Finance and Economic

Nissan’s quarterly profit dropped 20 percent as Japanese automakers took a battering from the quake and tsunami disaster that disrupted car production and destroyed dealerships.

A soaring yen and rising material costs also helped drag net profit for the fiscal first quarter down to 85 billion yen ($1 billion) from 106.6 billion yen in the April-June quarter last year, Nissan Motor Co. said Wednesday.

But Nissan Chief Executive Carlos Ghosn said the numbers show the maker of the Leaf electric car and Infiniti luxury models is holding up despite the huge odds.

The magnitude-9.0 earthquake on March 11 in northeastern Japan destroyed key suppliers of components, disrupting production for all Japanese automakers.

But Nissan’s production has been recovering faster than its rivals _ and Nissan officials acknowledge faster than they had expected themselves.

The result also outdid forecasts. A FactSet survey of analysts forecast a profit of 55 billion yen ($705 million).

Nissan sold 1.056 million vehicles in the quarter, up 10.6 percent from a year earlier. Quarterly sales edged up 1.6 percent to 2.08 trillion yen ($26.7 billion).

“Our rapid recovery from the natural disasters in March once again shows the power of Nissan in responding effectively and decisively to crisis,” Ghosn said.

Last month, Ghosn disclosed a six-year growth plan, his most ambitious since the revival plan for Nissan that he set in motion in 1999. At that time, Nissan was on the verge of collapse, and Ghosn was sent in by alliance partner Renault SA to turn it around.

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The U.S. Justice Department is investigating Credit Suisse Group’s offshore business with wealthy American clients as part of a larger probe into suspected U.S. tax evaders, the Swiss bank said Friday.

Credit Suisse said it was informed of the investigation Thursday and will cooperate with U.S. authorities within the limits set by Swiss banking secrecy.

“The investigation concerns historical private banking services provided on a cross-border basis to U.S. persons,” the bank said in a statement. “It has been reported that the U.S. authorities are conducting a broader industry inquiry,” it added.

Credit Suisse is the most high-profile Swiss bank to be targeted by U.S. investigators since rival UBS AG became embroiled in a tax evasion probe three years ago. Zurich-based UBS admitted to helping U.S. clients hide money on offshore accounts and ended up paying a fine and giving U.S. authorities details on thousands of American account holders instant credit report. The case prompted Switzerland to soften its strict banking secrecy rules in response to international pressure.

Observers had expected a formal investigation against Credit Suisse after three former and one current employee of the bank were indicted by U.S. authorities in February on charges of conspiring to help American tax cheats.

Analysts at Zuercher Kantonalbank noted that a new treaty currently being discussed by Bern and Washington _ which would automatically tax the accounts of American bank clients in Switzerland _ might ease the pressure on Credit Suisse and other Swiss banks.

Shares in Credit Suisse were down 1.5 percent at 30.13 Swiss francs ($36.88) on the Zurich exchange.

The bank releases its second-quarter results July 28.

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The Canadian housing market is due for a correction, but it will likely be a slow decline rather than a sharp drop, says a report from the Canadian Imperial Bank of Commerce.

Former Missouri Gov. Roger Wilson is out as chief executive of Missouri Employers Mutual Insurance Co., the state’s largest workers’ compensation provider, and a search is under way to replace him.

Wilson had been on administrative leave since May 13.

The departure comes as MEM, which was created in 1993 by the Missouri Legislature to provide insurance for small businesses, faces turmoil over criminal charges filed against two former members of the insurer’s board of directors.

The Columbia, Mo.-based insurer issued a statement Thursday announcing its board of directors decided to make a leadership change, and Wilson is no longer employed by MEM.

Wilson, who lives in Columbia, joined MEM’s board in January 2009 and became its acting president in June 2009. He was named CEO in January 2010.

MEM is not disclosing why Wilson was on leave or why he was removed.

“Since this is a personnel matter, we will not be making any additional comments regarding Mr. Wilson,” MEM’s statement read.

In a separate statement, Wilson said he was proud of his work at MEM. “I wish them very continued success in building on the strong record we compiled together,” Wilson’s statement read. Through a spokesman, Wilson declined to comment further.

Wilson was lieutenant governor of Missouri for two terms, beginning in 1992. He became governor upon the death of Gov. Mel Carnahan in 2000 and served for three months.

MEM’s leadership has gone through a shake-up in recent months. Douglas Morgan, a longtime MEM board member who was named chairman last fall, was indicted in April on charges that he allegedly defrauded Commercial Bank of St. Louis and owes the bank $1.5 million. Morgan also was charged with wire fraud in connection with efforts to build a casino in the Spanish Lake area while he was chairman of the St. Louis County Planning Commission. Morgan, who was removed as MEM’s chairman and resigned from the board on May 30, has pleaded not guilty to the charges.

Attorney Jim Owen of Chesterfield succeeded Morgan as board chairman. Owen is now serving as interim president and CEO of MEM.

Owen said MEM is looking for a chief executive with insurance industry leadership experience and financial expertise.

“Obviously, we want to fill this position as quickly as possible,” Owen said Thursday.

Another former MEM board member, Karen Pletz, was indicted in March on embezzlement charges. Prosecutors allege Pletz fabricated documents over several years authorizing more than $1.4 million in payments from the Kansas City University of Medicine and Biosciences, while she was the school’s president. Pletz was fired from the medical school in 2009.

Pletz, who resigned from MEM’s board in March 2010, has pleaded not guilty to the charges.

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In a rare move, the proposed back-to-work legislation to end the postal dispute sets out a wage settlement that is actually lower than Canada Post’s last offer.

“We’re really disappointed in the Conservative government’s position,” said Gayle Bossenberry, first national vice-president for the Canadian Union of Postal Workers. “The legislation is very restrictive.”

Labour Minister Lisa Raitt introduced the legislation on Tuesday, which outlines a wage settlement of 1.75 per cent in the first year, 1.5 per cent in the second year, and 2 per cent each in the final two years.

At the bargaining table, Canada Post has offered 1.9 per cent in each of the first three years, followed by 2 per cent in the final year.

The union, which represents 48,000 members, estimates the difference works out to about $875 for a full-time employee over the course of the four-year agreement.

While it may be rare to impose a wage deal, it’s not unheard of. In 1997, when the Liberal government ordered postal workers back to work after a two-week strike, it imposed a settlement that was less than Canada Post’s last offer, 5.15 per cent over three years instead of 5.25 per cent.

During question period, NDP Leader Jack Layton questioned the decision to impose wages, but Prime Minister Stephen Harper defended the move.

“The wage rates laid out in the legislation are the rates that this government agreed to with its other public service workers, and that is a fair settlement for Canada Post workers as well,” Harper said.

While the NDP has vowed to delay the legislation, Government House Leader Peter Van Loan told reporters that he expects the legislation will pass on Thursday or Friday, and then would go to the Senate. Mail service likely won’t resume until next week.

The government had threatened back to work legislation in the case of striking Air Canada workers, who reached a tentative deal with the airline last week.

In addition to the unusual step of setting wages, Bossenberry said it also uses the final offer selection process, where each side presents its final offer, and the arbitrator, who is appointed by Raitt, chooses a winner and a loser.

Unlike mediation-arbitration, there is no back and forth or attempt to find a middle ground.

The legislation also sets out penalties if the union or Canada Post defies the legislation, including up to $50,000 a day for union or company official, and up to $100,000 a day for the company or union. Individuals would face up to $1,000 a day.

“I think workers right across the country should be aware if this is the respect that the working class gets in Canada, I’m concerned,” Bossenberry said.

Even though both sides insist they want to hammer out their own agreement, they seem entrenched in their own positions. Talks are continuing, but there is little progress.

When mail volumes began to plummet, Canada Post announced plans to move to home delivery only three days a week. It then locked the workers out last week.

Ontario Federation of Labour president Sid Ryan said introducing back-to-work legislation is one thing, but “to start to prescribe what wage settlements should be is Draconian.

“It’s usually left to an arbitrator to decide. It’s unheard of,” said Ryan, noting that even in Wisconsin, where Governor Scott Walker has been taking on public sector workers, he did not set out wage settlements.

Carla Lipsig-Mummé, a York University professor who specializes in work and labour relations, called it highly unusual to put in a wage settlement as well as bring in back-to-work legislation in a lockout situation.

She believes this legislation could be subject to a court challenge on the grounds of contravenes charter protections, including the right to collective bargaining.

The legislation also states the arbitrator should be guided by the terms and conditions of what workers in other comparable postal industries face as well as flexibility to ensure the short-term and long-term viability of Canada Post.

It also says “the solvency ratio of the pension plan must not decline as a direct result of the new collective agreement.”

For organized labour, the Harper government’s swift action to bring in back-to-work legislation, in the Canada Post and Air Canada disputes sends a strong message.

“They have placed the labour movement on notice that the right to strike doesn’t really exist in Canada, even in the private sector,” said Ontario Federation of Labour president Sid Ryan. “(Harper) has thrown down the gauntlet, and said your move is next.

“We’ve got to respond,” said Ryan, adding there were no specific plans in the works though he mused about the one-day general strike launched in the 1970s in opposition to wage and price controls.

“We stand on the shoulders of labour leaders who came before us and fought for these rights. We have an obligation to fight for them.”

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Stocks climbed for a third straight day on Monday, the longest stretch of gains the market has had in nearly a month.

Major indexes opened mixed but moved higher in midday trading, putting the market further away from its longest weekly losing streak since 2002. Last week stocks eked out tiny gains, giving the Dow Jones industrial average and the Standard & Poor’s 500 index their first rises after a six-week slump.

The downturn, which began in early May, brought the S&P 500 close to its average level over the prior 200 days. So long as the index doesn’t sink far below that level, many technical traders see it as a sign to start buying stocks again. The S&P is now 6 percent below the 2011 high it reached on April 29.

“In the short term, stocks have been oversold, and you’re going to get some sort of bounce, whether justified or not, just for technical reasons,” said Paul Simon, chief investment officer for Tactical Allocation Group, which has $1.5 billion in assets under advisement.

The S&P 500 index is up 7 points, 0.6 percent, at 1,278. The Dow Jones industrial average is up 71 points, or 0.6 percent, to 12,076. The Nasdaq is up 16, or 0.6 percent, to 2,632.

European leaders failed over the weekend to agree on releasing more financial aid to Greece, saying the country must first agree to more budget cuts. Greece’s recent efforts to slash spending have led to street protests and political turmoil in Athens. The Greek government faces a confidence vote on Tuesday.

Prime Minister George Papandreou’s newly-reshuffled government is expected to prevail in the vote, and officials say they expect Greece to get its next installment of emergency loans in July. If Greece were to default, it could trigger losses for the banks that hold Greek bonds and more turmoil in financial markets personal loans for people with bad credit.

Investors are also looking ahead to the Federal Reserve’s two-day policy meeting, which begins Tuesday, and the next round of corporate earnings reports that begin in July, said Oliver Pursche, president of Gary Goldberg Financial Services.

“There’s a little fatigue about hearing about the same problems, and there’s no shock factor anymore,” he said. “So now you’re going to start looking ahead. Earnings season is going to start in three weeks or so.”

Analysts expect operating earnings per share for companies in the S&P 500 index rose 14 percent in the second quarter. They also expect the Fed to keep interest rates at nearly zero, a record low.

Fertilizer producer Agrium Inc. raised its forecast for second-quarter earnings after record crop prices pushed up demand for its products. Its stock rose 2.8 percent.

Nabors Industries Ltd., a driller for oil and gas, warned that its pressure pumping and international businesses have been weaker than it expected. The stock lost 2.2 percent.

PNC Financial Services Group Inc. fell 1.9 percent after saying it would buy the U.S. retail operations of Royal Bank of Canada for $3.45 billion. The deal will make PNC the fifth biggest U.S. bank with 2,870 branches. The deal follows Capital One Financial Corp.’s $9 billion purchase last week of ING’s U.S. online bank.

Greece has been at the center of Europe’s debt worries, but other countries are also facing troubles. Moody’s warned that it may cut Italy’s credit rating because of its mounting debt and sluggish growth prospects.

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ATHENS, GREECE

World stock markets moved lower Friday over concerns global economic growth is slowing, despite news of a narrower U.S. trade deficit that sent Wall Street up after a weeklong slump.

Oil prices hovered near $102 per barrel, while the dollar rose against the euro and fell against the yen.

In early European trading, Britain’s FTSE 100 dipped 0.2 percent to 5,844.60, Germany’s DAX lost 0.2 percent to 7,1456.01 and France’s CAC-40 dropped 0.7 percent to 3,853.49.

Shares in New York appeared headed for more losses as Dow Jones industrial futures lost 25 points to 12,019 and S&P 500 futures dipped less than 3 points to 1,279.10.

Trading was slightly less somber in Asia. Japan’s Nikkei 224 index rose 0.5 percent to close at 9,514.44, with vehicle makers posting gains. Toyota Motor Corp., the world’s No. 1 auto maker, rose 0.9 percent. Smaller rival Honda Motor Co. gained 1.1 percent and Nissan Motor Corp. was up 1.8 percent.

Shares of microchip maker Renesas Electronics Corp. gained 0.6 percent. The company said production at a plant damaged by the March 11 earthquake would return to pre-disaster levels in late September, one month earlier than anticipated, Kyodo News agency reported.

Elsewhere, though, markets were dragged down by fears of a global economic slowdown.

“I think it’s just the lingering caution that’s been pervading the market the last few weeks. There’s nervousness that the global economy is slowing down,” said David Cohen, an economist with Action Economics in Singapore.

“The Japanese are turning it around, and the market is still looking for a rebound of growth from the second half of the year in Japan,” Cohen said. “But I think people are still concerned about the U.S., and maybe that China is less of an engine than it was previously.”

South Korea’s Kospi index slid 1.2 percent to 2,046.67 after the Bank of Korea raised its key interest rate for the fifth time in less than a year amid a bid to fight inflation. At a monthly monetary policy meeting, the central bank lifted the benchmark base rate to 3.25 percent from 3 percent.

The action dampened investment sentiment, because traders _ believing that rate hikes discourage growth and hurt stock prices _ often take fright.

Hong Kong’s Hang Seng was 1.3 percent down to 22,315.47 as banking shares dropped.

The Bank of China Ltd., one of the country’s four major state-owned commercial lenders, lost 0.5 percent. Agricultural Bank of China Ltd., the country’s biggest rural lender, lost 0.2 percent. Industrial and Commercial Bank of China, the world’s biggest bank by market value, was down 0.2 percent.

Australia’s ASX/S&P 200 rose 0.3 percent to 4,562.10. Benchmarks in Singapore, Taiwan and the Philippines fell, while those in New Zealand, Thailand and mainland China rose.

The Shanghai Composite Index edged up less than 0.1 percent to 2,705.14, while the Shenzhen Composite Index gained marginally to 1,113.32. Shares in chemicals and heavy industries led the gains.

“The market is weak, gains are hard to come by but losses come easily. Investors also are expecting a rise in the consumer price index when it is released next week, fearing that could bring more monetary tightening measures,” said Liu Kan, an analyst at Guoyuan Securities, based in Shanghai.

Petrochina, the country’s biggest oil and gas company and the Shanghai benchmark’s biggest component, gained a mere 0.2 percent. Huaneng Power International, one of several big state-owned electricity generators, gained 6.2 percent.

On Wall Street, a report that U.S. exports hit a record in April sent stocks sharply higher Thursday as investors hoped the economic recovery may not be as sluggish as grim economic reports in the past week have suggested.

Stocks have been slipping since mid-April as investors become concerned that the U.S. economy has hit a soft patch. Rising oil prices, Japan’s tsunami and nuclear disaster and the risk that Greece might default on its debt have led investors to lower their forecasts for U.S. growth this year.

The Dow Jones industrial average rose 0.6 percent to close at 12,124.36. The Standard & Poor’s 500 index rose 0.7 percent to 1,289.00. The Nasdaq composite rose 0.4 percent to 2,684.87.

Thursday’s gains broke a six-day losing streak and marked the first time stocks rose in June. Stocks had dropped following poor reports on manufacturing, home sales, hiring and consumer confidence.

Benchmark crude for July delivery was down 36 cents to $101.56 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.19 to settle at $101.93 a barrel on Nymex on Thursday.

In currencies, the euro slipped to $1.4483 from $1.4509 in late trading Thursday in New York. The dollar fell to 80.07 yen from 80.26 Japanese yen.

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Stock futures are rising as investors await a raft of government reports about the state of the economy. The market’s major indicators have fallen for six straight sessions.

Ahead of the opening bell Thursday, Dow Jones industrial average futures are up 41, or 0.3 percent, at 12,071. Standard & Poor’s 500 index futures are up 5, or 0.4 percent, at 1,282. Nasdaq 100 futures are up 8, or 0.3 percent, at 2,255.

The Labor Department will report on the number of new applications for unemployment benefits last week cheap business cards. The number is expected to dip slightly from last week to 419,000. A number below 375,000 signals jobs are growing.

The government will report on the size of the trade deficit in April. Economists expect the deficit to have widened slightly from its March level.

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The chief executive officer of Chrysler and Fiat said Monday he and Canadian authorities have begun talking about purchasing Canada’s 1.7 percent ownership in Chrysler.

The Canadian federal government and provincial Ontario governments received 1.7 percent of Chrysler two years ago as part of a bailout that also provided $1.7 billion in loans to help the Detroit company survive.

Chrysler, already controlled by Fiat, recently paid back the last of the money it borrowed from the Canadian and American governments. Fiat then began the process of buying the shares owned by the U.S. government.

Chief executive Sergio Marchionne joined Canadian Finance Minister Jim Flaherty at a Chrysler Canada casting plant in Toronto on Monday to announce the loan repayment.

Marchionne said that he and Flaherty discussed buying Canada’s shares and said they are quite willing to consider purchasing them.

Unlike with the shares owed by the U.S. government, the company has no right to compel the Canadian government to sell.

Flaherty said Ottawa will wait to see how the stock transfer process unfolds in the United States before deciding whether Canada will also sell its shares guaranteed pay day loans.

The Turin, Italy-based automaker said Friday it will buy the U.S. government’s six percent stake in Chrysler under a process that was put in place in 2009 when Chrysler virtually shut down while in bankruptcy court.

Fiat initially received a 20 percent stake in Chrysler in 2009 for providing Chrysler with management expertise and technology.

Since then Fiat has been increasing its holdings in Chrysler and will soon control more than half of the company.

Fiat has helped change the corporate strategy of Chrysler, brought new fuel-efficient vehicles quickly to market and made the company cut costs and operate more efficiently.

The future looks brighter for the company, which has cut thousands of jobs in the United States and Canada in its bid to survive bankruptcy.

In Canada, the company employs 9,000 people and has major assembly plants in Windsor, a southwestern Ontario border city, and Brampton, a community northwest of Toronto.

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