ECONOMY

JOBLESS CLAIMS FELL SHARPLY LAST WEEK

The number of new applications filed last week for unemployment benefits fell sharply, offering a hopeful sign that the recovery in the job market may be gaining some steam. The Labor Department reported yesterday that the number of new people signing up for unemployment insurance benefits dropped by a seasonally adjusted 37,000 to 335,000, the lowest level since the beginning of September. In the prior three weeks, claims had gone up. The latest snapshot of the layoffs climate was better than economists were expecting. They were expecting claims to decline to around 355,000. Claims had risen recently in part because of the impact of hurricanes that pummeled Florida and elsewhere, wreaking damage, and disrupting commerce. The more stable, four-week moving average of claims, which smooths out weekto-week fluctuations, rose by 4,250 last week to 348,500. That compares with 394,250 a year ago – showing improvement has been seen over the past year. The number of people continuing to draw unemployment benefits declined by 1,000 to 2.86 million for the week ending September 25, the most recent period for which that information is available. A year ago, the number stood at 3.57 million. Many economists are forecasting a net gain of around 150,000 jobs for September, which would mark a bit of an improvement over the 144,000 jobs added in August. The nation’s unemployment rate is expected to hold steady at 5.4%. The government releases the employment report for September on Friday. The jobs report, the last to be issued before the November 2 elections, will be closely watched by the presidential campaigns, economists, and Fed Chairman Alan Greenspan and his Fed colleagues.

– Associated Press

PHARMACEUTICALS

PFIZER DEFENDS CELEBREX AGAINST CHARGE OF HEART RISK

Pfizer Inc., the world’s biggest drug maker, defended its painkiller Celebrex after a researcher’s suggestion the medication may be linked to heart risks sent the stock down as much as 8.3%.

Celebrex is in the same class of drugs as Merck & Co.’s Vioxx, which the no. 2 American drug maker withdrew from the market last week. A three-year company study showed patients who took Vioxx for more than 18 months faced twice the risk of a heart attack compared with those taking a placebo. The stock lost $26.8 billion in market value September 30 after the announcement.

“There’s an accumulation of cardiovascular data that proves that we’re different,” said Joseph Feczko, president of worldwide development for New York-based Pfizer, in a telephone interview.

Celebrex accounted for $1.5 billion, or 6.1%, of first-half revenue and is Pfizer’s fifth-largest seller. The company’s Bextra painkiller is in the same category of drugs.

Studies have suggested medications such as Celebrex and Vioxx that treat pain by inhibiting an enzyme known as Cox-2 may also cause heart problems, wrote Garret A. FitzGerald, the chairman of the department of pharmacology at the University of Pennsylvania in Philadelphia, in a letter in the October 21 New England Journal of Medicine. There is evidence that the cardiovascular risks may stem from a mechanism common to all of them, Mr. FitzGerald said in his letter.

– Bloomberg News

MARKETS

OIL PRICES REACH $53 AS GULF OF MEXICO OUTPUT LAGS

Oil prices reached $53 a barrel on Thursday, and have advanced more than 20 percent in a month, in large part because output in the Gulf of Mexico was hobbled by a hurricane and has not been restored as quickly as expected.

The possibility of violence and a labor strike in oil-rich Nigeria has also kept oil traders on edge, and underlying it all is global unease about the fact that the world’s available supply cushion is too thin to make up for any large, prolonged loss of output.

Light crude for November delivery climbed 65 cents to settle at a new high of $52.67 per barrel yesterday on the New York Mercantile Exchange, retreating from a high of $53 set earlier in the day. In London, Brent crude for November delivery soared 91 cents to close at $48.90 per barrel.

While oil prices are 73% higher than a year ago, when adjusted for inflation, they remain about $27 below the peak reached in 1981.

Oil and gas producers and pipeline companies operating in the Gulf of Mexico say it could be a few months before damage assessments of platforms and other infrastructure are complete, enabling operations to resume fully.

In some cases, damage to pipelines makes it impossible for producers to begin pumping fuel. In others, pipeline operators say oil and gas producers are not maximizing the transport capacity available to them.

BP PLC says it has four production facilities in the Gulf of Mexico, producing some 200,000 barrels of oil equivalent per day, that are ready to pump fuel but must wait for pipeline repairs and inspections to be completed.

El Paso Corp. says repairs continue on two pipeline systems it owns, and that full capacity has not been restored, but that producers are not transporting as much fuel as is currently possible anyway. Its Tennessee Gas pipeline is carrying 700 million cubic feet of natural gas per day, down from 1 billion cubic feet a day before Hurricane Ivan, while its Southern Natural Gas pipeline is carrying 370 million cubic feet of natural gas per day, down from 500 million cubic feet before the storm.

– Associated Press

IN THE COURTS

KODAK, SUN MICROSYSTEMS SETTLE A HIGH-STAKES LAWSUIT OVER JAVA

Eastman Kodak Co., poised to ask for more than $1 billion in damages from Sun Microsystems Inc., has reached an out-of-court settlement in a long-running patent dispute over the Silicon Valley company’s Java programming language.

A federal jury in Kodak’s hometown decided last Friday, after a three-week trial, that Java infringes on patents Kodak acquired when it bought Wang Laboratories Inc.’s imaging software business for $260 million in 1997.

The night before the trial’s damages phase, which was to begin yesterday, the companies ended their two-year-old battle, according to court papers filed in U.S. District Court.

Neither Kodak nor Sun Microsystems would comment and it was unclear whether the terms of the sealed settlement would be released.

“All that’s on the record is an order dismissing the case because the parties have a settlement agreement,” said attorney Paul Yesawich, who represented Kodak.

Kodak had been prepared to request $1.06 billion in lump-sum royalties _ equal to half Sun Microsystems’ operating profit from sales of computer servers and storage equipment from January 1998 to June 2001.

Sun Microsystems, based in Santa Clara, Calif., made its name selling servers that tie desktop computers together and host Web sites. Java, which it developed and first introduced in 1995, allows software to run on a variety of computing platforms, regardless of the operating system and including cell phones and other portable devices.

Sun Microsystems not only denied that any portions of Java infringe on Kodak’s patents but argued that the photography company’s patents were invalid.

– Associated Press

KPMG TO PAY $115 MILLION TO SETTLE LERNOUT LAWSUIT

KPMG International’s American and Belgian subsidiaries agreed to pay $115 million to settle a class action lawsuit by shareholders of Lernout & Hauspie Speech Products NV.

KPMG, the world’s fourth-biggest accounting firm, denied any wrongdoing or liability, in an e-mailed statement. KPMG said it was settling the litigation for “practical business reasons.”

Accounting irregularities helped trigger a decline in Lernout’s market value from $10.5 billion to $2 billion in 2000 and forced it into bankruptcy, shareholder attorney Jeffrey Block said. Lernout & Hauspie, whose software enables computers to understand the human voice, was founded by Jo Lernout and Pol Hauspie in 1987.

“Lernout & Hauspie used almost every accounting trick in the book to scam investors, which led to the company’s demise,” Mr. Block said.

Investors claimed the company and its top executives used deceptive accounting practices to artificially inflate Lernout & Hauspie’s reported revenues from April 1998 through November 2000, attorneys for the shareholders said in a press release. Investors’ claims against the officers and directors of Lernout and Dexia Bank Belgium are pending.

– Bloomberg News