Business Blog Posts

* European Council President Herman Van Rompuy calls an emergency meeting of top officials to discuss the debt crisis, amid fears it could engulf Italy, the region's third-biggest economy.

* The Eurogroup meeting of European finance ministers meets to discuss the debt crisis, including a second bailout package for Greece.

* Italian market regulator Consob on Sunday approved new short-selling disclosure rules to limit stock volatility after a selloff hit domestic bank shares and government bonds on Friday.

* Democrats and Republicans fail to reach agreement over a budget and debt deal at a meeting on Sunday. Discussions are set to resume at the White House on Monday afternoon.

* Chinese annual inflation rose to a three-year high in June, data released on Saturday showed, increasing chances for yet more monetary policy tightening there.

* Peabody Energy (BTU.N) and ArcelorMittal (ISPA.AS) launch a $5 billion bid for Australian firm Macarthur Coal (MCC.AX), the world's biggest producer of pulverized coal.

* Alcoa Inc (AA.N) is set to kick off the second-quarter earnings season with analysts expecting a profit of 34 cents a share compared with 13 cents last year, with revenues seen up 20 percent to $6.3 billion.

* News Corp's (NWSA.O) $14 billion bid to buyout UK broadcaster BSkyB (BSY.L) face opposition from the British government, lawyers for whom are drawing up plans to block the deal, the Independent newspaper said.

* American International Group (AIG.N) plans to replace one or more Wall Street banks in its next sale of shares from the U.S. government, The Wall Street Journal reported on Sunday.

* Texas pipeline company Southern Union Co (SUG.N), which is the subject of a takeover bidding war, held talks with at least nine potential suitors beginning in 2008, The Wall Street Journal reported on Sunday.

* Indonesian villagers who accused Exxon Mobil Corp's (XOM.N) security forces of murder, torture and other atrocities have regained their right to sue the giant oil company in the United States.

* Dana Holding Corp (DAN.N) eyes massive growth in China.

* Nestle (NESN.VX) bids around $1.7 billion for a 60 percent stake in Chinese candy maker Hsu Fu Chi International (HSFU.SI).

* Hong Kong's richest man bids for UK water company Northumbrian Water (NWG.L) in a deal valuing the company at around 2.4 billion pounds ($3.9 billion).

* Australia introduces a carbon tax scheme, hitting shares in miners, steel firms and airlines.

* The FTSEurofirst 300 .FTEU3 index of leading European shares fell 0.5 percent on Monday, extending a 0.8 percent fall in the previous session, weighed by euro zone sovereign debt concerns.

* Japan's Nikkei .N225 fell 0.7 percent overnight on profit taking after three weeks of gains, hurt by weak U.S. and Chinese data.

* The Dow Jones industrial average .DJI fell 62.29 points, or 0.49 percent, to 12,657.20 points on Friday, weighed by a much worse than expected non-farm payrolls reading for June.

* The Standard & Poor's 500 index .SXP, meanwhile, shed 9.42 points, or 0.70 percent, to 1,343.80, while the Nasdaq Composite Index .IXIC dropped 12.85 points, or 0.45 percent, to 2,859.81.

* The U.S. employment trend index for June is due for release at 1400 GMT.

(Editing by Jon Loades-Carter)

The development underlined the political pressure on Prime Minister David Cameron over the revelations, which have caused public outrage over the behavior of some journalists, police and politicians.

The new request to media regulator Ofcom, which is already assessing whether News Corps is a 'fit and proper' holder of a broadcast license, follows a report in the Independent newspaper that lawyers were drawing up plans to block Murdoch's bid to buy out the profitable pay-TV operator BSkyB.

Shares in BSkyB dropped more than seven percent on Monday morning after a similar fall on Friday. News Corp shares fell more than 5 percent in New York last week.

"We believe the deal is all but dead," Panmure Gordon analyst Alex DeGroot said.

Murdoch himself has shown no sign of backing away from the deal.

Opposition Labour party leader Ed Miliband said on Sunday he would force parliament to vote this week if Cameron did not take steps to halt News Corp's $14-billion bid for the 61 percent of BSkyB that it does not already own.

A vote in parliament could split the coalition between Cameron's Conservatives and the Liberal Democrats who, traditionally less favored by Murdoch's media, have signaled they could vote with Labour on the issue.

It would also give Labour a chance to cast itself as the champion of a public angered by allegations that News of the World reporters and editors were complicit in illegally hacking the voicemails of a murdered girl, London bombing victims and Britain's war dead in search of stories.

"We are working on a plan to suspend the deal while the police investigation is taking place," the Independent quoted a senior government source as saying. A spokesman for the prime minister declined to comment.

Secretary of State for Media Jeremy Hunt wrote to regulator OFCOM asking for a fresh assessment of the BSkyB buyout, which until last week's hacking revelations appeared assured.

"Given the well-publicized matters involving the News of the World in the past week...I would be grateful if you could let me know whether you consider that any new information that has come to light causes you to reconsider any part of your previous advice to me including your confidence in the credibility, sustainability of practicalities of the undertakings offered by News Corporation," the letter said.

Murdoch's own Sunday Times reported that a 2007 internal investigation at the News of the World had found evidence that phone hacking was more widespread than the company had admitted and that staff had illegally paid police for information.

Murdoch, 80, flew into London on Sunday to take charge of attempts to save the BSkyB deal and limit the damage to News Corp, the world's largest news conglomerate.

As he was driven into his London headquarters, he held up the final edition of the News of the World, the 168-year-old newspaper he bought in 1969 then closed last week in a bid to stem the crisis.

Christina Camargo-Lima, walking on her way to work past Murdoch's London flat on Monday morning, welcomed the criticism of Murdoch. "I think it's time the mogul came down. They just can't control democracy like that."

LURID HEADLINES

The paper is best known for its lurid headlines exposing misadventures of the rich, royal and famous. Its last headline said simply "Thank You & Goodbye" over a montage of some of its most celebrated splashes of the past 168 years.

On Monday, the Daily Mirror newspaper reported, citing an unidentified source, that News of the World journalists had offered to pay a New York police officer to retrieve the private phone records of victims of the September 11, 2001, attacks. [nLDE76A006]

Murdoch dined on Sunday in an upmarket hotel with his British newspaper arm's chief executive Rebekah Brooks, a friend of Cameron's and editor of the News of the World at the time of the alleged phone-hacking, and his son and heir apparent, James. Cameron has since called for her resignation.

The affair has thrown a harsh spotlight on the long-standing ties between British politicians and Murdoch. In particular, it has called into question the judgment of Cameron, who hired former News of the World editor Andy Coulson as his head of communications.

Coulson later resigned, and was arrested on Friday and released on bail after being questioned by police about voicemail hacking and payments to police. Coulson denies any knowledge that hacking was carried out.

Cameron has insisted that the government has no legal power to block the BSkyB deal if it is satisfied that enough media plurality -- competition -- will be maintained. It had already indicated it would accept News Corp's assurances on this count.

"FIT AND PROPER"

The Independent said the government had latterly hoped the broadcasting regulator Ofcom would stop the deal going through on grounds that News Corp directors were not "fit and proper" to run BSkyB, but this was unlikely to happen until a possibly lengthy police investigation had been completed.

Instead, it said lawyers in the department of Culture and media were now looking at using competition criteria to block the deal.

That would still be embarrassing for the prime minister, who has ordered a public inquiry and also admitted media barons had too much influence over politicians, but arguably less damaging than a split with his coalition partners.

Blocking the BSkyB deal on grounds of media plurality would also be better for Murdoch than if he and his team were found to be not "fit and proper" to run the broadcaster, as that could see him lose his existing 39 percent of the company.

(Writing by Jon Hemming; Editing by Jon Boyle)

There are a number of reasons to be cautious about the prospects for the global economic recovery.

It's against this background that U.S. Federal Reserve Chairman Ben Bernanke will step before Congress for his semi-annual testimony on Wednesday. He will likely be barraged with questions about Friday's jobs report -- a report so across-the-board disappointing that JPMorgan economist Michael Feroli called it "worse than Spinal Tap's 'Shark Sandwich.'"

The U.S. economy created just 18,000 jobs in June, much less than the 90,000 economists had expected.

A U.S. retail sales report may offer a little bit of hope on Thursday if it shows Americans spent money left over from a recent retreat in gasoline prices on other items.

"We're in a situation where the data is noisy and choppy," said Michael Hanson, a senior economist at Bank of America.

"For a central banker, you're now in risk management mode: 'We want to be ready to calm the markets in case we get more bad data, but we don't want to jump the gun, either.'"

Bernanke has argued that the biggest factors affecting growth in the first half of the year are temporary in nature: supply disruptions due to the Japanese earthquake, inclement weather and a surge in oil prices earlier this year.

He is expected to stick to that assessment.

"The weak jobs report does not rule out a second half recovery by any means. Employment is something of a lagging indicator," said Dean Maki, economist at Barclays Capital.

"It depends on consumer spending and we are focusing intently on retail sales as one of the first signals of how consumers are responding to the decline in gasoline prices."

In addition, U.S. industrial production and manufacturing data on Friday may show the Japanese earthquake-induced supply chain disruptions to auto production and sales have eased somewhat.

Japan's central bank, which meets on July 11-12, will likely revise up its assessment of the economy next week as companies restore supply chains more quickly than expected. Factory output is seen returning to pre-quake levels in August. The BOJ is expected to hold off easing monetary policy further, though it will likely warn of lingering risks to the global economy.

NO QUICK-FIXES

One of those risks is Europe's escalating debt crisis.

Euro zone finance ministers are set to meet on Monday to discuss a second bailout package for Greece.

But given the absence of a decision on how private bondholders might participate in any Greek debt rollover, markets are skeptical of how much progress can be made at the Eurogroup meeting.

Markets want European policymakers to come up with longer-term solutions rather than one temporary fix after the other if they are to avoid a domino effect as financial markets pounce on other weak euro area countries.

Contagion is already evident from the growing risk premia on debt issued by Spain and Italy, which some analysts view as a warning signal. Lower-rated euro zone government bonds have faced increased pressure since Moody's cut Portugal's credit rating to junk last week.

"There is not expected to be much of a resolution, so all together there is a lot of asymmetric risk out there," said Mark McCormick, currency strategist at Brown Brothers Harriman.

China raised interest rates for the third time this year on Wednesday as taming inflation remains a top priority even as the pace of growth in its vast economy slows.

Risky assets, particularly those with direct links to China's growth, sold off after the announcement on concerns the latest monetary tightening could choke an already sluggish global recovery.

On Wednesday, July 13, China will get a read on its second-quarter economic growth data and retail sales for June. Chinese consumer sentiment is expected to have been weighed down by surging inflation and high property prices.

"Unlike in Japan and the U.S., where we believe growth has slowed for temporary reasons, policy tightening in the euro area and China seems likely to yield a more persistent slowing in growth," Barclays' Maki wrote in a note to clients.

(Reporting by Kristina Cooke; Editing by Dan Grebler)

Analysts have been lowering earnings estimates of late and nervousness about the U.S. economic picture abounds, especially after Friday's poor June jobs report.

However, profit growth could still be strong in the second quarter -- and that could boost stocks. The Standard & Poor's 500 .SPX fell 0.4 percent in the second quarter, but rallied in recent days on hopes for economic improvement.

Over the last month, analysts have revised downward their earnings estimates for S&P 500 companies, with the mean change in earnings estimates a negative 6.4 percent, according to Thomson Reuters StarMine data.

"I think there's going to be a lot of anxiety going into it, and I think companies are going to continue what they've done for the last few quarters: Put out better-than-expected numbers, and guidance should be OK," said Scott Billeaudeau, portfolio manager at Fifth Third Asset Management, in Minneapolis.

S&P 500 components' earnings are expected to have increased an average of 7.3 percent in the second quarter from a year ago, down from first-quarter growth of 18.9 percent, Thomson Reuters data showed.

But the number could jump if most companies beat analysts' forecasts. Early estimates for first-quarter profit growth were at about 13 percent.

"The general economic data is suggesting some softness in the overall economy both globally and in the U.S. ... so that drives somewhat more realistic expectations for companies," said Natalie Trunow, chief investment officer of equities of Calvert Investment Management in Bethesda, Maryland, which manages about $14.8 billion.

This week, investors will get a steady stream of economic indicators along with the earnings reports. The international trade deficit for May and minutes from the Federal Reserve's June meeting will be released on Tuesday. Retail sales and the Producer Price Index for June will come out on Thursday, followed by the Consumer Price Index for June on Friday.

BANKS UNDER THE GUN

Financial services companies have seen the biggest downward revisions in earnings estimates in the last 30 days, with banks taking some of the biggest hits, including Goldman Sachs (GS.N) and Morgan Stanley (MS.N).

JPMorgan Chase (JPM.N) will be the first of the big banks to report, with results due on Thursday. Results from top tech player Google (GOOG.O) also are expected Thursday, while aluminum company Alcoa (AA.N) unofficially starts the season with earnings after the bell on Monday.

The S&P financial index .GSPF dropped 6.3 percent in the second quarter as worries escalated about the impact of the euro-zone debt problems on the global economy. The mean change for earnings estimates in the sector in the last 30 days is a negative 34.4 percent, StarMine data showed.

DISASTERS AND DISAPPOINTMENTS

Analysts have also said the aftermath of Japan's earthquake, months of extraordinary weather in the United States, and rising food and commodity prices took a toll on companies in the second quarter.

StarMine analysis showed companies, including Platinum Underwriters Holdings (PTP.N), were likely to disappoint with results because of tornado damage claims.

But companies have kept costs in check and that should support stronger results, while also giving a boost to stock prices, Billeaudeau said.

"I think things underneath the macro, global, political noise continue to percolate," said Mike Jackson, founder of Denver-based investment firm T3 Equity Labs. But "you're going to see higher-quality companies showing the surprises this quarter (versus) last."

Based on his own analysis, he expects industrials and utilities to surprise to the upside, especially for companies involved in "machinery, and roads and rails" and for electric utilities.

On the flip side, he sees a high probability for earnings disappointments in health care, consumer staples and materials sectors.

An S&P health-care index .GSPA led gains in the S&P 500 in the first half of the year as the market shifted to defensive shares, with the sector up 14 percent since the start of the year, followed by an S&P energy index .GSPE, up 11 percent.

The health-care sector may be subject to profit-taking once earnings start after its strong run so far this year, according to Tobias Levkovich, Citigroup's chief U.S. equity strategist, who made the point in a research note.

Some analysts expect total upside surprises to be less than in previous quarters, with the percentage of companies beating expectations likely to fall in the mid-60s percentage range, below the 70 percent range, where it has been.

S&P 500 earnings overall could beat estimates by a "modest" 1 percent to 3 percent, Charles Blood, senior market strategist at Brown Brothers Harriman, wrote in a research note.

"Margins typically rise in the second quarter," Blood wrote, "but our primary concern and one of the biggest investment debates, is, 'How much room do companies have for further improvement?'"

(Reporting by Caroline Valetkevitch; Editing by Jan Paschal)

Murdoch, 80, swept into his London headquarters in the front passenger seat of a red Range Rover car, holding up the last edition of the best selling newspaper, the News of the World, that he had closed hours earlier in a bid to contain the crisis.

Wearing a white panama-style hat, he ignored reporters massed at the entrance, focusing his attention on the newspaper he bought in 1969 as the cornerstone of a vast media empire. His car sped out of the complex again 15 minutes later but it was not clear what meetings he had planned

Best known for its lurid headlines exposing misadventures of the rich, royal and famous, the last News of the World said simply "Thank You & Goodbye" over a montage of some of its most celebrated splashes of the past 168 years. For admirers it had been a stock feature of lazy Sundays, for critics it had become a symbol of craven irresponsibility in the British media.

"All human life was here," the News of the World declared.

Murdoch had seemed on the point of clinching approval for a cherished prize, the buyout of broadcaster BSkyB, only last week; but revelations phone-hacking had extended beyond celebrities to relatives of a murdered girl, of victims of 2005 London bomb attacks and of soldiers killed in action stirred broad public anger.

Editor Colin Myler told media massed outside the newspaper's offices he deeply regretted the newspaper's closure.

"This is not where we wanted to be and it's not where we deserve to be, but as a final tribute to 7.5 million readers, this is for you and for the staff, thank you."

The scandal has raised questions about relations between politicians, including Prime Minister David Cameron -- who hired a former editor of the paper as his spin doctor -- and media barons such as News Corp chairman and chief executive Murdoch.

It has also brought to light accusations that journalists working for Murdoch and others illegally paid police for information. A senior police officer said the London police force had been 'very damaged' by its failure to press an initial investigation into telephone hacking at the News of the World.

Cameron's opponents have scented an opportunity in their efforts to block Murdoch's $14 billion bid for the 61 percent of the profitable pay-TV operator BSkyB that News Corp, the world's largest news conglomerate, does not already own.

Previously, those looking at whether Murdoch should get the go-ahead have focused on whether it would give him too much power over Britain's media.

But allegations that senior editors were involved in illegally accessing thousands of voicemail messages and paying police for information to get scoops have now prompted the regulator Ofcom to say it will consider whether News Corp directors are "fit and proper" persons to run BSkyB.

The government has received more than 135,000 public complaints against the BSkyB deal.

Cameron came under growing pressure on Sunday to halt Murdoch's bid for BSkyB, at least until an investigation into phone-hacking had been completed.

Labour opposition leader Ed Miliband said he would force the issue to a parliamentary vote this week if Cameron failed to act.

"He needs to make clear that BSkyB cannot go ahead until the investigation is complete," Miliband told the BBC's Andrew Marr program.

Pressure came too from members of the government's junior coalition partner, the Liberal Democrats, who have traditionally had a less cozy relationship with Murdoch. Deputy LibDem leader Simon Hughes said he would be prepared to back Labour's call for the deal to be postponed and urged other LibDems to do the same -- setting the stage for a major test of the coalition's unity

"LET DOWN"

"We've been let down by people that we trusted, with the result the paper let down its readers," the News Corp chief executive said as he left a media conference in Idaho.

News Corp shares fell more than 5 percent in New York last week.

Neither Cameron's office nor the Department for Culture, Media and Sport plan to speak to him during the visit, spokespeople said. Police declined to comment on whether they would try to speak to him.

The prime minister's close links with those at the heart of the scandal mean he too has been damaged by it but analysts say that, with probably nearly four years until a parliamentary election, he is unlikely to be sunk by it.

Cameron, a friend of former News of the World editor Rebekah Brooks, joined calls for her to step down as chief executive of News Corp's News International arm at a news conference on Friday where he admitted politicians had been in thrall to media for years, and ordered a public inquiry.

British police on Friday arrested Andy Coulson, the former spokesman for Cameron who had resigned as News of the World editor in 2007 after one of his reporters and a private investigator were convicted of hacking the phones of aides to the royal family. Coulson has also said he knew nothing about the phone hacking.

"HACKING WAS STANDARD PRACTICE"

A senior police officer told the Sunday Telegraph that voicemail hacking had been "standard practice" at the News of the World and that its executives had failed to cooperate fully with police during an investigation in 2005-06.

He said the new investigation had been prompted by "material that was completely available to them in 2005-06."

"It makes their assurances in 2005-06 look very shaky."

The Sunday Times said at least nine journalists and three police officers were facing jail in connection with the hacking scandal and quoted senior police officers as saying it was likely there would be further arrests soon.

Murdoch said on Saturday that Brooks, who was editor of the News of the World at a time when many of the alleged hacking incidents were taking place, had his "total" support. She denies knowing of the practice during her watch.

"I'm not throwing innocent people under the bus," he said.

Asked if he planned any management changes, for example in the responsibilities of his son and heir apparent James, he said "No." "Nothing's changed," he told reporters.

Some 200 people at the News of the World are losing their jobs.

At London Bridge railway station, copies of the last edition were selling well, said newspaper vendor Jean Natella.

"I think it's a shame because they've done a lot of good, they've riddled out a lot of, lets say, nasty people," she said. "It's unfortunate that a few people have brought it down. But they have got no choice because they condemned others so they have got to show they are accountable."

Others were less charitable.

"The specter of the old Murdoch, the one whose demise was signaled last week -- powerful, voracious and threatening -- must not be allowed to rise again from the ashes of the News of the World," said an editorial in The Observer, a rival weekly.

The Guardian newspaper said on Saturday police were investigating claims a News International executive may have deleted millions of emails from an internal archive in an attempt to hamper investigations. A News International spokeswoman said the allegation was "rubbish."

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

Cameron fleshed out on Sunday how inquiries into the scandal, announced on Friday, would work.

The first, a judge-led inquiry to be held in public, will cover phone hacking and criminal activity and look at the way the police investigated allegations against the News of the World, and the relationship between newspapers and the police.

The second inquiry will be asked to recommend a new framework for press regulation.

(Writing by Ralph Boulton)

(Additional reporting by Olesya Dmitracova, Jodie Ginsberg, Christina Fincher, Sarah McBride, Sudip Kar-Gupta; Writing by Alison Williams; Editing by Kevin Liffey and Janet Lawrence)