ECONOMY

HOME SALES NEAR RECORD; GOODS ORDERS RISE

American home sales held near a record in May and factories received more orders for durable goods, evidence that low interest rates are giving the economy a boost, economists said reports this week may show. Sales of new and existing homes probably totaled 8.485 million at an annual rate last month, just shy of the record 8.496 million sold in April, government and private reports will show, according to the median estimate of economists surveyed by Bloomberg News.

Orders for goods that last at least three years, such as autos and furniture, probably rose 1.5%, a second consecutive monthly increase, the survey showed. Reports last month showing inflation didn’t accelerate caused yields of government securities to drop, pushing down mortgage rates and other borrowing costs. The drop in yields also contributed to a decline in the index of leading economic indicators in May, a separate report this week is likely to show. For that reason, a lower index reading probably doesn’t signal an economic softening is imminent, economists said.

– Bloomberg News

PRECIOUS METALS

GOLD MAY RISE ON SPECULATION CENTRAL BANKS WILL CUT SALES

Gold may rise for a fifth straight week, the longest rally this year, on speculation European central banks will begin to slow bullion sales just as investor demand is growing, a Bloomberg survey showed.

Thirty-nine, or 78%, of 50 traders and investors surveyed from Sydney to New York on June 16 and June 17 forecast a rise in gold, which gained $10.70 to $440 an ounce last week in New York. It was the most bullish consensus since the survey began April 2004. Nine respondents forecast a decline and two expect little change.

European central banks, which agreed to limit gold sales to 500 tons a year through September, shed 346 tons as of April 1. If that rate was maintained, central banks will reach their sales target this week.

“They cannot keep selling at this rate,” said Ian MacDonald, managing director of precious metals trading in New York for International Assets Holding. “We should really be asking where the gold is going to come from to meet growing investor demand.”

– Bloomberg News

MERGERS AND ACQUISITIONS

WALTER INDUSTRIES BUYING HYDRANT MAKER

TAMPA, Fla. – Homebuilding and industrial conglomerate Walter Industries will acquire leading fire hydrant manufacturer Mueller Water Products Inc. for $860 million cash, the companies said yesterday.

The acquisition, in which Walter Industries also will assume $1.05 billion debt, will complement the Tampa-based company’s existing pipe operations and create a major water infrastructure company, according to a joint statement.

The companies expect to complete the acquisition in the third quarter of 2005.

Privately held Mueller Water, based in Decatur, Ill., makes pipes, valves and other infrastructure products for water and gas.

Walter Industries has annual revenues of $1.5 billion across its five business segments – home building, home financing, industrial products and natural resources. The company has about 5,100 employees.

– Associated Press

FRANCE TELECOM DENIES TAKEOVER BID REPORT

PARIS – France Telecom has denied a British newspaper report that it was planning a $7.3 billion takeover of British rival Cable & Wireless.

“France Telecom formally denies everything that is in this article,” said spokeswoman Nilou de Castel. “It is pure fantasy.”

The Sunday Telegraph newspaper, which did not cite any sources, said France Telecom was planning the bid as part of a strategy to diversify its interests in Britain.

– Associated Press