Friday, May 11, 2001

Business Digest




Greenspan urges caution

        WASHINGTON — Federal Reserve Chairman Alan Greenspan said Thursday policy-makers should proceed with caution as they explore overhauling a Depression-era system that insures deposits in banks and thrifts.

        The Federal Deposit Insurance Corp. has proposed some changes to the system, which was established in 1933.

        The FDIC last month recommended to Congress that all banks pay for deposit insurance according to their risk of failure, and proposed that the $100,000 limit on account coverage be pegged to inflation.
       

Jobless claims drop

        WASHINGTON — New claims for state unemployment insurance dipped last week but still remained at a high level, suggesting employers' demand for workers continues to be weak.

        The Labor Department reported Thursday that initial applications for jobless benefits dropped 41,000 to a seasonally adjusted 384,000 for the work week ending May 5.

        The report “could be seen as an indication that the labor market picture is not as dire as has been portrayed,” said David Orr, First Union chief economist.
       

Icahn bearish on insurer

        Financier Carl Icahn said he's shorting the stock of Conseco Inc., and has lost about $30 million on his mistimed bet that the insurer's shares would decline.

        Mr. Icahn said the company isn't worth its $6.1 billion in market capitalization. “Not only is it not worth it, I believe it's a candidate for really going downhill in a recession,” Mr. Icahn said. In a short sale, traders sell borrowed stock in the hope of buying it back later at a cheaper price.
       

Hotel deal worth $1.1B

        Hotel investor FelCor Lodging Trust Inc. is buying hotel management concern MeriStar Hospitality Corp. for about $1.1 billion in cash and stock in a deal that would create one of the biggest hotel companies.

        FelCor is the largest owner of Embassy Suites, Crowne Plaza, Doubletree and Holiday Inn hotels, while Meristar is a big owner of Hilton and Sheraton hotels.

        The deal announced Thursday would create a company with 299 properties and combined revenues of $2.9 billion.
       

Central bank slashes rates

        In a sudden turnaround, the European Central Bank unexpectedly slashed interest rates Thursday by a quarter percentage point, confusing markets with what some analysts called mixed signals as it tried to shield the continent's economy from a swelling global slowdown.

        While economists hailed the move, they also worried that ECB's abrupt break with earlier policy statements would undermine the fledgling bank's credibility.
       

Brewers deny takeover

        Heineken NV and Foster's Brewing Group Ltd. denied Thursday they have plans to merge following a published report that Heineken was securing loans to buy the Australian brewer.

        A spokesman for Dutch brewer Heineken dismissed as untrue a report in The Australian newspaper that said Heineken was arranging financing to buy Foster's for about $7.8 billion.
       

Siemens cuts more jobs

        Siemens AG, Germany's largest electronics maker, said it plans to cut 2,000 more jobs and take a charge of as much as 450 million euros ($399 million) at its network equipment and cellular-phone divisions as profit drops.

        The third round of cuts announced this year brings the total to 8,100, or about 1.7 percent of its work force.

       



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