FOREIGN EXCHANGE

CHINA TAKES STEP TO ALLOW REVALUATION OF YUAN

China expanded its foreign-currency trading Wednesday, part of government efforts to prepare for a more flexible exchange rate and make Asia’s second-largest economy more open to the global financial system.

Citigroup, HSBC, and five other foreign banks started dealing in four new currencies from 7 a.m., local time, including the British pound and Australian dollar through the China Foreign Exchange Trade System in Shanghai. It’s the first time foreign currencies have been traded against each other on the exchange.

The expansion of trading comes a day after the American government stopped short of accusing China of manipulating the value of its currency, the yuan. The expansion of Shanghai’s foreign exchange market helps prepare the conditions for China to widen the yuan’s trading band, economists said.

“This is an important step forward in the process of going for a more flexible exchange-rate system,” said Frank Gong, chief China economist at JPMorgan Chase & Company in Hong Kong.

– Bloomberg News

ECONOMY

WHOLESALE PRICES RISE, PRODUCTION FALLS

American wholesale prices rose more than forecast in April, keeping pressure on the Federal Reserve to raise interest rates even as industrial production slows.

Higher costs for gasoline and autos led the 0.6% increase in the measure of prices paid to factories, farmers, and other producers, the Labor Department said yesterday in Washington. The Fed said yesterday that industrial production unexpectedly fell 0.2% in April as warmer weather slowed utility output and automakers turned out fewer vehicles to reduce inventories.

Figures showing increased production of capital equipment suggest business investment will contribute to economic growth after a first-quarter lull, economists said. Manufacturing outside the auto industry rose 0.4% last month. Home-building jumped 11% in April, according to a separate government report.

– Bloomberg News

IN THE COURTS

CEO OF GE SUBSIDIARY ACCUSES COMPANY OF DISCRIMINATION

The chief executive of a General Electric subsidiary filed a federal lawsuit Tuesday accusing the conglomerate of discriminating against him and other black managers and employees in pay, promotions, and perks.

The president and CEO of GE Aviation Material, Marc Thomas, who is a former White House adviser, accused the parent company of refusing to promote or reward him despite exemplary sales and profits in the business he runs, and instead trying to push him out when he complained of discrimination. GE denied the allegations.

His experience at the Fairfield, Conn.-based industrial, finance, and media company echoes that of many other black managers whose careers have been stymied by cronyism and outdated policies, Mr. Thomas’s lawsuit alleges.

In the past year, GE has received awards for development of professional women and black leaders and was recognized by Black Enterprise Magazine for having four of its top 75 African-American leaders in business yesterday, the company said.

– Associated Press

AUTOMOTIVE

TOYOTA TO BUILD HYBRID CAMRY SEDAN AT KENTUCKY PLANT

Toyota Motor Corporation, the world’s largest seller of gasoline-electric cars, plans to build hybrid Camry sedans at a Kentucky plant starting in late 2006, expanding its production of the fuel-efficient vehicles to North America.

The Georgetown, Ky., factory will spend $10 million on improvements and training to produce 48,000 hybrid Camrys a year, Toyota said in a statement yesterday. The plant can now build 500,000 vehicles annually and makes gas-powered Camry, Solara, and Avalon cars. The Camry is the best-selling car in America.

Toyota, the world’s second-biggest automaker by sales, is building on American demand for its Prius hybrid car, which more than doubled sales to 34,225 through April and is on a pace to exceed 100,000 this year. Demand for gas-electric vehicles rose as domestic gasoline prices reached a record $2.28 a gallon in April.

– Bloomberg News

RETAIL

J.C. PENNEY FIRST-QUARTER PROFIT QUADRUPLES TO $172 MILLION

J.C. Penney, the second-largest American department-store company, said first quarter profit more than quadrupled, beating analysts’ estimates, on higher sales of private-brand apparel and furniture. The company raised its annual profit forecast for the second time this month.

Net income increased to $172 million, or 63 cents a share, from $41 million, or 13 cents, a year ago when the retailer had a charge for selling its drugstore chain. Sales in the quarter ended April 30 climbed 3.9% to $4.19 billion, the Plano, Texas based company said yesterday in a statement.

“They’re in a sweet spot with good merchandising,” said Dave Keuler of Milwaukee-based Mason Street Advisors, which manages about $70 billion in assets including J.C. Penney shares. “They’re the Target of the department store industry, offering fashionable merchandise at modest prices.”

– Bloomberg News

NORDSTROM’S FIRST-QUARTER PROFIT JUMPS 52%; FORECAST RAISED

Nordstrom, an upscale department store chain, said first-quarter profit jumped 52% on increased demand for designer clothing. The company boosted the profit forecast for the year and its quarterly dividend.

Net income beat most analysts’ estimates, climbing to $104.5 million, or 75 cents a share, from $68.7 million, or 48 cents, a year earlier. Sales in the quarter ended April 30 rose 7.7% to $1.65 billion, Seattle-based Nordstrom said yesterday.

President Blake Nordstrom, 44, has installed an inventory tracking system that helps the company keep its most popular merchandise in stock and limits the need for markdowns. Profit has climbed for 10 quarters in a row at Nordstrom, spurred by a boom in high-end retailing that began in 2003.

– Bloomberg News