PLANO, Texas — J.C. Penney Co. posted a 13 percent increase in first-quarter income on strong sales of exclusive fashions, and the department store chain raised its profit outlook for the year.

Shares of Penney rose $4.02, or 5.3 percent, to $79.74.

Chairman and Chief Executive Myron E. Ullman III told investors in a conference call Thursday that the company was benefiting from strong sales of private-label brands and improved inventory flow, which gets fashions on the shelves more quickly.

The middle-income shoppers that Penney serves face pressures from higher gasoline prices, a slowing economy and weaker housing markets. Ullman said he was aware of the potential impact but that Penney hasn't yet seen a change in customers' behavior.

Earnings in the quarter that ended May 5 rose to $238 million, or $1.04 per share, up from $210 million, or 89 cents per share, during the same period a year ago.

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FED RESERVE MAY CRACK DOWN ON SUBPRIME MARKET

WASHINGTON — Federal Reserve Chairman Ben Bernanke says the central bank is considering tougher rules to crack down on abusive practices by mortgage lenders. But he says the economy should escape without significant harm from the problems in the subprime market.

Facing criticism from members of Congress about lax regulation, Bernanke said Thursday that the Fed was reviewing all of its options from bolstering disclosure requirements on what lenders must tell prospective borrowers to writing tougher rules to guard against fraud.

Bernanke, who served as President Bush's chief economic adviser before taking over the Fed post in February 2006, said regulators needed to be sure that any rules they imposed did not stifle the market for legitimate loans.

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INDEX OF ECONOMIC INDICATORS DROPS SLIGHTLY

NEW YORK — A gauge of future economic activity showed the U.S. economy will slow in coming months, reversing recent gains and suggesting higher gas prices and a sluggish construction industry are beginning to take their toll.

The Conference Board said Thursday its index of leading economic indicators dropped 0.5 percent, higher than the 0.1 decline analysts were expecting. The reading is designed to forecast economic activity over the next three to six months.

The increase almost reversed an amended 0.6 percent climb in March, which analysts say should relieve pressure on the Federal Reserve to raise interest rates.

The reading tracks 10 economic indicators. Two of those readings were positive in April: stock prices and real money supply.

The negative contributors, beginning with the largest, were building permits, weekly unemployment claims, manufacturers' new orders for nondefense capital goods, consumer expectations, vendor performance, average weekly manufacturing hours and interest rate spread.

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TAKEOVER PLANS BOOST ALLIANCE DATA SHARES

DALLAS — Shares of credit card services provider Alliance Data Systems Corp. shot up nearly 25 percent Thursday after the company announced it was being acquired by private equity firm Blackstone Group in a deal valued at $6.43 billion.

Blackstone Capital Partners V LP agreed to pay $81.75 per share in cash for Alliance Data, representing a 30 percent premium to the stock's Wednesday closing price of $62.96. Based on Alliance Data's 78.7 million outstanding shares as of May 1, the deal is valued at $6.43 billion.

Alliance Data shares soared $15.50, or 24.6 percent, to $78.46 Thursday.

Blackstone senior managing director Chip Schoor said Alliance Data's "track record of continued growth combined with Blackstone's investment expertise and industry experience will create a powerful partnership."

In a statement, Alliance Data Chairman and CEO Mike Parks said the deal was in the best interest of shareholders.

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WPP TO BUY 24/7 REAL MEDIA

NEW YORK — WPP Group PLC, the world's second-largest marketing conglomerate, is buying online advertising company 24/7 Real Media Inc. for $649 million in the latest deal to plunge media and technology companies further into the Internet advertising boom.

The deal announced Thursday came fast on the heels of Internet search leader Google Inc.'s $3.1 billion acquisition of DoubleClick Inc. in mid-April, a move that gave Google a major foothold in online display advertising.

Yahoo Inc. also struck a deal last month to buy the rest of privately held online ad exchange Right Media Inc. that it didn't already own for $680 million.

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GAS PRICES HIT NEW HIGH

NEW YORK — Gasoline prices hit new records at the pump again Thursday, while gas and oil futures surged on ongoing concerns that refiners aren't making enough gasoline to meet peak summer driving demand.

With the summer driving season set to begin on Memorial Day weekend, in just over a week, the 1.7 million-barrel increase in gasoline inventories reported by the government on Wednesday simply wasn't enough to convince energy traders that supplies are catching up to demand.

And that means retail gasoline prices are likely to continue rising for at least another month, said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Ill.