AP
Business Highlights
Friday August 8, 6:52 pm ET

Fannie Mae loses $2.3B in quarter

WASHINGTON (AP) -- Fannie Mae is making bold cutbacks that will send shock waves through the mortgage market, after posting a quarterly loss Friday that was three times larger than Wall Street expected.

To slow its financial decline, the mortgage finance giant slashed its dividend to 5 cents a share from 35 cents a share and said it will eliminate loans for borrowers with solid credit scores but little proof of income or small or no down payments.

The company, which lost $2.3 billion for the quarter that ended June 30, also is raising its mortgage fees, which will be passed on to borrowers as higher interest rates or closing costs.

Oil sinks on stronger dollar to $115 a barrel

NEW YORK (AP) -- Oil prices dove to $115 a barrel on Friday, driven lower by a huge jump in the U.S. dollar, signs of moderating demand around the world and the burgeoning belief that commodities may have peaked.

Shrugging off concerns about a sabotaged oil pipeline in Turkey, investors pulled their money out of commodities and put it back into stocks, giving crude oil a weekly loss of nearly $10 a barrel, and driving the Dow Jones industrial average up more than 300 points.

Light, sweet crude for September delivery slumped $4.82 to settle at $115.20 a barrel on the New York Mercantile Exchange, its lowest settlement since May 1. During trading, crude dipped as low as $114.90. Prices for gasoline, heating oil and natural gas also dropped.

Stocks jump as oil prices fall sharply

NEW YORK (AP) -- Wall Street rebounded smartly Friday, shooting higher as a surge in the dollar and another plunge in oil prices eased some of investors' worries about losses at mortgage finance company Fannie Mae.

The Dow Jones industrials soared more than 300 points, more than wiping out a big loss from the previous session, and all the major indexes had their best weekly gains since April.

The session extended a streak of volatility that has seen the Dow making frequent triple-digit moves as investors reacted feverishly to news about the financial sector, corporate earnings and the economy.

The Dow rose 302.89, or 2.65 percent, to 11,734.32.

Dollar soars higher on euro zone woes

NEW YORK (AP) -- The dollar soared Friday in what analysts are calling a game-changing move as concerns about the deteriorating euro zone economy gripped investors and commodities sold off.

In late trading in New York, the euro came off its lows to $1.5013 from $1.5328 late Thursday. Earlier in the day, it sank as low as $1.5004. It is the highest point for the dollar since late February, and a rapid recovery from July 15, when the euro hit a record against the dollar at $1.6038.

The euro also sank against the British pound and the Japanese yen -- both of which are also weakening against the dollar.

Productivity growth slowed in spring

WASHINGTON (AP) -- The efficiency of America's workers grew at a slightly slower pace in the spring as companies sought to produce more with leaner work forces. Workers' compensation growth slowed, too.

The Labor Department reported Friday that productivity -- the amount an employee produces for every hour on the job -- grew at an annual rate of 2.2 percent during the April-to-June quarter. That was down from a 2.6 percent growth rate logged in the first three months of this year.

Economists were forecasting productivity to pick up slightly to a 2.7 percent pace.

UBS settles $18.6B auction-rate securities case

NEW YORK (AP) -- Swiss banking giant UBS AG agreed Friday to buy back nearly $20 billion in auction-rate securities from investors, a day after Citigroup Inc. reached a similar settlement with regulators for $7 billion as part of a wide-ranging investigation into the collapse of the market for the bond-like investments.

UBS will repurchase all $18.6 billion of the securities it sold and pay a fine of $150 million as part of an investigation led by New York Attorney General Andrew Cuomo into whether banks misled customers about the safety of the securities.

As part of its settlement announced Thursday, Citigroup will also pay fines of $100 million.

McDonald's July same-store sales rise 8 percent

NEW YORK (AP) -- Despite a tough U.S. economy, McDonald's Corp. posted an 8 percent gain in July same-store sales on Friday as hungry consumers worldwide lined up for breakfast items and the classic Big Mac sandwich.

Many consumers have cut back on eating out amid economic weakness and rising gasoline prices, but business at the Golden Arches held up well in July, especially in the U.S.

Same-store sales, or sales at stores open at least 13 months, grew 6.7 percent in the U.S. Same-store sales are a key indicator of restaurant performance because the measure growth at existing locations rather than newly opened ones.

European banks post better-than-expected results

LONDON (AP) -- The Royal Bank of Scotland posted first-half losses Friday that weren't nearly as bad as some analysts had feared, rounding out what is shaping up to be a relatively bright earnings season for Europe's biggest financial institutions.

European banks have been getting help from stronger business in emerging economies, and have been reporting surprisingly resilient results in the face of global economic turmoil and losses from the U.S. subprime mess.

Of the major banks, only Switzerland's UBS has yet to post its results, which are due Tuesday.

Insurance weighs on Berkshire Hathaway's 2Q profit

OMAHA, Neb. (AP) -- Berkshire Hathaway Inc. reported an 8 percent decline in second-quarter profit Friday because it collected fewer insurance premiums and recorded $1 billion in unrealized derivative losses.

Billionaire Warren Buffett's company said it generated $2.9 billion in net income, or $1,859 per share, during the quarter that ended June 30. That's down from the $3.1 billion net income, or $2,018 per share, it reported in the same period a year ago.

The three analysts surveyed by Thomson Financial were expecting earnings per share of $1,370.33 on average.

Beazer Homes 3Q loss narrows

Beazer Homes USA Inc. on Friday posted a narrower loss in its fiscal third quarter as the builder slashed expenses in the face of a 42 percent drop in orders for new homes.

There was some positive news for home shoppers, however, as home prices continued to decline. The average price of a Beazer home declined almost 9 percent in the quarter to $257,400.

The Atlanta-based company posted a loss of $109.8 million, or $2.85 a share, for the quarter that ended June 30. That compares with a loss of $118.7 million, or $3.09 a share, in the same period last year.

GM, Deloitte to settle shareholder suit for $303M

NEW YORK (AP) -- General Motors Corp. and its auditor have agreed to pay $303 million to settle claims that the automaker misled shareholders about its finances.

Under the settlement, GM would pay $277 million to investors, while its auditor, Deloitte & Touche LLP, would pay $26 million, pending approval from U.S. District Judge Gerald Rosen in Detroit.

The two-year-old class-action lawsuit claimed that GM misstated and mischaracterized its revenue, earnings and cash flow, artificially inflating the company's stock price and debt securities.

Ohio exec sentenced to 10 years in bribery case

COLUMBUS, Ohio (AP) -- The founder of a failed health care financing company was sentenced to 10 years in prison Friday for bribing a witness to testify at an upcoming corporate fraud trial.

U.S. District Court Judge Algenon Marbley also ordered Lance Poulsen, founder of National Century Financial Enterprises, to pay a $17,500 fine.

Federal prosecutors, who have likened the case to a privately held company's version of the Enron or Worldcom scandals, pushed for a 35-year sentence for Poulsen because of what they called the serious nature of his crime.

By The Associated Press

The Dow rose 302.89, or 2.65 percent, to 11,734.32.

Broader indicators also rose sharply Friday. The Standard & Poor's 500 index advanced 30.25, or 2.39 percent, to 1,296.32 and the Nasdaq composite index advanced 58.37, or 2.48 percent, to 2,414.10.

Light, sweet crude for September delivery slumped $4.82 to settle at $115.20 a barrel on the New York Mercantile Exchange.

Heating oil futures fell 10.56 cents to finish at $3.1280 a gallon on the Nymex, where gasoline futures fell 11.53 cents to close at $2.8874 a gallon. Natural gas futures fell 32.3 cents to settle at $8.248 per 1,000 cubic feet.

In London, Brent crude for September delivery fell $4.53 to finish at $113.33 a barrel.