ENERGY

CNOOC COULD ABANDON UNOCAL OFFER, SEEK OTHER U.S. OIL COMPANIES

Cnooc, China’s third-largest oil company, may abandon its effort to buy Unocal Corporation and instead seek other American oil producers such as Marathon Oil Corporation, Amerada Hess Corporation, or Murphy Oil Company, investors and analysts said. Cnooc’s $18.5 billion cash bid was passed over by Unocal’s board on Wednesday in favor of a sweetened cash-and-stock offer from Chevron Corporation worth $17.1 billion. Cnooc, 70%-owned by a state-controlled company, has until August 10 to raise its bid. That’s when shareholders vote on the Chevron deal.

Cnooc said yesterday its offer for Unocal stands.

– Bloomberg News

WALL STREET

MORGAN CHIEF MAY FACE RECRUITING PROBLEMS

The chief executive officer of Morgan Stanley, John Mack, may be stymied in his plan to lure four former executives to the world’s biggest securities firm because of their unwillingness to work for the acting president, Zoe Cruz, people familiar with the matter said. Since Mack returned to Morgan Stanley last month, after being ousted as president by then-CEO Philip Purcell in a 2001 power struggle, he has tried to persuade ex-members of the New York-based firm’s management committee, including investment banker Joseph Perella, to join him.

Mr. Perella, Terry Meguid, Vikram Pandit, and John Havens won’t return so long as Ms. Cruz remains president, said the people, who declined to be identified. The former executives turned against Ms. Cruz, 50, in March after she accepted a promotion from Mr. Purcell, the people said.

Mr. Purcell promoted Ms. Cruz during a campaign against him by a group of eight ex-Morgan Stanley senior managers. Mr. Pandit and Mr. Havens had earlier rejected Mr. Purcell’s approach. They then quit, followed by Mr. Perella, Mr. Meguid, and ex-President Stephan Newhouse.

– Bloomberg News

NYSE WILL KEEP 70-30 SPLIT IN ARCHIPELAGO MERGER

The New York Stock Exchange will keep the 70%-30% ownership split for its planned merger with Archipelago Holdings Incorporated, and the Big Board made official plans to shorten the merger’s “lock-up” period.

NYSE Chief Executive John Thain discussed those and other details of the deal at a press conference where the Big Board unveiled the registration statement for the NYSE’s acquisition of Archipelago, a Chicago operator of an electronic exchange. Mr. Thain defended the ownership split, in which NYSE members will get 70% of the merged company, NYSE Group Inc., while Archipelago shareholders get the remaining 30%.

“We’re definitely not changing it,” Mr. Thain said. He added that it would be highly unlikely that Archipelago would want to negotiate the terms to give NYSE members a higher stake, as some critics have suggested they deserve. Mr. Thain said the lock-up restrictions on when NYSE members could sell NYSE Group stock will be shortened to one to three years from an earlier planned lock-up period of three to five years. He also said that NYSE employees will be able to get restricted stock in the combined company, with the exchange reserving a $50 million stock package to split among staffers. Mr. Thain will not take part in this plan.

– Dow Jones Newswires

REAL ESTATE

FED WON’T USE MONETARY POLICY TO DEFLATE HOUSING ‘BUBBLE’

Federal Reserve policy-makers will not use monetary policy to deflate what some economists say is a “bubble” in the American housing market, the minutes of the Fed’s June 29-30 meeting said. “Given the unavoidable uncertainties associated with judgments regarding the appropriate level of and likely future movements in asset prices, a strategy of responding more directly to possible mispricing was seen as very unlikely to contribute, on balance, to the achievement of the committee’s goals,” the minutes that were released yesterday in Washington read.

– Bloomberg News

TRADE

CAFTA WOULD COST TAXPAYERS $50M A YEAR, BUDGET OFFICE SAYS

WASHINGTON – The Bush administration’s free-trade agreement with Central America would cost taxpayers $50 million a year in loan forfeitures by sugar farmers, the Congressional Budget Office says.

An administration official said yesterday that the analysis was unrealistic and that there would be virtually no cost under sugar provisions in the deal. The CBO released its estimate as House leaders planned for a vote next week on the Central America Free Trade Agreement. It would remove or lower trade barriers with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic.

– Associated Press

LABOR

UNEMPLOYMENT CLAIMS TUMBLE

WASHINGTON – Unemployment claims tumbled in the sharpest drop in more than two years last week as the automobile industry laid off fewer workers, while a gauge of the economy showed strength in June. New claims American workers made for jobless benefits slid by 34,000 to a seasonally adjusted 303,000 the week ending July 16, the Labor Department said yesterday.

– Dow Jones Newswires