Thursday PM March 1st, 2007

Wall Street closes modestly lower today, an early-session plunge...Prosecutors plan to push third trial against former Enron broadband executive...Baker study indicates most future world oil production will come from state-controlled national companies...

Wall Street closed modestly lower today, having made its way back from an early-session plunge. The Dow Jones industrials ended 34 points lower after tumbling 209 points in early trading and then briefly reaching positive territory in the afternoon. The industrial average fell to 12,234. Decliners on the New York Stock Exchange outnumbered advancers by a five-to-three margin. The Nasdaq composite index lost 12 points at 2404. And the Standard-and-Poor's 500 stock index was down 3.5 points at 1403. Trading volume on the New York Stock Exchange totaled 3.7 billion shares. Volume on the Nasdaq market came to 2.7 billion shares.

Major Asian stock markets retreated for a third straight session and European stocks turned mostly lower ahead of the opening bell on Wall Street. China's market, whose plunge Tuesday triggered a global sell-off, was down 2.9 percent today. Shares in Japan, Australia, Taiwan, Hong Kong, Singapore and Malaysia all retreated mildly. Key European stock market averages were posting declines of up to 1.5 percent. London shares were recently little changed. Analysts say the recent global jolt was most likely a correction to cool surging markets, but some say market volatility could persist for months.

The Justice Department has announced in a court filing that it will appeal U.S. District Judge Vanessa Gilmore's late January decision to erase Kevin Howard's conviction of falsifying books for Enron, according to the Houston Chronicle. Prosecutors are appealing one of five jury convictions won last year against the former finance chief of Enron's broadband division. The appeal is before the 5th U.S. Circuit Court of Appeals, which has tossed out convictions in a separate Enron case over the same issue prompting Judge Gilmore to erase Howard's record. Gilmore threw out all five convictions from Howard's retrial last year. Howard's first trial with four other ex-broadband executives ended in 2005 with some acquittals and jurors hung on dozens of other counts.

A new study from Rice University's James A. Baker III Institute for Public Policy indicates the vast proportion of rising world oil production over the next three decades will come from state-controlled national oil companies. They surpass the international majors, and that will impact future oil supply, pricing and security trends. Some 77 percent of the world's proven oil reserves are controlled by state-run oil companies. The report, compiled in conjunction with the Institute of Energy Economics in Japan, says government-held firms exhibit only 60 to 65 percent of the efficiency as privately-held international oil majors. The study examined national oil companies in Saudi Arabia, Nigeria, India, Russia, Malaysia, Indonesia, Iraq, China and Kazakhstan.

TXU has officially suspended efforts to get permits to build eight coal-fired plants in Texas, a condition of the company's proposed $32 billion sale to private buyers. TXU says it filed a motion to end proceedings for seven plants that were being challenged in hearings before a state agency. The company said it also dropped plans for an eighth plant that wasn't part of the case. Private-equity firms trying to buy TXU pledged to scuttle eight of 11 coal-fired plants that TXU had wanted to build.

A judge has given the go-ahead for TXU to build a new coal-fired power plant in the central Texas town of Rockdale. U.S. District Judge Sam Sparks approved the settlement this week between Alcoa, TXU and the U.S. Department of Justice. A spokeswoman says TXU will start construction as soon as possible on the plant at Alcoa's aluminum smelter in Rockdale, about 60 miles northeast of Austin. The new unit will replace three old coal-fired generators. The Justice Department had joined environmental and citizen groups in challenging some aspects of the new plant. Under the settlement, Alcoa won't have to apply for a new permit that had been sought by environmentalists. But Alcoa and TXU are supposed to cut nitrogen oxide emission rates by 20 percent from a rate called for in a 2003 settlement.

For the next six weeks, TXU is free to entice other offers for the electric utility--and speculation grows by the day about other bidders. Published reports citing unnamed sources have named a veritable roundup of usual suspects who might seek to trump the record-setting $32 billion offer from Kohlberg Kravis Roberts and Company, Texas Pacific Group and four other buyers. Among those in talks to make a run at TXU were the Blackstone Group, the Carlyle Group and Hellman and Friedman. That's according to the Financial Times and the Wall Street Journal. Blackstone and Carlyle declined official comment. Hellman and Friedman and TXU did not immediately return calls.

A big win for organized labor on Capitol Hill. House Democrats rewarded labor for its help in capturing control of Congress in November by passing a bill that makes it easier for workers to unionize. The vote of 241-to-185 takes away the right of employers to demand that workers vote in secret before unions can be recognized. The bill allows a union to be certified as soon as a majority of workers at a plant sign cards authorizing it. House Majority Leader Steny Hoyer says the move ''simply establishes fairness in the workplace.'' House Minority Leader John Boehner didn't see it that way. He says the bill makes it easier for union bosses to ''intimidate'' workers to sign cards. The House vote was short of the two-thirds majority that would be needed to overturn a promised presidential veto.

There's one seat in first class that American Airlines is opening to coach passengers--the lavatory. Beginning today, coach passengers can now use the front lavatory on American once again after the airline restricted its use to first-class fliers. The change applies to domestic flights and to international flights leaving the U.S. Under a rule added following 9-11, only first-class passengers could use that section's lavatory on flights en route to the United States. American decided to apply the rule to all flights. A spokesman says American was the only carrier with such a rule on all flights, so it opted to change the policy. Under Transportation Security Administration rules, passengers flying into the United States still have to use lavatories in their respective cabins.

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