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The Honolulu Advertiser

Posted at 1:06 p.m., Friday, May 11, 2007

Business highlights: Consumer confidence, oil prices

Associated Press

BIDDING WAR ESCALATES FOR CBOT HOLDINGS

CHICAGO — Chicago Mercantile Exchange Holdings Inc. sweetened its offer Friday for the Chicago Board of Trade's parent company in an attempt to end a bidding war, bumping the bid up 16 percent to nearly $10 billion and pledging a hefty stock buyback if the deal goes through.

CBOT Holdings Inc., which operates the Board of Trade, swiftly deemed the bid superior to the unsolicited one by IntercontinentalExchange Holdings Inc., even though ICE's offer is still higher — $10.5 billion versus $9.9 billion, based on Friday's closing stock prices. It recommended that shareholders accept the revised bid from the Merc.

The counteroffer had been anticipated ever since Atlanta-based ICE launched its surprise effort in March, disrupting the plans announced five months earlier for the Mercantile Exchange to buy CBOT for about $8 billion.

CONSUMER SPENDING DROPS IN APRIL

WASHINGTON — Consumers, battered by surging gasoline prices, cut back spending for clothes, cars and other items in April, raising worries about the already weak economy.

Retail sales fell 0.2 percent in April, the first decline in seven months, the Commerce Department reported Friday. Meanwhile, the Labor Department said that wholesale prices surged by 0.7 percent, led by a third consecutive big rise in gasoline prices.

The weak retail spending and the big rise in gasoline prices were seen as delivering a double whammy to the economy. The worry is that if gasoline prices spike further and the troubles in housing deepen, then consumer spending could be cut back further and the country could move toward a recession.

CONSUMER CONFIDENCE INDEX HOVERS NEAR 6-MONTH LOW

WASHINGTON — Consumer confidence was essentially stuck in a rut as worries about whether gasoline prices will move higher made people feel anxious about the economy's prospects and their own financial positions.

The RBC Cash Index found that confidence clocked in at 87.1 in May. The new figure hovered near April's reading of 85.4, a six-month low. The index is based on the results from the international polling firm Ipsos.

Those fears were a factor in the big drop in peoples' feelings about how the economy and their own finances will fare over the next six months. This expectations measure fell to 24.3, a nine-month low. In April, this gauge stood at 41.7.

THOMSON CORP. FREES UP CASH FOR REUTERS BID

HARTFORD, Conn. — The Thomson Corp., which has proposed paying more than $17 billion for British financial news provider Reuters Group PLC, freed up cash Friday by announcing that it agreed to sell education and publishing-related properties for $7.75 billion.

The agreement to sell Thomson Learning to two companies is seen as preparation for the company's blockbuster proposal to purchase Reuters. The deal, disclosed last week, would make Thomson-Reuters the world's leader in providing real-time data to traders and investment professionals.

Thomson said Apax Partners, a private equity firm, and OMERS Capital Partners, an Ontario-based pension plan, are buying the higher-education, careers and library-reference divisions of Thomson Learning as well as Nelson Canada, an Ontario-based book publisher and provider of online resources.

ALABAMA TO GET $4B THYSSENKRUPP PLANT

MOBILE, Ala. — German steelmaker ThyssenKrupp AG said Friday it will build a $4.19 billion steel plant in Alabama in a project that could create thousands of jobs. Louisiana was the other finalist, and both states offered millions of dollars in tax breaks and other incentives to get the plant.

Alabama Gov. Bob Riley celebrated the decision, saying a "project this size, with this amount of economic impact, comes along perhaps once in a generation."

But a steelworkers union official said the plant could hurt the industry.

The plant, set to open in 2010, would employ as many as 2,700 workers when fully operational and create as many as 38,000 related jobs ranging from suppliers to transportation to dining and entertainment, the company said.

ANTITRUST AUTHORITIES APPROVE U.S. STEEL DEAL

PITTSBURGH — Federal antitrust authorities have approved United States Steel Corp.'s planned acquisition of Lone Star Technologies Inc., a maker of welded pipe used in oil fields.

The $2.1 billion cash deal, announced in March, will make U.S. Steel the largest producer of tubular steel in North America.

The government has finished its review of the terms of the sale and ended a waiting period on the transaction, according to a Federal Trade Commission notice filed Thursday. The companies expect to complete the deal in the second quarter of 2007.

Pittsburgh-based U.S. Steel will be able to produce about 2.8 million tons of tubular steel in North America annually after the transaction is completed, the company has said.

ALCATEL-LUCENT POSTS LOSS FOR FIRST QUARTER

PARIS — Telecommunications equipment maker Alcatel-Lucent SA posted a loss of 8 million euros ($10.8 million) for the first quarter on Friday due to effects from the merger that formed the company but promised a strong second half. Its shares rose more than 2 percent.

Since the trans-Altantic merger that created the company, it has posted two profit warnings while some rivals, including Ericsson AB, say they are winning market share.

Alcatel-Lucent did not have comparative net figures for the year-ago quarter, since the company was formed late last year. It reported an adjusted first-quarter profit of 199 million euros ($269.2 million) compared with last year's 306 million euros, helped by a 677 million euros ($915.8 million) gain on the sale of assets to French electronics group Thales SA.

Revenue fell 12.4 percent to 3.88 billion euros ($5.25 billion) from 4.43 billion euros in the first quarter of 2006.

OIL PRICES TOPS $62 A BARREL

NEW YORK — Oil prices rose above $62 a barrel Friday after a report from the International Energy Agency raised concerns about the market's ability to meet an expected jump in demand for oil-based products.

Earlier Friday, the IEA said the Organization of Petroleum Exporting Countries needs to increase output soon. It expressed concern over the ability of refiners and OPEC's willingness to meet an expected jump in oil product demand of 1.6 million barrels a day in June.

Suggestions by OPEC officials that there is no need to boost its production levels "appear wide of the mark" the agency said.

CHINA'S TRADE SURPLUS DOUBLES IN APRIL

BEIJING — China's monthly trade surplus more than doubled in April to nearly $17 billion, the government said Friday, adding to pressure on Beijing ahead of closely watched talks with Washington on its swollen trade gap.

The April trade gap of $16.88 billion was below February's $23.7 billion — the second-highest level on record — but in line with steady increases in monthly trade surpluses over the past year.

Chinese and U.S. trade envoys are due to meet May 23-24 in Washington for talks on Beijing's surpluses, currency controls, product piracy and other contentious issues.

Some U.S. lawmakers are pushing for punitive tariffs on imports of Chinese goods if Beijing fails to ease currency controls that critics say keep its currency undervalued, giving exporters an unfair price advantage and adding to China's trade surpluses.