Business Highlights

AIG to sell Asian life insurer to repay bailouts

American International Group Inc. is selling a cornerstone of its business, Asia-based life insurer AIA Group, in a government-approved $35.5 billion deal. The sale to British insurer Prudential PLC could reduce by nearly one-fifth the amount of federal bailout money still invested in struggling AIG.

But officials and analysts say it's not clear whether taxpayers will eventually recoup all the money AIG drew from a $182.5 billion rescue package the government committed to at the height of the 2008 credit crisis. In return for that package, the government got a nearly 80 percent stake in the insurer.

___

Reports show modest but steady economic recovery

NEW YORK (AP) — Mixed reports Monday on manufacturing, construction and personal income and spending made clear that the economy is enjoying modest growth even though the recovery remains fragile.

Manufacturing output expanded in February for a seventh straight month. Factory output has provided one of the few areas of strength for the economy. Still, the growth in manufacturing activity slowed compared with January and fell short of economists' expectations.

In addition, construction spending fell for a third straight month in January. And though personal spending rose slightly more than expected, Americans' incomes scarcely budged. In part, that was because Social Security recipients didn't get their usual cost-of-living boost.

___

Kohn to leave Fed in June; gives Obama opening

WASHINGTON (AP) — Federal Reserve Vice Chairman Donald Kohn's decision to step down at the end of June gives President Barack Obama a chance to put a bigger imprint on the central bank.

Kohn, the Fed's second-highest ranking official, has played a major role in shaping the Fed's strategy in fighting the worst financial and economic crises to hit the country since the Great Depression.

His departure will open up a third seat on the seven-member Federal Reserve board in Washington. Board members are picked by the president and must be confirmed by the Senate.

___

Buyouts lift stocks to highest level since Jan.

NEW YORK (AP) — Major stock indexes rose to their highest levels in more than a month Monday after corporate buyouts raised hopes about the economy.

The Dow Jones industrial average rose 79 points to 10,403.79. The Standard & Poor's 500 index, the basis of many mutual funds, erased its losses for the year. The Nasdaq composite index also turned positive for 2010 after a Japanese drugmaker said it was pursuing OSI Pharmaceuticals Inc. and SanDisk Corp. raised its revenue forecast.

The biggest boost for the market came from insurer American International Group Inc., which agreed to sell its prized Asian life insurance business to Britain's Prudential PLC. It is seen as a sign of confidence in the economy when big businesses go ahead with takeovers.

___

EU, Greece discuss more cuts amid bailout reports

ATHENS, Greece (AP) — The EU's financial affairs chief pressed Greece hard Monday to make more painful, permanent budget cuts soon, as markets speculated that the bloc or heavyweights France and Germany are preparing a financial lifeline to get the country out of its debt crisis.

Finance Commissioner Olli Rehn insisted in Athens that additional measures were necessary "in the coming days," a view he said was shared by the European Central Bank and the International Monetary Fund.

Rehn said it was up to the Greek government to announce specific spending cuts, which he said must be permanent and structural. But he refused to be drawn on a possible bailout, saying that the bloc "has the ways and means to secure stability in the eurozone."

___

Payback formula for Bernard Madoff victims upheld

NEW YORK (AP) — The victims of Bernard Madoff's massive swindle are only owed the money they invested with his firm and not the $64.8 billion reflected on fictitious statements, a Manhattan bankruptcy judge ruled Monday.

The written decision by U.S. Bankruptcy Court Judge Burton Lifland rejected the victims' arguments that they had legitimate claims based on "securities positions" listed in final Nov. 30, 2008 statements. It upheld a "net equity" formula being used by a trustee overseeing the liquidation and distribution of Madoff's assets.

Madoff, 71, was sentenced last year to 150 years in prison for orchestrating an epic scheme that wiped out life savings and entire charities. He admitted that he never made investments, and instead used new investors' money to pay returns to existing ones.

___

Dish Network 4Q profit falls, gains subscribers

Dish Network Corp., the low-cost leader in a subscription-TV industry where growth comes from taking customers away from competitors, lifted fourth-quarter revenue by attracting budget-conscious customers with aggressive promotions.

As a result, the nation's second-largest satellite TV operator added 249,000 net subscribers during the quarter while several of its cable TV rivals lost ground. The increase in customers overshadowed a 17.5 percent drop in net income to drive shares higher by $1.29, or 6.5 percent, to $21.26 in afternoon trading on Monday.

Dish said Monday that it earned $179 million, or 40 cents per share, in the quarter compared with $217 million, or 48 cents per share, in the prior year's quarter. The results exceeded the 32 cents per share in earnings that analysts had been expecting on average, according to Thomson Reuters.

___

Astellas Pharma plans $3.5B takeover bid for OSI

Japanese drugmaker Astellas Pharma Inc. said Monday it will take a $3.5 billion takeover offer for OSI Pharmaceuticals directly to shareholders after being rebuffed several times by executives of the U.S. biotechnology company.

Astellas said it will start on Tuesday an offer to pay $52 per share in cash for all outstanding common shares of the OSI Pharmaceuticals Inc. stock — a premium of more than 40 percent over Friday's close.

Shares of OSI, based in Melville, N.Y., soared above the offered price in Monday trading, suggesting some traders expect the bidding will go higher. OSI shares rose $19.23, or 51.9 percent, to close at $56.25 after rising to a 52-week high of $57 earlier in the session.

___

Treasury sets Bank of America warrant sale date

WASHINGTON (AP) — The Treasury Department said Monday it will auction 272 million warrants for Bank of America stock to recoup taxpayer money from the controversial financial bailout fund.

Treasury said the auctions will take place on Wednesday and will be divided into two classes of warrants. Warrants are financial instruments that allow the holder to buy stock in the future at a fixed price.

Bank of America Corp. repaid the government $45 billion in December as part of its efforts to sever ties with the $700 billion bailout program. The auction of the warrants is taking place because Bank of America and the Treasury Department could not agree on a price for the warrants.

___

High court hears ex-Enron CEO Skilling's appeal

WASHINGTON (AP) — The Supreme Court appeared troubled Monday by the selection of the jury that convicted former Enron CEO Jeffrey Skilling as well as the use of a federal fraud law against him.

Several justices appeared receptive to arguments by Skilling's lawyer that he did not have a fair trial in Houston, Enron's hometown, following the energy company's 2001 collapse that cost thousands of jobs and billions of dollars.

Skilling was convicted in 2006 on 19 counts of conspiracy, securities fraud, insider trading and lying to auditors. His lawyers are hoping for a new trial.

Critics say the law is vague and unfair.

The Dow rose 78.53, or 0.8 percent, to 10,403.79.

The broader S&P 500 index rose 11.22, or 1 percent, to 1,115.71. The Nasdaq rose 35.31, or 1.6 percent, to 2,273.57.

The Russell 2000 index of smaller companies rose 14.09, or 2.2 percent, to 642.65.

Crude oil fell 96 cents to settle at $78.70 per barrel on the New York Mercantile Exchange.

In other Nymex trading in April contracts, heating oil fell 1.18 cents to settle at $2.0235 a gallon, and gasoline lost 3.23 cents to settle at $2.1556 a gallon. Natural gas lost 13.4 cents to settle at $4.679 per 1,000 cubic feet.

In London, Brent crude dropped 70 cents to settle at $76.89 on the ICE futures exchange.