaire Warren Buffett's holding company reported Friday that its net income jumped 12 percent during the first quarter because of strong performances in its insurance and utility divisions.

Berkshire Hathaway Inc. said it earned $2.6 billion, or $1,682 per Class A share, during the quarter which ended March 31. That's up from $2.3 billion, or $1,501 per share, last year.

Berkshire said its companies and investments generated $28.8 billion in revenue during the quarter, up from $19.2 billion in the same period a year ago.

Berkshire's Class A shares are the most expensive U.S. stock, and they have traded above $100,000 a share since last fall. The stock gained $650 Friday to close at $109,250 before Berkshire's earnings report was released

The earnings report was released on the eve of Berkshire's annual meeting.

Between 25,000 and 28,000 Berkshire shareholders are expected to attend Saturday's annual meeting.

BANK OF AMERICA SUES ABN AMRO

CHARLOTTE, N.C. — Focused intently on moving into Chicago and undeterred by the prospect of a trans-Atlantic legal fight, Bank of America Corp. sued ABN Amro on Friday to preserve its $21 billion deal to buy the Dutch company's LaSalle Bank Corp. subsidiary.

The move places Charlotte-based Bank of America in the middle of a $100 billion takeover battle for ABN Amro between Britain's Barclays PLC and a three-bank consortium led by Royal Bank of Scotland PLC.

In a filing in a New York federal court, Bank of America said it had an exclusive sale agreement with ABN Amro for LaSalle, which the nation's second-largest bank by assets has long coveted for its business in Chicago, the nation's third largest financial services market.

KODAK NARROWS QUARTERLY LOSS

ROCHESTER, N.Y. — Eastman Kodak Co. posted a smaller first-quarter loss Friday — its ninth quarterly deficit in the last 2.5 years — as it applies the final cost-cutting touches to a drastic digital makeover. The results still missed Wall Street expectations and its shares dipped nearly 5 percent.

The photography company lost $151 million, or 53 cents a share, in the January-March period versus a loss of $298 million, or $1.04 a share, a year ago when it took hefty charges tied to its massive overhaul.

Sales fell 8 percent to $2.12 billion from $2.89 billion a year ago, hurt by Kodak's move away from lower-priced cameras in favor of marketing pricier but more profitable models.