AP
Business Highlights
Wednesday September 3, 6:08 pm ET

August auto sales fall but some say worst is over

DETROIT (AP) -- Nearly every major automaker saw its U.S. sales drop in August, but many are seeing signs that the worst slump in recent history may have bottomed out.

Most upbeat were executives from General Motors Corp., which posted a 20.3 percent sales decline from a year ago but a 31 percent improvement over July's dismal totals.

Much of the gain came from offering all buyers employee discounts on many models.

Chrysler LLC said its U.S. sales fell more than 34 percent in August, while Ford Motor Co. reported a 26.5 percent decline. Toyota Motor Corp.'s sales dipped 9.4 percent, and Honda Motor Co. saw a 7.3 percent slide.

Nissan Motor Co. was the only major automaker to report an increase over August 2007: Its sales climbed 13.6 percent.

Fed: Slow growth, still-high prices hit economy

WASHINGTON (AP) -- The nation struggled with slow economic growth and still-high prices that are weighing on consumers and businesses alike.

The Federal Reserve's new snapshot of business conditions, released Wednesday, underscored the toll the housing, credit and financial debacles are having on the economy and the challenges likely to be faced by the next president. Problems are expected to persist into next year.

Fed Chairman Ben Bernanke and his colleagues are all but certain to leave a key interest rate alone at 2 percent when they meet next on Sept. 16 and probably through the rest of this year.

2 Wall St. brokers accused of $1B subprime fraud

NEW YORK (AP) -- A former Wall Street broker pleaded not guilty Wednesday to charges he and a colleague duped investors into purchasing more than $1 billion in high-risk securities by making it look as though the trades were protected by the federal government.

An indictment unsealed in federal court in Brooklyn said because the securities actually were tied to subprime mortgages, Eric Butler and Julian Tzolov stood to pocket higher commissions. The scheme was exposed when the subprime market collapsed.

If convicted, each faces up to 20 years in prison and a $5 million fine.

Wall Street mixed on global economic worries

NEW YORK (AP) -- Wall Street finished mixed in fickle trading Wednesday, with investors unsettled about the economy ahead of Friday's employment report and only somewhat relieved about sliding commodities prices.

The Commerce Department gave the market just modest comfort when it said orders for manufactured products rose by 1.3 percent in July. The figure was higher than the 0.8 percent predicted by economists polled by Thomson Financial/IFR; the department also upwardly revised its June reading to an increase of 2.1 percent.

However, many traders brushed off the report as old news, given that it is now September. With automakers releasing sluggish August sales and the Federal Reserve reporting weak economic activity throughout the nation, investors proceeded cautiously.

Oil falls on stronger dollar, falling fuel demand

NEW YORK (AP) -- Oil prices inched lower Wednesday as a stronger dollar and slowing demand for crude overshadowed an almost total shutdown of energy output in the Gulf of Mexico after the passage of Hurricane Gustav.

Light, sweet crude for October delivery fell 36 cents to settle at $109.35 a barrel on the New York Mercantile Exchange, after earlier dipping as low as $107.22.

At the pump, a gallon of regular fell to a new national average of $3.681. That's less than half a penny lower than Tuesday's average and more than 10 percent off the all-time record of $4.114 set July 17.

GMAC slashing work force, reduces mortgage lending

LOS ANGELES (AP) -- Lender GMAC Financial Services said Wednesday it will close all of its 200 retail offices and lay off about 5,000 employees as part of plan to reduce its mortgage lending and servicing because of the housing market downturn.

The majority of the layoffs are slated for GMAC's mortgage lending division, Residential Capital LLC, known as ResCap, and will reduce work force at the unit by 60 percent, the company said.

In the first half of the year, ResCap's U.S. mortgage loan production was valued at about $35.7 billion, down nearly 39 percent from the same period in 2007.

DOJ: Ex-KBR chief pleads guilty to bribery charges

WASHINGTON (AP) -- A former chief executive of construction firm KBR Inc. pleaded guilty Wednesday to federal bribery and kickback charges in connection with the company's work in Nigeria from 1995 to 2004.

The Justice Department said Albert "Jack" Stanley entered a guilty plea in federal court in Houston to conspiring in a decade-long scheme to bribe Nigerian government officials in return for engineering and construction contracts.

Under his plea agreement, Stanley, 65, faces a sentence of seven years and payment of $10.8 million in restitution.

Staples 2Q profit drops 16 percent

CHICAGO (AP) -- Slowing sales, falling foot traffic in North American stores and penny-pinching customers combined to drag down Staples Inc.'s second-quarter profit by 16 percent, but a massive acquisition helped the office-supply chain top revenue expectations.

The world's largest office supply company earned $150.2 million, or 21 cents per share, for the quarter ended Aug. 2. That's down from a year-ago profit of $178.8 million, or 25 cents per share.

Analysts surveyed by Thomson Reuters expected the company to earn 21 cents per share on revenue of $4.69 billion..

Hovnanian reports wider 3Q loss

LOS ANGELES (AP) -- Hovnanian Enterprises Inc. says its third-quarter loss more than doubled from a year ago as the homebuilder suffered steep declines in new home contracts and land values.

Hovnanian said Wednesday that after paying preferred stock dividends it lost $202.5 million, or 2.67 a share, for the quarter that ended July 31. That compares with a loss of $80.5 million, or $1.27 a share, in the same period last year.

This is the eighth consecutive quarterly loss for the Red Bank, N.J.-based company.

Commodities bubble burns big investment funds

NEW YORK (AP) -- The deflating commodities bubble is claiming its first casualties as large investment funds absorb staggering losses from bad bets that prices for oil, precious metals and grains would keep going up.

Hedge fund operator Ospraie Management LLC notified investors Tuesday that it's closing its flagship fund after it suffered losses in August on positions in energy, mining and other natural resource-related stocks that left the fund down nearly 40 percent year-to-date. It's believed to be the first hedge fund to go bust in this latest commodities boom as prices come crashing down after a historic bull-run earlier this year.

And the bloodletting may have only begun.

Coca-Cola offers to buy Huiyuan in $2.5B deal

HONG KONG (AP) -- The Coca-Cola Co., the world's biggest beverage company, moved to expand its operations in the fast-growing Chinese market Wednesday with a $2.5 billion bid for major juicemaker China Huiyuan Juice Group Ltd.

Under the deal, Coca-Cola's wholly-owned subsidiary Atlantic Industries would purchase the Chinese company's shares for 12.20 Hong Kong dollars ($1.56) each, almost triple their last closing price, the companies said in a joint statement to the Hong Kong stock exchange. That would value the Beijing-based juice producer at around HK$17.9 billion ($2.3 billion).

Coca-Cola also offered to pay for all outstanding convertible bonds and options, bringing the total amount of the deal to as much as HK$19.6 billion (around $2.51 billion).

According to research firm Dealogic, it is the largest-ever deal in China's food and beverage industry.

By The Associated Press

The Dow Jones industrial average rose 15.96, or 0.14 percent, to 11,532.88, after rising by as many as 37 points and falling by as many as 100.

Broader stock indicators slipped. The Standard & Poor's 500 index fell 2.60, or 0.20 percent, to 1,274.98, and the Nasdaq composite index fell 15.51, or 0.66 percent, to 2,333.73.

Light, sweet crude for October delivery fell 36 cents to settle at $109.35 a barrel on the New York Mercantile Exchange, after earlier dipping as low as $107.22.

In other Nymex trading, heating oil futures inched up half a penny to settle at $3.0788 a gallon, while gasoline futures rose 3.31 cents to settle at $2.7668 a gallon. Natural gas futures rose less than half a penny to settle at $7.264 per 1,000 cubic feet.

In London, October Brent crude fell 28 cents to settle at $108.06 a barrel.