AP
Business Highlights
Tuesday August 12, 6:59 pm ET

June trade deficit shrinks as exports climb

WASHINGTON (AP) -- The U.S. trade deficit has gone on a diet, helped by strong exports of farm products and manufactured goods and by Americans spending less as the economy limps along.

The deficit for June fell by 4.1 percent to $56.8 billion. That's the lowest level in three months and a surprise to economists who had expected an increase reflecting a big surge in oil prices during the month, the Commerce Department reported Tuesday.

While oil prices did rise to a record level, exports of everything from soybeans and corn to aircraft engines and heavy machinery surged by the largest amount in four years, offsetting the rising oil bill.

USDA raises corn estimates on 'ideal' weather

WASHINGTON (AP) -- After months of rising food prices, there may be some relief coming with farmers on track to produce the second largest corn crop and fourth largest soybean crop in history.

In its first estimates this year based on field visits and farmer surveys, the U.S. Department of Agriculture sharply raised its estimate Tuesday of corn production and said "nearly ideal" weather has helped Midwestern farmers recover from June's devastating floods.

That recovery eventually may lead to lower prices for corn and soybeans, which in turn could provide some relief to meat producers who use the grains for animal feed.

Stocks fall sharply amid financial sector concerns

NEW YORK (AP) -- Wall Street skidded lower Tuesday as downbeat news from JPMorgan Chase & Co. and other financial companies lifted the market's anxiety about the continuing impact of the credit crisis on the economy. The Dow Jones industrials fell nearly 140 points to 11,642.47.

The latest reminder of continuing troubles for banks and brokerages came when JPMorgan said late Monday it has incurred wider losses in its mortgage holdings so far in the third quarter than in the second quarter.

The losses were proof to investors that the financial sector's problems appear to be nowhere near a resolution.

Oil prices dip again on signs of waning demand

NEW YORK (AP) -- Oil prices fell again Tuesday, dampened by a stronger U.S. dollar and more evidence that developed countries such as the United States are cutting back on their energy use.

Light, sweet crude dipped by $1.44 to settle at $113.01 a barrel on the New York Mercantile Exchange, after falling as low as $112.31, a new three-month low. Oil is now nearly $35 below its July 11 record high of $147.27.

The International Energy Agency lowered its forecast on Tuesday for oil product demand from 30 developed countries, located mostly in Europe and North America, to 48.6 million barrels a day, down 1.3 percent from last year.

GENEVA (AP) -- UBS AG, one of the hardest-hit banks in the subprime mortgage crisis, announced Tuesday that it is reorganizing itself into three business units after reporting a large quarterly loss and taking another $5.1 billion hit in writedowns.

Switzerland's largest bank is separating its ailing investment bank from its healthier businesses: wealth management for high net worth individuals and asset management.

The decision arrived as the bank reported a 358 million Swiss franc ($331 million) loss the April-June period, compared with a profit of 5.5 billion francs in the same period a year earlier. The writeoffs on dwindled assets brought the total for the past year to $42.5 billion.

Budget deficit soars to $102.8 billion in July

WASHINGTON (AP) -- The federal budget deficit soared in July, pushed higher by economic stimulus payments and $15 billion in outlays to protect depositors at failed banks.

The Treasury Department reported that the deficit for July totaled $102.8 billion, nearly triple the $36.4 billion deficit recorded in July 2007. The deficit outstripped the $97 billion gap that Wall Street economists had been expecting.

The Treasury said outlays were pushed up by $15 billion because of payments the Federal Deposit Insurance Corp. made to depositors at failed banks. The Treasury report did not identify the banks but federal regulators seized the assets of California-based IndyMac Bank, the largest regulated thrift to fail in U.S. history.

SEC short-selling ban on Fannie, Freddie to end

WASHINGTON (AP) -- A government order expires Tuesday that temporarily banned a certain kind of short-selling of the stocks of mortgage finance companies Fannie Mae and Freddie Mac and 17 large investment banks.

The companies' shares have stabilized since the ban took effect July 21. The Securities and Exchange Commission says its order helped prevent stock manipulation, and that regulators will be able to analyze data to gauge its effectiveness. But some experts say that may be difficult to determine.

TJX's 2Q profits triple as shoppers seek bargains

NEW YORK (AP) -- TJX Cos., which operates the T.J. Maxx and Marshalls stores, said Tuesday that its second-quarter profits more than tripled from a year ago when the discount fashion retailer digested a charge for a widely publicized security breach.

The Framingham, Mass.-based company also raised its profit outlook as it attracts new shoppers looking for cheaper alternatives in a challenging economy.

President and Chief Executive Carol Meyrowitz told investors in a conference call that she's confident TJX can retain its new customers even when the economy recovers and emphasized a goal to create a global brand with more than 4,300 stores, up from about 2,600 now.

BP shuts down Georgian pipeline as precaution

LONDON (AP) -- BP PLC said it shut down an oil pipeline that runs through Georgia on Tuesday as a precautionary measure, but added that it is unaware of any Russian bombings on pipelines in the region.

BP said the 90,000-barrel-a-day pipeline to Supsa on Georgia's Black Sea coast from Baku in Azerbaijan will remain closed indefinitely.

Another pipeline operated by the London-based oil company in the former Soviet Republic, the larger Baku-Tbilisi-Ceyhan pipeline, is already out of action after a fire last week on its Turkish stretch. The BTC pipeline usually provides around 1 million barrels of Caspian crude to international markets.

CVS Caremark buys Longs Drug Stores

CHICAGO (AP) -- Drug store chain CVS Caremark Corp. said Tuesday that it's buying Longs Drug Stores Corp. in a deal valued at $2.7 billion, excluding the assumption of debt.

The $71.50 per-share cash offer was announced after the end of trading and is a 32 percent premium over Walnut Creek, Calif.-based Longs' closing price of $54.04.

Including the assumption of the chain's $200 million in debt, the deal would be valued at about $2.9 billion.

China's July inflation eases to 6.3 percent

BEIJING (AP) -- China's politically volatile inflation eased in July as sharp rises in food costs slowed, according to data reported Tuesday, giving Beijing more leeway to try to boost slowing economic growth.

Consumer prices rose 6.3 percent in July over the same month last year, the National Bureau of Statistics reported. That was driven by a 14.4 percent rise in foods costs, though that rate was down from 17.3 percent in June. The overall rate, the lowest in nearly a year, was a decline from June's 7.1 percent.

Japan wholesale prices rise 7.1 percent in July

TOKYO (AP) -- Japan's corporate goods prices rose at their fastest pace in more than 27 years, pushed up by surging oil and commodities prices, the Bank of Japan said Tuesday.

Higher wholesale costs may mean that the consumer price index will climb even further, as domestic companies pass on their increasing business costs to consumers.

Japan's index for domestic corporate goods prices increased 7.1 percent in July from a year earlier to 112.0, growing at the fastest pace since an 8.1 percent gain in January 1981. Then, as now, high oil prices were driving inflation.

By The Associated Press

The Dow fell 139.88, or 1.19 percent, to 11,642.47.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 15.73, or 1.21 percent, to 1,289.59, and the Nasdaq composite index fell 9.34, or 0.38 percent, to 2,430.61.

Light, sweet crude dipped by $1.44 to settle at $113.01 a barrel on the New York Mercantile Exchange.

In other Nymex trading, heating oil fell 4.14 cents to $3.0781 a gallon, while gasoline futures slipped 2.34 cents to $2.8432 a gallon. Natural gas futures slid 1.9 cents to $8.33 per 1,000 cubic feet.

On London's ICE futures exchange, Brent crude for September fell $1.52 to $111.15 a barrel.