Business Highlights

Stocks pare losses to finish mixed after oil spikes

NEW YORK (AP) _ Wall Street capped a week of big gains with modest moves Friday as investors grappled with surging energy prices that overshadowed news of a surprise increase in home construction.

Investors hoping for an economic rebound in the second half of the year and searching for signs that the housing market is bottoming got some relief before the market opened: the Commerce Department's report that home construction jumped 8.2 percent in April.

But investors were clearly sidetracked for much of the session by energy prices and their effect on consumer spending, which accounts for more than two-thirds of U.S. economic activity. The price of a barrel of oil spiked to $127.82 for a new trading record on Friday.

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Oil sets record near $128; pump price at high, too

NEW YORK (AP) _ Oil prices shot to new highs again Friday as traders, unimpressed by U.S. and Saudi efforts to boost supply, kept buying on the belief that prices had more room to rise.

Light, sweet crude for June delivery jumped $2.17 to settle at record close of $126.29 on the New York Mercantile Exchange. Earlier in the session, prices surged to $127.82 a barrel, also a new high. It was the eighth time in the past 10 sessions traders rewrote the record books, and the first time prices topped $127 a barrel.

Investors shrugged off news from Saudi Arabia's oil minister, Ali Naimi, that the country increased its production by 300,000 barrels a day last week in response to requests from customers. The market also had little reaction to the Energy Department's announcement said it would cancel shipments into the Strategic Petroleum Reserve for six months beginning July 1.

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Surprise rebound in housing, outlook still shaky

WASHINGTON (AP) _ Construction of new homes increased by the biggest percentage in more than two years in April, a rare spot of good news amid the worst downturn in housing in more than two decades.

Analysts, however, played down the increase, noting that all the strength came from the volatile apartment sector.

They said the painful housing slump is far from over as a record flood of foreclosures continues to add to the sizable stockpile of unsold homes.

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Treasury secretary says markets are calmer now

WASHINGTON (AP) _ Treasury Secretary Henry Paulson said Friday that financial markets are "considerably calmer" now than they were two months ago. He predicted the economy will be rebounding by the second half of this year.

In a speech to business executives in Washington, Paulson said the drag from housing, which he characterized as still the biggest risk to the economy, will soon be lessened by nearly $100 billion in economic stimulus payments to U.S. households.

In his remarks, Paulson never used the word recession, although many private economists believe the country is in one.

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GE confirms plans to exit appliance business

NEW HAVEN, Conn. _ General Electric Co. plans to sell or spin off the business that for a century has put appliances in American homes, a decision that could presage further asset sales, analysts said.

The industrial conglomerate, one of the world's largest companies, said in a statement Friday that the move is part of an ongoing plan to exit "slower growth and more volatile businesses."

Last year, Fairfield-based GE shed its underperforming plastics business by selling it to a Saudi Arabian company for $11.6 billion.

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Fannie Mae scraps higher downpayment requirements

WASHINGTON (AP) _ Fannie Mae is doing away with higher minimum down-payment requirements for borrowers in parts of the country where home prices are dropping.

The government-sponsored mortgage finance company said Friday it will require minimum down payments of between 3 percent and 5 percent for all loans that it guarantees. That replaces a December policy that required a higher minimum if the loan was for a home in a zip code with declining real estate prices.

Washington-based Fannie says the move is part of its effort to help resuscitate the flagging mortgage market.

Fannie Mae and its smaller sibling, Freddie Mac, had been under intense pressure to relax lending policies that had been tightened in recent months as foreclosures and defaults skyrocketed.

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UN: World economy to grow by 1.8 percent in 2008

UNITED NATIONS (AP) _ The world economy is "teetering on the brink" of a severe downturn and is expected to grow only 1.8 percent in 2008, the United Nations said in its mid-year economic projections Thursday.

That's down from a global growth rate of 3.8 percent in 2007, and the downturn is expected to continue with only a slightly higher growth of 2.1 percent in 2009, the U.N. report said.

The mid-year update of the U.N. World Economic Situation and Prospects 2008 blamed the downturn on further deterioration in the U.S. housing and financial sectors in the first quarter.

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California winemaking patriarch Robert Mondavi dead at 94

BERKELEY, Calif. (AP) _ Robert Mondavi, the pioneering vintner who helped put California wine country on the map, died at his Napa Valley home Friday. He was 94.

Mondavi died peacefully at his home in Yountville, Robert Mondavi Winery spokeswoman Mia Malm said.

He was 52 and a winemaking veteran in 1966, when he opened the winery that would help turn the Napa Valley into a world center of the industry. Clashes with a brother that included a fistfight led him to break from the family business to carry out his ambitious plans with borrowed money.

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Macy's signs deal to put FAO Schwarz in its stores

CINCINNATI (AP) _ FAO Schwarz will open toy stores in nearly 700 Macy's department stores over the next two years in a move that both stores hope will drive traffic in a tough economic environment.

The two companies announced Friday that about 75 full-size FAO Schwarz toy stores will open across the country in the fall, along with about 200 smaller shops that will be up to 300 square feet.

Macy's CEO Terry Lundgren told shareholders that FAO Schwarz will open stores in up to 275 of Macy's stores this fall, and the companies plan to expand over the next two years to include 685 Macy's stores that have children's departments.

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Abercrombie profit edges up on sales increase

COLUMBUS, Ohio (AP) _ Teen retailer Abercrombie & Fitch Co. said Friday that its first-quarter earnings rose 3 percent from a year ago on stronger sales.

Abercrombie said it earned $62.1 million, or 69 cents per share, in the three months ended May 3 compared with profits of $60.1 million, or 65 cents a share, a year ago.

Sales rose 8 percent to $800.1 million from $742.4 million last year. But sales at stores open at least a year, considered a key indicator of a retailer's strength, fell 3 percent.

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By The Associated Press

The Dow Jones industrial average slipped 5.86, or 0.05 percent, Friday, closing at 12,986.80. For the week, the Dow rose 1.89 percent.

The Nasdaq composite index fell 4.88, or 0.19 percent, to 2,528.85 Friday, but still jumped 3.41 percent for the week. The S&P 500 and Nasdaq remain at five-month highs.

Light, sweet crude for June delivery jumped $2.17 to settle at record close of $126.29 on the New York Mercantile Exchange. Earlier in the session, prices surged to $127.82 a barrel, also a new high.

Gasoline futures jumped to a record $3.2438 a gallon on the Nymex before easing slightly to settle at $3.2235, up 5.777 cents.

In other Nymex trading, heating oil futures rose 8.04 cents to settle at $3.7028 a gallon. Natural gas futures fell 30.5 cents to settle at $11.094 per 1,000 cubic feet.

In London, July Brent crude surged $2.36 to settle at $124.99 a barrel on the ICE Futures exchange.