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Reuters Canada Business Summary

01/07/08

Ford U.S. sales plunge 28 percent

DETROIT (Reuters) - Ford Motor Co said on Tuesday U.S. sales fell 28 percent in June on an unadjusted basis, driven by steep declines in sales of trucks and SUVs under rising gasoline prices. Sales dropped to 174,091 vehicles in June from 242,029 vehicles a year earlier, including all the automaker's brands, Ford said.

Flaherty cautious on economy: report

TORONTO (Reuters) - Canadian Finance Minister Jim Flaherty said he was concerned that economic weakness in the United States, his country's top trading partner, could hold back the domestic economy in the coming months, a news service reported on Tuesday. Flaherty said he welcomed Monday's stronger-than-expected report on April gross domestic product, which showed Canada's economy had expanded for the first time in three months.

Oil rises on supply worries, Middle East tensions

NEW YORK (Reuters) - Oil prices rose on Tuesday on forecasts that global supplies will struggle to keep pace with demand and rising tensions between Israel and Iran, a major oil producer. U.S. crude traded $2.60 higher at $142.60 a barrel, close to the record $143.67 hit Monday, by 12:20 p.m. EDT. London Brent crude gained $2.90 to trade at $142.73 a barrel.

Chrysler St. Louis cut seen good for Canada plant

TORONTO (Reuters) - Chrysler LLC's decision to shut down its St. Louis minivan plant is good news for the company's van plant in Windsor, Ontario, although it underscores the long-term uncertainty of the van segment, an analyst said on Monday. "I think for now the production there is safe," said Aaron Bragman, an automotive analyst at Global Insight, of the Windsor plant, which currently runs three shifts producing the industry-leading Town & Country and Dodge Grand Caravan minivan models.

CIT shares jump on deal to shed mortgage assets

NEW YORK (Reuters) - CIT Group Inc said on Tuesday it agreed to sell nearly $10 billion of mortgage assets, in a deal that removes problem loans from the commercial lender's balance sheet and lifted its shares 14 percent in premarket trading. CIT, which has struggled to finance itself amid the credit crunch, sold its subprime mortgage business for $1.5 billion in cash to Lone Star Funds, which is also assuming $4.4 billion of outstanding debt and other liabilities. The mortgage business includes $9.3 billion of assets.

Writedown fears nag as UBS rejigs management

ZURICH (Reuters) - UBS AG failed to calm investors' fears of further asset writedowns on Tuesday, dishing out instead a restructuring of top management and sending the shares to a fresh 10-year low. UBS, Europe's biggest casualty of the credit crisis and under fire from investors for shoddy corporate governance, said it would dismantle the office of chairman, a key demand of one of its top shareholders, activist investor Olivant.

Babcock to maintain Canada's submarine fleet

LONDON (Reuters) - British engineering support services company Babcock International Group Plc won a five-year contract to maintain four Victoria class submarines for Canada, which has an option to extend the deal to 15 years. Babcock said in a statement on Tuesday the initial contract was worth C$250 million ($245 million) to the company, and up to C$1.5 billion if the deal ran for 15 years.

Real, not speculative reasons for record oil: IEA

LONDON (Reuters) - It is easy to blame speculation for the doubling of oil prices over the past 12 months, but the real reasons are strong demand growth, coupled with shortages of supply and refining capacity, the IEA said on Tuesday. In its Medium-Term Oil Market Report, the International Energy Agency (IEA) said there was little evidence speculation had distorted prices over both the longer and shorter term, although it noted a lack of data on inventory levels, as well as on financial market participants.

Factories hit worldwide as commodity prices soar

LONDON/TOKYO (Reuters) - Soaring commodity costs are denting manufacturing activity in Asia and Europe and the outlook looks bleak as new orders drop off in the face of rising prices, surveys showed on Tuesday. Manufacturing activity in the euro zone contracted in June for the first time in three years while business confidence in Asia's largest export markets is buckling and output has likely contracted further in the United States.

BCE defers second-quarter common share dividend

TORONTO (Reuters) - BCE Inc , the telecom giant being bought out for C$34.8 billion by a group of private-equity investors, is deferring a dividend payment on its common stock while it works to complete the deal. BCE said late on Monday said it would retain the C$294 million that would have gone to the second-quarter dividend while the buyout by the Ontario Teachers' Pension Plan group is finished.

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