TRADE DISPUTE

E.U. STRIKES BACK AT AMERICA WITH COMPLAINT TO WTO OVER BOEING

BRUSSELS, Belgium – Digging in for a new trade war with Washington, the European Union filed a counter complaint yesterday at the World Trade Organization claiming that Boeing receives illegal American government aid.

The European trade commissioner, Peter Mandelson, said he had little choice but to retaliate because America decided to close the door on reaching an amicable solution to the standoff between Boeing and France-based Airbus.

“The path of negotiations has been closed,” Mr. Mandelson said, laying the blame for the new trade war at the feet of the Americans after the Bush administration decided late Monday to abandon negotiations that began in January and take the E.U. to a legal panel at the WTO.

The WTO confirmed that it had received complaints from America and the E.U. Mr. Mandelson said the WTO action could only rupture fragile E.U.-American ties. “America’s decision will, I fear, spark the biggest, most difficult, and costly legal dispute in the WTO’s history,” he said, adding that it would be “manifestly expensive and [involve] quite destructive litigation.”

Mr. Mandelson said the American move was ironic because the WTO action now opens the door for E.U. governments to feed Airbus the aid it needs to launch the new model. “If the Americans had opted for a deal I offered on the table, and accepted a negotiated settlement, they would have immediately seen a sharp reduction” in launch investment, Mr. Mandelson said.

– Associated Press

FOREIGN EXCHANGE

EURO SKIDS TO BIGGEST LOSS SINCE JANUARY

The euro fell the most since January against the dollar yesterday on concern France’s rejection of a European Union constitution will slow the region’s economic integration. Polls show Dutch voters will oppose the treaty tomorrow.

“There’s a belief that the European project is under threat,” said Mark Austin, head of global currency research in London at HSBC Holdings. “There’s no obvious reason why the euro will stop here given that sentiment is so negative.”

The euro extended its slide after French President Chirac replaced Jean-Pierre Raffarin as prime minister with his former chief of staff, Dominique de Villepin. The euro dropped 1.38% to $1.2303 at 5 p.m. in New York yesterday from $1.2475 Monday, and earlier touched $1.2297, the lowest since October 13. It’s the biggest one-day decline since January 4.

– Bloomberg News

ECONOMY

ECONOMIC CONFIDENCE RISES UNEXPECTEDLY; MANUFACTURING SLOWS

American consumer confidence unexpectedly rebounded this month and business in the Chicago area expanded at a slower pace, evidence of uneven growth in the economy, private reports showed.

The Conference Board’s index of consumer sentiment increased to 102.2 during the month from 97.5 in April, the New York-based research group said yesterday. An index of Chicago-area business, a center of manufacturing, fell to an almost two-year low of 54.1, the National Association of Purchasing Management-Chicago said. Readings above 50 indicate growth.

The reports paint a picture of an economy led by consumer spending, while manufacturers are slowing production as companies work off excess inventories. Corporate leaders, though less optimistic than they were last quarter, expect the economy to grow at an above-average 3.4% this year, a separate survey of chief executives found. “Even with the weakness in the Chicago number, it’s still high enough to be consistent with solid growth,” said James O’Sullivan, an economist at UBS Securities.

– Bloomberg News

BANKING

CITIGROUP AGREES TO PAY $208 MILLION TO SETTLE SEC CASE

Citigroup agreed yesterday to pay $208 million to settle regulators’ claims it pocketed fees that should have been passed on to its mutual funds.

The settlement with the U.S. Securities and Exchange Commission wraps up part of a probe that Citigroup disclosed in 2003. Citigroup Global Markets and Smith Barney Fund Management were accused of misrepresenting and omitting facts when recommending to the mutual funds’ boards that they change to a transfer agent that was a Citigroup affiliate, the SEC said.

Citigroup made $100 million in profit at the expense of its mutual funds’ shareholders during a five-year period, the agency said. The company didn’t admit or deny wrongdoing.

– Bloomberg News

MERGERS AND ACQUISITIONS

AMERITRADE IN TALKS TO BUY TD WATERHOUSE

OMAHA, Neb. – Ameritrade Holding and TD Bank Financial Group confirmed yesterday that they are in discussions regarding a potential deal involving the online brokerage TD Waterhouse USA. The companies said they will make no further comment until an agreement is reached. Some financial analysts speculate that Ameritrade wants to acquire TD Waterhouse as the industry tilts toward consolidation in the face of declining trade volume and commissions.

– Associated Press