WSF Headline Roundup - 5/8/08 - Consumer Debt Rise; Rice gains; Nasdaq earnings jump; BOE holds rates at 5%; Investors braced for bad AIG news; UBS returns $35M to towns; Private banks tax evasion crackdown; Northern Rock legal challenge; more

• U.S. Consumer Debt Rises More Than Forecast in March
• Rice Gains for Fifth Day on Myanmar Cyclone, Increased Demand
• Nasdaq Profit Surges on Record Trading, OMX Merger
• Pound Stays Higher as Bank of England Holds Rate at 5 Percent
• AIG's Marks May Be Deep
• UBS to return $35 million to Massachusetts towns
• Private banks face tax evasion crackdown
• Northern Rock investors begin legal battle
• Facebook users give thumbs down to Microsoft
• Icahn ups stake in Motorola to 7.6%
• Best Buy and Carphone in £1.1bn European link
• Sam's Club giving away memberships-with a purchase

U.S. Consumer Debt Rises More Than Forecast in March - Bloomberg

U.S. consumer borrowing jumped more than double the amount economists forecast in March, indicating a slowing economy is forcing Americans to accumulate credit-card and other forms of debt.

Consumer credit increased by $15.3 billion for the month to $2.56 trillion, the biggest monthly rise since November, the Federal Reserve said today in Washington. In February, credit rose by $6.5 billion, previously reported as an increase of $5.2 billion. The Fed's report doesn't cover borrowing secured by real estate, such as home-equity loans.

Consumers are turning to credit cards after banks tightened standards for home-equity loans and other borrowing. The March figures brought U.S. consumer borrowing in the first quarter to $34 billion, the most since the first three months of 2001, when the economy entered its last official recession.

``Consumers are strapped as incomes are not keeping up with inflation and this is leading them to rely increasingly on credit to see them through the worst housing downturn since the Great Depression,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York. ``The days of extracting cash from one's home to spend on goods and services are long gone.''....

Rice Gains for Fifth Day on Myanmar Cyclone, Increased Demand - Bloomberg 

Rice gained for a fifth day after a cyclone in Myanmar flooded 5,000 square kilometers (1,930 square miles) of farmland, and Malaysia began imports from Thailand.
 
  Rice futures, which touched a record last month, rose as much as 3.5 percent to $22.35 per 100 pounds on the Chicago Board of Trade, bringing this year's increase to 61 percent. That's the biggest gain since April 15.
 
  Cyclone Nargis struck the country's main rice-growing area on May 3, worsening a food crisis that's triggered unrest from Haiti to Egypt. Rice, wheat, corn and soybeans have risen to records this year, raising the risk of malnutrition for 1 billion Asians, according to the Asian Development Bank.
 
  ``The crop damage in Myanmar has fueled concern over tight global supplies and prompted importers to rush for the grain,'' Hiroyuki Kikukawa, general manager of the research department at IDO Securities Co., said today in Tokyo. ``Any supply disruptions may stoke panic buying.''...

Nasdaq Profit Surges on Record Trading, OMX Merger - Bloomberg

Nasdaq OMX Group Inc., the all- electronic exchange that handles the most shares in the U.S., said first-quarter profit surged sixfold on record trading as it gained business from rivals.

Net income increased to $121.4 million, or 69 cents a share, from $18.3 million, or 14 cents, a year earlier, when the results excluded business from the newly acquired OMX AB, the New York-based company said today in a statement. Revenue increased 45 percent to $813.8 million.

Chief Executive Officer Robert Greifeld's strategy of reducing transaction costs for brokerages helped fuel growth, and investors traded more shares during the quarter amid concern the U.S. economy was sliding into a recession. Greifeld plans to spend $5.51 billion on acquisitions this year to push into Europe and technology services after the purchase of OMX.

``The U.S. stock business is ultra-competitive and becoming more so,'' Patrick O'Shaughnessy, an analyst at Raymond James & Associates who rates the stock ``market perform,'' said in an interview before earnings were released. ``To the extent that it can diversify into faster growing, less competitive areas, that's certainly the direction they want to head.''...

Pound Stays Higher as Bank of England Holds Rate at 5 Percent - Bloomberg

The pound stayed higher against the euro after the Bank of England kept interest rates unchanged, as forecast by economists.

The nine-member Monetary Policy Committee, led by Governor Mervyn King, held its main rate at 5 percent to curb inflation, after three reductions since December. Fifty-six of 61 economists surveyed by Bloomberg News predicted the decision. The European Central Bank will also leave borrowing costs on hold today, according to a separate survey.

``There was limited speculation of a rate cut and so we may see a brief move higher,'' said Ian Stannard, senior currency strategy at BNP Paribas SA in London. ``Any rebound we see will provide a selling opportunity.''

The pound was at 78.43 pence per euro by 12:27 p.m. in London, from 78.79 pence yesterday. It pared gains versus the dollar, trading at $1.9573 from $1.9539, near a 2 1/2-month low. It will probably stay between $1.9340 and $1.9610 this week, Stannard forecast.....

AIG's Marks May Be Deep - Wall Street Journal

Investors have braced for more dismal news from American International Group Inc. when it reports earnings Thursday, as the giant insurer grapples with losses from derivatives tied to subprime mortgages.

But the less obvious risk in AIG's travails is that they will play out over the next several years in the form of sluggish profitability, weaker returns and missed opportunities.

"They are more vulnerable, because the capital cushion gets dented," says Nigel Dally, an analyst at Morgan Stanley. "The fundamentals are being hit from a lot of different angles."....

UBS to return $35 million to Massachusetts towns - Reuters 

Swiss bank UBS will return more than $35 million to Massachusetts cities and towns after the money was put into prohibited investments, the state's attorney general said on Wednesday.
 
  Attorney General Martha Coakley's office had been probing allegations that UBS misled Massachusetts officials over whether state law allowed them to invest in auction rate securities.

Private banks face tax evasion crackdown - Financial Times 

The world’s leading private banks could be facing an international government crackdown on tax evasion.
 
  This week’s admission by UBS that a leading private banker had been detained as a material witness by the US authorities followed German public prosecutors’ efforts to unmask citizens with undeclared accounts in Liechtenstein.

Matters could escalate this month, when European Union finance ministers review arrangements allowing private banking centres, such as Switzerland and Liechtenstein, to retain client confidentiality in return for taxing foreigners’ savings.
 
  Pressure, led by Germany, to tighten the EU’s savings tax directive could remove the loophole enabling income to remain untaxed if held by a company, rather than an individual. The loophole has led many wealthy account holders, assisted by their banks, to move assets into company names....

Northern Rock investors begin legal battle - The Times of London

Northern Rock shareholders are today expected to lodge a legal challenge to claim back compensation they allege they are owed from the nationalisation of the Newcastle-based bank.

The UK Shareholders Association and SRM Global, the hedge fund run by former UBS trader Jon Wood, will submit an application for a judicial review into the terms of Northern Rock's nationalisation. If the application for review is approved, the case will come to court in about nine months time.

Shareholders believe that the Government has fixed the terms by which they are to be compensated, meaning that they will receive practically nothing. At present, shareholders are set to receive what their shares would have been worth had the Government not propped up the bank....

Facebook users give thumbs down to Microsoft - The Times of London

Microsoft will likely meet with stern resistance from within the Facebook community should its reported approach to the fast-growing social networking site gather momentum.

The Facebook community, populated as it is by a large core of university students, is one of the strongest bastions of anti-Microsoft sentiment on the web, and frequently points out what it sees as the flaws in many of the software giant's products.

Yesterday it was reported that Microsoft's bankers had approached Facebook to ask whether the company might be interested in selling - although the parties are not said to be in official talks. Neither company has commented on the report, which appeared first in The Wall Street Journal.

There are at least three groups of Facebook users set up specifically to vent anger at the site's potential acquisition by Microsoft, with names such as 'If Facebook sells to Microsoft, we're leaving', and 'Don't sell Facebook to Microsoft!'.....

Icahn ups stake in Motorola to 7.6% - Chicago Tribune

Billionaire investor Carl Icahn on Wednesday reported raising his stake in Motorola Inc. to 7.6 percent from 6.4 percent.

Icahn beneficially owns about 172.18 million shares of the Schaumburg cellphone maker, according to a filing with the Securities and Exchange Commission.

Icahn previously reported holding about 144.56 million Motorola shares in late March....

Best Buy and Carphone in £1.1bn European link - Financial Times

Best Buy of the US is to buy 50 per cent of Carphone Warehouse’s European and US retail interests for £1.1bn to create a joint venture to sell consumer electronics goods in Europe.

The move has increased speculation that Carphone will focus in future on becoming a telecoms provider.

Carphone said on Thursday it would use the proceeds to pay down debt and make further investments in its telecoms network. Last month it disclosed debt for the year to March 31 2008 was £850m, far higher than many City analysts had expected, as it spent heavily on its fibre optic network.

Dan Gardiner, an analyst at Landsbanki, said the venture was a sensible move given Carphone’s distribution business was facing significant challenges and the move into consumer electronics was unlikely to offer the same returns as the existing handset distribution business.....

Sam's Club giving away memberships-with a purchase - Reuters

For a limited time this month, Wal-Mart Stores Inc's Sam's Club division is giving a free annual membership to customers who purchase one of a dozen select items in its warehouse clubs.

Sam's Club also said that from May 18 through May 31 it will give current members a $40 gift card if they buy one of the items, which include BF Goodrich Tires, a Brighton patio dining set, Serta mattresses, a Samsung LCD television and a Blu Ray home theater system.

The announcement comes a week after U.S. consumers began receiving tax rebates, which are part of Washington's $152 billion 2008 economic stimulus package.

Retailers have been announcing special deals and discounts to try to get shoppers to spend their rebates in their stores, although numerous surveys have shown that Americans plan to use the bulk of the cash for savings, to pay down debt or for basic household expenses....