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The Honolulu Advertiser

Posted at 1:16 p.m., Tuesday, May 22, 2007

Business highlights: Diet pill, XM Satellite Radio, P&G

Associated Press

CHINA, U.S. OPEN ECONOMIC TALKS

WASHINGTON — The United States and China opened a new round of high-level economic talks on Tuesday with the leader of China's delegation bluntly saying that any effort to politicize economic differences between the two nations was not acceptable.

The Bush administration was pushing for concrete results to show to an increasingly restive Congress, where lawmakers blame America's soaring trade deficits and the loss of one in six manufacturing jobs since 2000 in part on China's trade practices in such areas as currency manipulation and copyright piracy.

The U.S. delegation also raised the issue of food safety highlighted by such incidents as the deaths of pets who had eaten pet food made with tainted wheat gluten imported from China.

U.S. Trade Representative Susan Schwab, who briefed reporters on the discussions, said food safety was raised over breakfast by Agriculture Secretary Mike Johanns and Health and Human Services Secretary Michael Leavitt.

In opening remarks delivered in an ornate government auditorium decked out in flags from both nations, Chinese Vice Premier Wu Yi cautioned the United States against pursuing a blame-game.

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EDUCATIONAL EXHIBIT BEGINS FOR DIET PILL

NEW YORK — You won't lose weight in your sleep or shed pounds while eating anything you want — that's the sobering message from the maker of a weight loss pill poised to hit shelves next month.

GlaxoSmithKline on Tuesday opened an educational exhibit in New York City to prepare the country for alli, the first over-the-counter diet pill approved by the Food and Drug Administration.

While the cautionary marketing approach may not trigger stampedes to the counter, analysts say the drug's fate hinges on the pharmaceutical giant's ability to convince people that diet pills aren't a magic bullet.

GlaxoSmithKline has apparently learned the lesson and is counting on alli to become a star money maker. The company is spending $150 million on marketing alli this year, making it one of the drug maker's biggest campaigns to date.

In clinical trials, the FDA says that people using alli lost an additional 2 to 3 pounds for every 5 pounds lost through diet and exercise. The FDA approved alli to be sold over the counter in February.

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OIL PRICES DROP BELOW $65 A BARREL

NEW YORK — Oil prices dropped below $65 a barrel as investors sold contracts before their expiration Tuesday, and before the government's weekly inventory report.

News of a partial oil production shutdown in Alaska and a government report predicting a busy hurricane season failed to boost prices.

The June contract for light, sweet crude, which expired Tuesday, lost $1.30 to settle at $64.97 a barrel on the New York Mercantile Exchange. The July contract also fell $1.36 cents to close at $65.51 a barrel.

July Brent crude slipped 97 cents to settle at $69.52 a barrel on the ICE Futures exchange.

Concerns ahead of the high-demand summer driving season in the U.S. have propped up prices lately, despite expectations that a snapshot of inventories due for release Wednesday could show the third increase in gasoline stocks in as many weeks.

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XM SATELLITE RADIO SERVICE DISRUPTED

XM Satellite Radio restored service Tuesday after a software glitch knocked out the signal from one of its four satellites and disrupted service to many of the company's 8 million subscribers for about a day.

The problems began around noon Monday, the company said. They initially expected to fix the problem after a few hours but service remained disrupted for about 24 hours.

It is still not clear exactly how many of XM's customers were affected by the outage. Internet message boards indicated the problem was widespread.

The company apologized to customers in a brief statement Tuesday.

XM customers pay about $13 a month for the service.

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P&G PLANS DETERGENTS WITH DOUBLE CONCENTRATIONS

CINCINNATI — Liquid detergents made by the Procter & Gamble Co. for distribution in North America will be sold in double-strength concentrations by April, the company said Tuesday.

That will mean smaller containers easier for consumers to handle, and will decrease the volume of packaging to be warehoused and, ultimately, disposed of in landfills, the consumer products company said.

The brands include Tide, Gain, Cheer, Era and Dreft liquid. The rollout in the southern U.S. and Puerto Rico will begin in September and will be completed by April in the Northeast and Canada.

The concentrated detergents provide consumers with the same number of loads in a detergent bottle half the size, the company said.

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OVERSIGHT MAY INCREASE FOR HOME MORTGAGE BUYERS

WASHINGTON — Legislation to tighten federal oversight of the two biggest buyers of home mortgages, Fannie Mae and Freddie Mac, cleared the House Tuesday.

However, the bill could lose the critical support of the Bush administration because of a new provision trimming the authority of federal regulators.

The vote in the House was 313-104 for the measure providing for stricter federal supervision of the two government-sponsored companies, which together finance or guarantee more than three-quarters of U.S. home mortgages. The legislation also would create a housing aid fund — worth as much as $3 billion — to be financed by Fannie Mae and Freddie Mac.

The legislation is the product of a compromise between majority Democrats in the House and the administration.

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STAPLES LOWERS PROFIT GUIDANCE

BOSTON — Office supply retailer Staples Inc. nudged its profit guidance lower on Tuesday, saying that the pressure to cut costs among consumers and businesses could slow already sluggish U.S. sales.

The forecast came as Staples reported profits rose 12 percent in the first quarter, when listless domestic sales growth was offset by strong gains in its office products delivery business and overseas operations.

Staples' shares fell 62 cents, or more than 2 percent, to $25.05 Tuesday.

Framingham-based Staples said its net income for the three-month period ended May 5 rose to $209.1 million, or 29 cents per share, up from a profit of $186.1 million, or 25 cents per share, in last year's first quarter. Sales rose 8 percent to $4.59 billion from $4.24 billion a year ago.

The latest quarter's profit matched the consensus forecast of 29 cents a share by analysts surveyed by Thomson Financial, though the sales result fell short of analysts' forecast of $4.67 billion.

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UNIVERSAL GETS OK TO BUY BMG MUSIC

BRUSSELS, Belgium — EU regulators gave Universal Music Group clearance Tuesday to buy BMG Music Publishing for about for about $2.09 billion in a deal that will create the world's largest music publishing company.

The EU warned, however, that its "serious doubts" about the deal's effect on online music were soothed only by the companies' plan to sell the rights to some hits from the '80s and '90s by artists such as Justin Timberlake, Iron Maiden and R. Kelly.

Combining the world's No. 3 and No. 4 music publishing catalogs will give Universal the publishing rights to artists as diverse as Mariah Carey, U2, 50 Cent, Elton John and Leonard Bernstein. With a 22 percent market share, it will scrape ahead of current market leader EMI Group PLC.

EU approval was the last hurdle for the deal, which Universal said would close shortly. It is separate from the merger of the Sony-BMG music units more than two years ago that the EU is now re-examining.