Thursday PM February 7th, 2008

U.S. Chemical Safety Board probes latest death at BP Texas City refinery...Senate Democrats and Republicans end stalemate over economic stimulus bill...National Association of Realtors says pending home sales fell in December to second-lowest reading on record...

Federal investigators are focusing on whether an explosion inside equipment at BP's Texas City refinery caused a worker's death last month. But officials with the U.S. Chemical Safety Board declined to speculate on whether the plant's safety might have contributed to the accident. The plant's "safety culture'' was heavily criticized after the March 2005 explosion that killed 15 people and injured 170. William Joseph Gracia died January 14th after a metal lid struck him in the head as a water filtration unit was being restarted. He was the third worker to be killed at the refinery since the deadly blast nearly three years ago.

Rebate checks for most taxpayers may be a step closer to getting into the mail. A majority of senators have voted for an economic rescue bill that adds $300 rebate checks for 20 million older people living on social security benefits to the House-passed economic aid package, but stopped short of tacking on other extras Democrats were pushing for. Democrats earlier agreed to drop their push to add jobless benefits, heating aid for the poor, and more business subsidies. The package would lead to tax rebates of up to $600 for individuals and up to $1,200 for couples for most taxpayers. The bill is meant to jump-start the economy with extra cash in consumer pockets and business incentives. House Speaker Nancy Pelosi had been urging Democrats in the Senate to stop the infighting and pass the bill, saying there is "no reason for any more delay.''

New industry data show pending U.S. home sales fell 1.5 percent in December to the second-lowest reading on record, yet another indication that the housing market is worsening. The National Association of Realtors says pending sales for existing homes fell to 85.9 from 87.2 in November. The reading was just short of the record low of 85.5 hit in August, at the peak of the worldwide credit squeeze. Analysts had predicted the index would rise to 88. Typically there is a one- to two-month lag between when a buyer signs a home-sale contract and the closing of the deal. Sales completed last month and into this month should be reflected in the December reading. The group is also lowering its forecast for U.S. existing home sales this year. It now projects sales will fall to 5.4 million, down from 5.7 million in 2007.

The latest figures on mortgage interest rates show they've remained largely flat over the past week. Freddie Mac says the average for 30-year, fixed-rate mortgages is 5.67 percent. That's compared to 5.68 percent last week. A year earlier, that average stood at 6.28 percent. The average for 15-year fixed is 5.15 percent, down from 5.17 percent last week. For one-year treasury-indexed adjustable rate mortgages, Freddie Mac says the average is 5.03 percent, down from 5.05 percent last week.

Despite hopes that holiday season gift-card redemptions might provide a much-needed lift, retailers report that January was a tough month. Major chains delivered generally downbeat results. It was the weakest January increase ever tallied by one trade group. Disappointments cover key sectors such as discounters like Wal-Mart, teen retailers including Pacific Sunwear of California, and mall-based apparel chain Limited Brands. Even affluent shoppers are pulling back, hurting stores like Nordstrom. The UBS-International Council of Shopping Centers preliminary sales tally of 43 retailers rose just 0.5 percent in January, well below the original 1.5 percent forecast. The group's chief economist says it is the weakest gain for January since the group began keeping track in 1970.

The European Central Bank today held its key interest rate steady at four percent. At the same time, the Bank of England cut its benchmark rate by a quarter of a percentage point to 5.25 percent. Both facing dueling concerns about inflation and the strength of their economies. The Bank of England lowered its key interest rate for the second time in three months, while the ECB left its benchmark rate at the same level it has been since June 2007. ECB President Jean-Claude Trichet said ''there was no call for increase of rates or decrease of rates.'' But he added that there was a thorough discussion. There is growing sentiment among analysts that the bank may have to cut rates later this year despite rising inflation in the 15-nation Euro zone--a bloc of more than 318 million people that accounts for more than 15 percent of the world's gross domestic product. However Trichet said it was "naive'' to claim to know in advance what the ECB would do. Despite his assertion, he appeared to hold the door open at least a crack for an eventual rate cut, noting that risks to growth in the Euro zone were on the rise.

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