AUTOMOTIVE

GM, FORD, HONDA REPORT LARGE DROPS IN AMERICAN SALES

General Motors, Ford, and Honda said American sales last month fell more than 11% from May 2004, the second-strongest month for sales last year. Toyota’s sales declined 0.5% while Nissan’s sales rose.

Ford, the second-biggest American automaker, also announced it would trim North American production 2.3% in the third quarter. GM, the biggest carmaker in the world, said it will try to boost sales by offering its employee-discount program to all customers through July 5.

“Ever seen erosion when water runs down the hill and you can’t stop it? It’s going to be more of the same with the domestics continuing to lose ground and the Asians continuing to gain ground,” said Frank Ursomarso, a Wilmington, Del., dealer.

GM said its domestic sales of cars and trucks fell 12% to 393,197 in May from the same month last year. Sales of Ford cars and light and heavy-duty trucks fell 11% to 283,994, the Dearborn, Mich.-based company said in a statement.

– Bloomberg News

GOVERNMENT INVESTIGATING ENGINE STALLING IN TOYOTA PRIUS

WASHINGTON – The Toyota Prius, the gas-electric hybrid sedan that has generated waiting lists of environmentally conscious consumers, is the subject of a government investigation into reports that the engine can stall without warning.

The National Highway Traffic Safety Administration said yesterday its preliminary investigation will involve about 75,000 of the passenger cars from the 2004-2005 model years.

Toyota Motor Sales USA said in a statement it was “an early-stage inquiry to determine if further analysis is warranted, not a recall.”

NHTSA said it has received 33 complaints alleging engine stalling. The majority involved reports of the engine stalling at speeds of 35 mph and 65 mph.

– Associated Press

BANKING

CITIGROUP MAY BE EXCLUDED FROM $5 BILLION CHINA IPO

Citigroup, the world’s biggest bank, may be excluded from this year’s largest initial public offering, a $5 billion sale for China Construction Bank, sources involved in the deal said. Construction Bank didn’t invite Citigroup to meetings with bankers from Morgan Stanley and China International Capital over the past two weeks, the sources said. The three firms were hired last year to prepare the bank for an IPO. Citigroup was in talks to buy a stake in the no. 3 Chinese lender. Those talks have stalled, they said. Underwriters of Beijing-based Construction Bank’s IPO probably will be paid about $150 million in fees, which equals 3% of the transaction’s value. The sale also brings bragging rights because the IPO is the first overseas share sale for one of the four largest state-owned lenders in the world’s fastest-growing major economy.

“It would be a slap in the face if they lose out,” said Sam Ho at KDB Asia.

– Bloomberg News

MARKETS

CRUDE OIL RISES MOST IN 6 MONTHS ON CONCERN OVER FUEL SUPPLIES

Crude oil had the biggest gain in almost six months, topping $54 a barrel in New York, as refinery malfunctions raised concern that refiners won’t produce enough gasoline to meet peak demand this summer.

American refineries have increased operations to about 95% of capacity as they struggle to meet growing demand. Royal Dutch/Shell Group shut two units at its Deer Park, Texas, refinery on May 30. Analysts were divided on whether a report today will show that oil supplies rose or fell last week after an unexpected supply decline the week ended May 20.

– Bloomberg News

EURO FALLS TO 8-MONTH LOW AS EUROPEAN MANUFACTURING CONTRACTS

The euro fell to an eight-month low below $1.22 after manufacturing in the region contracted and the European Central Bank and European Commission cut their economic growth forecasts.

“There’s very little reason to be buying the euro at the moment,” said Paul Robson, a currency strategist at Royal Bank of Scotland. “Growth remains very sluggish in the euro zone, and that’s not going to change anytime soon.”

– Bloomberg News

ECONOMY

FACTORY GROWTH SLOWS FOR A SIXTH MONTH

U.S. manufacturing expanded in May at the slowest pace since June 2003 and cost pressures eased, boosting prospects Federal Reserve policy makers may soon stop raising interest rates.

The Institute for Supply Management said yesterday its factory index fell to 51.4 in May, the sixth straight decline, from 53.3. Orders, production and employment slowed last month. Readings higher than 50 indicate growth.

– Bloomberg News