Business news in brief

QUOTE OF THE DAY

“We knew that weather dramatically impacted growth in the first quarter, and we fully expect a bounce back in the second quarter.”

Dan Greenhaus, BTIG chief strategist

Article, 1D

30-year mortgage rate dips to 4.12%

WASHINGTON -- Average U.S. rates on fixed mortgages fell this week for a fifth-straight week. The spring home-buying season has started slowly, but it may be aided by the low rates.

Mortgage buyer Freddie Mac said Thursday that the average rate for a 30-year loan edged down to 4.12 percent from 4.14 percent last week. The average for the 15-year mortgage declined to 3.21 percent from 3.25 percent.

Warmer weather has yet to boost home-buying as it normally does. Rising prices and higher interest rates beginning in mid-2013 have made homes less affordable for would-be buyers. At the same time, a limited supply of homes is available to buy.

Mortgage rates still are nearly a full percentage point above record lows reached about a year ago.

To calculate average mortgage rates, Freddie Mac, the Federal Home Loan Mortgage Corp., surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged from a week earlier at 0.6 points. The fee for a 15-year loan also held steady, at 0.5 points.

-- The Associated Press

Southwest fined: $59 flights illusory

DALLAS -- Southwest Airlines is being fined $200,000 for advertising a fare sale too good to be true.

The U.S. Department of Transportation said Thursday that in TV ads run in October, the airline promised flights from Atlanta to New York, Chicago and Los Angeles for just $59 -- but didn't make any seats available at that price.

The government said Southwest's ads were deceptive and violated rules on advertising of airline fares. Southwest was also required to pay an extra $100,000 that had been suspended after a similar offense last year.

The Transportation Department said airlines have long known that as part of rules governing fare advertising, they must have a "reasonable number" of seats available at the advertised price. In October, Southwest ran ads on eight Atlanta stations in which the narrator told viewers, "Discover amazing low sale fares" of $59 "to places like New York, Los Angeles and Chicago."

The department said it checked and found that Southwest had no seats for $59 to those three cities on any of the travel dates listed in the ad.

Southwest said the three cities were never intended to be part of the Atlanta fare sale.

"As soon as we became aware of our mistake, we pulled all incorrect advertisements off the air," spokesman Brad Hawkins said.

The airline said it honored the $59 fare for customers who asked for that price.

-- The Associated Press

Police seize fake high-end wines in Italy

ROME -- Italian police have seized about 30,000 bottles of wine falsely labeled as prized Brunello di Montalcino, Chianti Classico and other premium wines.

Siena Carabinieri Col. Marco Grandini said investigators were alerted to the fraud by consumers who recognized the impostors as "normal table wine."

With a bottle of Brunello running some $40, Grandini estimated the fraud in the hundreds of thousands of dollars.

Authorities seized the counterfeit wines from restaurants, wine bars and grocery stores in central Italy. Authorities say some of the falsely labeled wines may have been bound for international markets, including the United States.

The head of the Brunello di Montalcino Consortium, Fabrizio Bindocci, said Thursday that the wines did not originate from his territory and that producers were the victims of fraud.

-- The Associated Press

Medtronic settles suit for $9.9 million

FRIDLEY, Minn. -- Medical device maker Medtronic Inc. will pay the U.S. Department of Justice $9.9 million to settle a lawsuit that accused the company of giving doctors gifts in return for using its defibrillators and pacemakers.

Medtronic has not admitted any wrongdoing as a result of the settlement. The lawsuit unsealed this week accused Medtronic of funneling "millions of dollars in unrestricted grant money to physicians" to get them to encourage the use of Medtronic defibrillators and pacemakers.

"Improper financial incentives have the potential to compromise physician medical judgment," said Assistant Attorney General Stuart F. Delery of the Justice Department's Civil Division. "This case demonstrates the Department of Justice's commitment to pursue medical device manufacturers that use improper financial relationships to influence physician decision-making."

Medtronic said the settlement brings to a close a long-running review dating back to 2001 and that it has taken steps to prevent inappropriate sales practices, including voluntarily disclosing payments to health care professionals on its website.

The settlement is the result of a whistle-blower complaint filed by a former Medtronic employee, Adolfo Schroeder, who will receive about $1.7 million for his role in bringing the matter to light, the Department of Justice said.

-- The Associated Press

Abercrombie's loss is less than forecast

Abercrombie & Fitch Co., the clothing retailer, posted a first-quarter loss that was narrower than analysts estimated.

Excluding some items, the loss in the quarter ended May 3 was 17 cents a share, the New Albany, Ohio-based company said in a statement Thursday. The average of 34 analysts' estimates compiled by Bloomberg was for a loss of 19 cents.

Chief Executive Officer Mike Jeffries has been working to revive Abercrombie's appeal among teenage shoppers who've strayed from the chain in favor of fast-fashion purveyors such as Forever 21 and Hennes & Mauritz AB. First-quarter sales fell 1.9 percent to $822.4 million, topping analysts' $796.3 million average estimate.

"They made some substantial improvements to their fashion," said Stephanie Wissink, a Minneapolis-based analyst at Piper Jaffray Cos.

Abercrombie shares rose $2.02, or 5.8 percent to close Thursday at $37.14.

First-quarter sales online and at stores open at least a year decreased 4 percent, slower than the 17 percent drop a year earlier.

The net loss for the quarter widened to $23.7 million, or 32 cents a share, from $7.2 million, or 9 cents, a year earlier, the company said.

-- Bloomberg News

Business on 05/30/2014

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