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Associated Press

Posted on January 17, 2013 at 5:00 PM

Business News at 3:30 p.m.

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NEW THIS DIGEST:

— Adds: PHILADELPHIA NEWSPAPERS, INMATE TAX CHEATS, OBAMA-ENERGY

— Updates: ALGERIA-KIDNAPPING

TOP STORIES:

787-WHAT'S NEXT

Boeing says it will keep making its flagship jetliner while engineers try to solve battery problems that have grounded most of the world's 787 fleet. It's not clear how long the investigation — or the fix — will take, but Boeing is sure to pay a high price and airlines that had sought the prestige of flying the world's most sophisticated plane are instead stuck with one they can't use. By Joshua Freed.

AP photos, video.

With:

BOEING-787 WOES

WASHINGTON — Lithium batteries that can leak corrosive fluid and start fires have emerged as the chief safety concern involving Boeing's 787 Dreamliner, a problem that apparently is far more serious than government or company officials acknowledged less than a week ago. The Federal Aviation Administration has grounded Boeing's newest and most technologically advanced jetliner until the risk of battery fires is resolved. By Joan Lowy and Joshua Freed.

AP photos.

Also:

— JAPAN-787 BATTERY MAKER — The troubles with Boeing's 787 Dreamliner are shining an unwelcome spotlight on the Japanese maker of the powerful lithium-ion batteries that have become the focus of investigations into onboard fire risks.

— FRANCE-AIRBUS — Airbus, the No. 2 biggest plane maker behind Boeing, says it's confident that it won't run into the same battery problems afflicting its archrival. AP photos.

— POLAND-DREAMLINER — Poland's airline LOT says it may seek compensation from Boeing for the grounding of its two 787 Dreamliner planes due to security concerns. AP photo.

MORTGAGE SETTLEMENT-TAX DEDUCTIBILITY

WASHINGTON — Consumer advocates have complained that U.S. mortgage lenders are getting off easy in a deal to settle charges that they wrongfully foreclosed on many homeowners. Now it turns out the deal is even sweeter for the lenders than it appears: The money they're ponying up will be subsidized by U.S. taxpayers. The IRS regards the lenders' reimbursements to homeowners as a cost incurred in the course of doing business. Result: They're tax-deductible. By Business Writer Marcy Gordon.

Also:

— CONSUMER PROTECTION-MORTGAGES — The government's consumer lending watchdog finalizes new rules aimed at protecting homeowners from shoddy service and unexpected fees charged by companies that collect their monthly mortgage payments.

AP POLL: DEBT LIMIT

WASHINGTON — Most Americans think a major economic crisis would ensue if lawmakers fail to renew the government's borrowing limit, but they're divided over how to do it. Only 3 in 10 support President Barack Obama's demands that the debt ceiling be raised quickly and by itself. More believe instead that raising the limit should be tied to the fight over cutting budget deficits. By Alan Fram and Jennifer Agiesta.

HOUSING STARTS

WASHINGTON — U.S. builders started work on homes in December at the fastest pace since the summer of 2008 and 2012 finished as the best year for residential construction since the start of the housing crisis. The Commerce Department says that builders broke ground on houses and apartments at a seasonally adjusted annual rate of 954,000. By Economics Writer Martin Crutsinger.

AP photos.

SUBWAY-FOOTLONG SCANDAL

NEW YORK — What's in an inch? Apparently, enough missing meat, cheese and tomatoes to cause an uproar. Subway, the world's largest fast food chain with 37,000 locations, is facing criticism after an Australian man posted a picture on the company's Facebook page of one of its famous footlong sandwiches next to a tape measure that seems to show it's just 11 inches. By Mae Anderson.

ARGENTINA-ECONOMY

BUENOS AIRES, Argentina — Six pesos a day. That's all it takes to eat in Argentina, at least according to government economists. But on the streets of the capital, 6 pesos will buy you a pack of chewing gum or a single cup of yoghurt. Even a ham and cheese sandwich — without lettuce or tomato — costs 13 pesos. Official statistics are so widely disbelieved that the International Monetary Fund is considering sanctions against the country. By Michael Warren.

AP photo.

MARKETS & ECONOMY:

UNEMPLOYMENT BENEFITS

WASHINGTON — The number of Americans seeking unemployment aid fell to a five-year low last week, a hopeful sign the job market is healing. But much of the decline reflects seasonal volatility in the data. The Labor Department says weekly unemployment benefit applications fell 37,000 to a seasonally adjusted 335,000. By Economics Writer Christopher S. Rugaber.

AP photo.

— MORTGAGE RATES — The average U.S. rate on the 30-year fixed mortgage inched closer to its record low this week, helping to keep home buying more affordable

IMF-LAGARDE

WASHINGTON — International Monetary Fund chief Christine Lagarde says the threat of financial collapse in the global economy appears to have eased. But she is warning that developed economies still need to follow through on financial reforms and debt reduction. By Desmond Butler.

WALL STREET

NEW YORK — Stocks advance, pushing the Standard and Poor's 500 to another five-year high, after strong reports on housing starts and unemployment claims make investors more optimistic about the U.S. economy.

— OIL PRICES —The price of oil rises above $95 a barrel on positive reports about the U.S. economy.

— INMATE TAX CHEATS — Tax fraud appears to be a popular pastime in the nation's prisons, but the Internal Revenue Service is catching on.

EARNINGS:

EARNS-BANK OF AMERICA

NEW YORK — Bank of America says its fourth-quarter earnings shrank as it cleaned up old problems from its mortgage unit. The bank made $367 million in the last three months of 2012, down from $1.6 billion in the same period a year ago. By Business Writer Christina Rexrode.

AP photo.

Also:

EARNS-CITIGROUP

Citigroup is reporting earnings that are below Wall Street's expectations as the bank's legal expenses climb. The bank, based in New York, says a big chunk of the legal expenses came from a settlement reached last week over illegal foreclosure practices in the aftermath of the housing bust. By Business Writer Daniel Wagner.

AP photo.

— EARNS-AMERICAN EXPRESS — American Express Co. reports quarterly financial results after the market closes.

With:

— EARNS-CAPITAL ONE FINANCIAL — Capital One reports quarterly financial results after the market closes.

— EARNS-UNITEDHEALTH — UnitedHealth's fourth-quarter net income slips 1 percent, as growing medical costs counter revenue gains for the nation's largest health insurer. AP photo.

INDUSTRY:

ALGERIA-KIDNAPPING

ALGIERS, Algeria — Algerian forces launch a military assault at a natural gas plant in the Sahara Desert, trying to free dozens of foreign hostages held by militants who have ties to Mali's rebel Islamists, diplomats and an Algerian security official say. Yet information on the Algerian operation vary wildly and the conflicting reports emerging from the remote area are impossible to verify independently. By Aomar Ouali and Paul Schemm.

AP photos.

With:

— ALGERIA-KIDNAPPING-GLANCE — Hostages from at least 8 countries are being held by Islamist militants at an Algerian gas plant.

OBAMA-ENERGY

WASHINGTON — President Barack Obama's second-term energy agenda is taking shape and, despite the departure of key Cabinet officials, it looks a lot like the first: more reliance on renewable energy sources, such as wind and solar, and expanded production of oil and natural gas. Obama also is promising to address climate change, an issue he has acknowledged was sometimes overlooked during his first term. By Matthew Daly.

AP photos.

BRITAIN-RIO TINTO

LONDON — The chief executive of mining giant Rio Tinto and another senior executive are stepping down immediately after the company announced a $14 billion write-down from its aluminum business and an acquisition of a coal company in Mozambique.

— GENERAL MOTORS-INVESTMENT — General Motors says it will invest $1.5 billion in its North American factories this year.

— MINE EXPLOSION — A former superintendent at West Virginia's Upper Big Branch mine — where an explosion killed 29 — will learn his fate after pleading guilty to a federal conspiracy charge. Eds: Sentencing scheduled for 1:30 p.m. EST.

— IRAQ-OIL — Iraq considering bid from BP to raise output at oil field in contested area.

— HIGH SPEED RAIL — Amtrak and the California High-Speed Rail Authority say they'll work together to search for trains that will operate at up to 220 miles per hour along both coasts of the United States.

— AMERICAN AIRLINES-NEW LOOK — American Airlines is getting a new look. The familiar red, white and blue stripes along the side of the fuselage are gone, replaced by a new logo and "American" in large letters on the silver body.

TECHNOLOGY & MEDIA:

JAPAN-SONY

TOKYO — Sony, the struggling Japanese electronics and entertainment company, is headed in the right direction although its comeback is not yet complete, its chief executive says. By Business Writer Yuri Kageyama.

— EARNS-INTEL — Intel reports quarterly financial results after the market closes.

PHILADELPHIA NEWSPAPERS

PHILADELPHIA — The owners of Philadelphia's two major newspapers have threatened to liquidate or sell the company's assets if they can't get new labor contracts by Friday, according to the union representing journalists. By Kathy Matheson.

— AMAZON-IPHONE MP3S — Amazon says iPhone and iPod Touch users will be able to buy music from its digital store for the first time beginning Thursday.

— FINLAND-NOKIA-CUTS — Struggling Nokia is downsizing by more than 1,000 jobs, part of a plan to cut costs and streamline operations.

— TAIWAN-EARNS-TSMC — Taiwan Semiconductor Manufacturing, the world's largest contract chip manufacturer, says fourth-quarter profit rose 32 percent on growing smartphone, tablet sales.

INTERNATIONAL:

DUBAI-QE2

DUBAI, United Arab Emirates — After more than four years sitting idle in a Dubai port, the storied passenger liner Queen Elizabeth 2 is bound again for the high seas as part of deal to convert the vessel into a luxury hotel in Asia. By Brian Murphy.

AP photos.

BRITAIN-HORSEMEAT HORROR

LONDON — In Britain, a horse is a horse — not a main course. Ten million burgers have been taken off shop shelves after the revelation that beef products from three companies in Ireland and Britain contained horse DNA. The AP looks at tastes and taboos when it comes to horseflesh. By Jill Lawless.

AP photos.

— GREECE-SWISS ACCOUNTS — Greece's Parliament is debating whether to launch criminal investigations into two former prime ministers and finance ministers over how leaked data on Greeks who banked in Switzerland was handled. AP photos.

— FRANCE-SALES-CARREFOUR — Retailer Carrefour sees slim sales growth amid Europe's troubles; bolstered by Latin America.

— EU-BUDGET SUMMIT — The European Union's 27 leaders will try again to reach a seven-year budget deal for the bloc at a summit next month.

— GREECE-FINANCIAL CRISIS — Greek doctors, Athens metro workers on strike against austerity measures.

PERSONAL FINANCE:

OF MUTUAL INTEREST-60/40 PORTFOLIO

BOSTON — Is it time to retire the traditional 60/40 investment portfolio? A growing number of critics say a mix of 60 percent in stocks and 40 percent in bonds isn't up to the task of helping middle-aged investors achieve their retirement savings goals. Two top investment strategists take sides. In the anti-60/40 corner is Ben Inker of asset management firm GMO. In the opposite corner is Vanguard's Fran Kinniry. By Personal Finance Writer Mark Jewell.

AP photos.

______

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CENTERPIECE

Worldwide rallyIf you close your eyes and place your finger on a map, chances are good that you'll hit a country whose stocks are up over the last year. Whether Western or Eastern, emerging or developed, most markets around the world climbed.

COMPANY SPOTLIGHT

A new look for American

American Airlines debuted a new logo and look for its planes on Thursday. The familiar red, white and blue stripes along the side of the fuselage are gone, replaced by a new logo and "American" in large letters on the silver body.

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