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The Honolulu Advertiser
Posted on: Wednesday, June 2, 2010

BUSINESS BRIEFS
Key interest rate jumps quarter point in Canada


Associated Press

Hawaii news photo - The Honolulu Advertiser

A construction crew works on a bridge site in San Diego. The economic recovery gained strength on the biggest rise in construction spending in nearly a decade and the 10th-straight month of expansion for the manufacturing sector.

GREGORY BULL | Associated Press

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TORONTO Canada yesterday became the first Group of Seven nation to raise interest rates since the global financial crisis, but said any further hikes would depend on global economic conditions.

The Bank of Canada increased its key interest rate by a quarter point to .50 percent from a record-low rate of .25 percent.

The bank said thus far the impact of Europe's sovereign debt crisis in Canada has largely been limited to a modest fall in commodity prices.

It said the rate hike still leaves considerable monetary stimulus in place.

Economists expected the central bank to raise rates after the country's economy grew 6.1 percent in the first three months of this year, a considerably faster rate than the U.S.

COVIDIEN BUYS EV3 IN $2.6B CASH DEAL

NEW YORK Covidien PLC said yesterday it is buying medical device maker ev3 Inc. for $2.6 billion in cash in a deal that could help it step up sales growth.

Covidien, which makes drugs and medical devices, will pay $22.50 for each share of ev3, a premium of nearly 19 percent over Friday's closing price.

Ev3's devices are used in endovascular surgeries, operations in which surgeons make small incisions and maneuver devices in the body through major blood vessels. Other products are used in neurovascular procedures, or procedures involving both blood vessels and nerves. Ev3 expects $520 million to $530 million in revenue this year.

AIG REJECTS LOWER PRUDENTIAL OFFER

LONDON Bailed-out U.S. insurer AIG said yesterday it won't accept a lower offer for its Asian insurance business from Prudential, which proposed a $5 billion cut to calm rebellious shareholders who thought the price was too high.

London Stock Exchange-listed Prudential PLC initially agreed to pay $35.5 billion for AIA, the Asian insurance business of American International Group Inc. Faced with the growing possibility that it could not win 75 percent backing from shareholders, Prudential lowered the offer to $30.375 billion.

AIG, majority owned by the U.S. government, plan- ned to use the proceeds to repay U.S. taxpayers for some of the $180 billion it got in bailout money.

HUNDREDS TO LOSE JOBS AT CITIFINANCIAL

NEW YORK Citigroup Inc. is closing 330 branches of its U.S. consumer finance business as part of a restructuring aimed at finding a buyer for the unit, the bank said yesterday.

The branch closures at CitiFinancial will result in about 500 to 600 job cuts across 48 states, the bank said.

The U.S. business of CitiFinancial will also be split into two parts, one offering personal, home equity and refinancing loans and the other handling loan modifications and restructuring, Citigroup said.

CitiFinancial will be renamed after the reorganization is complete.

HONDA SAYS STRIKE AT CHINA FACTORY OVER

BEIJING Honda Motor Co. said a key parts factory in China resumed full operation today following a two-week strike over wages that forced Honda to halt production at four assembly plants.

The strike highlighted tensions between workers and foreign companies that look to China as a source of cheap labor and a fast-growing market amid weak demand elsewhere. Work resumed after employees of the factory belonging to Honda's joint venture, Guangqi Honda Automobile Co., accepted Honda's pay increase offer. The plant in the southern city of Foshan, near Hong Kong, makes transmissions and engine parts.

FDA GIVES APPROVAL TO AMGEN'S PROLIA

WASHINGTON The Food and Drug Administration yesterday approved Amgen's bone strengthening drug, Prolia, for postmenopausal women at risk for fractures, a potential blockbuster market.

The injectable drug is given once every six months to increase bone mass and strength.

Analysts think Prolia should bring Amgen billions in revenue. Sales of the company's former top sellers, the anemia drugs, Aranesp and Epogen, have dropped in recent years due to safety concerns and label restrictions.

Pill-based osteoporosis drugs, such as Fosamax and Zometa, have been available for more than a decade. But Amgen executives say many women can't tolerate those drugs or have trouble remembering to take a daily medication.