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US stocks rise, pushing market to record levels

Written By Unknown on Senin, 12 Mei 2014 | 23.16

NEW YORK — Stock rose on Monday, pushing U.S. market indexes to all-time highs, as investors bought some of the unloved stocks that have been slumping in recent weeks. Twenty-First Century Fox gained following reports that the company is trying to consolidate its European satellite TV businesses.

KEEPING SCORE: The Standard & Poor's 500 index rose 14 points, or 0.8 percent, to 1,892 as of 11:08 a.m. The index closed at an all-time high of 1,890 on April 2. The Dow Jones industrial average gained 99 points, or 0.6 percent, to 16,682. The Dow closed at a record high on Friday of 16,583. The Nasdaq climbed 59 points, or 1.5 percent, to 4,131.

EUROPEAN CONSOLDATION: Twenty-First Century Fox rose $1.11, or 3.3 percent, to $35.27 following reports that the company is seeking to consolidate its European satellite television business.

BARGAIN HUNTING: Some areas of the market that had slumped in recent weeks gained on Monday. Facebook rose $2.16, or 3.8 percent, to $59.40. The stock is still down 17 percent since March 10, after investors started dumping high-growth stocks. Twitter, another stock that has been beaten down recently, rose $1.36, or 4 percent, to $33.34.

GOBBLED UP: Pinnacle Foods surged $4.47, or 15 percent, to $34.95 after the company agreed to be acquired by Hillshire Brands. Pinnacle's brands include Duncan Hines and Aunt Jemima, while Hillshire makes Jimmy Dean and Sara Lee products. Hillshire fell $2.20, or 6 percent, to $34.76.

FLIP-FLOP: Stocks have alternated between weekly gains and losses for the past nine weeks. Investors have appeared reluctant to push the market higher amid uncertainty about how well the economy is doing. After surging last year, stocks have made only moderate gains so far this year. The S&P 500 is up 2.4 percent and the Dow Jones is just 0.6 percent higher.

THE QUOTE: "We've taken a temporary pause in the confidence that was pushing the market forward," said Gerry Paul, chief investment officer of U.S. value equities at AllianceBernstein. "But the fundamentals will ultimately bear out and bring people back in."

OVERSEAS: Stocks in China and Hong Kong rose after authorities there promised financial reforms. China's Shanghai Composite jumped 2.1 percent to 2,052.87 after the country's Cabinet promised late Friday to allow local governments to issue bonds and to streamline the approval process for initial public stock offerings.

BONDS AND COMMODITIES: U.S. government bond prices fell. The yield on the 10-year Treasury note rose to 2.65 percent from 2.63 percent late Friday. The price of oil rose 73 cents, or 0.7 percent, to $100.71 a barrel.


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Bankrupt Stockton defends financial plan in court

FRESNO, Calif. — The largest city in California to file for bankruptcy protection is asking a judge Monday to approve its plan for reorganizing more than $900 million in long-term debt to rescue the city from two years of financial uncertainty.

Standing in Stockton's way is Franklin Templeton Investments, which says the city is treating it unfairly. In 2009, Templeton loaned Stockton $35 million to build firehouses, parks and move its police dispatch center. Franklin says the city today is offering it $350,000.

The city has reached deals with all of its major creditors, except for Franklin, which is taking Stockton to a trial before U.S. Bankruptcy Judge Christopher Klein.

Stockton's bankruptcy attorney Marc Levinson recently told the City Council that he knows Franklin isn't happy. "We are choosing our battles and fighting where we have to fight and making deals where we can," Levinson said.

An inland port city 80 miles east of San Francisco, Stockton filed for Chapter 9 protection in 2012, making it the nation's largest bankrupt city before Detroit filed for bankruptcy last year. Vallejo went through bankruptcy before Stockton. San Bernardino filed shortly after Stockton, but it has yet to present an exit plan.

Stockton's leaders say the city fell victim to an unforgiving boom-and-bust economic cycle.

Before the recession, leaders spent millions of dollars revitalizing the downtown by buying a new City Hall and building a marina, a sports arena and a ballpark. The city issued about 3,000 permits annually to build new homes, and it paid police premium wages and health benefits.

With the recession, building dried up, and Stockton became ground zero for home foreclosures. Like many residents, City Hall couldn't pay its bills. The city slashed millions of dollars from its budget and laid off 25 percent of its police officers. Crime soared.

Franklin argues that Stockton agreed to pay its other creditors 52 percent or more of what they owe over the next 40 years. At trial, the judge has the power to approve or reject Stockton's plan. City Manager Kurt Wilson has said the bankruptcy could be over as soon as June 30. But if the judge rejects this plan, it could take another six months, he said.

Commenting on the bankruptcy trial, San Francisco attorney Michael Sweet noted that the judge has questioned whether the California Public Employees' Retirement System, which manages the city's pensions plan, should be brought into the reorganization plan.

"If that pops up again, it's huge," Sweet said.

The city says cutting pensions would make it hard to hire workers, such as police.

Jeff Michael, an economist at Stockton's University of the Pacific, said he was surprised Stockton didn't reach a deal with Franklin to avoid the trial.

While home building remains low, Michael said the economy surrounding Stockton is starting to improve and crime in the city has declined.

"Some optimism is coming back," he said. "It's not a case of endless downward spiral."


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EU adds 13 people, 2 firms to Ukraine list

BRUSSELS — European Union foreign ministers added 13 people Monday to their visa ban and asset freeze list over Ukraine's crisis but are not expected to decide whether to impose tough economic measures on Russia before Ukraine's May 25 elections, officials said.

The 28 EU ministers also said in a statement that two firms in Russia-annexed Crimea would be hit with asset freezes later Monday.

The ministers agreed to expand the scope of visa bans and asset freezes to target people undermining stability in Ukraine or obstructing international organizations there.

The Obama administration has its own sanctions list that targets several close associates of Russian President Vladimir Putin and their assets for Russia's actions in Ukraine.

France's European affairs minister, Harlem Desir, said additional EU sanctions may be imposed if "actions and provocations" hamper the Ukraine presidential election campaign. He said the 13 people targeted Monday included "Ukrainian separatists and Russian officials."

A total of 61 people are now on the EU's sanctions list due to Ukraine.

Beyond the visa and asset measures, British Foreign Secretary William Hague said it is essential to show Moscow the bloc is ready to step up measures further "depending on Russia's attitude toward the elections" in Ukraine.

France and Germany had already called on Russia to promote de-escalation in Ukraine so its presidential elections could take place May 25. If there is no action from President Vladimir Putin, the EU could increase sanctions, the two nations said.

The EU threw its weight behind efforts of the Organization for Security and Cooperation in Europe set up talks in Ukraine to contain the chaos and violence. France and Germany have already called for a "national dialogue" between the interim government in Kiev and representatives of all Ukrainian regions.

___

Follow Raf Casert on Twitter at http://www.twitter.com/rcasert


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Allergan board turns down Valeant takeover offer

IRVINE, Calif. — Botox maker Allergan formally rejected on Monday a takeover bid from Valeant Pharmaceuticals, saying that the unsolicited offer worth nearly $46 billion undervalues the company and poses a significant risk to its growth prospects.

Shortly after Canada's Valeant and activist investor Bill Ackman made their offer public last month, Allergan announced a so-called poison pill plan, a defensive tactic that makes a buyout prohibitively expensive. Allergan also told Valeant that it didn't want to discuss a tie-up, but said that it would evaluate the offer.

Valeant spokeswoman Laurie Little said Monday in an email that her company was disappointed that Allergan made its decision without "engaging in any substantive discussions" with Valeant or Allergan's largest stockholder, Ackman's Pershing Square Capital Management LP. She added that they remain committed to pursuing this deal.

Under the proposed deal, Valeant said that it would exchange each Allergan share for $48.30 in cash and a portion of shares of Valeant Pharmaceuticals International Inc.

Allergan stockholders would own 43 percent of the combined company under that proposal.

Pershing Square, which holds a 9.7 percent stake in Allergan, agreed to take only stock if the deal went through, and would remain as a long-term shareholder of the combined company.

Allergan Chairman and CEO David Pyott told analysts during a conference call Monday that he did speak with Ackman recently and listened carefully to the investor. But he added that Ackman was essentially a co-bidder with Valeant, and "his views and interests may not be completely the same as other stockholders."

A Pershing Square spokeswoman declined to comment on Allergan's rejection.

Allergan said Monday that Valeant's uncertain long-term growth prospects and business model create a risk for Allergan shareholders, especially given the stock component of the offer.

"In particular, we question how Valeant would achieve the level of cost cuts it is proposing without harming the long term viability and growth trajectory of our business," Pyott said in a letter to his counterpart at Valeant, Michael Pearson.

Allergan, based in Irvine, has long been considered one of the star performers in the specialty pharmaceutical sector. Revenue from its Botox treatment approached $2 billion last year.

The injectable drug is most famous for its ability to smooth wrinkle lines on aging foreheads. But over the years Allergan has racked up more than a half-dozen other approved uses for Botox, including treatment for neck spasms and migraine headaches.

Pyott detailed the growth of Botox and other drugs like the dry eye treatment Restasis in explaining Allergan's growth prospects as a stand-alone company. He said Allergan expects to increase adjusted earnings per share between 20 percent and 25 percent.

"We put our customers first, and we believe our ability to continuously gain market share is a direct result of our focus on our customers, physicians and their patients," he said.

Shares of Allergan Inc., which hit an all-time high this month, slipped $1.82 to $159.48 Monday morning while the Standard & Poor's 500 index rose slightly. U.S.-traded shares of Valeant, meanwhile, fell $1.61 to $129.56.


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German labor official urges speedy minimum wage

BERLIN — Germany's new top labor official says he will push to have the country introduce a national minimum wage quicker than planned and work to make union membership more attractive to young people.

Reiner Hoffmann, 58, was elected Monday to succeed Michael Sommer as the head of the German Trade Union Confederation or DGB — an umbrella organization that represents German unions in dealing with government authorities, political parties, employers' organizations and others.

According to the dpa news agency, Hoffmann, who ran unopposed, says Germany needs to immediately implement the planned national minimum wage of 8.50 euros ($11.75) per hour. Current plans are to introduce it next year, and phase it in over the following two.

Hoffmann, known as a pragmatist, was an official with the industrial IG-BCE union.


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Mass. gas prices down by 2 cents per gallon

BOSTON — Massachusetts drivers are getting a break at the pump, with the cost of a gallon of gas trickling down by 2 cents.

AAA Southern New England reports Monday that self-serve regular dropped in the past week to an average of $3.66 per gallon.

That's still 13 cents higher than a month ago and 18 cents higher per gallon than at the same time last year.

The Massachusetts price is also a penny per gallon higher than the national average.

AAA found a wide range of prices, from a low of $3.39 for a gallon of self-serve regular to a high of $3.79 for the same grade.


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Pfizer underscores UK commitments in memo

LONDON — Pfizer Inc. has sought to allay concerns over its proposed $106 billion takeover offer of Anglo-Swedish pharmaceuticals firm AstraZeneca, insisting that its promises will be legally binding.

In a memo Monday to two U.K. parliamentary committees studying its proposed overture, the U.S. drugmaker laid out its vision ahead of its testimony before the science and business committees. Crucially, it sought to ease worries that British jobs will be lost and that the nation's science base eroded by the potential merger.

It repeated promises to complete AstraZeneca's research and development hub in Cambridge and to establish the new company's tax residence in England.

"Delivering on these commitments will make us a stronger company that delivers benefits to patients, value to shareholders, and creates and protects high value jobs," the memo said.

The maker of Viagra has already written to U.K. Prime Minister David Cameron to offer commitments, but the memo bolstered the message, saying the promises were "binding as a matter of English law."

The cash and stock deal has become politically fraught, with much of the debate centering on whether Pfizer can be trusted to honor promises in what would be the biggest foreign takeover of a British business. Cameron has been accused by the opposition Labour Party of being a cheerleader for the deal.

The British leader was forced Sunday in a BBC interview to reject the notion that he was favoring Pfizer. But he also said Britain should not "put up the drawbridge" to outside investment.

Pfizer has made three approaches to AstraZeneca since January — all of which have been rejected. AstraZeneca said Pfizer's latest offer undervalues the company and that a takeover would disrupt its work on a potentially lucrative pipeline of new drugs.

The potential deal comes amid a spate of mergers among pharmaceutical companies, who are seeking to find new ways to grow as generic drugmakers move in to make cheaper versions of products with expiring patents.


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Hillshire looks beyond meat with Birds Eye, Vlasic

NEW YORK — Hillshire Brands is pushing further outside the deli case with a deal to buy the maker of Birds Eye frozen vegetables, Duncan Hines cakes mixes and Hungry-Man frozen dinners.

The Chicago-based company, which makes Hillshire Farm lunch meats, Jimmy Dean sausages and Ball Park franks, said Monday that it would buy Pinnacle Foods in a deal valued at $4.23 billion. The move builds up Hillshire's reach into other sections of the supermarket as more Americans watch how much meat they're eating.

Among Pinnacle's other brands are Wish-Bone salad dressing, Celeste frozen pizzas and Vlasic pickles.

"Meats go with vegetables, sandwiches go with pickles," Hillshire CEO Sean Connolly said in explaining why the deal made sense during a conference call with analysts.

In a phone interview, Connolly noted that Americans are eating meat just as often, but less of it per meal. He said that actually benefits Hillshire because food products that incorporate different ingredients — such as its Jimmy Dean breakfast sandwiches — are more profitable than simpler items lunchmeats or sausages.

"We've often said we like products that are more than just meat," Connolly said.

Given its reduced reliance on meat, the combined company is expected to have significantly higher profit margins than Hillshire alone.

Still, some of Pinnacle's brands such as Hungry-Man are seen as having an outdated image at a time when many people are trying to move away from foods they feel are processed or unhealthy. On Tuesday, the frozen food industry even plans to launch its first TV ad defending the nutritional benefits of its products.

The ad is part of a major marketing push by the American Frozen Food Institute, which represents companies including Hillshire, Pinnacle, ConAgra, Nestle and others.

When asked whether Hillshire planned to hold onto all of Pinnacle's products, Connolly said it was "too early to tell," but noted Hillshire's record of investing heavily in its strongest brands. He added that Birds Eye, which has a more health-conscious image, was particularly attractive to Hillshire when eyeing the deal.

Last month, Hillshire also said it was buying Van's Natural Foods, which makes gluten-free foods including cereal, chips and snack bars.

Connolly declined to specify the scope of the layoffs expected as a result of the acquisition. But he noted that the deal is expected to result in $140 million in annual cost savings from consolidated manufacturing and other overhead costs.

Each share of Parsippany, New Jersey-based Pinnacle Foods Inc. common stock will be exchanged for $18 in cash and 0.5 shares of Hillshire Brands Co. common stock. The companies said the implied purchase price is $36.02 per share, an 18 percent premium to Pinnacle's Friday closing price.

Including Pinnacle's outstanding debt, they put the deal's total value at about $6.6 billion.

The combined company will use the Hillshire Brands name and be based in Chicago. Connolly will serve as its president and CEO.

Both companies' boards unanimously approved the acquisition, which is expected to close by September. It still needs shareholder approval.

Hillshire anticipates that it will maintain its annual dividend of 70 cents per share and suspend a previously announced stock repurchase program.

Pinnacle's shares rose 15 percent to $34.92 and Hillshire's shares fell 6 percent to $34.82.


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Godzilla proves even giant monsters need lawyers

He spews radioactive fire, razes cities and pummels creatures from Earth and beyond, but even Godzilla needs a good lawyer sometimes. After all, you don't survive 60 years in the movie business without taking some fights to court.

For decades, attorneys acting on behalf of Godzilla's owners, Tokyo-based Toho Co. Ltd., have amassed a string of victories, fighting counterfeiters and business titans such as Comcast and Honda along the way. The opponents have come from all corners of pop culture: TV commercials, video games, rap music and even the liquor industry.

The litigation has kept Godzilla's brand thriving and helped pave the way for commercial and merchandising tie-ins that will accompany the monster's return to the big screen on Friday after a 10 year hiatus. Godzilla's image is for sale, but permission is needed.

Toho's attorneys use copyright and trademark law as effectively as Godzilla uses his tail and claws to topple buildings and swat opponents. Their court injunctions have permanently whacked music, books and movies from store shelves.

Since the mid-1980s, Chuck Shephard of the Los Angeles law firm of Greenberg Glusker has been Godzilla's lead lawyer, filing suits like the one against a wine called Cabzilla that resulted in a winemaker being forced to dump its stock of Cabernet Sauvignon down the drain.

"Godzilla is just as protected as Mickey Mouse," said Shephard in a recent interview. Toho's lucrative licensing efforts, which include endorsements, toys, comic books, video games and even official wine and sake brands, require the company to be vigilant against copycats, he said.

Since 1991, Toho's attorneys have filed at least 32 copyright and trademark lawsuits and countless warning letters, gaining court injunctions in a quarter of the cases. Most others have resulted in settlement agreements that while confidential, result in products disappearing from the marketplace.

Since the late 1990s, Shephard has worked Toho cases with attorney Aaron Moss, whose high-end Century City office is cluttered with a mix of legal filings and official and unofficial Godzilla merchandise.

Some of the spoils of court victories include a now out-of-circulation copy of rapper Pharoahe Monch's 1999 album that improperly used Godzilla's theme music and a two-foot-tall dog toy called Tuffzilla.

"Toho is not out there to extract a pound of flesh," Moss said. "They need to protect their brand."

Both attorneys said they carefully evaluate when to file lawsuits, and Toho trusts their judgment. Litigation often starts with a cease-and-desist letter, and a company's reaction to it often determines whether the case escalates, they said.

"When you have something as famous as Barbie or as Godzilla, you're well-served to protect that," said Larry Iser, a partner at the Santa Monica, California-based firm Kinsella Weitzman Iser Kump & Aldisert.

Iser represents toy maker Mattel and noted that trademarks for some popular products such as the trampoline and escalator have fallen into the public domain, making them easier and cheaper for companies to copy.

But Godzilla's trademarks could last forever if they're properly handled, Iser said.

Godzilla debuted in Japan in the 1954 hit film "Gojira" but has proven to be just as popular in the United States. That's made him an attractive spokesmonster.

He's appeared in ads for Snickers candy bars, Nike shoes, Doritos chips, as well as in marketing for the original "Simcity" computer game, Honda minivans, and Subway's "Five Dollar Footlong" specials. Yet those last three uses weren't properly licensed and prompted Toho to sue.

Godzilla's appearance in the 1991 Rose Parade sparked Toho's first court fight with Honda. Decked out in a tuxedo and top hat, American Hona's float was engineered to make it look like Godzilla was traipsing down the street.

The next day, Toho called Shephard. Godzilla's image hadn't been licensed for the float, and the ensuing lawsuit lasted more than a year before Godzilla finally prevailed. Honda denied that their float depicted Godzilla, despite advertisements and a memo about the float describing the creature by name.

It was one of many cases that featured what Moss calls "the dinosaur defense."

Defendants sometimes claim their products aren't Godzilla, but simply dinosaurs. It's a dubious argument, Moss said, because the products often feature a spiky spine similar to Godzilla's, or depict the creature in a cityscape. Godzilla may munch on cities, but dinosaurs didn't.

"It just doesn't work," Moss said. "Why does it breathe fire and stomp on cities?"

Godzilla has suffered one notable loss. In 1981 — before Shephard's firm was involved — a federal appeals court dismissed a lawsuit by Toho against Sears Roebuck & Co. filed over a line of trash bags the retailer had named "Bagzilla." The bag's use of a Godzilla-esque creature represented a "humorous caricature" and not a serious threat to Toho's business interests, the court ruled.

One ongoing fight for Godzilla's lawyers is against a Louisiana brewery, which is being sued over its Mechahopzilla beer line. The giant metal lizard on the beer's cans and tap handles is too similar to Godzilla's mechanical version, Mechagodzilla, Toho's lawyers argue. The brewery contends its beer is a parody and is relying in part on the Sears case.


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World markets weather latest Ukraine jitters

LONDON — Stock markets in China and Hong Kong were the best performers Monday after authorities promised financial reforms. Markets elsewhere were solid, particularly in the U.S., despite ongoing concerns over Ukraine.

China's Shanghai Composite jumped 2.1 percent to 2,052.87 after the Cabinet promised in an announcement late Friday to allow local governments to issue bonds and to streamline the approval process for initial public stock offerings. It gave no details, but the news also boosted Hong Kong's market with the Hang Seng up 1.8 percent to 22,261.61.

Elsewhere, markets advanced despite tensions between the West and Russia over the future of Ukraine.

The latest concerns have centered on referendums in the eastern part of Ukraine where the majority of voters allegedly said they backed sovereignty for their regions.

In Europe, France's CAC-40 closed up 0.4 percent at 4,493.65 while Germany's DAX rose 1.3 percent to 9,702.46. Britain's FTSE 100 ended 0.6 percent higher at 6,851.75.

In the U.S., the Dow Jones industrial average was 0.6 percent higher at 16,682 while the broader S&P 500 index rose 0.8 percent to 1,893. If sustained through the rest of the session, both indexes will close at all-time highs.

"Any fears that an after reporting season lull would set in to tempt the 'sell in May brigade' are swiftly being set aside," said Alastair McCaig, market analyst at IG.

Earlier in Asia, the regional heavyweight, Tokyo's Nikkei 225, shed 0.4 percent to 14,149.52 while Sydney's S&P/ASX 200 dropped 0.2 percent to 5,448.40.

Elsewhere, markets were fairly subdued. Among currencies, the euro was flat at $1.3759 while the dollar rose 0.2 percent to 102.12 yen.


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