My finance view

Forecasters say Ophelia has weakened from a hurricane to a tropical storm as it races toward the Avalon Peninsula of Newfoundland, Canada.

The National Hurricane Center in Miami said early Monday that Ophelia was lowered from a Category 1 storm, as its top sustained winds weakened to about 70 mph (110 kph). The storm was moving northeast at 43 mph (69 kph).

Ophelia was centered about 55 miles (85 kilometers) west-southwest of Cape Race, Newfoundland, and a tropical storm watch was in effect for Newfoundland’s Avalon Peninsula. The center says Ophelia is expected to continue to weaken, but still pack powerful winds.

Meanwhile, Tropical Storm Philippe was moving over the central Atlantic and is not expected to affect land.

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Who gets hurt by a credit downgrade?

The U.S. government could end up paying higher interest rates when it has to borrow money, says Steve Foerster, a finance professor at the University of Western Ontario

Stocks gave up some of their gains Thursday as the House of Representatives prepared to vote on a bill to avoid a U.S. debt default. Indexes were still higher for the day following an unexpected decrease in unemployment claims.

The Dow Jones industrial average rose less than a point to 12,303 in afternoon trading. The index had been up as many 82 points earlier in the day. The Dow has fallen over the previous four days over worries that the U.S. might default on its debt as soon as next week if Congress doesn’t raise the country’s borrowing limit.

The Standard & Poor’s 500 rose 4, or 0.3 percent, to 1,309. The Nasdaq composite index rose 13, or 0.4 percent, to 2,777.

The House of Representatives is expected to vote later Thursday on a new plan to avoid a default. Speaker John Boehner pleaded with fellow Republicans to support the proposal, which calls for cutting $900 billion from the deficit over the next decade.

The bill still faces opposition from Senate Democrats and the White House, but the vote could bring President Barack Obama and Congress a step closer to resolving the standoff. The Treasury Department says the government won’t have enough money to cover all its bills after next Tuesday.

Even if the U.S. doesn’t default, investors worry that the country might lose its triple-A credit rating. That could raise interest rates and possibly slow down the U.S. economy, which is still recovering from the worst recession in decades.

“We’re running out of time,” said Phil Dow, director of equity strategy at RBC Wealth Management in Minneapolis. “It’s getting scary.”

Markets were far less volatile than Wednesday, when the Dow had its biggest one-day drop since early June.

One reason for the optimism: The government said first-time applications for unemployment benefits fell to 398,000 last week, the lowest level in four months instant payday loan lenders. That’s a sign that employers are laying off fewer workers.

The price of gold, which tends to rise when investors are fearful of economic disruptions, fell $1.70 to $1,613.40 an ounce. It’s still up 13.4 percent this year. The dollar rose against other currencies, as did Treasury prices. The dollar and Treasurys would likely fall if investors were worries that a default was imminent.

Utility and telecommunications stocks fell the most in the S&P 500 index. That suggested investors were becoming more comfortable taking on risk since those stocks tend to be less volatile than the rest of the market.

Technology stocks rose. LSI Corp., which makes storage and networking chips, forecast revenues that were higher than investors were expecting. Its stock gained 13.7 percent, the most in the S&P 500.

Bristol-Myers Squibb Co. rose 2.2 percent after the drugmaker reported earnings that were better than analysts anticipated. The company also raised its earnings forecast for 2011. Exxon Mobil Corp. fell 1.8 percent, the most of the 30 companies that make up the Dow average, after its earnings came in below analysts’ estimates.

Other earnings results were mixed. DuPont Co. rose 0.8 percent after the chemical maker said its earnings increased 5 percent on higher revenue. The company also raised its earnings outlook for the year.

Akamai Technologies Inc. fell 19.1 percent, the most in the S&P 500 index, after the online streaming company’s earnings were lower than analysts had expected. Sprint Nextel Corp. fell 15.9 percent. The nation’s No. 3 wireless carrier said its loss widened in the second quarter, in part, because of a tax expense and investment losses.

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Missouri’s delicate compromise on economic development incentives got a boost Thursday when Gov. Jay Nixon said he endorsed many of its key elements.

From cargo hub tax credits to a new fund for high-tech startups, Nixon echoed many of the priorities laid out by House and Senate leaders in tax credit legislation they unveiled Wednesday. He called the deal

London police arrested Rebekah Brooks, Rupert Murdoch’s former British CEO, in the phone hacking and police bribery scandal Sunday, bringing the U.K. investigation into Murdoch’s inner circle for the first time.

Brooks, 43, was arrested at a London police station at noon Sunday. The former editor of Murdoch’s News of the World tabloid is being questioned on suspicion of conspiring to intercept communications _ phone hacking _ and on suspicion of corruption, which relates to bribing police for information.

A statement released on Brooks’ behalf said she “voluntarily attended a London police station to assist with their ongoing investigation.”

Sunday’s arrest comes just days before Brooks, Murdoch and his son James are due to be grilled by a U.K. parliamentary committee investigating the hacking. The arrest throws Brooks’ appearance before Parliament’s Culture, Media and Sport committee into question; she would not have to answer questions that could prejudice a criminal investigation.

Brook’s spokesman, David Wilson, said Sunday’s appointment with police was prearranged on Friday but said she was not aware she was going to be arrested.

“Obviously this complicates matter greatly,” Wilson said. “Her legal team will have to have discussions with the committee to see whether it would still be appropriate for her to attend.”

Brooks, one of Murdoch’s most loyal lieutenants, stepped down Friday as head of his British newspaper arm, News International. She was editor of the now-defunct News of the World between 2000 and 2003 when some of the phone hacking took place, but has always said she did not know that hacking was going on. That claim has been greeted with skepticism by many who worked there.

At an appearance before lawmakers in 2003, Brooks admitted that News International had paid police for information _ an admission of possible illegal activity that went largely unchallenged at the time.

Police have already arrested nine other people connected to Murdoch’s British media empire over allegations that the News of the World hacked into the phone voice mails of hundreds of celebrities, politicians, rival journalists and even murder victims. No one has yet been charged.

The arrest also piles more pressure on Prime Minister David Cameron, a friend and neighbor of Brooks, who has met with her many times and invited her to stay at his official country retreat.

Cameron is already under fire for hiring Andy Coulson, who resigned as News of the World editor after two employees were jailed for corruption in 2007, as his communications chief. Coulson resigned from Downing Street in January after police reopened their hacking investigation. He was arrested last week and questioned before being released on bail.

Brooks’ arrest is another blow for Murdoch, who is struggling to tame a scandal that has already destroyed one of his British newspapers, cost the jobs of two of his senior executives and sunk his dream of taking full control of a lucrative satellite broadcaster, British Sky Broadcasting.

On Sunday, Murdoch took out a second newspaper ad promising that News Corp. will make amends for the phone hacking scandal. The ad in several U.K. Sunday newspapers, titled “Putting right what’s gone wrong,” said News Corp. would assist the British police investigations into phone hacking and police bribery. It vowed there would be “be no place to hide” for wrongdoers.

“It may take some time for us to rebuild trust and confidence, but we are determined to live up to the expectations of our readers, colleagues and partners,” the ad said.

That follows a full-page Murdoch ad in Saturday’s U.K. papers declaring, “We are sorry.”

Last week Murdoch shut down the 168-year-old News of the World after it was accused of eavesdropping on cell phones for years. Sunday was the first day in Britain that the popular, gossipy, muckraking weekly was not on the newsstands.

Murdoch also abandoned his BSkyB takeover bid, and two of his senior executives resigned _ Brooks and Wall Street Journal publisher Les Hinton.

But Murdoch’s critics say that is not enough. Labour Party leader Ed Miliband said Sunday that Murdoch has “too much power” in Britain and his share of British media ownership should be reduced. With the News of the World gone, Murdoch now owns three national British newspapers _ The Sun, The Times and The Sunday Times _ and a 39-percent share of BSkyB.

“I think that we’ve got to look at the situation whereby one person can own more than 20 percent of the newspaper market, the Sky platform and Sky News,” Miliband told The Observer newspaper.

“I think it’s unhealthy because that amount of power in one person’s hands has clearly led to abuses of power within his organization. If you want to minimize the abuses of power then that kind of concentration of power is frankly quite dangerous,” he said.

Deputy prime Minister Nick Clegg agreed there should be greater plurality in the British media.

“A healthy press is a diverse one, where you’ve got lots of different organizations competing, and that’s exactly what we need,” Clegg told the BBC.

Clegg’s Liberal Democrat party has asked Britain’s broadcast regulator to consider whether News Corp. is a “fit and proper” owner of BSkyB _ if not, Murdoch’s current stake in BskyB could be in danger.

Cameron’s Conservative-led government and the London police also are facing increasing questions about their close relationship with Murdoch’s media empire.

Cameron has held 26 meetings with Murdoch executives since he was elected in May 2010 and invited several to his country retreat. Senior police officers also had close ties to Murdoch executives, even hiring as a consultant a former News of the World editor who has since been arrested for alleged hacking.

Home Secretary Theresa May plans to make a statement Monday in the House of Commons outlining her “concerns” about close police ties with News International.

Police are under pressure to explain why their original hacking investigation several years ago failed to find enough evidence to prosecute anyone other than News of the World royal reporter Clive Goodman and private investigator Glenn Mulcaire. Detectives reopened the investigation earlier this year and now say they have the names of 3,700 potential victims.

Records show that senior officers _ including Paul Stephenson, the current chief of London’s Metropolitan Police _ have had numerous meals and meetings with News International executives in the past few years. The force also hired Neil Wallis, a former News of the World executive editor arrested last week in the phone hacking, as a part-time PR consultant for a year until September 2010.

Stephenson also stayed for free earlier this year at a health resort that employed Wallis to do its public relations. The police force said the stay had been arranged through the facility’s managing director, a family friend, as Stephenson recovered from surgery. It said the police chief had not known that Wallis worked there.

Murdoch is eager to stop the crisis from further spreading to the United States, where many of his most lucrative assets _ including the Fox TV network, 20th Century Fox film studio, The Wall Street Journal and the New York Post _ are based.

The FBI has already opened an inquiry into whether 9/11 victims or their families were also hacking targets of News Corp. journalists.

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MARMORA, ONT.

Top U.S. and Indian officials are discussing economic cooperation and financial sector reforms that could promote American investment in the fast-growing Asian country.

U.S. Treasury Secretary Timothy Geithner is hosting Indian Finance Minister Pranab Mukherjee for the second annual meeting of the U.S.-India Economic and Financial Partnership.

The central bank chiefs and top regulators are also attending. A conference on Monday will be followed by formal talks at the Treasury on Tuesday instant credit report.

Among the issues for discussion will be how to finance the development of India’s creaking infrastructure, which offers major opportunities for U.S. companies.

The U.S. is gently urging India to expedite economic reforms that could prove politically unpopular in India.

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After years of legal wrangling, the first of hundreds of lawsuits over acceleration problems against Toyota Motor Corp. has been scheduled for trial.

A crash that killed two people in Utah will be the first lawsuit to be weighed in court, a federal judge said Friday.

U.S. District Judge James Selna told attorneys the case of 38-year-old Charlene Jones Lloyd and 66-year-old Paul Van Alfen, whose Toyota Camry slammed into a wall in Utah in 2010, is scheduled to go to trial in February 2013.

The case _ Van Alfen v. Toyota Motor Sales, U.S.A., Inc. _ will be the first of several bellwether lawsuits, intended to determine how the rest of the litigation will proceed.

Selna wrote in a tentative order that he hoped the selection would “markedly advance these proceedings.”

“The Court believes that selection of a personal injury/wrongful death case is most likely the type of case to meet that goal,” Selna said.

Toyota said it welcomes the Utah case as the first suit to reach court.

“We are pleased that the initial bellwether will address plaintiffs’ central allegation of an unnamed, unproven defect in Toyota vehicles, as every claim in the multi-district litigation rests upon this pivotal technical issue,” the company said in a statement.

Toyota has previously argued the plaintiffs have been unable to prove that a design defect in its electronic throttle control system is responsible for vehicles surging unexpectedly cheap business cards. It has instead blamed driver error, faulty floor mats and sticky accelerator pedals.

The automaker’s defense was buoyed earlier this year when U.S. regulators said electronic flaws weren’t to blame for unintended acceleration. Plaintiffs’ attorneys, however, want to look at Toyota’s secretive source code that may provide more information about the system.

Van Alfen was driving the Camry on Interstate 80 near Wendover, Utah, on Nov. 5, 2010, when it suddenly accelerated, investigators said. Tire skid marks showed that Van Alfen tried to stop the vehicle as it exited Interstate 80, police said. The car went through a stop sign at the bottom of the ramp and through an intersection before hitting the wall.

Van Alfen and Lloyd, his son’s fiancee, were killed. Van Alfen’s wife and son were injured.

The Utah Highway Patrol concluded based on statements from witnesses and the crash survivors that the gas pedal was stuck.

The 2008 Camry Van Alfen was driving was subject to recalls focusing on all-weather floor mats interfering with accelerator pedals, unsecured mats entrapping the gas pedal and accelerators getting stuck.

Selna said a second bellwether case will be selected in September with trial to start in May 2013.

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Canada

Chrysler Group LLC, newly profitable and confident in its revamped products, will soon sever its ties with the U.S. government.

Italian automaker Fiat SpA agreed late Thursday to buy the U.S. Treasury’s 6 percent interest in Chrysler for $500 million. Once the deal closes, the government will no longer hold a stake in the auto company. Treasury officials said it could take up to three months to make sure the agreement meets regulatory approvals, but it will likely close more quickly than that.

President Barack Obama is expected to announce the agreement Friday during a trip to a Chrysler facility in Toledo, Ohio.

The deal means the U.S. government won’t get back the full $12.5 billion in bailout loans it gave Chrysler from the end of 2008 through Chrysler’s bankruptcy in the summer of 2009. The Treasury Department said Thursday that Chrysler has repaid $11.2 billion, but it is unlikely to recover $1.3 billion. But government officials have long said that they didn’t expect to recover the full amount they loaned to Chrysler and General Motors Co. during the auto industry downturn, and that their top priority was saving thousands of auto jobs.

“We didn’t do this to maximize return. We did it to save jobs,” Treasury Secretary Timothy Geithner said during a trip to Detroit in April.

Fiat also agreed to pay $75 million for the right to purchase the Chrysler shares held by a trust for retired autoworkers cheap pay day loans. The Treasury will receive 80 percent of those proceeds, or $60 million, while the government of Canada will get $15 million. The trust holds a 47 percent stake in the company.

The deal will give Fiat a majority 52 percent stake in the automaker just two years after it agreed to manage Chrysler after its bankruptcy.

Chrysler has made a remarkable turnaround. Before entering bankruptcy proceedings, the automaker was nearly out of cash and needed U.S. government money to survive. The company made a first-quarter net profit of $116 million and is forecasting 2011 earnings of $200 million to $500 million. Under the leadership of Fiat CEO Sergio Marchionne, the company has cut costs and revived its sales by refurbishing most of its lineup of Jeep, Chrysler, Dodge and Ram vehicles. Sales of the Jeep Grand Cherokee were nearly three times higher in May than in the same month a year ago.

Fiat’s stake is likely to rise to 57 percent before the end of the year, when Chrysler meets another milestone set by the U.S. government: Producing a 40 mpg small car in the U.S. All told, Fiat has the right to purchase more than 70 percent of Auburn Hills, Mich.-based Chrysler.

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