U.S. Blue-Chips Retreat

Blue-chip stocks came down to earth Wednesday as profit-taking tamed the market, one day after the Dow rallied on news the Federal Reserve decided to hold the line on interest rates. The Dow Jones industrial average closed down 12.77 points at 7,290.69 after soaring 75 points Tuesday. But in the broader market, advancing issues led declines 1,420 to 1,108 on heavy volume of 537 million shares on the New York Stock Exchange. Stocks surged initially, but then fell as much as 50 points under pressure from a weak bond market. Technology and small-name stocks defied the market's sell-off, boosting the Nasdaq Composite index by 9.87 points to 1,373.75.

U.S. Trade Gap Narrows in March

The U.S. government said Wednesday that robust foreign demand for American-made aircraft and other goods narrowed the U.S. trade deficit sharply in March as it gave the economy added impetus. The Commerce Department said the shortfall between exports and imports tumbled 19 percent from February to $8.51 billion, the smallest gap since $7.97 billion last November. The closely watched bilateral deficit with China was the lowest in nearly a year. Analysts said the better-than-expected March performance meant the U.S. economy was churning forward at an even brisker first-quarter pace than previously thought, straining to meet orders.

Europe Objects to Boeing Merger

The European Commission Wednesday formally notified Boeing Co. that it objects to the proposed acquisition by the aerospace giant of its rival McDonnell Douglas Corp. Boeing said in a statement it remains confident that the planned merger would be completed this summer despite the objections. In a statement, Boeing Chairman and Chief Executive Officer Phil Condit said the company would continue working with the EC to respond to its concerns. But he reiterated Boeing's position that the U.S. Federal Trade Commission should have the main authority over whether the $14 billion all-stock transaction should be allowed to go through.

Household Buys Transamerica Unit

Household International Inc. says it has a definitive agreement to purchase Transamerica Corp.'s consumer finance business for $1.1 billion in cash. With the agreement, Household said it will make significant progress toward expanding the HFC consumer finance branch network, the oldest in the country. The network provides consumer lending and credit card products in the United States, Canada and Britain. Household is one of the nation's largest issuers of private-label and general purpose credit cards, such as the GM Card and the AFL-CIO's Union Privilege card. The deal will boost Household's portfolio of core real estate-secured receivables by $3 billion, or almost 38 percent.

LG&E Buys KU Energy Corp.

LG&E Energy said Wednesday it's going to acquire KU Energy, another Kentucky utility, in a deal worth about $1.54 billion. The new holding company, LG&E Energy, would serve 1.1 million customers in Kentucky, Virginia and internationally. Its combined revenues in 1996 would have been more than $4.3 billion. The companies say they do not expect to seek any base rate increases over the next five years. They also said efficiencies created by the merger should reduce customers' bills nearly 2 percent for each of those five years.

Marvel, Toy Biz Agree on Plan

Bondholders of Marvel Holdings Inc. said Wednesday they reached an agreement with Toy Biz Inc. on a reorganization plan that would give Toy Biz 40 percent of the restructured company. The agreement comes one day after Toy Biz withdrew from a previous reorganization plan and would end a long squabble over control of the famous comic book maker. Under the new plan, Marvel and Toy Biz would become separate subsidiaries of a new holding company. Toy Biz shareholders would receive 40 percent of the new holding company's shares, and Marvel shareholders would receive the remaining 60 percent.

Texaco May Seek French Partner

Analysts say Texaco Inc. may seek a French partner to shore up its struggling European refining and marketing business, and the betting is that it will be the big French oil company, Total SA. Texaco owns one refinery in Europe, a 180,000 barrel-a-day plant in Britain, and has a 35 percent stake in another. Its petroleum product sales last year were 461,000 barrels a day. Analysts estimate Texaco has 7 percent of the British gasoline market and a somewhat smaller share in Europe. Texaco Chief Executive Peter Bijur told industry analysts in February that the company would complete a study in 90 days on its European options, and that time is now up.

US Begins Elk Hills Sale

The Energy Department Wednesday began the auction of its stake in California's giant Elk Hills oil field, saying it wanted offers by Oct. 1. The sale is expected to be one of the largest U.S. government divestures since the privatization of Conrail, which was sold for $1.6 billion 10 years ago. The Elk Hills Naval Petroleum Reserve near Bakersfield, Calif., produces almost 60,000 barrels per day of oil and more than 350 million cubic feet per day of natural gas and is one of the largest fields in the lower 48 states. It was set aside as part of the government's petroleum reserves in the early 1900s to ensure a long-term source of oil for the Navy.

Coffee Prices Surge Again

Coffee prices surged again Wednesday after coffee-exporting countries agreed to extend an agreement to limit their exports for another 12 months despite recent soaring world prices. At the Coffee Sugar and Cocoa Exchange in New York, coffee for July delivery closed 12.85 cents a pound higher 253.10 cents. The market rose early on weather forecasts for cold weather moving into Brazil later this week. Copper prices also continued to rise. Copper for July delivery at COMEX in New York ended 0.35 cent a pound higher at 118.20 cents, touching a new life-of-contract high during the day and remaining at the highest levels seen in a year.

Dollar Up Yen, Mark

The dollar rose against most currencies Wednesday after the Commerce Department reported that the U.S. trade deficit shrank a surprisingly large 19.3 percent in March, dealers said. Also, U.S. Treasury Secretary Robert Rubin gave the dollar a boost in late trade by assuring markets the administration's policy for a strong dollar will remain unchanged, and that a strong dollar is "good" for the economy because it leads to lower interest rates and lower inflation. The dollar rose to 1.6943 marks from 1.6770 at Tuesday's close and to 114.35 yen from 112.63.

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