AP

AP
Business Highlights
Tuesday January 6, 6:12 pm ET

Alcoa to cut 13 pct of global work force

PITTSBURGH (AP) -- Alcoa Inc., the world's third-largest aluminum maker, said Tuesday it will cut 13,500 jobs, or 13 percent of its work force, and slash spending and output to cope with the global economic slowdown.

The Pittsburgh-based company also said 1,700 contractors will be cut as part of a broad-based plan to reduce costs that includes the planned sale of four business units and a global salary and hiring freeze.

As a result of its actions, Alcoa expects total fourth-quarter charges of between $900 million and $950 million. The company plans to report quarterly results Jan. 12. Alcoa also said the moves are expected to save the company about $450 million annually, before taxes.

Fed: Economic woes will last despite radical moves

WASHINGTON (AP) -- Even as Federal Reserve officials slashed their key interest rate to a record low and pledged to use other unconventional tools to fight the worst financial crisis since the 1930s, they still feared the economy would be stuck in a painful rut for some time.

Documents released Tuesday provided insights into the Fed's historic decision to ratchet down its rate to near zero from 1 percent at its Dec. 15-16 meeting. In the first action of its kind in the Fed's 95-year history, Fed Chairman Ben Bernanke and his colleagues created a target range for its rate, putting it at zero to 0.25 percent.

Fed officials expected the economy would "contract sharply" in the final three months of 2008 and in "early 2009," the document said.

Stocks end higher on hopes for economic rebound

NEW YORK (AP) -- Wall Street brushed off more bad economic news Tuesday to finish with a moderate advance that left broad stock indexes at their highest levels in two months.

Stocks gained after stumbling in the early going because of mixed data on the service sector, factory orders and pending home sales. While investors expected the readings would show further deterioration, they were hoping the pace of the declines would slow. The market is eager for signs that the U.S. recession will end this year.

Stocks recovered in midafternoon trading after the Federal Reserve released the minutes from its December meeting, providing insight into the central bank's historic decision to ratchet down its key interest rate to near zero to revive the economy.

US service sector improves slightly in Dec.

WASHINGTON (AP) -- A measure of the U.S. services sector improved slightly in December, beating analysts' estimates, but pending home sales and factory orders both fell more than expected and the overall economic outlook remains grim.

In a reading bolstered by improvements in new orders and employment, the Institute for Supply Management said Tuesday that its services sector index rose to 40.6 in December from 37.3 in November. Wall Street economists surveyed by Thomson Reuters expected the index to slip slightly to 37.

But the index from a trade group of purchasing executives continues to signal the sector is shrinking as any reading below 50 signals contraction. Prices continued to fall, with that component of the index hitting its lowest level since it was first reported in 1997.

German mogul kills self over financial meltdown

BERLIN (AP) -- German billionaire Adolf Merckle threw himself in front of a train after his business empire, which included interests ranging from VW cars to pharmaceuticals to cement, ran into trouble in the global financial crisis, his family said Tuesday.

The 74-year-old's body was found Monday night on railway tracks at Blaubeuren in southwestern Germany, prosecutors in nearby Ulm said in a statement. They described the death as a "railway accident" and said there was no evidence that anyone else was to blame.

His family, which had reported Merckle missing after he failed to return home Monday, issued a brief statement saying he took his own life. A person close to the investigation, who requested anonymity because he was not authorized to speak with the media, said Merckle left a suicide note. Its contents were not divulged.

Apple cuts copy protection and prices on iTunes

SAN FRANCISCO (AP) -- Apple Inc. is cutting the price of some songs in its market-leading iTunes online store to as little as 69 cents and plans to make every track available without copy protection.

In Apple's final appearance at the Macworld trade show, Apple's top marketing executive, Philip Schiller, said Tuesday that iTunes song prices will come in three tiers: 69 cents, 99 cents and $1.29. Record companies will choose the prices, which marks a significant change, since Apple previously made all songs sell for 99 cents.

Apple gave the record labels that flexibility on pricing as it got them to agree to sell all songs free of "digital rights management," or DRM, technology that limits people's ability to copy songs or move them to multiple computers.

Skilling convictions upheld, resentencing ordered

HOUSTON (AP) -- A federal appeals court Tuesday upheld former Enron Corp. Chief Executive Jeffrey Skilling's convictions for his role in the energy giant's collapse but vacated his 24-year prison term and ordered that he be resentenced.

A three-judge panel of the 5th U.S. Circuit Court of Appeals in New Orleans denied Skilling's request to overturn his convictions. Skilling argued his conviction was invalid because of what his lawyers argued were incorrect legal theory, faulty jury instructions, a biased jury and prosecutorial misconduct, including accusations of witness intimidation and withholding evidence.

While denying those arguments, the judges agreed U.S. District Judge Sim Lake erred by applying guidelines that resulted in a prison term of 24 years and four months, and ordered that Skilling be resentenced.

Natural gas shortages slam many European nations

VIENNA, Austria (AP) -- The Russia-Ukraine natural gas dispute hit Europe with the force of a winter storm Tuesday, cutting or limiting supplies to at least a dozen nations. Tens of thousands of people were left without heat and governments scrambled to find alternate energy sources.

Shocked by how fast the shortages were spreading, the European Union demanded a quick end to the quarrel -- a sharp turnaround from their earlier stance, when officials had downplayed the conflict between Moscow and Kiev as primarily a business matter.

But by Tuesday evening, gauges on delivery pipelines to seven countries -- including some depending totally on Russian gas -- pointed toward zero and an increasing number of other nations reported significant reductions.

Economy trumps geopolitical strife: oil falls

COLUMBUS, Ohio (AP) -- Oil prices fell Tuesday as fresh signs of a deepening U.S. recession trumped tensions in the Middle East and worries over natural gas shortages in Europe.

A natural gas dispute between the Ukraine and Russia did effect heating oil prices in the United States.

By The Associated Press

The Dow Jones industrial average rose 62.21, or 0.69 percent, to 9,015.10.

Broader stock indicators showed steeper advances to end at their highest levels since Nov. 5. The Standard & Poor's 500 index rose 7.25, or 0.78 percent, to 934.70. The Nasdaq composite index advanced 24.35, or 1.50 percent, to 1,652.38, helped by an 18.6 percent jump in Ciena shares.

Light, sweet crude for February delivery fell 23 cents to $48.58 a barrel in trading on the New York Mercantile Exchange. Prices early on reached $50.47, the highest point since Dec. 1, before the National Association of Realtors reported that pending home sales fell to the lowest level on record in November. In other Nymex trading, gasoline futures rose 6.68 cents to settle at $1.189 a gallon. Heating oil rose 5 cents to settle at $1.6268 a gallon while natural gas for February delivery fell 8.9 cents to settle at $5.983 per 1,000 cubic feet.

In London, February Brent crude rose 91 cents to $50.53 a barrel on the ICE Futures exchange.