Investment News: Money Morning

Citi Buys Back Securities; Jobless Claims Rise; Toyota Earnings Skid; Brazil Grows More Grain; Vale’s Record Earnings; Nestle’s Earnings Crunch

• Beleaguered banking giant Citigroup Inc. (C) will buy back more than $7 billion worth of illiquid auction rate securities under a settlement, the Office of the New York Attorney General said yesterday (Thursday). Citi will also have to pay two civil penalties of $50 million each: One to New York state and the second to the North American Securities Administrators Association. The settlement calls for Citi to buy back the securities by Nov. 5. The deal is aimed at relieving about 40,000 customers who have been unable to sell the securities since Feb. 12, according to MarketWatch.com.

• The number of U.S. workers filing new claims for unemployment benefits unexpectedly rose last week to a six-year high, the Labor Department reported yesterday (Thursday). Initial claims for unemployment benefits rose 7,000 to 455,000 after seasonal adjustments in the week ended Aug. 2 – the highest level since March 2002.

• Toyota Motor Corp. (ADR: TM) said yesterday (Thursday) that its fiscal first-quarter profit dropped 28% to $3.23 billion, as demand was stifled by a sluggish global economy. The strengthening yen, which eroded the profits of Japanese exporters, cost Toyota $1.8 billion, the company said. Quarterly sales fell 4.7% to $56.8 billion.

• Brazil’s statistics agency is forecasting a 9% increase in national grain production this year as more fields were planted amid rising world food prices, The Associated Press reported. The agency says Brazil’s grain harvest will rise to 145 million tons this year from 133 million tons in 2007.

• Brazil’s Vale (ADR: RIO) mining company announced that net income hit $5 billion in the second quarter, as demand from emerging markets resulted in a higher price for the company’s iron ore, according to Bloomberg News. On a per-share basis, profits rose to $1.02 a share in the second quarter, up from 85 cents a share a year ago. Revenue increased 22% to a record $10.9 billion in the quarter, up from $8.9 billion a year ago, Vale said.

• Nestle SA, the world’s biggest food-and-beverage company, reported 6.1% growth in first-half net profit yesterday (Thursday). The company said it earned $4.93 billion during the first six months of the year, an increase of $282 million from the same period last year. Nestle posted $ 50.18 billion in sales during the first half, up 3.8% from a year ago.

August 8th, 2008

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