BOA to sell China-based bank
Bank of America Corp. is selling half of its stake in China Construction Bank Corp. to raise cash and shore up its capital base. The nation's largest bank by assets said yesterday it will sell 13.1 billion shares in the Chinese bank for $8.3 billion to a group of investors it declined to name. The sale, which had been expected, will generate a gain of $3.3 billion for Bank of America. The news came four days after the Charlotte, N.C., bank got a $5-billion investment from Warren Buffett's Berkshire Hathaway Inc., which provided a big boost to Bank of America's battered stock. The billionaire investor made investments in other major companies such as Goldman Sachs Group Inc., helping restore confidence in them when they were out of favor. After the sale, Bank of America will still own about 5 percent of China Construction Bank. It currently owns about 10 percent.
Contracts to buy homes fall
The number of people who signed contracts to buy homes fell in July, further evidence that the depressed housing market remains a drag on the economy. The National Association of Realtors said yesterday that its index of sales agreements fell 1.3 percent in July to a reading of 89.7. A reading of 100 is considered healthy by economists. The last time the index reached that level was in April 2010, the final month that buyers could qualify for a federal tax credit. Contract signings are usually a reliable indicator of where the housing market is headed. There's typically a one- to two-month lag between a sales contract and a completed deal. But the Realtors group says a growing number of buyers has canceled contracts after appraisals showed the homes were worth less than they bid. A sale isn't final until a mortgage is closed. Michael Gapen, director of U.S. economic research at Barclays Capital Research, said the high number of cancellations suggest "heightened uncertainty on the part of purchasers and tighter credit standards in mortgage finance." Home loans are harder to come by. Many lenders are requiring 20 percent down payments and strong FICO credit scores to qualify. Signings are still roughly 18 percent above the June 2010 reading of 75.9, the lowest figure since the housing market went bust more than four years ago.
Metal prices fall; oil price rises
Gold prices pared losses slightly after tumbling 2.7 percent yesterday, giving back the previous session's gains as fears of a new recession receded, while oil rose and corn hit contract highs on crop concerns. Spot gold was down $1.60 at $1,786.80 an ounce yesterday, sliding more than $120 from its peak last week at a record $1,911.46. Copper futures fell in New York, with the active December COMEX contract dropping 0.19 percent to settle at $4.1095 per lb. U.S. crude climbed 2.2 percent to settle at $87.27 a barrel. New-crop corn futures soared to a contract high in overnight Globex trading on concerns about dry conditions in the Midwest hurting crop prospects, the weaker dollar and robust demand from the livestock and ethanol sectors.
UAW calls for workers' raises
United Auto Workers president Bob King said he has asked for raises for new workers at General Motors Co., Ford Motor Co. and Chrysler Group Llc, which he said won't add to the companies' fixed costs. King said UAW has proposed that new workers receive a wage increase in current contract negotiations. They now are paid $14 an hour, half what senior production employees make. The UAW's contracts covering 113,000 workers at GM, Ford and Chrysler expire Sept. 14. In a speech to the Detroit Economic Club, King said the UAW wouldn't add to fixed costs of the automakers. John Fleming, Ford's executive vice president for global manufacturing and labor affairs, attended King's speech and also said negotiators are making progress.
From wire service reports