My finance view

ST. THOMAS, ONT.

World stock markets advanced Tuesday as investors awaited new U.S. economic data amid hopes that more measures are on the way to spur lackluster growth in the world’s biggest economy.

Oil prices hovered above $87 a barrel in Asia while the dollar strengthened against the euro but was down against the yen.

European shares were mostly higher in early trading. Britain’s FTSE 100 jumped 2.4 percent to 5,251.53, catching up on gains after being closed for a holiday Monday. Germany’s DAX slipped less than 0.1 percent to 5,664.99 while France’s CAC-40 rose 0.5 percent to 3,168.41.

But Wall Street turned jittery after a strong start to the week Monday. Dow Jones industrial futures fell 0.3 percent to 11,486 while S&P 500 futures lost 0.3 percent to 1,204.

Asian shares registered gains in a day absent the volatility that has shaken markets recently. The Nikkei 225 index in Tokyo added 1.2 percent to 8,953.90 as investors seized on positive U.S. consumer spending figures and overlooked a rise in Japan’s unemployment rate.

Hong Kong’s Hang Seng gained 1.7 percent to 20,204.17 and South Korea’s Kospi was 0.8 percent higher at 1,843.82. Australia’s S&P/ASX 200 rose 0.1 percent to 4,269.20.

Signs that the U.S. may be staving off another recession helped exporters that depend heavily on demand from the West. Sharp Corp. rose 2.8 percent and Panasonic Corp. was 3.3 percent higher. Isuzu Motor Corp. rose 3.4 percent.

One sign of possible help on the horizon was the Federal Reserve’s decision to extend its upcoming policy meeting to two days instead of one. That raised the possibility of action, at least in the eyes of traders, to jolt the economy.

Another reason for the upbeat mood: investors were anticipating an announcement next week by President Barack Obama on a new jobs initiative.

“I think the focus is on President Obama’s speech, which is related to measures that will revive the economy,” said Kwong Man Bun, chief operating officer at KGI Securities in Hong Kong. “All this provides some of sort positive expectations for investors.”

Mainland Chinese shares lost ground, however, with the benchmark Shanghai Composite Index falling 0.4 percent to 2,566.60. The Shenzhen Composite Index fell 1 percent to 1,148.29.

Shares in food-related companies and financials advanced while shares in manufacturing and plastics companies weakened on expectations that upcoming manufacturing data could be worse than earlier forecast guaranteed payday loans.

European shares jumped Monday after Greece’s second- and third-largest lenders agreed to combine, creating the country’s largest bank. Greece’s government and central bank have been urging banks to merge, saying it would help them survive.

In the U.S. on Monday, stocks rose broadly after it became clear that Tropical Storm Irene had caused far less damage than many had feared. Insurance shares rose sharply as analysts lowered their estimates of how much damage the storm would cause.

An increase in consumer spending also helped to push stocks higher. The government reported that spending rose 0.8 percent in July. It was a sharp turnaround from June, when Americans cut spending 0.1 percent, the first decline in 20 months.

The Dow Jones industrial average rose 2.3 percent to close at 11,539.25. The Standard & Poor’s 500 index rose 2.8. The technology-focused Nasdaq rose 3.3 percent to 2,562.11.

Despite Monday’s gains, analysts warned market sentiment will remain fragile ahead of U.S. economic indicators this week that could show slowing growth. Later Tuesday, the Consumer Confidence Index for August will be released. Then on Friday, the Labor Department will release U.S. employment data for August.

“The perception that stocks are more cheaply valued has helped to feed into appetite for equity markets. However, likely weak data in the days ahead both in the US and Europe may result in a reality check for markets,” Credit Agricole CIB said in a research note.

In currencies, the euro dropped to $1.4438 from $1.4505 late Monday in New York. The dollar slipped to 76.73 yen from 76.95 yen.

Benchmark oil for October delivery was down 22 cents to $87.05 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.90 to end at $87.27 per barrel on the Nymex on Monday.

In London, Brent crude for October delivery was down 23 cents to $111.64 on the ICE Futures exchange.

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Ralcorp Holdings makes some of the most tame-sounding brands in the cereal aisle, from Shredded Wheat to Bran Flakes. And it often flies under the radar, with most of the pasta, cereal and crackers it produces sold at grocery stores under store-brand labels.

Ralcorp doesn’t even hold conference calls with analysts when it announces quarterly earnings, a practice mostly unheard of among public companies.

But lately, the company, headquartered at 800 Market Street in downtown St. Louis, has been anything but boring. Great change is afoot for its 9,000 employees, of which about 300 work downtown.

ConAgra Foods’ unsolicited bids to buy Ralcorp has set off a chain of events that ensures one of St. Louis’ largest publicly held companies will no longer look like it does today.

Within the past week and a half, several new scenarios have emerged for Ralcorp. As a defensive move, the company said it’s planning to spin off its Post Foods cereal business unit as a standalone company, with Ralcorp’s chairman, Bill Stiritz, taking over as chairman of Post Foods.

Most analysts don’t see the strategy as a plan to stop ConAgra’s bid for Ralcorp, with more than $4 billion in sales last year. Instead, the move is being viewed by some as a crafty way for Ralcorp’s board to elicit the most value for its shares.

Should the Post spinoff happen, that would likely mean the end of St. Louis as the hub of decision making for a portfolio of some of the country’s most recognizable cereal brands, which also includes Honey Bunches of Oats, Grape-Nuts, Raisin Bran, Golden Crisp, Honey-Comb, Alpha-Bits, Pebbles and Waffle Crisp.

Post Foods’ divisional headquarters is in Parsippany, N.J. The spinoff would result in Post Foods emerging as a new publicly traded company listed on the New York Stock Exchange.

Unwelcome suitor

ConAgra first offered to buy Ralcorp in March, and in May sweetened its bid to $86 a share, or $4.9 billion.

Ralcorp’s board of directors rejected both of ConAgra’s offers, but the rejections haven’t dampened ConAgra’s appetite for Ralcorp.

When Ralcorp announced its Post Foods spinoff plans on July 14, ConAgra released a statement the same day saying its bid to buy all of Ralcorp remains in the best interests of Ralcorp’s shareholders. Neither ConAgra or Ralcorp made executives available to comment for this story.

ConAgra’s executives have indicated they are most interested in adding Ralcorp’s private-label cereal, pasta, crackers and other foods that are sold under store names. Private- label products accounted for three-fourths, or $3.5 billion, of Ralcorp’s sales for the 12 months that ended March 31.

“In light of the current economic environment - where high gas prices, anemic wage growth, and elevated unemployment levels are weighing on an already fragile consumer - we still think that by extending its offerings beyond its lackluster brand portfolio, ConAgra may be able to benefit as consumers opt for lower priced products and retailers increasingly tout value offerings,” Morningstar analyst Erin Lash wrote in an investors’ note July 15, referring to the appeal of Ralcorp’s private-label products.

Ralcorp’s roots in St. Louis date to 1894 when William Danforth founded the Robinson-Danforth Commission Co., which made animal feed. The company later added breakfast cereals, and in 1902 changed its name to Ralston Purina. In 1994, Ralston Purina spun off its cereal business and a few other businesses outside of pet food, and Ralcorp was formed.

Ralcorp acquired Post Foods from Kraft in 2008 for $2.7 billion. Through its Post Foods division and private-label offerings, Ralcorp has grown to become the third-largest maker of cereal nationwide in the ready-to-eat category, behind Kellogg and General Mills.

By spinning off its Post business, Ralcorp could prompt other parties to make a competing offer for all or part of Ralcorp, analyst Alexia Howard of Sanford C. Bernstein wrote in a note to investors July 20.

“We now believe that Ralcorp may be prepared to sell if a sufficiently high price is offered for either the whole company or its components,” Howard wrote in the note.

Separately, The Sunday Times newspaper in the United Kingdom reported last week that Lion Capital LLP, a London-based private equity firm, plans to offer $1.5 billion for Post Foods.

Lion Capital already owns Weetabix, the second-largest maker of cereals and cereal bars in the U.K. Post Foods recently added Pebbles Treats, its first foray outside of the ready-to-eat cereal category, which would complement Weetabix’s cereal bar offerings.

Still, ConAgra might not choose to patiently wait for Post to be spun off.

Christopher Growe, an analyst at Stifel Nicolaus, wrote in a research note July 15 that he expects ConAgra to increase its price per share bid to the mid-to-upper $90s.

Last week, Ralcorp’s shares hovered above $86, closing Friday at $87.92 a share.

“Could it wait until the breakup occurs and just go after the private- label business?” Growe wrote in his note. “Sure. However, we believe the company would be better suited to purchase the whole Ralcorp.”

Still, the surprise twists and turns taken in the past few months mean Ralcorp’s future path won’t be decided any time soon, according to Morningstar’s Lash.

“This saga has been ongoing for the past several months and it might continue for some time, in our view,” she wrote in the note.

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The European Union is introducing new rules that would make it cheaper to use mobile and smartphones abroad.

The proposals from the EU’s executive Commission Wednesday seek to spur competition among providers and put new caps on roaming charges.

For the first time, the EU is slapping caps on the price individuals have to pay for going online from a smartphone or tablet computer when moving from one country to another. The EU is made up of 27 countries.

The European Commission also said that from July 2014 operators will have to open their networks to providers from another EU state, which would give consumers more providers to choose from. At the same time, consumers will be able to sign a separate roaming contract, allowing them to take advantage of cheaper offers when moving about.

The new rules will kick in when the bloc’s existing regulation on mobile roaming expires at the end of June next year.

While the current rules have forced the price of making calls down to 35 euro cents (about 50 U.S. cents) a minute when traveling in another EU country and kept a lid on the cost of receiving calls and sending text messages, the Commission believes that charges remain way too high.

The Commission’s goal is to bring roaming prices in line with national ones by 2015, an important step in getting the 27-country bloc closer together and spurring business and freedom of movement in the EU’s internal market. The new rules would also apply in non-EU states Iceland, Liechtenstein and Norway.

“This proposal tackles the root cause of the problem _ the lack of competition on roaming markets _ by giving customers more choice and by giving alternative operators easier access to the roaming market,” Neelie Kroes, who is in charge of the EU’s digital agenda, said in a statement.

For the first time, the rules would also cap the price of going online from a smartphone or tablet computer. Using mobile Internet in another EU country can quickly drive up phone bills, with prices for downloading one megabyte of data averaging euro2.23 ($3.22) but sometimes going up to euro12 ($17.35), according to the Commission.

One megabyte is equivalent to about 100 e-mails without attachments or a few seconds of streaming video online. Under the new proposal, charges for data roaming would have to come down to 90 cents a megabyte by July next year and sink to 50 cents by 2014.

By that date, the price of making calls would be capped at 24 cents a minute, while incoming calls and text messages would cost 10 cents.

At the center of the Commission’s proposals are efforts to increase competition between providers. From July 2014, operators will have to open their networks to providers from another EU state, which would give consumers more services to choose from.

At the same time, consumers will be able to sign a separate roaming contract, allowing them to take advantage of cheaper offers from a different provider while keeping their regular number and SIM card.

The Commission believes that more competition is the best way of forcing operators to bring down prices and stop price ceilings from effectively becoming price floors.

The new rules still have to be approved by EU states and the European Parliament.

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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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French and British food safety officials on Saturday were investigating seeds from a British company linked to an E. coli outbreak near Bordeaux.

France halted the sale of fenugreek, mustard and arugula sprout seeds from British seed and plant vendor Thompson & Morgan after eight people were hospitalized following an E. coli outbreak. French investigators found that two of them were sickened after consuming sprouts from the three seed types in the southwestern town of Begles, a suburb of Bordeaux.

Some of those affected were infected by the same strain of E. coli that has killed 44 people _ all but one in Germany _ and sickened more than 3,700 in recent weeks.

The company cautioned the link was unsubstantiated, arguing in a statement that it believed that “something local in the Bordeaux area, or the way the product has been handled and grown, is responsible for the incident rather than our seeds.”

The company said it understood that French officials were still testing the seeds and investigating how they were grown. In the meantime, Thompson & Morgan said it had submitted samples of its seeds to British health authorities for investigation.

A spokesman for Britain’s Food Safety Agency said that officials “don’t have definitive evidence that the company is the source of the contamination” and that an investigation was ongoing. He noted that European health authorities have misattributed the source of E. coli outbreaks in the past. Spanish cucumbers, for example, were wrongly blamed for the illnesses in Germany.

The food safety official spoke on condition of anonymity, in line with department policy.

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The great Motivational Seminar has come and gone

Billionaire investor George Soros said the European Central Bank’s decision to raise its benchmark lending rate was “quite inappropriate” because several euro member countries are suffering from too much debt.

European Central Bank President Jean-Claude Trichet yesterday raised the benchmark interest rate to 1.25 percent from a record low of 1 percent, where it had been since May 2009. Policymakers will bring the rate to 1.5 percent in July and 1.75 percent in October, according to the median of 20 estimates in a Bloomberg News survey.

The rate increase may lift borrowing costs and hurt peripheral euro-region countries already struggling to service their debt. The International Monetary Fund said today it had received a financial aid assistance request from Portugal, which earlier this week followed Greece and Ireland in asking the European Union for aid.

Raising rates “is not appropriate in current circumstances when you have a number of countries that are suffering from too much debt and high interest rates,” Soros said today in an interview with Bloomberg Television’s Michael McKee and Sara Eisen at the Bretton Woods conference in New Hampshire.

States in the U.S. will face a tightening of their budgets and are in a “similar situation as Spain and Portugal,” because they cannot issue their own currency, Soros, 80, said in the interview pay day loan lenders. Still, the U.S. government “could actually absorb some more debt in order to get the economy going.”

‘Wise Thing’

The benefit of more debt would depend on how it is used, he said. Stimulating consumption would have little impact, while spending on infrastructure “would be a very wise thing to do.”

Soros said he was concerned about inflation in China, where the government is trying to control price increases after stimulating the economy “full force.” As a consequence, a “shadow banking” system has developed that is “growing very rapidly,” he said.

Consumer prices jumped 4.9 percent in February from a year earlier, topping the government’s full-year target of 4 percent. Inflation probably accelerated to 5.2 percent in March, which would be the highest level since July 2008, according to the median estimate in a Bloomberg News survey of 23 economists.

“There’s a real danger there of wage-price inflation,” Soros said. “The Chinese government made a mistake not allowing its currency to appreciate.”

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An Ecuadorean judge ruled Monday in an epic environmental case that Chevron Corp. was responsible for oil drilling contamination in a wide swath of Ecuador’s northern jungle and ordered the oil giant to pay $9.5 billion in damages and cleanup costs.

The amount _ $8.6 billion plus a legally mandated 10 percent reparations fee _ was far below the $27.3 billion award recommended by a court-appointed expert but appeared to be the highest damage award ever issued in an environmental lawsuit.

But whether the plaintiffs _ including indigenous groups who say their hunting and fishing grounds in Amazon River headwaters were decimated by toxic wastewater that also raised the cancer rate _ can collect remains to be seen.

In a statement, Chevron called the decision “illegitimate and unenforceable” and said it would appeal. It has long contended it could never get a fair trial in Ecuador and has removed all assets from this politically volatile Andean country, whose leftist president, Rafael Correa, had voiced support for the plaintiffs.

Chevron, which earned $19.1 billion last year, said it did not believe the judgment “enforceable in any court that observes the rule of law.”

Company spokesman Kent Robertson told The Associated Press that “the evidence of fraud on the part of the plaintiffs’ lawyers is overwhelming.”

“We intend to see that the perpetrators of this fraud are held accounable for their misconduct,” he added in an e-mail exchange.

The marathon, high-stakes case, fraught with corporate espionage and geopolitical intrigue, has been winding its way through U.S. and Ecuadorean courts for more than 17 years but has in recent years turned into an unusually acrimonious legal slugfest.

Even Hollywood had a role, with Chevron successfully forcing documentary filmmaker Joe Berlinger to surrender outtakes from his documentary “Crude” about the dispute, a decision upheld by a U.S. appeals court. Those outtakes were used in an attempt to show that a plaintiffs’ attorney, Steven Donziger, had both denigrated and unethically influenced Ecuadorean justice.

The plaintiffs’ lead lawyer, Pablo Fajardo, called the 187-page judgment “a great step that we have made toward the crystallization of justice” but added that “we are not completely satisfied” with court-specified damage award. The plain-spoken native of the oil patch told The Associated Press that the plaintiffs were discussing whether to appeal.

The suit was originally filed in a New York federal court in 1993 against Texaco and dismissed three years later after the oil company argued that Ecuador was the proper venue to hear the case. Chevron bought Texaco in 2001 and the suit was refiled in Ecuador two years later.

Though it had only 47 named plaintiffs, the suit sought damages on behalf of 30,000 people for environmental contamination and illnesses that allegedly resulted from Texaco’s operation of an oil consortium from 1972 to 1990 in a Rhode Island-sized oil patch dug out of virgin rain forest.

Monday’s ruling was hailed by the environmentalist groups Amazon Watch and Rainforest Action Network as “proving overwhelmingly that the oil giant is responsible for billions gallons of highly toxic waste sludge deliberately dumped into local streams and rivers, which thousands depend on for drinking, bathing, and fishing.”

“It is time Chevron clean up its disastrous mess in Ecuador,” they said in a joint statement.

A local indigenous leader, Guillermo Grefa of the Kichwa people, was quoted by the plaintiffs as saying “we can now tell our neighbors and those affected that justice exists. They can now dream of drinking clean water that doesn’t have petroleum residues like what we’ve had to drink up until now.”

Chevron invested tens of millions of dollars in its legal defense as well as counterattacks against the plaintiffs and Ecuadorean officials. It has long argued that a 1998 agreement Texaco signed with Ecuador after a $40 million cleanup absolves it of any liability in the case. The plaintiffs say the cleanup was a sham and didn’t exempt third-party claims.

Chevron sought relief in a half-dozen U.S. federal courts and requested binding arbitration in an international tribunal in the Netherlands.

The oil company even used corporate spies to clandestinely videotape meetings with Ecuadorean officials in which the men posed as contractors seeking oil contamination cleanup contracts. The two even tried to coax the trial judge _ who later resigned as a result _ into saying he expected to rule against Chevron. One of the men turned out to be a convicted drug trafficker.

Just last week, U.S. federal judge Lewis A. Kaplan in New York took the unusual step at Chevron’s request of pre-emptively blocking any judgment for at least 28 days after concluding that attempts to collect assets could seriously disrupt the business of a company vital to the global economy.

Issued by Judge Nicolas Zambrano from a ramshackle courthouse in the provincial city of Lago Agrio, Monday’s ruling gives Chevron 60 days to set up an escrow account in Ecuador through which the damages would be distributed.

If upheld and enforced, the award would substantially exceed the $5 billion originally awarded to victims of the 1989 Exxon Valdez oil spill in Alaska’s Prince William sound. That jury award was later cut down to $507.5 million by the U.S. Supreme Court. Other major environmental damage payments include the $470 million paid by Union Carbide in 1989 to India’s government for the lethal gas leak five years earlier in Bhopal that killed an estimated 15,000 people.

BP set up a $20 billion oil spill compensation fund after last year’s massive Gulf of Mexico oil spill, of which about $3.4 billion has been paid out.

Zambrano’s decision specifies that Chevron pay $6 billion for cleanup of soil and water, $1.4 billion to put build health care systems, $800 million for creating health care plans and attending to cancer patients _ the court-appointed expert had calculated 1,401 pollution-cased cancer deaths.

The balance is earmarked for recovering native plant species, water distribution systems and repairing cultural damage. In addition, Fajardo confirmed to the AP late Monday, the law specifies that Chevron must pay 10 percent of the judgement as reparations.

A professor at Loyola Law School in Los Angeles who has studied the case, Georgene Vairo, said the comparatively small judgment is a signal from Ecuador that it is willing to negotiate a smaller fine.

“This is way low compared with what everyone was expecting to happen,” she said. “They are trying to show the world they are reasonable people. This is Ecuador coming to the table.”

Fajardo called on Chevron in a statement issued later Monday to comply with the ruling and halt its “campaign of warfare against the Ecuadorean courts and the impoverished victims of its unfortunate practices.”

“We believe the evidence before the court deserves international respect and the plaintiffs will take whatever actions are appropriate consistent with the law to press the claims to a final conclusion,” he added.

Among actions taken by Chevron against the plaintiffs is a civil suit it filed in New York on Feb. 1 against Donziger and other plaintiffs’ lawyers claiming they confected the contamination suit and accusing them of extortion and racketeering.

The San Ramon, California-based company has long contended that the court-appointed expert in the case was unduly influenced by the plaintiffs. In a statement Monday, it called Zambrano’s ruling “the product of fraud (and) contrary to the legitimate scientific evidence.”

Robertson, the company spokesman, said Chevron had presented evidence in various U.S. courts showing that the plaintiffs’ attorneys and consultants had ghostwritten the court-appointed expert’s report that recommended $27.3 billion in damages.

“The legitimate scientific evidence provided to the court, as well as scientific analysis performed by the government of Ecuador, proves Texaco’s cleanup worked,” he contended Monday.

Chevron contends that Texaco’s former partner in the consortium, state oil company Petroecuador, kept polluting after Texaco pulled out. It disputes the findings of the expert, geological engineer Richard Cabrera, who concluded that Texaco left a mess when it departed in the early 1990s.

Cabrera’s 14-member team of experts found petroleum hydrocarbons at levels deemed unsafe by national standards in 44 percent of water samples it tested. It also found cadmium, barium, lead and other heavy metals in the mud of wastewater pits and said 80 percent required cleanup. The team also cited scientific studies that found cancer levels nearly twice Ecuador’s norm, with stomach and uterine cancer the most common followed by leukemia.

Chevron disputed all those findings, and Wall Street analyst Fadel Gheit of Oppenheimer & Co. told the AP in New York that he did not believe the plaintiffs would be able to collect.

“They think Chevron’s a cash cow, so they thought they could get something, but it’s not going to happen. If so, it would be unprecedented. Companies like Chevron have been accused of polluting for decades” without being forced to pay, he told the AP.

The news hit during trading hours, but Chevron’s stock closed up $1.22, or 1.3 percent, at $96.95.

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Land line telephones might not be disappearing any time soon, but they