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Federal Reserve hinted on Wednesday that a surprisingly strong jobs market recovery could lead it to raise interest rates earlier than it had been anticipating. At the same time, most Fed officials wanted further evidence before changing their view on when rates should rise, according to the minutes from the central bank's July 29-30 meeting. "Labor market conditions had moved noticeably closer to those viewed as normal in the longer run," the minutes said, adding that policymakers "generally agreed" the job market was healing faster than they had expected. The Fed had said in its policy statement following the July meeting that there was "significant" labor market slack, but the minutes showed many members of its policy-setting panel thought this characterization "might have to change before long." "The committee as a whole has started to shift its stance," said Paul Dales, an economist at Capital Economics in London.
Bank of America Corp is expected to pay more than $16.5 billion to end investigations into mortgage securities that the bank and its units sold in the run-up to the financial crisis, in a deal that could be announced as early as Thursday, a person familiar with the matter said. An agreement in principle was reached earlier this month after a phone call between the bank's chief executive, Brian Moynihan, and Attorney General Eric Holder. Representatives of the Justice Department and Bank of America declined comment.
The minutes were from the two-day meeting of the Federal Open Market Committee in late July, when the Fed trimmed its monthly bond-buying program by an additional $10 billion. Stocks pared gains immediately after the release of the minutes, but the Dow and the S&P 500 returned to positive territory with a little more than an hour of trading left in the regular session. "The market was absolutely being driven by the Fed. It started out strongly, then it looked like a bit of capitulation before the statement came out, and then we obviously saw a big sigh of relief," said Drew Wilson, an equity analyst at Fenimore Asset Management in Cobleskill, New York. The S&P 500 gained 4.91 points, or 0.25 percent, to finish at 1,986.51.
By Hugh Bronstein and Alejandro Lifschitz BUENOS AIRES (Reuters) - Argentina's new plan to skirt U.S. The government has sent a bill to Congress that would replace its New York intermediary bank with state-run Banco Nacion, the latest move in a years-old legal chess game between Argentina and its "holdout" creditors who refused to participate in the restructuring. Argentina's black market peso reeled on the news, falling 2.0 percent to an all-time low 13.5 to the U.S. The legal deadlock is squeezing Argentina's foreign reserves and the availability of dollars in the market by preventing the economically ailing country from issuing international bonds.Last month, Argentina defaulted on an estimated $29 billion of its restructured debt after a New York court blocked an interest payment of $539 million.
By Edwin Chan SAN FRANCISCO (Reuters) - Hewlett-Packard Co posted a surprise increase in quarterly revenue after sales from its personal computer division climbed 12 percent, but a flat to declining performance from its other units underscored the company's uphill battle to revive growth. HP sales rose a mere 1 percent to $27.6 billion in its fiscal third quarter from $27.2 billion a year earlier. It's trying to reduce a reliance on PCs and move toward servers, storage and networking for enterprises - part of Chief Executive Officer Meg Whitman's effort to return the sprawling company to growth. Whitman credited personal computer demand for "coming back some" as consumers and corporations upgrade ageing machines.
By Paul Lienert DETROIT (Reuters) - Ford Motor Co plans to introduce a new hybrid gasoline-electric car in late 2018 to compete against the best-selling Toyota Prius, two sources with knowledge of the company's plans told Reuters on Wednesday. The compact car will be Ford's first "dedicated" hybrid - that is a vehicle designed to be marketed exclusively as a hybrid, rather than a variation of an existing gasoline model, such as the automaker's Fusion hybrid, the sources said. The sources said Ford eventually could offer several different body styles of the new hybrid, as Toyota does with the Prius. The new Ford hybrid is expected to arrive as a 2019 model, roughly 21 years after the introduction of the original Prius in Japan.
By Rosemarie Francisco MANILA (Reuters) - Top Japanese automakers in the Philippines are threatening to shift production to cheaper Southeast Asian countries as the government drags its feet on a plan to rebuild its shrinking car manufacturing industry. The potential pullout of production lines by Toyota Motor Corp and Mitsubishi Motors, which have a combined 50,000 vehicle annual capacity in the country, would mean the Philippines could lose more than 1,000 jobs and millions of dollars worth of planned and existing investments. Time is running out, industry officials say, because there's less than two years left in the term of President Benigno Aquino, who has been backing the plan. The original government plan includes tax incentives to help rebuild the country's tiny auto industry and turn it into a major manufacturing hub.
By Svea Herbst-Bayliss BOSTON (Reuters) - Billionaire investor Carl Icahn said on Wednesday that he owns an 8.5 percent stake in Hertz Global Holdings Inc and plans to pressure the rental car company's management over accounting issues and operational failures. Last year Hertz adopted a so-called poison pill to prevent any one shareholder from gaining control of the company as activist investors began circling. Hertz announced in March that it would spin off its equipment rental unit and earlier in the year speculation mounted that Icahn had built up a stake in the company. His second-quarter filing showed that he made a new bet on Gannett Co and liquidated his position in Forest Laboratories Inc, which was acquired by Actavis.
By Polina Devitt and Vladimir Soldatkin MOSCOW (Reuters) - Russia ordered the temporary closure of four McDonald's restaurants in Moscow on Wednesday, a decision it said was over sanitary violations but which comes against a backdrop of worsening U.S.-Russian ties over Ukraine. The four restaurants ordered to suspend operations by the state food safety watchdog included the first ever McDonald's in Russia, which opened in the last days of the Soviet Union, and which the company says is its most frequented in the world. McDonald's Corp shares were down 0.3 percent at 3:11 p.m. EDT, against the backdrop of a slightly firmer U.S. The watchdog, known in Russia as Rospotrebnadzor, said in a statement inspectors had found numerous sanitary violations.
Closing the evidentiary record is the last formal step before the Financial Stability Oversight Council can vote on whether to designate MetLife with the tag. The tag is applied to large firms whose failure could threaten financial markets, and it brings far greater scrutiny by financial regulators, as well as new capital requirements. The risk council later on Wednesday said it had closed the evidentiary record on a "non-bank financial company," but it does not name the firms in the process. MetLife declined to comment.