Business Blog Posts

As Cameron fielded hostile questions over why he had hired the paper's former editor Andy Coulson in 2007, despite knowing that one of his journalists had been jailed for hacking into voicemails in search of scoops, Coulson was being arrested by police on suspicion of conspiring in the illegal practice.

Underlining the seriousness of the threat facing his News Corp empire, Murdoch will fly to London on Saturday to deal with the crisis, according to two people familiar with his plans.

And in a sign of how it could be escalating further, The Guardian newspaper reported on its website that police are investigating evidence an executive at Murdoch's News International unit may have deleted millions of emails from an internal archive in an apparent attempt to obstruct police investigations. A spokeswoman for Murdoch's News International unit said the allegation was "rubbish".

"We are cooperating actively with police and have not destroyed evidence," she said.

Cameron said he took "full responsibility" for his decision to appoint Coulson, who quit Downing Street in January when police relaunched inquiries. But the premier rebuffed criticism and strove to spread the blame for an affair that has generated public outrage against the press, politicians and police.

"Murder victims, terrorist victims, families who have lost loved ones in war..." he said: "That these people could have had their phones hacked into in order to generate stories for a newspaper is simply disgusting."

So widespread was the rot, Cameron told an emergency news conference after Murdoch dramatically shut down his best-selling Sunday paper, that only a completely new system of media regulation and a full public inquiry into what went wrong over a decade at News of the World and beyond would meet public demand.

"This scandal is not just about some journalists on one newspaper," Cameron said. "It's not even just about the press. It's also about the police. And, yes, it's also about how politics works and politicians too."

In another indication of spreading fallout, police said they had arrested a 63-year-old man in Surrey in southern England over allegations of inappropriate payments to police. A police spokesman said the man was not a serving policeman.

News of the World and other newspapers have been accused of paying the police for information.

Police also raided another tabloid, the Daily Star, earlier on Friday over allegations of phone hacking.

PRESS BARONS' GRIP

While defending himself for hiring Coulson, Cameron said politicians of all parties had been in thrall to press barons for decades. He indicated a new assertiveness toward the Murdoch empire by withholding overt endorsement of News Corp's controversial bid for British broadcaster BSkyB.

Shares in the pay-TV chain fell 7.6 percent after the media ministry also said it would take events at the News of the World into account before giving its approval to the takeover. News Corp shares in New York lost around 4 percent.

Cameron's opponents on the left want to block the $22-billion bid for the 61 percent of BSkyB that he does not already own on the grounds it would give Murdoch too much political clout. The day's events created new uncertainties for investors who had welcomed the government earlier giving its blessing.

In a mark of the drama of larger-than-life personalities at play, Cameron also criticized his friend and neighbor Rebekah Brooks, Coulson's predecessor as editor and now a top executive and confidante of Murdoch. She should have resigned herself, he said, after closing down the newspaper at a cost of 200 jobs.

Cameron told reporters he had heard that Brooks offered her resignation. "I would have taken it," he said.

BROOKS' "TOXIC" BRAND

Journalists putting together the final edition of the 168-year-old title, Britain's biggest-selling Sunday paper, had an emotional, sometimes angry, meeting with Brooks, who told them, according to a staffer who was present, that the News of the World brand had become "toxic". Advertisers and readers bailed out following allegations this week of serial phone hacking.

But the 43-year-old, whose mane of red hair, sharp wit and seemingly charmed relationship with the 80-year-old Australian-born media mogul have long made her an object of fascination for fellow tabloid journalists, made clear she was staying on to manage News International, Murdoch's British newspaper arm.

Brooks denied the company, which many assume will soon fill the gap left by the News of the World by extending publication of the Sun daily to Sundays, was simply combining a useful cost-saving measure with a theatrical attempt to remove a threat to its expansion in television.

She has denied knowing that journalists on the paper were hacking the voicemails of possibly thousands of people. But she has become the focus of anger among the 200 News of the World staff sacked by Murdoch's son James with little ceremony.

There was "seething anger" and "pure hatred" directed toward her, one reporter said: "We think they're closing down a whole newspaper just to protect one woman's job."

Fellow journalists saluted the end of a venerable, muckraking title: "Hacked To Death" headlined Murdoch's own Times. "Paper That Died Of Shame" said the tabloid Daily Mail.

Nonfarm payrolls rose only 18,000, the weakest reading since September, the Labor Department said on Friday, well below economists' expectations for a 90,000 rise.

The unemployment rate climbed to a six-month high of 9.2 percent, even as jobseekers left the labor force in droves, from 9.1 percent in May.

"The message on the economy is ongoing stagnation," said Pierre Ellis, senior economist at Decision economics in New York. "Income growth is marginal so there's no indication of momentum.

U.S. stock index futures fell sharply on the data, while U.S. bond prices rose. The dollar rose against the euro.

The government revised April and May payrolls to show 44,000 fewer jobs created than previously reported.

The report shattered expectations the economy was starting to accelerate after a soft patch in the first half of the year. It could prompt calls for the Federal Reserve to consider further action to help the economy, but Fed officials have set a high bar.

The U.S. central bank wrapped up a $600 billion bond-buying program last week designed to spur lending and stimulate growth.

"This confirms our view that the Fed will continue to keep rates on hold into 2012 and if weak employment continues it will be pushed out even further," said Tom Porcelli, chief economist, RBC Capital Markets in New York.

Hopes were high that the economy was starting to find firmer ground as motor vehicle manufacturers ramped up production and gasoline prices descended from their lofty levels.

Economic activity in the first six months of the year was dampened by rising commodity prices and supply chain disruptions following Japan's devastating earthquake in March.

WHITE HOUSE HEADACHES

Signs the labor market is struggling is a major blow for the Obama administration, which has struggled to get the economy to create enough jobs to absorb the 14.1 million unemployed Americans.

The economy is the top concern among voters and will feature prominently in President Barack Obama's bid for re-election next year. So far, the economy has regained only a fraction of the more than 8 million jobs lost during the recession.

"Today's report is more evidence that the misguided 'stimulus' spending binge, excessive regulations, and an overwhelming national debt continue to hold back private-sector job creation in our country," House of Representatives Speaker John Boehner said in a statement.

The economy needs to create between 125,000 and 150,000 new jobs a month just to absorb new labor force entrants.

The private sector added 57,000 last month, accounting for all the jobs created, with government employment shrinking 39,000 because of fiscal problems at local and state governments.

Details of the report showed widespread weakness, though factory payrolls rebounded 6,000 after contracting in May for the first time in seven months, with the recovery reflecting a step-up in motor vehicle production.

Construction employment fell 9,000 last month after declining 4,000 in May. Government employment declined for an eighth straight month as municipalities and state governments continued to wield the ax to balance their budgets.

The report also showed the average workweek fell to 34.3 hours from 34.4 hours. Employers have been reluctant to extend hours because of the uncertainty surrounding the recovery.

Average hourly earnings slipped a penny, more evidence that wage-driven inflation is not a risk.

(Editing by Neil Stempleman)

* Data at 1230 GMT is expected to show that U.S. companies stepped up hiring in June as the economy recovered from a stumble in recent months, although job growth was not expected to be strong enough to eat into high unemployment.

* Nonfarm payrolls are forecast to have risen by 90,000, according to a Reuters survey conducted last week. In May, employment rose a paltry 54,000. Many economists raised their forecasts on Thursday after a stronger-than-expected reading on U.S. private hiring from payrolls processor ADP, and they now expect gains of anywhere between 125,000 and 175,000.

* Caterpillar Inc (CAT.N), the world's largest maker of heavy equipment, said China's regulator had approved its acquisition of U.S. mining equipment firm Bucyrus International (BUCY.O), paving the way for the company to complete a deal announced in November.

* The Commerce Department releases wholesale inventories for May at 1400 GMT. Economists forecast May inventories to rise 0.7 percent versus a 0.8 percent increase in April.

* At 1430 GMT, Economic Cycle Research Institute (ECRI) releases its weekly index of economic activity for July 1. In the prior week the index read 126.4.

* In a startling response to the scandal engulfing Rupert Murdoch's media empire, the British newspaper arm of News Corp (NWSA.O) announced it would publish the 168-year-old News of the World for the last time this weekend.

* The IMF executive board on Friday is expected to approve the disbursement of just over 3 billion euros for Greece, in time to help the country pay debts falling due this month.

* President Barack Obama told top U.S. lawmakers on Thursday he would not sign a short-term extension of the U.S. debt ceiling and said negotiators would work through the weekend on a deal to avoid a debt default.

* Air France-KLM (AIRF.PA) hopes to announce the results of a contest between Airbus (EAD.PA) and Boeing (BA.N) to supply the European airline with wide-bodied jets during the summer, its chief executive said on Thursday.

* Newport Corp (NEWP.O), a U.S. manufacturer and distributor of precision components, is to buy Israeli group Ophir Optronics (OPIR.TA) for $230 million, to strengthen Newport's position in thermal imaging products.

* Google Inc (GOOG.O) is leaving open the door to more co-operation with social-media giants Facebook and Twitter, and believes there is room for multiple social networks as it rolls out its own, executive chairman Eric Schmidt said.

* The FTSEurofirst 300 .FTEU3 index of top European shares rose 0.2 percent on Friday after rising 0.4 percent in the previous session to its highest close in five weeks. Japan's Nikkei average .N225 hit a four-month peak.

* The Dow Jones industrial average .DJI shot up 93.47 points, or 0.74 percent, to 12,719.49. The Standard & Poor's 500 Index .SPX gained 14 points, or 1.05 percent, to 1,353.22. The Nasdaq Composite Index .IXIC climbed 38.64 points, or 1.36 percent, to 2,872.66.

(Reporting by Atul Prakash)