Business Blog Posts

NEW YORK Reuters Burger King Holdings Inc, the No. 2 U.S. hamburger chain, has been considering a possible sale and has held talks with potential buyers, a source familiar with the situation said on Wednesday.

The company, which has a market capitalization of about $2.3 billion, has been public since May 2006.

Famed for its flame-broiled Whopper, Burger King had previously been owned by private equity, which still hold a stake in the company. TPG, Bain Capital and Goldman Sachs GS.N had owned it; after buying Burger King from British drinks company Diageo DGE.L in 2002 for about $1.5 billion.

The Wall Street Journal previously reported the news, saying that Burger King has been in talks with private equity firms in recent weeks about a possible sale, and one interested firm was 3i Group Plc III.L.

The source who spoke to Reuters confirmed that one potentially interested party was 3i.

Burger King and 3i could not immediately be reached for comment.

Burger King in August forecast weak demand for its new fiscal year amid a struggling economy and said it was unsure how costs for key ingredients like beef would impact the company.

The company did not issue an earnings forecast for fiscal 2011 but said on Tuesday that high U.S. unemployment and government austerity programs in several European countries would weigh on same-restaurant sales.

The company, which competes with McDonalds Corp MCD.N, said it expected commodity costs in the United States to be flat in fiscal 2011, although prices of wheat and beef were uncertain.

Private equity firms have become increasingly active in the past few months, amid a spurt of M&A activity.

In August, Blackstone Group struck a deal to buy power company Dynegy Inc DYN.N for $543 million, or $4.7 billion including debt.

Last month was the busiest August since 1999 in terms of the value of M&A deals struck.

Additional reporting by Krishna N. Das in Bangalore; Editing by Mike Nesbit

BEIJING Reuters Chinas manufacturing sector regained some momentum in August while India and Russia continued to power ahead, cheering investors in the face of signs that sputtering U.S. recovery was cooling global demand.

A pair of Chinas manufacturing surveys showed activity picked up last month after a government-engineered slowdown and Indian factories stayed in top gear after Asias third-largest economy grew at its fastest rate in nearly three years in the last quarter.

Factories in Russia -- part the BRIC quartet of new economic powers alongside China, India and Brazil -- also cranked up their output, expanding at their fastest rate in 28 months largely thanks to the strength of domestic demand.

Fears that recovery in the United States, the worlds biggest economy, was petering out and could stall the global upturn led by export-driven Asian economies have haunted markets for weeks pushing the global stock index .MIWD00000POUS down more than 3 percent last month.

Trade data from South Korea, the worlds ninth largest exporter showed its shipments abroad hit a five-month low last month, while a pair of Chinese surveys provided mixed messages about the strength of demand for the nations exports.

An official survey compiled by China Federation of Logistics and Purchasing showed a pick-up in new export orders, while one produced by the HSBC bank showed export demand slipping for a third consecutive month.

Yet optimism that Beijing was succeeding in shifting toward a more domestic-driven and sustained growth after a credit-fueled spurt early this year helped lift Asian stocks and metals markets largely dependent on demand from China.

"This reconfirms our long-held view that China is moderating rather than melting down," said Qu Hongbin, chief economist for China at HSBC.

The banks HSBC purchasing managers index PMI rose to a three-month high of 51.9 in August from 49.4 in July, while the official index also rose, to 51.7 from 51.2.

China, which by some measures has already overtaken Japan as the worlds second-largest economy, has been exerting ever growing influence as exporter, importer and investor.

The China effect was at hand in Australias second quarter economic performance when it grew by 1.2 percent, handily beating market forecasts largely with the help of Chinas and Indias voracious appetite for Australias resource riches from coal to wheat.

A manufacturing survey for August, however, showed that even the developed worlds overachiever was not entirely immune to economic headwinds with factory activity and new orders growth slowing markedly.

A U.S. PMI index due from the Institute for Supply Management at 1400 GMT 10 a.m. EDT is expected to ease to 53.0 in August from 55.5, still safely above 50 that separates growth from contraction.

Investors, however, will look at new orders data for any signs whether manufacturing growth can be sustained.

With unemployment stubbornly stuck near 10 percent and the impact of the governments $862 billion economic stimulus fading, investors and economists worry that even if the U.S. economy avoids a double-dip recession it may face a period of near-stagnation.

That would be bad news for Asia and Europe, which despite a recent shift in demand toward fast growing emerging economies such as China, India or Brazil, still largely rely on U.S. demand to keep their economies growing.

In Europe, euro zone manufacturing industry, led by the German export juggernaut, is expected to keep a solid pace of expansion even as doubts persist how long it can rely on exports to make up for the effects of spending cuts at home.

The Markit PMI index due around 0800 GMT is seen steady at 55.0

In South Korea, manufacturing sector activity barely expanded last month with export orders virtually stagnating. The government forecast that exports growth will slacken in the final quarter after buoyant growth this year that put Asias fourth-largest economy at the forefront of the global recovery.

Additional reporting by Yoo Choonsik in Seoul, Wayne Cole in Sydney, Lidia Kelly in Moscow and Yati Himatsingka in Bangalore; Writing by Tomasz Janowski; Editing by Kazunori Takada

BEIJING Reuters Chinas manufacturing economy staged a moderate rebound in August after slowing for several months under the onslaught of government measures to rein in credit and deter property speculation.

Despite encouraging signs of stabilization in a pair of business surveys released on Wednesday, analysts cautioned that the robust domestic economy would have to battle the headwinds of soft external demand, especially from the United States.

"This reconfirms our long-held view that China is moderating rather than melting down," said Qu Hongbin, chief economist for China at HSBC.

He was commenting on a rise in the banks purchasing managers index PMI to a three-month high of 51.9 in August from 49.4 in July.

A PMI produced by the China Federation of Logistics and Purchasing CFLP also rose, to 51.7 from 51.2.

Investors cheered the news. MSCIs index of Asia Pacific stocks outside Japan rose 1.5 percent .MIAPJ0000PUS, while metals prices got a lift in anticipation of stronger Chinese demand.

"After the run of weak data from the United States through August, the Chinese numbers were a breath of life for the start of the new month," a metals dealer in Perth said.

The increase in the official PMI was close to the median forecast of 51.8 in a Reuters poll.

A figure above 50 denotes expansion; a reading below 50 indicates that business has contracted from the month before.

Both gauges had been trending lower -- since January in the case of HSBCs and since April for the CLFPs. This had fanned concern that Beijing was overdoing its tightening and throttling an economy that has become a major driver of global growth.

But Zhang Liqun, a government researcher, said the official survey of 820 firms across China showed that market concerns of an abrupt slowdown were unfounded.

"The modest rise in Augusts PMI shows that there will not be a deep correction in the Chinese economy," Zhang said in a comment on behalf of the logistics federation, which compiles the index for the National Bureau of Statistics.

ORDERS, INVENTORIES BODE WELL

Both surveys showed a decline in the stocks of finished goods even as orders improved, an indication that manufacturers will have to ramp up production to meet demand.

"The new orders to finished goods inventory PMI has been a good indicator of turning points in the cycle over the past two years," said Ben Simpfendorfer, an economist with Royal Bank of Scotland in Hong Kong.

"It suggests the current correction began in the middle of the first quarter and was tentatively signaling stabilization even before todays sharp rise in the ratio," he said in a reaction to the official PMI.

Bank of America Merrill Lynch agreed that the inventory and orders data boded well for a recovery in output in coming months.

With the government mounting a big push to build public housing, the bank reaffirmed its full-year GDP growth forecast of 10.1 percent, up from 9.1 percent in 2009.

But it said weakening growth in the United States and Japan would act as a drag on the economy and could prompt Beijing to slow the pace of the yuans rise.

According to HSBCs survey, new export orders fell outright in August for the third month in a row.

Brian Jackson with Royal Bank of Canada in Hong Kong said it was too soon to celebrate the signs of stabilization.

"We expect China will have a relatively moderate slowdown over the second half of 2010, but weaker external demand from the United States and Europe still represent a significant downside risk in coming months," he said in a note.

Several economists also expressed concern at a sharp rise in input prices in both surveys.

But He Yifeng, an economist with Hongyuan Securities in Beijing, said it was also evidence of stronger economic activity.

"As businesses see economic growth picking up, they will want to step up investment and this will increase demand for upstream products and push up prices of inputs such as iron ore," he said.

For more Asian and global PMI reports, see

Editing by Kim Coghill

NEW YORK Reuters Online retailer Amazon.com Inc is trying to create a service that gives paying subscribers unlimited access to some television shows and movies over the Internet, The Wall Street Journal reported.

The Seattle-based retailer has proposed a Web-based subscription service to several major media companies including General Electric Cos NBC Universal, Time Warner Inc and Viacom Inc, the newspaper said, citing people with knowledge of the proposal.

Amazon did not return calls seeking comment. CBS, Viacom Time Warner and NBC Universal declined to comment.

The news comes as more companies try to boost their online TV businesses. The new service would look to take on companies like Netflix Inc that allow paid subscribers to stream TV shows and rent movies.

"CBS had talked to Amazon but there is no impending deal," a source familiar with the matter told Reuters.

Viacom had also met with Amazon, another source familiar with the matter told Reuters.

The Journal reported that in at least one version of Amazons proposal, subscriptions could be bundled with its existing Amazon Prime service immediately giving the service a large number of built-in subscribers.

Prime is a service that offers members free two-day shipping on most Amazon purchases for $79 a year.

Reporting by Dhanya Skariachan, Jennifer Saba and Yinka Adegoke; editing by Ilaina Jonas and Matthew Lewis

WASHINGTON Reuters The outlook for the U.S. economy would have to deteriorate "appreciably" to spur fresh support from the Federal Reserve, minutes of the central banks last policy meeting released on Tuesday said.

"The committee would need to consider steps it could take to provide additional policy stimulus if the outlook were to weaken appreciably further," the minutes of the Feds August 10 policy session said.

At that meeting, officials agreed to reinvest maturing mortgage-related securities in longer-term U.S. government debt to hold the Feds balance steady at about $2 trillion and keep in place supports for the stumbling economic recovery.

While the minutes showed the current preference was to buy Treasury debt, officials left the door open to other options.

"While reinvesting in Treasury securities was seen as preferable given current market conditions, reinvesting in MBS mortgage-backed securities might become desirable if conditions were to change," the minutes said.

The Fed stopped buying MBS and mortgage-agency debt at the end of March after it had accumulated about $1.4 trillion worth. It also bought $300 billion in longer-term Treasury securities as part of a program to spur recovery.

The buying spree came after the U.S. central bank had chopped benchmark borrowing costs to near zero in December 2008, leading policy-makers to cast about for additional ways to stimulate the economy.

Financial markets were little changed after the release of the minutes, with the dollar holding earlier declines against the Japanese yen and the euro, and with prices for U.S. Treasury easing slightly.

Reporting by Mark Felsenthal and Glenn Somerville

WASHINGTON Reuters The U.S. loan picture improved slightly during the second quarter, with the amount of loans 90 days or more past due declining for the first time in more than four years, bank regulators said on Tuesday.

The Federal Deposit Insurance Corp revealed some encouraging figures about the bank industry, saying the sector earned $21.6 billion during the quarter largely due to banks putting away less money to cover expected loan losses.

During the first quarter, the industry earned $17.8 billion.

In other signs of improvement, the total assets of banks characterized as "problem" institutions fell during the quarter to $403 billion from $431 billion, and the FDICs insurance fund increased by $5.5 billion during the quarter.

But there are still troubling indicators.

Loan balances continued to decline during the second quarter, with net loan and lease balances declining by 1.3 percent. Loans to small businesses and farms -- a major focus of the Obama administration -- fell by 1.8 percent during the quarter.

"Earnings remain low by historical standards, and the numbers of unprofitable institutions, problem banks, and failures remain high," FDIC Chairman Sheila Bair said.

While the assets at problem banks declined, the total number of such institutions bumped up to 829 from 775 last quarter.

The FDIC does not disclose the names of the institutions, which regulators have flagged for low capital levels, poorly performing assets and other troubles.

The agency has said the bank failures are expected to peak during the third quarter. So far this year, 118 banks have failed. Last year 140 bank collapsed.

Bair said the FDIC still anticipates that the number of failures this year will exceed last year, but that the total assets of this years failures will probably be lower.

That is because it is mostly smaller banks that have been failing.

She said economic uncertainties mean banks should continue to exercise caution and maintain strong reserves.

But she also highlighted the industrys gains.

"The banking sector is gaining strength. Earnings have grown, and most asset quality indicators are moving in the right direction, putting banks in a stronger position to lend," Bair said.

Reporting by Karey Wutkowski and Dave Clarke; Editing by Andrea Ricci

NEW YORK Reuters Prices of U.S. single-family homes gained more than expected in June and rose in the second quarter, reflecting the lingering boost from homebuyer tax credits that ended in April, Standard & Poors/Case Shiller home price indexes showed on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas rose 0.3 percent in June from May on a seasonally adjusted basis. The rise was better than the 0.2 percent increase expected by economists polled by Reuters, though slower than the 0.5 percent rise in May.

Unadjusted, the 20-city index gained 1 percent following Mays 1.3 percent jump.

S&P, which publishes the indexes, also said home prices nationally rose 4.4 percent in the second quarter after a 2.8 percent drop in the first quarter.

Prices rose in 17 of the 20 metro areas in June, S&P said, adding that in the first half of the year 15 of the 20 areas had positive annual growth rates. The housing market is in better shape than a year ago, S&P said.

"The worry starts when you remember that the Homebuyers Tax Credit has expired, foreclosures are still at high levels, and July data on home sales and starts were very, very weak," David M. Blitzer, chairman of the index committee at S&P, said in a statement.

"The inventory of unsold homes and months supply data were particularly troubling," he said, adding that "if this relative weakness in demand continues, it will likely filter through to home prices in coming months."

Reporting by Lynn Adler, Editing by Chizu Nomiyama

BANGALORE Reuters Electric utility Exelon Corp said it agreed to buy John Deere Renewables, the wind energy business of Deere & Co, for about $860 million to generate more power from renewable sources of energy.

Exelon, the largest U.S. nuclear power operator, said the deal will add 735 operating megawatts MW of clean energy to its generation portfolio, plus an additional 230 MW in advanced stages of development.

"We expect to see increasing demand for clean, efficient wind power at a national level and in the 29 states that already have a renewable energy standard," Exelon Chief Executive John Rowe said in a statement.

The deal includes a provision for up to an additional $40 million payment upon commencement of construction on the advanced development projects, Exelon said.

Separately, farm equipment maker Deere said the deal would result in a fourth-quarter after-tax charge of about $25 million.

Barclays Capital acted as financial advisor to Exelon.

Reporting by Adveith Nair in Bangalore; Editing by Gopakumar Warrier

NEW YORK Reuters Dollar General Corp DG.N posted a higher-than-expected quarterly profit as it attracted bargain-seeking consumers who spent more per visit, and the discount retailer raised its profit outlook.

The company, which prices most of its merchandise below $10, said profit was $141.2 million, or 41 cents a share, in the second quarter ended July 30, up 50.9 percent from $93.6 million, or 29 cents a share, a year earlier.

Excluding one-time items, Dollar General reported a profit of 42 cents per share, beating analysts average forecast of 38 cents , according to Thomson Reuters I/B/E/S.

Sales rose 11 percent to $3.21 billion, in line with analyst estimates. Same-store sales, or sales at stores open at least a year, rose 5.1 percent.

Dollar General raised its adjusted full year 2010 earnings forecast to a range of $1.68 to $1.74 from a previous range of $1.62 to $1.69. That compares with Wall Street estimates of $1.72 per share.

Dollar General expects same-store sales to be up by between 4 percent and 6 percent.

Reporting by Phil Wahba; Editing by Derek Caney

LONDON Reuters Stock index futures pointed to a lower open for Wall Street on Tuesday, extending a sharp decline in the previous session, on worries about the strength of the global economic recovery.

At 0854 GMT 4:54 a.m. EDT, futures for the Dow Jones, S&P 500 and Nasdaq were down between 0.3 and 0.4 percent.

The FTSEurofirst 300 .FTEU3 index of leading European shares was down 0.9 percent at 1,016.61 points, with banks among the biggest fallers.

Tokyo stocks fell 3.6 percent to a 16-month closing low on Tuesday, with disheartened investors bailing out of the market after the Bank of Japans emergency moves the day before failed to curb the yens strength.

U.S. home prices likely eked out a small gain in June, but a rise would represent the final tail winds of the homebuyer tax credit that ended in April rather than housing market improvement. The Standard & Poors/Case-Shiller 20-city composite home price index likely rose 0.2 percent in June after a 0.5 percent increase in May, seasonally adjusted, according to a Reuters survey.

The Conference Boards consumer confidence index is expected to have edged up to 50.5 for August from 50.4 in July, which was the lowest reading since February.

U.S. stocks fell in the years lightest volume on Monday as worries about the pace of economic recovery overshadowed data showing a rise in consumer spending and income.

The Federal Reserve releases minutes from its August 10 policy meeting, where it endorsed a more dovish monetary posture, citing a willingness to "reinvest" in monetary accommodation. The notes come on the heels of Fed Chairman Ben Bernankes comments last week in which he said the economic recovery had weakened more than expected.

The Dow Jones .DJI, S&P 500 .SPX and Nasdaq Composite .IXIC fell between 1.4 and 1.6 percent.

Hewlett-Packard Co HPQ.N has agreed to pay $55 million to settle kickback allegations related to federal government contracts, the U.S. Justice Department said on Monday.

Reporting by Brian Gorman; Editing by Mike Nesbit

TAIPEI Reuters Taiwan regulators rejected AIGs AIG.N planned $2.2 billion sale of its Taiwan unit to a China-related group, citing regulations on mainland investment, and leaving the insurer facing another auction.

American International Group, needing to sell assets to pay back the U.S. government for a bailout, first agreed to sell the Nan Shan unit last October, but suspicions in Taiwan about the connections of buyer China Strategic 0235.HK with China and concern it could not run an insurance business held up the deal.

The economics ministry said on Tuesday that the deal did not comply with Taiwans rules on investment from its political foe China, and also noted the lack of experience in insurance on the part of battery maker China Strategic and its bid partner, Hong Kong investment firm Primus.

"It did not come as a surprise," said an analyst at a European financial institution, who asked not to be identified.

"AIG needs to pay back money to the U.S. government so ultimately it will have to sell the unit."

The ministry said China Strategic is able to appeal the decision within 30 days. Taiwans top regulator, the Financial Supervisory Commission, will hold a media briefing at 0900 GMT to talk further on the decision.

"It is reasonable that the FSC took a more cautious attitude in reviewing this case as it requires more in-depth levels of skill to run an insurance companys finances and management," said Susan Chu, a vice president at Standard & Poors in Taiwan.

AIG will find Taiwanese bank Chinatrust Financial 2891.TW waiting in the wings to bid for Nan Shan. The bank, Taiwans top credit card firm, has repeatedly said it wants to buy Nan Shan after coming second to China Strategic in the original bid in October.

On Monday a retired Taiwanese diplomat, who said he wanted to "save" Nan Shan from mainland Chinese hands, said he was lining up a bid, backed by unnamed Japanese and Qatari investors.

AIG and China Strategic were not immediately available for comment following the decision.

China Strategics shares were suspended in Hong Kong after the announcement.

Reporting by Argin Chang, Faith Hung and Rachel Lee; Writing by Jonathan Standing; Editing by Ken Wills

LONDON Reuters World stocks fell on Tuesday in markets dominated by concerns the U.S. economy is sliding back into recession, prompting further flows into safe-haven assets.

The yen - a favorite for carry trades at times of economic stress - hovered back near 15-year high against the dollar after investors brushed off Japans attempt to weaken the currency, yields on benchmark German government bonds hit record highs and the Swiss franc soared against the euro and dollar.

Mounting U.S. economic concerns likely to keep investors away from riskier assets and push up the yen, keeping pressure on Japan to intervene directly in currency markets for the first time in more than six years. Crude prices, seen as a proxy for world economic growth, also came under pressure, and were down 6.6 percent so far in August and on track for their worst monthly losses since May.

World stocks measured by MSCI All-Country World Index .MIWD00000PUS lost 0.9 percent. The index was also headed toward its worst monthly performance in three months.

Tokyos Nikkei average .N225 shed 3.6 percent, its worst daily drop in three months, after the Bank of Japans move the day before to boost cheap loans to banks failed to curb the yens strength.

In Europe, the FTSEurofirst 300 .FTEU3 index dropped 1.1 percent and the Thomson Reuters Peripheral Eurozone Countries Index .TRXFLDPIPU fell 1.3 percent. "If you look at all the noise, all the volatility and all the nervousness, its clear that this market has one major fear at the moment and thats the double dip," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.

"And we are not going to have the answer to that one until the fourth quarter. There is more downside risk for equities over the next couple of weeks."

The VDAX-NEW volatility index .V1XI, Europes main barometer of investor anxiety, rose 3.4 percent. The higher the volatility index, the lower investors appetite for risk.

YEN NEAR 15-YR HIGH

The dollar was down 0.4 percent at 84.27 yen, not far from its 15-year low of 83.58 hit last week. The U.S. currency fell 2.5 percent against the Japanese currency this month after sliding 2.2 percent in July.

"Japans ministry of finance is sending signals that is willing to intervene but clearly people remember its struggle with intervention a few years ago," said Simon Derrick, head of currency research at Bank of New York Mellon.

"If they dont intervene when the yen is at 84, when will they do it? Once its goes to all time lows? I think their resolve of staying away from intervention will be tested."

Japanese Finance Minister Yoshihiko Noda repeated on Tuesday that the government would take decisive action on currencies -- usually seen as code for intervention -- when necessary, but reaction in the market was limited. The yen has lost more than 9 percent versus the greenback so far this year.

The euro fell 0.5 percent against the yen to 106.65 yen, crawling toward a nine-year low of 105.44 yen hit last week.

The single currency also fell to an all-time low against the Swiss franc, which also hovered close to a seven-month high against the dollar.

Yields on benchmark 10-year German Bunds hit record lows at 2.085 percent, while those on 10-year U.S. Treasuries slipped 2 basis points to 2.5143 percent, hovering near 18-month low.

In the commodity market, oil lost 1.4 percent to trade below $74 a barrel, while copper dropped 0.9 percent but was still up 1.3 percent this month.

Additional reporting by Atul Prakash, Anirban Nag and William James in London; Editing by John Stonestreet