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Top stories for August 27,

1. U.S. Economy: July Home Resales Fall 3% to 5.17 Million Rate
2. Argentine Bondholders to Meet Treasury Officials in Washington
3. AIG Shares Could Post First Yearly Loss Since 1990
4. Deere Plans to Sell Homelite Unit, Shed 2,000 Jobs
5. At Home Says Note Holders Demand $50 Mln Payment
6. American Express Picks a Haagen-Dazs Marketer to Boost Mutual Fund Profile
7. Franklin Mutual Sold Sunbeam Stake: Mutual Funds
8. Euro Falls Amid Rising Doubt the ECB Will Lower Rates Thursday
9. U.S. Bonds Fall, 2-Yr Notes Rise; Additional Fed Rate Cut Seen
10. U.S. Stocks Fall as Home Sales Drop; Home Depot, Lowe's Slip
11. Ohio Utility DPL Sells Securities and Pays Back Investor KKR
12. Japanese Companies Offer Fat Payouts to Get Workers to `Retire'

1. U.S. Economy: July Home Resales Fall 3% to 5.17 Million Rate
Washington: U.S. sales of previously owned homes fell in
July to the slowest pace in six months, a sign buyers may be
turning wary because of rising unemployment and a weak economy,
an industry report showed.
Home resales dropped 3 percent to 5.17 million units at an
annual rate from a 5.33 million-unit pace in June, the National
Association of Realtors said. Sales fell in every region except
the Northeast, and home prices declined from a record high.
A jobless rate at a 2 1/2-year high and the slowest 12 months
of economic growth since the last recession may restrain housing
in coming months. Even so, the industry is still on pace for its
second-best year.
``We're looking at the future with cautious optimism,'' said
Robert Moles, chief executive at Cendant Corp.'s real estate unit,
whose franchises include Century 21 and Coldwell Banker.

2. Argentine Bondholders to Meet Treasury Officials in Washington
New York: U.S. Treasury officials will meet with holders
of Argentine bonds tomorrow to gauge their reaction to a planned
debt swap that is part of an $8 billion loan agreement with
the International Monetary Fund, investors invited to the meeting
said.
J.P. Morgan Chase & Co., the biggest U.S. investment bank in
Argentina, helped arrange the meeting in Washington through Joyce
Chang, who runs the bank's emerging market research. U.S. Treasury
Undersecretary John Taylor is expected to attend.
The meeting comes as Argentine bonds have fallen for two
days, erasing some of the 9.5-point surge recorded after the IMF
approved a new loan for the country a week ago. Investors are
concerned because the government hasn't provided any information
on how it will swap some of the country's $95 billion of bonds.
``Treasury officials are looking to manage expectations and
gather some information from investors,'' said Christian Stracke,
head of Latin American strategy and research at Commerzbank
Capital Markets. ``There's some concern that the market sees the
U.S.-led debt swap as an overly generous bailout of Argentina.''

3. AIG Shares Could Post First Yearly Loss Since 1990
New York: American International Group Inc. shares may post
their first annual loss since 1990 as investors fret the global
economic slowdown will stunt growth at the second-biggest financial-services
company.
Shares of AIG, which gained an average 29 percent a year
between 1991 and 2000, beat the Standard & Poor's 500 Index's
average 17 percent rise in that time and outpaced every financial
stock except Merrill Lynch & Co. This year, AIG has declined 21
percent to $76.67.
The drop, which sliced the value of Chairman and Chief
Executive Maurice ``Hank'' Greenberg's holdings by about $860
million, reflects investor concern over the effects of slowing
economies in Asia and potential liabilities in the U.S. Price
increases of as much as 30 percent at its flagship insurance
businesses may not boost profits as planned, some investors say.
``In a slowing economy, no one is going to sit still for
paying more for insurance,'' said Philip Foreman, a portfolio
manager at Evergreen Asset Management, which owns about 5.2
million AIG shares after selling 3.6 million in the last quarter.

4. Deere Plans to Sell Homelite Unit, Shed 2,000 Jobs
Moline, Illinois: Deere & Co. plans to sell its money-losing
Homelite lawn care-products business and reorganize its construction
and forestry division to cut about 2,000 jobs, or about 4.6
percent of its payroll.
Homelite products include chainsaws, blowers and trimmers.
Deere, the biggest farm-equipment maker, will try to sell the
Homelite operation in Chihuahua, Mexico, which employs 1,200. In
Charlotte and the South Carolina cities of Greer and Columbia,
some or all of Homelite will be closed, and 475 jobs lost.
Deere is scaling back a seven-year foray into retailing
consumer-brand lawn-care products that was intended to reduce its
reliance on sales of heavy farm equipment, analysts said. Deere
already planned to trim production of tractors and combines by
25 percent as sales slow, and said in June it would prune
1,250 salaried positions in the U.S.
``It's becoming obvious the economy isn't going to bounce
right back,'' said Susan Cross, an analyst with Wilmington Trust
Co., which owns about 13,000 Deere shares. ``They're doing what
they have to do given the environment.''

5. At Home Says Note Holders Demand $50 Mln Payment
Redwood City, California: At Home Corp. may be forced into
bankruptcy by Promethean Investment Group LLC, which is demanding
a $50 million payment before Friday on convertible notes issued
in June. At Home disputes the claim.
At Home, facing delisting from the Nasdaq Stock Market and
losses exceeding $50 million a quarter, said Promethean -- a
lender of last resort to several Internet firms -- claims that
AT&T Corp.-backed At Home underestimated its financing needs when
they bought the notes. At Home shares fell 11 cents to 39 cents,
its lowest-ever close.
``When you go to a company like Promethean to get capital,
bankruptcy is always lurking round the corner,'' said F. Drake
Johnstone, an analyst at Davenport & Co. who downgraded At Home to
``sell'' last week. ``If Promethean has a provision allowing them
to demand cash, they won't be shy.''
Promethean extended EToys Inc. a so-called death spiral loan
before the toy retailer filed for bankruptcy protection in March.
Log On America Inc. sued lenders including Promethean last year,
claiming they deliberately drove down the company's share price to
profit on bets the stock would fall. The suit against Promethean
is still outstanding though Promethean Chairman James O'Brien
denied the claim in an affidavit and his firm has counter sued.

6. American Express Picks a Haagen-Dazs Marketer to Boost Mutual Fund Profile
Minneapolis: Claire Huang joined Haagen-Dazs's marketing
group in 1994 when the ice cream maker had nothing to compete
with Ben & Jerry's No. 1 flavor, Cherry Garcia.
She pushed for a new cherry ice cream, tasting flavors with
mixes of swirls and chunks. Her vanilla ice cream with cherry
pieces and a little juice is now the 11th-most popular of 25 U.S.
flavors for Haagen-Dazs, the leading premium ice cream brand.
Huang now is charged with boosting business at the American
Express Co. unit that sells mutual funds and retirement plans, and
has lagged its competitors in collecting assets. The No. 1 charge-
card company has 11,600 financial advisers and just $161 billion
in private client assets -- 12 percent of the $1.3 trillion
Merrill Lynch & Co. handles with 15,000 U.S. brokers.
``When you think of American Express, you don't think of
asset management,'' said Henry Cavanna, senior equity portfolio
manager at J.P. Morgan Fleming Asset Management, which owns
American Express shares.

7. Franklin Mutual Sold Sunbeam Stake: Mutual Funds
Washington: Franklin Mutual Advisers LLC sold its stake
in Sunbeam Corp. this year, ending an investment relationship
that former fund manager Michael Price forged more than a decade
ago.
The Short Hills, New Jersey, mutual fund group reported in a
regulatory filing that it no longer held any Sunbeam shares as of
June 30. At the end of last year, Franklin Mutual ranked as the
second-largest Sunbeam shareholder with a 17.4 percent stake in
the Boca Raton, Florida, company.
Price, the former chief executive of Franklin Mutual, helped
bring the appliance company out of bankruptcy in 1990. Now, 11
years later, Sunbeam is once again reorganizing under Chapter 11
of the federal bankruptcy code. Its shares trade at 9 cents, and
bank lenders are expected to end up owning the company.
``It's almost a moot point now (as to) who is an equity
holder,'' said Rommel Dionisio, an analyst at Friedman, Billings,
Ramsey & Co. ``There was no plan for recovery for equity holders
under the current bankruptcy plan.''

8. Euro Falls Amid Rising Doubt the ECB Will Lower Rates Thursday
New York: The euro fell against the dollar on doubts the
European Central Bank will lower interest rates this week.
Some investors were concerned a report tomorrow will show
money supply, one measure of inflation, rose in July, giving the
central bank less room to reduce its 4.5 percent benchmark rate at
a meeting Thursday. Investors have been betting on a rate cut to
boost growth in the currency region.
The euro is going to fall ``as the market starts thinking
they're not going to cut rates,'' said Marc Chandler, chief
currency strategist at HSBC Bank USA.
Europe's common currency dropped as much as 0.62 percent to
90.86 U.S. cents, from 91.41 Friday, for its largest slide since
July 5. It then recovered to 91.21 cents. The euro fell to 109.37
yen, from 109.88.

9. U.S. Bonds Fall, 2-Yr Notes Rise; Additional Fed Rate Cut Seen
New York: U.S. Treasury bonds fell, and two-year notes gained,
amid expectations the Federal Reserve would lower interest rates
once more in an effort to head off a recession.
``The risk of a recession is so costly that the Fed can
afford'' to cut rates again, even at the risk of stoking
inflation, said Sung Won Sohn, chief economist at Wells Fargo &
Co. in Minneapolis.
Thirty-year bonds, among the securities most sensitive to
faster inflation, fell 9/32, or $2.81 per $1,000 bond, to 98
21/32, boosting yields 2 basis points to 5.47 percent. Current
two-year notes rose 1/32 to 100 1/4, lowering yields 2 basis
points to 3.74 percent. Two-year notes scheduled to be sold
Wednesday, currently trading under ``when-issued'' status,
yield 3.78 percent.
That widened the difference between current two- and 30-
year Treasury yields 5 basis points to 1.73 percentage points.
The spread expands because yields on longer-term securities are
more closely linked to expectations for growth and inflation,
while those on shorter maturities track rates set by the Fed.

10. U.S. Stocks Fall as Home Sales Drop; Home Depot, Lowe's Slip
New York: U.S. stocks fell after sales of previously owned
homes declined more than expected in July, raising concern consumer
spending may be slowing and corporate profits won't rebound
soon.
The New York Stock Exchange had its fourth-slowest full-day
session this year as regional banks such as Washington Mutual Inc.
and home-improvement retailers Home Depot Inc. and Lowe's Cos.
dropped on the home-sales report.
``People are concerned about consumers' ability to pay those
mortgages,'' said John Forelli, who helps manage $25 billion at
Independence Investment LLC in Boston. ``The consumer has stayed
strong for so long, yet we are not seeing a pick-up from the cuts
in business spending and layoffs.''
The Standard & Poor's 500 Index dropped 5.72, or 0.5 percent,
to 1179.21. The Dow Jones Industrial Average declined 40.82, or
0.4 percent, to 10,382.35, led by Home Depot. The Nasdaq Composite
Index fell 4.39, or 0.2 percent, to 1912.42, wiping out a 0.9
percent gain in the final hour of trading.

11. Ohio Utility DPL Sells Securities and Pays Back Investor KKR
New York: DPL Inc. took advantage of a drop in borrowing
costs to sell bonds and repay investor Kohlberg Kravis Roberts
& Co., which last year invested $550 million in the Ohio utility.
DPL sold $700 million of notes and equity-like debt Friday,
most of which will be used to repay $550 million of securities
bought by buyout firm KKR. The Dayton, Ohio-based utility got
rates on the new debt as much as 2 percentage points lower than
the rate on the 30-year securities sold to KKR.
``It was our decision to sell bonds now,'' said Elizabeth
McCarthy, DPL's chief financial officer. ``Given where the market
was, it made sense to lock in lower interest rates.''
DPL on Friday sold $300 million of 30-year trust preferred
securities -- which have characteristics of both debt and equity -
- and $400 million of 10-year notes. The notes pay out interest of
6.875 percent, less than the 8.5 percent rate on the securities
held by KKR. The rate on the new trust preferred securities is
also lower at 8.125 percent.

12. Japanese Companies Offer Fat Payouts to Get Workers to `Retire'
Tokyo: Two years ago, Yoshi Matsushima was called in by
his boss and asked to resign. He refused, and not even a 10
percent pay cut and a demotion could push him out the door.
``I was so angry, and I still am,'' 51-year old Matsushima
says, recalling the day he was asked to leave Kokusai Kogyo Co., a
bus and resort owner. ``To ask me to quit after working there all
my life! How could I get another job?''
Firing staff is rare in a country where a job for life is
considered a right, hampering efforts by companies to cut costs
and bolster profits. While workers in the U.S. may get little more
than a month's pay with their pink slips, Matsushita Electric
Industrial Co. offered 10-year veterans as much as $500,000 to
retire early.
``Workers count on lifetime employment and the seniority-
based promotion system in Japan, so they need something extra to
agree to leave early,'' said Kumiko Takahashi, a spokeswoman at
Daiei Inc., which paid 1,000 workers about double their retirement
entitlements to leave early.

Top stories for August 24, 2001

1. U.S. Stocks Rally as Cisco Orders, Home Sales Boost Optimism
2. U.S. Economy: Home Sales Rise Amid Factory Slump
3. Firestone, Texas Family Reach Settlement in Tire Suit
4. U.S. Bankruptcy Filings Rise 24.5% in 2nd Qtr From Year Ago
5. Cisco Rises 8.9% as It Says Orders Meeting Forecast
6. U.S. Bonds Post Biggest Loss in More Than 3 Weeks; Stocks Rise
7. P&G Chairman, CEO Got $72.9 Million in Stock Options
8. Morgan Stanley to Require Stock Analysts to Disclose Ownership
9. Gasoline Surges as Midwest Refinery Shutdown Spurs Supply Worry
10. Microsoft Antitrust Case Sent to Judge Kollar-Kotelly
11. AMR's American Air Pilots Reject Fast-Track Talks
12. Bush Administration, Senate May Trim Number of `Boutique' Fuels

1. U.S. Stocks Rally as Cisco Orders, Home Sales Boost Optimism
New York: U.S. stocks rallied, sending the Nasdaq Composite
Index to its biggest gain in six weeks, after networking-equipment
maker Cisco Systems Inc. said orders are meeting forecasts.
Cisco's report raised optimism that corporate profits may
reverse their slide, helping lift shares of technology companies
including Juniper Networks Inc., Microsoft Corp. and Sun
Microsystems Inc. Their gains propelled the Nasdaq to its first
winning week since Aug. 3.
Stocks also got a boost after new-home sales unexpectedly
rose in July, on pace to make 2001 the best year on record for the
industry.
As the third-largest Nasdaq company by market value, ``Cisco
carries weight'', said Barry Hyman, investment strategist at
Ehrenkrantz King Nussbaum. ``The housing numbers showed the
consumer is still in the game, which means a second-half recovery
may still be possible.

2. U.S. Economy: Home Sales Rise Amid Factory Slump
Washington: Americans bought new homes at the fastest pace
in four months in July, helping ease the damage to the economy
from slumping orders for factory goods.
The Commerce Department reported a 4.9 percent rise in sales
to 950,000 houses at an annual pace, the most since March. The
increase was the second in a row and surprised analysts, who were
expecting sales to drop.
A 0.6 percent decrease in new orders for durable goods, also
reported by the Commerce Department, came as no surprise. Still,
the 2.6 percent drop the previous month was larger than previously
thought and the level of orders excluding the volatile
transportation category was the lowest since January 1997.
``Demand for housing products remains very strong,'' said
Pete Correll, chief executive officer of Georgia-Pacific Group,
the second-biggest maker of forest products such as paper,
packaging, lumber and plywood, in an interview. At the same time,
``Some of our businesses are the worst I've seen in 30 years.''

3. Firestone, Texas Family Reach Settlement in Tire Suit
McAllen, Texas: Bridgestone/Firestone Inc. agreed to settle
a wheelchair-bound Texas woman's lawsuit over a tire-failure
accident, the first case to go to trial since 6.5 million tires
were recalled a year ago.
Firestone agreed to pay $7.5 million to the family of Marisa
Rodriguez in addition to $350,000 it paid earlier, said one of the
plaintiff's lawyers who declined to be identified by name. Federal
safety officials have linked Firestone tires to 203 deaths and
more than 700 injuries. Firestone blamed the family's 1998 Ford
Explorer that rolled over after a tire failed, while Ford Motor
Co. says the Explorer is safe and blames Firestone.
``Marisa Rodriguez needs lifetime, around-the-clock care,''
said a Rodriguez family lawyer, Mikal Watts, who added that the
settlement ``will ensure she will always have resources to take
care of her as long as she's on earth.'' The family settled with
Ford last month for $6 million.
The lawsuit against Firestone originally sought $1 billion in
damages. Earlier this week, Rodriguez attorney Rick Garcia said
the family was seeking $17 million during settlement talks. In
settling the case, Firestone avoided the possibility of a large
judgment and a jury finding of fault. Ford also could have been
found at fault even though it was not involved in the suit.

4. U.S. Bankruptcy Filings Rise 24.5% in 2nd Qtr From Year Ago
Washington: More than 400,000 Americans declared bankruptcy
between April and June, a 24.5 percent increase from the same
period last year, according the Administrative Office of the
U.S. Courts.
``That's just a shocking number,'' said Sam Gerdano,
executive director of the American Bankruptcy Institute, a non-
partisan research institution. ``There's never been a first six
months like we've had this year.''
Gerdano attributed the rise to a sluggish U.S. economy and a
desire by some consumers to declare bankruptcy before Congress
clears legislation making it harder to discharge credit card debt.
Bankruptcy filings increased 8.6 percent to 1,386,606 during
the 12-month period that ended in June, according to the data.
Personal filings increased 8.8 percent to 1,349,471 during that
period. Business filings increased 0.6 percent to 37,135.

5. Cisco Rises 8.9% as It Says Orders Meeting Forecast
San Jose, California: Cisco Systems Inc. shares rose 8.9
percent after the largest maker of computer- networking equipment
said business may be ``stabilizing'' and orders are meeting
its forecast.
The shares rose $1.49 to $18.25. They have declined
52 percent this year.
Cisco predicted Aug. 7 that fiscal first-quarter sales
would be unchanged to down 5 percent from the previous period's
$4.3 billion, which was a 25 percent decline from a year earlier.
Chief Executive John Chambers already has cut 8,500 jobs this year
and trimmed product lines, and yesterday he introduced the biggest
management reorganization since 1997.
``The market's thirsting for something positive to hang their
hat on, and I think it's a good sign that Cisco is beginning to
see stabilization,'' said Christopher McHugh, senior portfolio
manager at Turner Investment Partners, which owned 8.59 million
Cisco shares as of June 30.

6. U.S. Bonds Post Biggest Loss in More Than 3 Weeks; Stocks Rise
New York: U.S. bonds posted their biggest loss in more than
three weeks as gains in stocks and faster new home sales suggested
the economy may recover without further Federal Reserve rate
cuts.
The 30-year bond fell 19/23, or $5.94 per $1,000 face amount,
to 98 7/8. The yield rose 4 basis points to 5.45 percent, its
biggest decline since Aug. 2. The benchmark 10-year bond yield
rose 4 basis points to 4.92 percent, its first weekly rise in
three weeks, while two-year note yields rose 4 basis points to
3.73 percent, up from a 25-year low last week.
Investors pushed Treasuries lower as the Nasdaq Composite
Index rose 4 percent on optimism corporate profits may reverse
their slide. Networking-equipment maker Cisco Systems Inc. said
today orders are meeting its forecast. The Dow Jones Industrial
Average gained 1.9 percent.
``Cisco said that orders were stabilizing, which was enough
to push stocks higher,'' reducing the demand for government
securities, said Paul Gifford, who helps manage $1 billion at 1st
Source Corp. in South Bend, Indiana. He sold three- and four-year
Treasury, corporate and asset-backed debt to buy five-and six-year
debt to pick up extra yield.

7. P&G Chairman, CEO Got $72.9 Million in Stock Options
Cincinnati: Procter & Gamble Co., the largest U.S. household-goods
maker, gave its two top executives options to buy stock valued
at $72.9 million after they took over following the ouster of
Chairman Durk Jager 14 months ago.
Chairman John Pepper, 63, got an option valued at $37.1 million
in the year ended June 30, and total pay of $38.6 million, the
company said in a proxy filing with the U.S. Securities and Exchange
Commission. Chief Executive A.G. Lafley, 54, got an option valued at
$35.8 million and total pay of $37.3 million.
Lafley has announced plans to cut 9,600 jobs, or 9 percent of
the workforce, and jettison declining lines such as Jif peanut
butter and Crisco shortening. Shares of Procter & Gamble have
fallen 1.8 percent this year as the company this month reported
its first loss in eight years.
``It obviously contradicts the state of the current
business,'' said Chuck Stutenroth, a portfolio manager with Fort
Washington Investment Advisers, which owns more than 1 million
Procter & Gamble shares. ``Most investors will view this as
providing further incentive to turn the ship around. If you're an
employee, you'd have a different view of it.''

8. Morgan Stanley to Require Stock Analysts to Disclose Ownership
New York: Morgan Stanley Dean Witter & Co., seeking to address
concerns research is biased, will require its 129 equity analysts
in North America to disclose whether they own the stocks they
cover, a practice an industry group recommended Wall Street
firms adopt two months ago.
Morgan Stanley, the second-biggest brokerage, isn't going as
far as Merrill Lynch & Co. and Credit Suisse First Boston, which
limited analyst ownership. Goldman Sachs Group Inc. also required
only that ownership be revealed, adhering to guidelines the firms
helped write.
Disclosures by analysts at Morgan Stanley and Merrill are
important, money managers said, as their research is disseminated
widely to individual investors. Morgan Stanley has about 5 million
clients worldwide who may have access to its research.
``The institutional investor always knew there were conflicts
of interest, especially in regards to investment banking
relationships,'' said Laurie Buntain, co-manager of the $775
million Sife Trust Fund, which owns Morgan Stanley shares. ``The
individual investor didn't.''

9. Gasoline Surges as Midwest Refinery Shutdown Spurs Supply Worry
New York: Gasoline rose almost 6 percent on expectations
that the shutdown of a refinery near Chicago will strain supplies
for the rest of the year.
Citgo Petroleum Corp. said its 160,000-barrel-a-day refinery
in Lemont, Illinois, will be closed for five to six months because
of damage from a fire last week. The shutdown has caused wholesale
prices in the Midwest to surge, luring gasoline from other
regions. The supply disruption has coincided with stronger-than-
normal nationwide demand.
``Gasoline is taking off and it's definitely due to the
Chicago issue,'' said Ed Silliere, vice president of risk
management at Energy Merchant LLC in New York. ``You are starting
to see trucks bring gasoline to the Chicago region from places
like Pittsburgh, and barges from the Gulf Coast'' will also
arrive.
Gasoline for September delivery rose 4.63 cents, or 5.9
percent, to 83.57 cents a gallon on the New York Mercantile
Exchange, the highest closing price since June 19. Prices climbed
13 percent this week, the biggest gain since last October.
Gasoline futures, which represent wholesale prices, are down 12
percent from this time last year.

10. Microsoft Antitrust Case Sent to Judge Kollar-Kotelly
Washington: The Microsoft Corp. antitrust case was assigned
to U.S. District Judge Colleen Kollar- Kotelly, a 1997 appointee
of President Bill Clinton, to consider how to curb the software
maker's illegal defense of its Windows operating system monopoly.
Kollar-Kotelly, selected randomly from a pool of judges,
replaces Thomas Penfield Jackson, who was removed by an appeals
court because of remarks he made to reporters about the case.
The appointment came on the day Microsoft sent computer
makers the final version of its new Windows XP operating system.
State antitrust enforcers have suggested they may seek changes in
the new system before it hits stores on Oct. 25.
The government will make its case to a judge who has
specialized in criminal law and mental-health issues and has
virtually no track record on antitrust law.

11. AMR's American Air Pilots Reject Fast-Track Talks
Fort Worth, Texas: AMR Corp.'s American Airlines pilots
rejected a company contract proposal that would have increased
pay as much as 22 percent immediately in exchange for the union
giving up the right to strike.
The Allied Pilots Association, which represents more than
11,000 American pilots, turned down the four-year offer a week
before a deadline set by the company. The plan would have provided
immediate raises of 15 to 22 percent to match industry pay leader
Delta Air Lines Inc. before settling other issues.
American made the proposal in an attempt to avoid drawn-out
talks and a possible strike threat from pilots. The carrier
estimates that new contracts, including an eventual pilots'
accord, may raise American's labor costs $500 million this year
and $700 million in 2002.
``The offer of the pay raise immediately was conditional on a
whole series of other issues which were actually quite onerous,''
said Robert Mann, a former airline executive who heads RW Mann &
Co. and has advised the union in the past.

12. Bush Administration, Senate May Trim Number of `Boutique' Fuels
Philadelphia: Sunoco Inc., one of the biggest fuel sellers
in the U.S. Northeast, began making gasoline at its refinery
in Toledo, Ohio, 107 years ago. Today, the business is more
complicated.
The Toledo refinery churns out one type of gasoline for Ohio,
another for Detroit, a third for Indiana and yet another for
Illinois, all tailored to state standards designed to meet federal
clean-air requirements.
The U.S. Environmental Protection Agency and Senate Energy
Committee now are looking at ways to reduce the number of such
``boutique'' fuels. The gasoline varieties, while successful at
reducing pollution, have forced refiners to juggle several grades.
They also have led to price increases of as much as 70 cents a
gallon when either supplies of gasoline or additives run low.
``Boutique fuels can create a whale of a problem,'' said Joel
Maness, vice president for refining at Philadelphia-based Sunoco.
``We've gotten real benefits, but this has gotten a little out of
hand.''

Top stories for August 23, 2001

1. U.S. Economy: Jobless Claims Rise; More Workers Stay Unemployed
2. Limited, Intimate Brands Profits Fall; Kmart Has Loss
3. Fed June 27 Rate Cut Vote 9-1, Inflation a Concern
4. European Economies: German GDP Stalled Last Quarter
5. Argentina, With IMF Agreement, Searches for Banker
6. NASD's Analyst-Conflict Rule Draws Support From Big Brokerages
7. U.S. Stocks Fall on Profit Concern; Merck, Gateway Shares Drop
8. XM Satellite, Sirius's Radio Plans May Be Delayed
9. J.P. Morgan Employees Say Service Slipped, Poll Shows
10. Computer Associates Proxy Opponents Quarrel Over Share Value
11. Pimco's Bill Gross Turns Around Biggest Bond Fund: Mutual Funds
12. Lucent CEO Delayed Turnaround by Focusing on Merger

1. U.S. Economy: Jobless Claims Rise; More Workers Stay Unemployed
Washington: The number of U.S. workers filing new claims
for jobless benefits rose last week and an increase in those
continuing to receive payments suggests the fired employees
are having trouble finding work.
``So few new jobs are being created that nearly all of the
newly laid off are finding themselves unemployed,'' said Steven A.
Wood, chief economist at FinancialOxygen Inc. in Walnut Creek,
California. ``These data suggest that payroll employment is likely
to be negative for August.''
Initial jobless claims rose by 8,000 to a level of 393,000 in
the week that ended Saturday from a revised 385,000 the prior
week, the Labor Department said. The four-week moving average of
claims, which smoothes out volatility in the weekly numbers, rose
to 378,750 from 372,000 the prior week.
Ford Motor Co. and office-furniture maker Steelcase Inc. are
among the latest companies to announce job cuts made to preserve
profits. Slower economic growth is making it harder for workers to
find new jobs. A survey of economists by the Federal Reserve Bank
of Philadelphia forecasts slower growth and higher unemployment
this year and next than previously expected.

2. Limited, Intimate Brands Profits Fall; Kmart Has Loss
New York: Limited Inc. and Intimate Brands Inc. said fiscal
second-quarter earnings fell as shoppers shunned their clothing
and reduced spending. Kmart Corp.'s loss narrowed after the
discount chain closed stores and cut advertising costs.
In the third quarter, earnings will fall more than forecast
as sales continue to drop, Limited and Intimate Brands said.
Shares of Limited, the second-largest U.S. apparel chain, declined
$1.36, or 9 percent, to $13.84 in late trading, and Intimate
Brands fell $1.22, or 8.4 percent, to $13.39.
Limited cut prices on pants and tops that failed to attract
customers, eroding profit. Sales of Intimate Brands' soaps, bath
products and Victoria's Secret lingerie slowed. Kmart Chief
Executive Chuck Conaway shut 70 stores the past year and was more
selective about who got the retailer's advertising circulars, as
he tries to return the No. 2 discounter to profitability.
``The consumer is reacting to the slowdown in the economy,''
said analyst Richard Jaffe of UBS Warburg. He doesn't own Limited
or Intimate Brands shares. ``Retailers must have fashion-right
products, or very low prices'' to draw customers.

3. Fed June 27 Rate Cut Vote 9-1, Inflation a Concern
Washington: Federal Reserve policy makers decided to lower
the overnight bank lending rate by just a quarter percentage
point on June 27 because they were afraid inflation might accelerate
after five half-percentage point cuts earlier in the year, minutes
of the meeting showed.
While members of the policy-setting Open Market Committee
said the June cut to 3.75 percent probably wouldn't be the last,
central bankers voted 9-1 to scale back the size of the move.
William Poole, president of the St. Louis Fed Bank, was the lone
no vote, his first dissent in three years.
``In the view of a number of members, the committee might
well be near the end of its easing cycle,'' the minutes said,
suggesting that central bankers expected the results of six rate
reductions to date would soon would start to boost growth.
``Much of the lagged effects of the committee's earlier
easing actions had not yet been felt in the economy,'' and advance
tax refund checks would soon be mailed to consumers, the minutes
said. ``In these circumstances, a smaller move than those
undertaken earlier this year would have the advantage of reducing
the odds on adding to inflation pressures later.''

4. European Economies: German GDP Stalled Last Quarter
Frankfurt: The German economy stalled for the first time
since 1999 in the second quarter as slowing global growth led
companies to spend less on factory machinery and construction.
``We haven't reached the bottom yet,'' said Paul Junk, the
chief executive of Winkler + Duennebier AG, the world's largest
producer of envelope-making machinery, which reported a first-half
loss. ``Economic growth will stagnate in the third and probably
also in the fourth quarter.''
Gross domestic product was unchanged from the first three
months of the year, government figures showed. The economy has
expanded every quarter since the second quarter of 1999, when it
shrank. From a year ago, the economy grew 0.6 percent, the slowest
rate in four years.
The world's third-largest economy is the second among the
countries using the euro to report no growth or a contraction in
the second quarter. Italy's economy shrank 0.1 percent. That adds
to pressure on the European Central Bank to trim borrowing costs
at next week's meeting of policy makers, analysts said. German
consumer prices declined 0.2 percent in August.

5. Argentina, With IMF Agreement, Searches for Banker
New York: Now that Argentina has an $8 billion pledge from
the International Monetary Fund, the country needs a banker
to advise on fulfilling its side of the bargain: rescheduling
part of the nation's $130 billion debt.
Credit Suisse First Boston, J.P. Morgan Chase & Co., Goldman,
Sachs & Co. and Deutsche Bank AG are the most likely candidates on
Wall Street to manage a bond swap or debt buyback, analysts said.
Argentina has $95 billion of bonds outstanding.
``It's a great deal and most banks on the Street would like
to get it,'' said Peter Petas, managing director at CreditSights
Inc., an independent research group. ``I'm sure Argentina has been
talking to banks throughout this process.''
For the advisers, an Argentine swap could bring in millions
of dollars in fees. In June, Credit Suisse, J.P. Morgan and eight
other banks earned almost $140 million in fees when Argentina
exchanged $29.5 billion in government bonds. The fees were the
highest paid in the country since 1983.

6. NASD's Analyst-Conflict Rule Draws Support From Big Brokerages
Washington: The largest U.S. brokerages endorsed a regulatory
plan to require stock analysts to disclose potential conflicts
of interest, while arguing that they shouldn't be forced to
give details during television appearances.
The Securities Industry Association, a trade group that
represents 700 firms, had previously urged a delay in any rule-
making on analysts' conflicts. In a letter outlining its new
position, the SIA gave qualified support to the National
Association of Securities Dealers' regulatory plan.
``The SIA has been the biggest potential roadblock to a new
regulation, but it's raising only specific, legitimate concerns
that will get worked out,'' said Georgetown University law
professor Donald Langevoort. ``We'll now see this rule adopted
relatively quickly.''
Congress and the Securities and Exchange Commission have
pushed for changes in brokerage practices, arguing that analysts
may have made unreasonably optimistic forecasts to advance their
financial interests. Many analysts own stock in companies they
cover and are paid on the basis of their firms' underwriting
profits, a recent SEC study found.

7. U.S. Stocks Fall on Profit Concern; Merck, Gateway Shares Drop
New York: U.S. stocks fell for the second time in three
days on concern the economy and corporate profits won't rebound
soon. Merck & Co. and Gateway Inc. declined.
The Standard & Poor's 500 Index and Nasdaq Composite Index
erased midday gains after minutes from the Federal Open Market
Committee's June meeting reinforced concern that the economy will
slow further.
``It seems like the economy is continuing to decline,'' said
Leo Smith, head of trading at Putnam Investments Inc., which
manages $400 billion in Boston. ``That has ramifications for
weaker earnings in the fourth quarter. Predictions for a second-
half rebound this year don't seem to be panning out.''
The Nasdaq fell 17.00, or 0.9 percent, to 1843.01, erasing a
1.3 percent gain. The S&P 500 declined 3.29, or 0.3 percent, to
1162.02, with Gateway among the biggest losers. The Dow Jones
Industrial Average dropped 47.75, or 0.5 percent, to 10,229.15,
led by Merck.

8. XM Satellite, Sirius's Radio Plans May Be Delayed
Washington: XM Satellite Radio Holdings Inc.'s plan to provide
music and news to motorists anywhere in the U.S. may be delayed
by complaints from AT&T Wireless Services Inc. that the satellite
networks will interfere with phone and data communications,
analysts said.
XM and rival Sirius Satellite Radio Inc. say they need
repeaters to transmit radio signals under bridges and in tunnels
and cities where tall buildings block reception. Opponents say the
repeaters will interfere with their planned wireless networks that
provide phone, Internet and video services.
AT&T Wireless and BellSouth Corp. have asked the U.S. Federal
Communications Commission to make XM Satellite and Sirius use less-
powerful repeaters. Satellite radio, which promises to transmit
dozens of channels and CD-quality sound to cars, will be available
next month from XM and in the fourth quarter from Sirius.
``They would be absolutely foolish to launch the service
without being able to use the repeaters,'' said Mickey Alpert,
president of Alpert & Associates, a Washington communications
consulting firm. Alpert, who owns XM Satellite and Sirius shares,
says the companies won't be able to provide nationwide service
without that equipment.

9. J.P. Morgan Employees Say Service Slipped, Poll Shows
New York: J.P. Morgan Chase & Co. employees said service
to customers slipped in the months after the $32 billion merger
that created the second-biggest U.S. bank, according to an internal
survey obtained by Bloomberg News.
The number of respondents who gave a gave a favorable rating
to their departments' service fell to 60 percent in the poll,
which was conducted in May and June. That's down from 69 percent
in a similar study done in December and January, when Chase
Manhattan Corp. bought J.P. Morgan & Co.
``It's not unusual that a company going through the trauma of
a consolidation suffers some erosion of service,'' said Raphael
Soifer, chairman of Soifer Consulting LLC, which advises financial
services companies.
The poll's findings underscore the difficulties combining
almost 100,000 workers in more than a dozen businesses while the
economy and stock market stumble. Bank employees were asked 39
questions, including whether management encourages diversity and
if colleagues from the two banks are cooperating on the job.

10. Computer Associates Proxy Opponents Quarrel Over Share Value
Islandia, New York: Dallas billionaire Sam Wyly's main weapon
in the proxy fight for seats on Computer Associates International
Inc.'s board is what he sees as poor appreciation of the software
maker's stock.
``By any performance measure, this company has clearly under-
performed, compared to other software companies,'' Wyly said in a
videotape he mailed recently to 50,000 shareholders.
Not so fast, Computer Associates management says: it all
depends on how you measure.
Wyly has built his campaign on the rallying cry that shares
in the Islandia, New York-based company have under-performed
rivals over the past five years -- and that is certainly true.

11. Pimco's Bill Gross Turns Around Biggest Bond Fund: Mutual Funds
Newport Beach, California: Seven weeks ago Bill Gross, the
world's biggest bond manager, was trailing almost nine out of
ten competitors. Now, he's beating 85 percent of his fixed-income
peers.
Gross, who runs the $45.7 billion Pimco Total Return Fund,
managed the turnaround by making a big bet on lower interest rates
just as the U.S. Treasury market began its strongest one-month
rally in almost three years in July.
Pimco Total Return, which trailed 87 percent of competing
funds at midyear with just a 2.6 percent gain, has soared more
than 4 percent in less than two months. With a 6.9 percent return
for the year, Gross is now among the top 15 percent of bond
managers, according to fund-tracking firm Lipper.
``It's good to be back,'' Gross wrote in a letter to
shareholders posted on Pimco's Web site. ``You have no idea what a
lousy six-month stretch of poor relative performance numbers can
do to a bond fund manager who bases his entire ego on performing
miracles year after year.''

12. Lucent CEO Delayed Turnaround by Focusing on Merger
Murray Hill, New Jersey: As Lucent Technologies Inc. Chief
Executive Henry Schacht jetted back and forth across the Atlantic
in April and May to negotiate a merger with France's Alcatel
SA, dozens of employees at a company plant in North Andover,
Massachusetts, were crocheting or playing cards.
They were killing time, waiting to learn who among them would
be fired. Lucent had put its entire workforce of 106,500 on notice
in January, when it announced plans to eliminate 10,000 jobs in
six weeks to help halt the company's long slide.
In April, Lucent said that 800 positions at the factory 30
miles north of Boston would be part of the reductions.
``Work was getting really slow,'' says Paula Bianco, an
electronics assembler at the factory who'd been advised to expect
a pink slip. ``A lot of people sat around doing nothing. It was
ridiculous.''

(c) 2001 Bloomberg L.P. All rights reserved.

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