Financial News

Eastman Kodak Co. is seeking to block imports of certain camera-enabled BlackBerrys by Research in Motion.

The Rochester, N.Y.-based camera company filed a complaint this week with the U.S. International Trade Commission, alleging that the BlackBerrys in question infringe on a Kodak patent relating to a method for previewing images.

Respondents in the action include both Research in Motion’s primary business in Canada and its U.S. operation, which is based in Las Colinas. A Research in Motion spokeswoman declined to comment on the matter.

Also named in Kodak’s International Trade Commission complaint is Apple Inc., which Kodak alleges is infringing on the same patent with its iPhones. Apple officials weren’t immediately available for comment Friday.

Kodak also filed two patent-infringement lawsuits against Apple in federal district court in New York guaranteed online personal loans.

The company did not sue Research in Motion in federal court, however; instead, it's only pursuing the International Trade Commission action against it, according to a Kodak press release.

David Lanzillo, a Kokak spokesman, told the Dallas Business Journal that the company opted not to pursue a court action against Research in Motion. “Our approach is appropriate to the specific infringement that we allege on the part of Apple and Research in Motion,” he said.

Earlier this week, the International Trade Commission opened an inquiry to a separate patent-infringement complaint against Research in Motion by a Nebraska company called Prism Technologies LLC.

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The Bank of Nova Scotia said Tuesday it has been approved to set up independent operations in Dubai's financial district, making it the first Canadian bank to do so.

The licensing clearance from the Dubai International Financial Center allows the bank's ScotiaMocatta division to open an independent branch in one of the Middle East's hubs for international finance.

ScotiaMocatta has operated in Dubai since 1998 through an alliance with the National Bank of Dubai to provide financial services to gold traders, jewellers and others.

"This is a strategic initiative that reflects our confidence not only in the precious metals market, but also in the region," said Barry Wainstein, vice-chairman and deputy head, of Scotiabank Global Capital Markets.

The move comes as debt-burdened Dubai struggles to retain its prominence as a centre for Middle East investors and traders.

"We are very happy to welcome Scotiabank, the first Canadian bank to join the DIFC," said DIFC governor Ahmed Humaid Al Tayer in a statement Tuesday morning.

"As the DIFC begins to play a more prominent role in the global economy, we are keen to expand the industry cluster within the financial district with new companies from across the global financial industry," he said.

Pramod Mohan, a senior executive at Scotiabank's Dubai branch, said the bank recognized the importance of establishing a stand-alone presence in the region as the previous metals market in the Middle East continues to grow.

"Dubai is ideally located in a large wholesale and consumer market and is uniquely positioned to channel gold from the international markets to the ultimate destination," he said.

ScotiaMocatta is the precious metals division of the Scotiabank Group. Scotiabank Group currently employs close to 68,000 people in about 50 countries.

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The U.S. Treasury Department’s refusal to sell its 34 percent stake in Citigroup Inc. is hampering the bank’s plans to repay $20 billion of remaining bailout funds, people familiar with the bank said.

Executives at the New York-based bank are growing frustrated because they can’t sell stock to raise money for repayment until the Treasury signals when and how it will unload its 7.7 billion shares, said the people, declining to be identified because the matter is under discussion. Investors may be reluctant to buy shares because a Treasury sale could drive down the price.

“The ball is in the government’s court,” said Chris Kotowski, an analyst at Oppenheimer & Co. in New York, who has a “market perform” rating on the bank’s shares. “It’s not Citibank’s decision to sell them or not sell them.”

Bank of America Corp.’s plan to repay $45 billion of bailout funds would leave Citigroup as the only large bank subject to compensation reviews by Treasury paymaster Kenneth Feinberg. Other bailed-out companies under his purview include insurer American International Group Inc. and carmakers General Motors Co. and Chrysler Group LLC.

Citigroup Chairman Richard Parsons said in September that the bank must pay employees competitively to ward off poaching by rivals. Under pressure from Feinberg, the bank cut total 2009 compensation for its 25 highest-paid people by about 70 percent from 2008.

$6 Billion Paper Gain

For almost three months, executives at the bank have tried to persuade Treasury to move ahead with a sale, the people said. At the current market price, the Treasury’s shares are worth about $31.2 billion. Because the common shares were converted from $25 billion of bailout funds, that’s a paper gain of about 25 percent, or more than $6 billion.

Meg Reilly, a Treasury spokeswoman, declined to comment on whether the government has sold any shares or when it may do so. “Treasury does not comment on individual institutions as a general policy,” she said. Citigroup spokesman Jon Diat said he couldn’t comment.

Treasury hasn’t told Citigroup how or when it plans to dispose of the stake, the people said. The shares are held within the department’s Office of Financial Stability, run by Herb Allison, the former chief executive officer of retirement- services firm TIAA-CREF payday loans for bad credit. Allison reports to Treasury Secretary Timothy Geithner.

Pandit’s Vow

Citigroup got a total of $45 billion last year from the Treasury’s $700 billion Troubled Asset Relief Program. In September, $25 billion of that was converted into common stock, which the Treasury is free to sell at any time.

Chief Executive Officer Vikram Pandit, 52, said Oct. 15 he was “focused on repaying TARP as soon as possible.” He said, “We’re going to do so in consultation with the government and our regulators.”

In a report, CreditSights Inc. analyst David Hendler said Citigroup could repay the $20 billion of TARP funds by selling about $10 billion of common stock along with $10 billion or more of junior debt securities. Regulators may be keeping Citigroup in TARP because of lingering concern that the economy won’t recover quickly, Hendler wrote.

The company has almost doubled its cash holdings to $244.2 billion over the past year, the biggest such stockpile of any U.S. bank.

‘Not Cash’

“It’s not a question of cash,” Kotowski said. “It’s a question how much the regulators will force banks to raise to clear themselves of the stigma of being a TARP bank.”

JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley, all based in New York, repaid bailout funds in June. San Francisco-based Wells Fargo & Co., which hasn’t repaid $25 billion of bailout funds, isn’t subject to Feinberg’s rules because it hasn’t received “exceptional assistance.”

Even if the Treasury sold its Citigroup shares and the bank paid off the remaining $20 billion, it still might be subject to the paymaster’s purview because it has $301 billion of government asset guarantees, the people said. Citigroup has no plans to terminate the guarantees, which remain in effect for 10 years on home loans and mortgage-backed securities and 5 years for other types of assets, the people said.

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Lithuania won’t adhere to a “painful” euro adoption schedule that would quell demand and hurt the economy, Prime Minister Andrius Kubilius said.

The former Soviet state will probably fail to comply with the European Union’s excessive deficit procedure, which calls on the government to bring the gap within 3 percent of gross domestic product by 2011, Finance Minister Ingrida Simonyte said in an interview yesterday. Euro adoption is unlikely before 2013, she said.

“Those are very ambitious measures, very painful measures, and of course there are some limits to what you can implement,” Kubilius said in an interview in London yesterday. The goal is “not killing the whole economy and the stability in your society when you are cutting expenditures, wages and pensions.”

The economy of the Baltic state, which abandoned communism in 1991, contracted 14.3 percent last quarter as the government pushed through budget cuts equivalent to 8 percent of gross domestic product this year. Even after the austerity measures, Lithuania will post a deficit of 9.7 percent in 2011, compared with 9.8 percent this year, the European Commission estimates.

Lithuania, which pegs the litas to the euro, needs the euro “as soon as possible, but possibilities have very practical limits and practical measures that should be implemented,” Kubilius said.

More Cuts

The government has proposed budget cuts for 2010 worth 5 percent of GDP that target social benefits, such as maternity and jobless pay and pensions.

Credit-default swap spreads on five-year Lithuanian debt jumped 19.08 basis points, to 343.01 basis points yesterday, the highest since Sept. 10, according to CMA DataVision prices. A wider spread reflects investor perceptions of higher risk.

Lithuania is lagging behind neighboring Estonia, which is set to join the single currency bloc in January 2011 after its government used years of budget surpluses to build up reserves, leaving public finances intact even after the credit crisis engulfed its economy easy payday loans. Latvia has said its economic collapse will prevent it from joining the euro region before 2014.

All three countries enjoyed a property and income boom after joining the EU in 2004. The credit crisis laid to waste the debt-fueled surge in wealth that followed EU accession and the three states are now mired in the bloc’s deepest recessions.

Debt Sales

“We would be very happy if our neighbors, Estonia, are able to have the euro much earlier,” Kubilius said. “It will show us very clearly what different policies Estonia and Lithuania were implementing during the last four, five years. Estonia had very strict fiscal control and surpluses in their budget, and we had deficits. Now, during the recession and financial crisis, that makes quite a big difference. Estonia is fighting to keep the deficit below 3 percent and we are fighting to keep it below 9 percent.”

Lithuania will probably return to international markets to sell bonds by next spring and again in the second half of the year, Simonyte said yesterday. She declined to specify the size or currency of any potential debt sale.

Unlike neighboring Latvia, Lithuania won’t go to the International Monetary Fund for financial assistance as it’s able to fund itself through capital markets, Kubilius said.

“The policies required by the IMF or the EU we can implement ourselves, therefore we have possibilities to borrow in international markets,” Kubilius said. “Those possibilities are becoming better and better as the price for borrowing is decreasing. We hope that during next year the price will go down even more.”

Lithuania raised $1.5 billion on Oct. 7 in its biggest-ever debt sale with the notes priced to yield 462.5 basis more than U.S. Treasuries.

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Chile’s central bank will probably keep its benchmark interest rate at a record low in a bid to safeguard a nascent economic rebound amid tame inflation.

Policy makers meeting today will keep the benchmark rate at 0.5 percent for a third month, according to all 10 economists surveyed by Bloomberg. Central bank President Jose De Gregorio last week said that the bank’s five-member board will likely maintain its current rate until the second quarter of 2010.

The bank’s president said he plans to hold borrowing costs down in an effort to stoke an economic expansion above 4.5 percent, which would likely push inflation back up toward policy makers’ 3 percent target. Prices fell 1.1 percent in the 12 months through September, the steepest decline since the 1930s, after the cost of energy dropped and the economy shrank.

“Inflation is negative and no one expects much inflation in coming months,” said Julio Espinoza, an economist at Banco Bice SA in Santiago. “If things change, the bank may raise rates sooner, maybe in March, but it’s difficult to see it happening before then.”

Beyond setting the benchmark rate today, board members may decide to shorten the maturity of cheap six-months loans the bank has been offering to lenders since July, according to economists including Espinoza and Jimena Zuniga at Barclays Capital in New York.

‘Extraordinary’ Measures

Trimming the duration of the longest loans available to 90 days or 150 days from the current 180 days would give De Gregorio greater freedom to act, Zuniga said.

The 180-day loans, for which the bank charges the overnight rate, represent a “commitment and conviction” that the rate will remain low, De Gregorio said in July. It would be bad business for the bank to raise its overnight rate while cheaper loans were still outstanding, he said.

“The withdrawal of the extraordinary liquidity measures will be sooner rather than later,” said Juan Eduardo Coeymans, an economics professor at the Pontifica Universidad Catolica de Chile. “When they start to raise the rate depends on the economy bad credit pay day loans.”

Chile’s economy shrank in the first two quarters of this year after prices for its exports, led by copper, plunged and domestic demand evaporated.

Companies reacted to uncertainty by running down their inventories to historical lows, selling stock and emptying warehouses, Finance Minister Andres Velasco said Oct. 6.

Trend, Targets

After ramping up the cost of borrowing to a 10-year high last year as inflation reached 9.9 percent, the central bank lowered its overnight rate by 7.75 percentage points this year, a reduction matched only by Turkey.

Chile’s consumer prices will probably fall 0.8 percent this year as gross domestic product contracts 1.6 percent, the government’s budget office said Oct. 7.

The shrinking economy has opened up a gap between actual output and potential output, the central bank argued in a monetary policy report last month.

Chile’s economy can probably grow 4 percent to 4.5 percent next year without generating inflation, so the bank will probably set policy to target a growth rate faster than that to help inflation return toward its target over the next two years, it said in the report.

“With negative inflation and trying to bring back inflation to our target, we have an extremely expansionary monetary policy,” De Gregorio said in Oct. 5 interview from Istanbul.

2010 Growth

Pushing for growth faster than 4.5 percent is the “only coherent way to close the quite substantial output gap and bring inflation back toward the target,” he said.

The economy may grow 5 percent in 2010 as companies ramp up hiring and output, Velasco said Sept. 30.

The central bank forecasts growth of as fast as 5.5 percent next year, which would be mostly due to its efforts to keep borrowing cheap, De Gregorio said. Recovering inventories aren’t a good engine for prolonged growth, he said.

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UPDATED: 10:32 a.m. Thursday

ST. LOUIS — American Airlines said Thursday it will dramatically slash its remaining St. Louis flight schedule next year as part of a dramatic restructuring.

American’s parent company, AMR Corp. announced it will raise or borrow $2.9 billion and will focus service on its primary hub airports, including Chicago’s O’Hare International Airport and Dallas/Fort Worth International. The moves will leave St. Louis with 36 daily departures to nine cities on American and American Eagle next April.

"Today’s announcement positions our company well to face today’s industry challenges and allows us to remain focused on the future and on returning to profitability," said AMR chairman and chief executive Gerard Arpey.

American St. Louis officials were briefed on this latest round of flight reductions late Wednesday. Since 2003, American has made a series of deep service cuts at Lambert-St. Louis International Airport — once a thriving midcontinental hub for Trans World Airlines.

By the end of November, St. Louis already was being scaled back to 82 daily flights to 20 destinations. St. Louis leaders expressed disappointment with Thursday’s news that American was making even deeper cuts.

St. Louis Mayor Francis Slay called it a "bad business decision."

"By eliminating what was left of the St. Louis hub it took over from TWA, American will be walking away from more than 620,000 passengers a year," Slay said in his blog. "And they will walk away from approximately $108 million in system revenue."

Lambert Director Richard Hrabko said a major concern is that the move will eliminate nonstop service to a dozen U.S. cities from Lambert. St. Louis travelers looking for nonstop service already had seen their choices plummet from more than 100 cities reachable by nonstop flights to about 70.

There will no longer be nonstop air service between St. Louis and the following cities: Austin, Texas; Nashville; Indianapolis; Wichita, Kan.; Jacksonville, Fla.; Madison, Wis.; Norfolk, Va.; Raleigh-Durham, N.C.; Richmond, Va.; San Antonio, Texas; San Francisco; and Des Moines, Iowa.

"If you look at this history since 2003, it has been a steady downturn," Hrabko said. "They have continued to cut consistently down to this ultimate cut, which I consider to be the ultimate cut."

American spokeswoman Mary Frances Fagan said the new daily St. Louis flight schedule will include two American Eagle flights to Boston and two to JFK International Airport in New York, and American Airline flights to New York’s LaGuardia (4), Washington, D.C.(4), Miami (2), Dallas-Fort Worth (9), Chicago O’Hare (9), Los Angeles (3), and Seattle (1).

Earlier story:

American Airlines has announced that St. Louis will lose 46 American and regional flights and end service to 20 cities.

American said this morning that it will be cutting all but 36 flights to nine destinations from St. Louis.

St. Louis will lose lose 46 American and regional flights and end service to 20 cities. While the airline is getting a $2.9 billion boost, it is using it to add flights to other cities like at hubs in Dallas/Fort Worth, Chicago, Miami and New York. Those cities, and Los Angeles, are key parts of the company’s plan to benefit from closer cooperation with British Airways, Iberia and other partners.

The company said it will reduce operations at St. Louis and Raleigh/Durham, N.C.

St. Louisans were already finding it tougher to get where they’re going on a nonstop flight.

When Lambert-St. Louis International Airport served as the midcontinental hub for Trans World Airlines Inc., air travelers could book a flight from St. Louis to more than 100 cities. But no more.

Nonstop air service has shrunk to about 70 cities — and St. Louis to San Diego will fall out of the mix in November when cuts to American Airlines’ domestic flight schedules take effect. The airline eliminated flights from Lambert to Cedar Rapids, Iowa, and Springfield, Mo., last month.

Blame the ongoing metamorphosis of Lambert to a midsize hub airport, last year’s fuel price increases and — most recently — the sputtering economy, which has taken a big bite out of business travel budgets.

"It’s unfortunate that they would reduce their direct flights to a city that’s well visited from the St. Louis area," business traveler Linda Jacobs said before boarding an American flight for San Diego last week. "It’s understandable that American is doing what they have to do … to continue to be profitable guaranteed fast personal loans. But it’s inconvenient to the traveler."

The biggest wave of flight reductions occurred in the fall of 2003, when American slashed half of its St. Louis schedule — including nonstops from St. Louis to 27 cities. Most of the remaining flights were on smaller planes flown by American’s regional airline partners.

The loss of nonstop flights has included a mix of big city destinations and smaller regional markets in Missouri and central Illinois.

"That is really indicative of what happened to Lambert after TWA went away," said Kent Boyd, spokesman for the Springfield-Branson National Airport. "When TWA was in existence, I would hazard to guess half our passengers went to Lambert to make connections."

By the time American eliminated the single daily American Eagle flight between St. Louis and Springfield, Mo., last month, Boyd said, the planes were flying less than one-third full.

Boyd said American added a seventh flight to Dallas-Fort Worth International Airport at that time.

"We certainly understand that given the choice, people would prefer a nonstop," said American Airlines spokesman Tim Smith. "But if we can make connections reasonable, convenient and timely, it is the next best thing."

Smith said the majority of travel itineraries these days involve connecting flights. American serves 250 cities worldwide.

Lambert Director Richard Hrabko said St. Louis flight losses actually have stabilized somewhat in the past couple of years and the airport is served by a healthy mix of airlines. The presence of low-cost carriers Southwest Airlines, AirTran Airways and Frontier Airlines have helped keep fares in check, he added.

There still are 270 departing passenger flights each day, and other hub airports also have lost some air service.

"We’re not in this deal alone," Hrabko said.

American’s latest round of Lambert cuts may already have touched off some competitive maneuvering.

After American officials decided to reduce nonstop service to Boston in November, Southwest said it will add two daily nonstops from Lambert to Boston’s Logan International Airport beginning Jan. 10.

Southwest also added two new nonstop flights to Minneapolis/St. Paul but reduced its daily flights between St. Louis and Baltimore, Cleveland, Detroit and Las Vegas.

"This growing airline has seen this as a growth market," Southwest spokesman Brad Hawkins said of St. Louis.

Southwest now offers nonstop flights to two dozen cities from Lambert.

Despite its loss of flights in recent years, Lambert appears "ripe" for Southwest to increase its presence because its location in the middle of the country and its excess capacity make it a good candidate for connecting traffic, said George Hobica, founder of Airfarewatchdog.com.

"I think it is an underutilized airport (since) TWA pulled out and after American … basically implied they would maintain the service and didn’t," Hobica said.

Direct air service to a multitude of cities can brighten a region’s prospects for growth, economists say, and is one factor a company would consider when locating a new facility. Lambert officials say St. Louis remains a strong travel market compared to similar-sized metropolitan areas.

Brian Hall, chief marketing officer for the St. Louis Convention and Visitors Commission, agreed that St. Louis is well served by air service based on its population, and the loss of some direct flights hasn’t been a barrier to meeting planners or leisure travelers.

"I think our expectation is that of when TWA was hubbed out of Lambert," Hall said. "We had extraordinary service, including a lot of international nonstop travel to Europe. We never had the population base to support that. But the fact that they chose St. Louis as a hub, we were very fortunate to have that robust service."

But Tina Garcia Arras, president of the Travel Desk Inc., said frequent business travelers are having to spend more time making flight connections than they once did.

"It’s become a real pain," she said.

Before the recession, passenger boardings had grown from a baseline of 6.3 million in 2004 — the first year after American’s significant schedule reduction — to 7.7 million in 2007.

"I don’t dwell on the past much," Hrabko said. "I look at the future. Seventy nonstop destinations. That’s pretty good."

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Demolition is under way on two Central West End buildings that BJC Healthcare will replace with a $75 million, 12-story tower for outpatient clinics, doctors’ offices and its corporate headquarters.

Rising at the northwest corner of Forest Park and South Euclid avenues, the tower will extend north to the building that houses Majestic restaurant, at 4900 Laclede Avenue. The tower’s completion is expected in early 2012.

Consolidation of clinics, doctors’ offices and executive offices in the new 300,000-square-foot tower will expand BJC’s high-rise medical complex to the north side of Forest Park Avenue. It will go up just east of the parking garage built in 1994 and will be connected by an elevated walkway to the Barnes-Jewish Hospital complex.

The city’s Preservation Board voted July 27 to approve demolition of buildings to make way for BJC’s new tower and a small park. The structures at 4901 Forest Park, known as the Ettrick Building, and 3 South Euclid were completed in 1905 as apartments and ground-floor shops. Occupancy has dwindled in recent years.

Also scheduled to come down is the four-story building at 4949 Forest Park, erected in 1934 for the Shoenberg Nursing School. Now vacant, it served for many years as a nurses’ residence. June Fowler, BJC’s spokeswoman, said Friday that the site will be used as the construction staging area for the tower project. While another building may eventually go on the Shoenberg site, it will be set aside as green space after the tower is done.

In recommending approval of BJC’s demolition requests, the Preservation Board’s staff noted that the new tower, designed by the Christner architecture firm, will have "a storefront system to replicate the rhythm and integrity of the historic streetscape scale on the first floor."

The staff also said the park, between the Barnes-Jewish parking garage and St. Nicholas Greek Orthodox Church, will benefit the church and the neighborhood.

Low-rise buildings once dominated the area but in recent decades, Barnes-Jewish, St. Louis Children’s Hospital, Washington University School of Medicine and St. Louis College of Pharmacy expansions have produced a high-rise complex with a daytime population of more than 20,000 employees and patients.

The new tower’s exterior will use materials similar to those of the Center for Advanced Medicine, which is across Forest Park Avenue from the new building’s site.

Fowler said BJC needs more headquarters space than it leases now from the Washington University medical school at 4444 Forest Park. Wohl Clinics in other parts of the BJC complex will be consolidated in the new building, which also will house doctor’s offices.

After the new building is completed, BJC will redo that section of Euclid to match a planned streetscape project in the vicinity. Utility relocations and preparation for streetscape work will require temporary closures of Euclid’s southbound traffic lane, said an official of Tarlton Corp., the tower project’s general contractor.

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MONTREAL–Groupe Aeroplan Inc. saw its second-quarter results deteriorate as the economic recession and concerns about Air Canada's future caused members to spend less and redeem more Aeroplan loyalty points.

The Montreal-based company, which runs customer-loyalty programs for the airline and other businesses, reported profits of $26.7 million or 13 cents per share for the quarter ended June 30, down from year-earlier net earnings of $31.5 million or 16 cents per share.

Groupe Aeroplan, which originated as the in-house frequent-flyer program for Air Canada (TSX: AC.B) but now operates as an independent company that also runs customer loyalty programs for non-airline companies, said quarterly revenue dipped to $333.5 million from $336.7 million a year ago.

The decline was partially attributed to a drop in gross billings from the sale of Aeroplan miles, which sagged 5.6 per cent to $337.8 million from $335.9 million recorded in the same quarter of 2008. On a constant currency basis, the number decreased three per cent.

Among Aeroplan's key partners are CIBC (TSX: CM) and American Express, which offer credit cards that provide Aeroplan points that travellers can used to pay for airline tickets, hotel rooms, rental cars.

"We believe the uncertainty surrounding Air Canada has had an additional impact on our Canadian business, ultimately influencing the average per card spend in our financial partner portfolio, which was also impacted, both by a decline in business travel and the recession," Groupe Aeroplan chief executive Rupert Duchesne said in a statement.

Higher mile redemptions caused the cost of rewards to increase 4 payday loans in 1 hour.7 per cent to $201.7 million. Aeroplan said redemption activity in all programs was within normal seasonal levels.

The results failed to meet analyst expectations. Analysts polled by Thomson Reuters thought EPS would increase 67 per cent to 27 cents on $359 million of revenues.

"I am the bear on the Street and it was slightly disappointing even to me,“ said Neil Linsdell of Versant Partners."

He said Aeroplan predictably was affected by consumer behaviour during the recession to spend less on credit cards and use their Aeroplan miles instead of cash.

Heightened concerns about Air Canada's future also prompted members to cash in miles fearing the rules on their use might be changed, even if the airline avoided bankruptcy protection, Linsdell said in an interview.

Duchesne said assisting Air Canada with a $150 million loan was the right thing to do "both from a commercial perspective and for the benefit of all of our stakeholders."

"A stronger Air Canada, a key strategic partner, means our Canadian program will be in a better position going forward," he said.

But Linsdell said most Aeroplan investors do so for the loyalty program and not for the company to be lending money to a business with a questionable future.

"Unfortunately, Aeroplan is over a barrel."

On the Toronto Stock Exchange, Aeroplan shares lost 38 cents, or 3.85 per cent, to $9.50 in midday trading.

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Americans are looking past the stock market surge and signs of a stabilizing economy and focusing on something more personal — job worries.

Consumer confidence fell this month, the Conference Board said Tuesday, presenting a big obstacle for already hammered stores as they head into the back-to-school season.

The confidence index fell to 46.6, down from 49.3 in June and weaker than expected. It takes a reading above 90 to signal Americans believe the economy is on solid footing.

The second straight month of declining confidence followed an upbeat report offering more evidence that the real estate market is showing signs of life. According to a widely watched index, home prices in May posted their first monthly increase since the summer of 2006.

But vanishing job security and reduced work hours continue to plague shoppers, who are relying more on their paychecks as two previous sources of money — credit cards and home equity loans — have shrunk business card.

When the Labor Department releases its monthly jobs report next week, economists expect it to show unemployment climbed to 9.7 percent in July, up from 9.5 percent in June and within shouting distance of its post-World War II high.

Americans’ lack of confidence presents a hurdle for retailers because consumer spending accounts for more than 70 percent of economic activity. Confidence had been rebounding since March after reaching historic lows. But since June, economic realities are catching up with shoppers again.

"Even though we have seen an improvement in economic indicators, there hasn’t been any meaningful improvement in household finances," said Mark Vitner, senior economist at Wells Fargo.

"Consumers are not in the position to step up their spending."

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NEW YORK — Your credit card debt may soon get a lot more expensive.

Two of the biggest issuers in the nation — Bank of America and Chase — say they’re switching some fixed-rate cards to variable rates, which could push up the amount of interest taken out of your monthly payment. The changes will take effect in August for both banks.

Chase and Bank of America wouldn’t give specifics on how many accounts the change will affect but said they will continue to offer some fixed-rate cards. Chase has 159 million credit cards in the U.S. and Canada, while Bank of America has 70 million worldwide.

Fixed-rate cards are generally reserved for the best customers. Fixed-rate cards currently make up 34 percent of credit cards issued by the nation’s largest lenders, according to Bankrate.com.

Despite the name, the terms on fixed-rate cards always could be changed in the past. That allowed banks to make the gamble of offering customers favorable fixed rates — then raising rates if the customers later proved too risky, said Leigh Allen, CEO of Global Consumer Finance Advisory, a consulting firm based in New York business card. But new laws will limit lenders’ ability to change card agreement terms.

"They have to be very careful about who they give these (fixed) rates to," Allen said.

The switch to variable rates will limit the banks’ risk under the new credit card law.

Chase and Bank of America are not alone in this move. Discover Financial Services already moved some of its cardholders from fixed to variable rates in June.

The switch to variable-rate cards are just the latest clampdown on cardholders over the last year. To prepare for a new law that will limit banks’ ability to change card terms, lenders have been raising interest rates, tightening credit limits and even closing inactive accounts.

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