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Associated Press

Posted on August 15, 2011 at 8:01 PM

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Google's patent play: $12.5B for Motorola Mobility

SAN FRANCISCO — Google Inc.'s $12.5 billion deal to buy cellphone maker Motorola Mobility Holdings Inc. is aimed at giving the Internet search leader more legal firepower as it battles Apple Inc. and Microsoft Corp. to gain the upper hand in the increasingly important mobile computing market.

The all-cash acquisition announced Monday is the boldest move in Google's 13-year history.

Besides being by far the largest deal that Google has ever proposed, buying Motorola would push the company into phone and computer tablet manufacturing for the first time, at the risk of alienating the other device makers that depend on Google's Android operating system.

The proposed deal also is likely to increase antitrust scrutiny on Google.

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A golden decade for defense companies is ending

NEW YORK — The wars in Iraq and Afghanistan are winding down, Osama bin Laden is dead, and the federal government is deeply in debt. This spells the end of what was a golden decade for the defense industry.

In the decade since the Sept. 11 attacks, the annual defense budget has more than doubled to $700 billion and annual defense industry profits have nearly quadrupled, approaching $25 billion last year.

Now defense spending is poised to retreat, and so are industry profits. Congress agreed last month to cut military spending by $350 billion over the next 10 years. The defense budget will automatically be cut by another $500 billion over that period if lawmakers fail to reach a deficit-cutting deal by November.

Defense industry stocks have already begun to suffer; they are lagging the S&P 500 in recent months.

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Stocks rise for third day after acquisition flurry

NEW YORK — Stocks are having their longest rally since early July. A $19 billion corporate buying spree and encouraging economic news form Japan sent the Dow Jones industrial average up 213 points and erased its losses from last week.

The return of what's called "Merger Monday" on Wall Street made investors more optimistic about the future.

So did a report that Japan's economy shrank less than feared following the March 11 earthquake and tsunami.

Japan's report helped temporarily ease worries that the U.S. economy may slide into another recession.

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Foreign holdings fell during debt limit talks

WASHINGTON — Foreign investors cut their holdings of U.S. Treasury debt in June for the first time since April 2009. The decline came at a time of anxiety about whether the United States would raise its borrowing limit.

China, the biggest buyer of U.S. Treasury debt, increased its investment for a third straight month. But Japan, the second-largest buyer, along with Brazil, Russia, Hong Kong, and a group that includes the Bahamas, Bermuda, the Netherlands and the Cayman Islands cut their investments.

Overall foreign holdings dropped 0.4 percent to $4.5 trillion.

Much of the decline was driven by private investors.

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ECB in record $32 billion bond buying spree

PARIS — The European Central Bank revealed Monday that it splashed out €22 billion ($32 billion) last week — more than it has ever done before — propping up the bond markets of Italy and Spain.

News of the big bond purchases came a day before the leaders of Germany and France meet to discuss the debt crisis that has engulfed Europe for over a year and a half. Speculation that German Chancellor Angela Merkel and French President Nicolas Sarkozy would be considering proposals for the eurozone to issue jointly guaranteed government debt appear to have been dashed, however.

Tuesday's meeting in Paris comes after a week of turmoil in financial markets, which was partly blamed on Europe's sprawling government debt crisis, which threatened to sweep up economic heavyweights such as Italy and Spain.

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Shell: 54,600 gallons of oil spilled in North Sea

LONDON — Royal Dutch Shell estimated Monday that 54,600 gallons of oil have spilled into the North Sea from an oil rig off Scotland's eastern coast.

The Gannet Alpha oil rig, located 112 miles east of the city of Aberdeen, is operated by Shell and co-owned by Shell and Esso, a subsidiary of the U.S. oil firm Exxon Mobil.

Glen Cayley, technical director of Shell's European exploration and production activities, called the spill "significant" given the amount of oil that generally spills into the North Sea.

Cayley said he believed waves would disperse the oil sheen and the spill was not expected to reach the shore.

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Berkshire reveals stakes in Dollar General, Verisk

OMAHA, Neb. — Warren Buffett's company revealed new investments in retailer Dollar General and insurance data specialist Verisk Analytics along with several other adjustments in its $52.4 billion U.S. stock portfolio.

Berkshire Hathaway said that at the end of June, it held 1.5 million Dollar General shares and 2.1 million shares of Verisk.

Besides those new holdings, Berkshire reported increases in holdings of Wells Fargo and MasterCard, and Buffett's company trimmed its Kraft Foods stake.

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Muted demand leaves Lowe's 2nd-qtr profit flat

NEW YORK — Volatile weather and shoppers' worries about the economy muted demand during Lowe's key early-summer selling season, leaving its second-quarter net income nearly flat, the nation's second-largest home improvement retailer said Monday.

Lowe's Cos. lowered its sales forecast for the second half of its fiscal year due to consumers' uncertainty, CEO Robert Niblock told The Associated Press.

Niblock cited three factors likely to hurt spending: The debate in Washington this month over the debt ceiling, the subsequent downgrade by Standard & Poor's of the nation's credit rating and the recent stock market fluctuations.

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US home builders remain pessimistic in August

WASHINGTON — Homebuilders are just as pessimistic about the depressed housing market as they were two years ago.

The National Association of Home Builders said Monday that its index of builder sentiment in August was unchanged at 15. The index has been below 20 for all but one month during the past two years.

Any reading below 50 indicates negative sentiment about the housing market. It hasn't reached 50 since April 2006, the peak of the housing boom.

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Legal beef: Sara Lee, Kraft escalate wiener war

CHICAGO — The nation's two largest hot dog makers took their legal beefs on Monday to federal court, where a judge will determine whether Oscar Mayer or Ball Park franks broke false-advertising laws in their efforts to become top dog.

As the bench trial got under way, U.S. Magistrate Judge Morton Denlow cast his eyes across the Chicago courtroom, where half a dozen attorneys were at opposing tables, and said, "Let the wiener wars begin."

The battle pits Chicago-area companies Sara Lee Corp., which makes Ball Park franks, against Kraft Foods Inc., which makes Oscar Mayer, in a case that could clarify how far companies can go when boasting that their product is better than a competitor's.

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By The Associated Press(equals)

The Dow Jones Industrial average rose 213.88 points, or 1.9 percent, to 11,482.90. It has gained 762.96 points since Thursday. That's the best three-day point gain since it rose 927.18 in November 2008, during the depths of the financial crisis. The Dow is also up 7.1 percent over the three days, the biggest percentage gain since it rose 9.5 percent the first three days of the bull market in March 2009.

The Standard & Poor's 500 index rose 25.68, or 2.2 percent, to 1,204.49. The Nasdaq composite index rose 47.22, or 1.9 percent, to 2,555.20.

Benchmark West Texas Intermediate crude for September delivery surged $2.50 to $87.88 per barrel on the New York Mercantile Exchange. That's the highest finish since Aug. 3.

Brent crude, which is used to price many international oil varieties, rose $1.88 to finish at $109.91 on the ICE Futures exchange in London.

In other Nymex trading for September contracts, heating oil rose 4.04 cents to end at $2.9441 per gallon and gasoline futures gained 5.23 cents to end the day at $2.8745 per gallon. Natural gas fell 3.6 cents to finish at $4.024 per 1,000 cubic feet.

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