News

Today's top stories from Report on Business:

Buffett's Berkshire to buy railroad

Warren Buffett is getting into the railway business with his biggest takeover ever. Mr. Buffett's Berkshire Hathaway Inc. BRK.B-N struck a $34-billion (U.S.) deal today to acquire Burlington Northern Santa Fe Corp. BNI-N , offering $100 a share in cash and stock for about 80 per cent of the railroad it does not already own. It's a big bet on the future of the American economy, given that Burlington Northern, the second-biggest U.S. railway, hauls everything from corn to coal and is thus an indicator of the country's health. Analysts said Mr. Buffett is seeking an investment that will bring rewards for years, and that he's not as concerned about immediate returns. He is, said one analyst “buying at the trough – things aren't going to get much worse.” Mr. Buffett said more people will move more goods over the next three decades, and he sees the U.S. prospering. Mr. Buffett, known as the Oracle of Omaha, described the deal as an “all-in wager of the economic future of the United States. I love these bets.” Read the story

How investors can buy in to Buffett

Small investors are about to get their best chance yet to buy into Mr. Buffett's wisdom. To accommodate the railway deal, under which Burlington shareholders can opt for Berkshire shares, his company will split its Class B BRK.B-N shares 50-to-1. That means holders of the Berkshire Bs will get 50 new shares for each they now own. These shares are known as “baby Bs” because of their lower trading price compared with Berkshire A BRK.A-N shares. Of course, even the babies are worth several thousand dollars. With the upcoming split, they will be worth far less individually. As yet, there's no timetable for the split. Read the story

GM scuttles Magna's Opel deal

Frank Stronach's vision of turning Magna International Inc. into a full-fledged auto maker has evaporated after General Motors Co. decided to hang on to the European subsidiary. GM said in a statement late Tuesday that its board agreed to retain the European business given the improving environment for GM over the past few months and the importance of Opel to the auto maker. The GM move followed months of negotiations that ended with a deal for Magna and its Russian partner Sberbank to acquire 55 per cent of Opel. Read the story

Gold jumps to fresh record as India buys bullion

Gold GC-FT prices jumped to a record after India's central bank bought 200 tonnes of bullion from the International Monetary Fund. The $6.7-billion (U.S.) sale to the Reserve Bank of India was half of the IMF's long-planned bullion sale. Analysts said the deal will relieve the gold market of some uncertainty about how and when the IMF would sell about one-eighth of its total gold stock, and the deal fuelled speculation that other central banks, possibly China's, may also be ready to diversify their reserves. Traders said the IMF sale could help support bullion prices. “Gold was kept off the market and sold directly to central banks so potential sales on market are limited by this,” said one analyst. Read the story

Market Blog: IMFmakes golden sale

Related : The IMF sale to India

Britain shakes up its banking industry

Britain's two largest retail banks secured another £31-billion ($50.5-billion U.S.) from the government Tuesday and agreed to sell branches and key businesses to appease EU competition concerns about state aid. Royal Bank of Scotland and Lloyds Banking Group also accepted drastic caps on bankers' bonuses in deals that pave the way for Britain to begin selling the bank stakes it bought during the crisis, a crucial source of money as the country struggles with a ballooning budget deficit. Lloyds also freed itself from a government insurance scheme for bad debts by raising £13.5-billion in the world's largest-ever rights issue. That left RBS, already Britain's whipping boy in the banking crisis blame game, as the only bank taking up the government's Asset Protection Scheme and accepting the most punitive disposals. Read the story

Vehicle sales in Canada, U.S. recover from depths

Vehicle sales in Canada and the United States are recovering from the depths hit earlier this year but the pace of the turnaround is slow and bypassing some key companies. Sales fell 1 per cent in Canada last month and were roughly flat in the U.S. market. That’s the best combined performance in the two countries since the auto crisis began last fall, with the exception of the Washington’s cash for clunkers incentive scheme that artificially boosted U.S. sales in July and August. A 33 per cent slide at General Motors of Canada Ltd. kept Canadian sales from jumping into positive territory for the first time this year, while a 30 per cent plunge in Chrysler Group LLC’s U.S. sales was the worst performance among the Detroit Three.

Australia hikes interest rates again

The Reserve Bank of Australia boosted interest rates by a quarter of a percentage point for the second month in a row, but was careful not to fuel expectations for another rate hike next month. Australia, whose central bank's benchmark rate now stands at 3.5 per cent, escaped a recession during the global meltdown and its fortunes have far exceeded those of other countries. The move will not likely spur other major banks to follow suit. The Federal Reserve, which began a two-day meeting today, is not expected to change interest rates when it announces its decision Wednesday afternoon. Nor are the European Central Bank and Bank of England when they meet Thursday. Currency traders have also speculated that the Bank of Canada could follow Australia given the similarities of the two economies – speculation that tends to boost the Canadian dollar – but economists have also ruled that out. Rather, Bank of Canada Governor Mark Carney is seen sticking to his pledge to keep rates at historic lows well into next year. Read the story

Market Blog : Loonie taking an Aussie tone again?

Lookahead : The Federal Reserve makes its policy announcement at 2:15 p.m. ET.

TSX notches strong afternoon gains

Surging gold prices and a rebound in technology heavyweight Research In Motion propelled the Toronto Stock Exchange to strong afternoon gains, as the Canadian market posted its second-strongest session in the past six weeks. Stocks in New York were mixed, as concerns about the banking sector and U.S. employment prospects were offset by generally encouraging earnings reports. The Dow Jones industrial average slipped 17.53 points to 9,771.91, but the S&P 500 was up 2.53 points at 1,045.41 and the Nasdaq composite rose 8.12 points to 2,057.32. Read David Parkinson's Market Blog

Johnson & Johnson slashes work force

Johnson & Johnson JNJ-N its trimming the ranks of its management, cutting thousands of jobs and planning other restructuring moves in a bid to save up to $900-million (U.S.) next year. The health products manufacturer said the cuts will affect 6 or 7 per cent of its global work force, or more than 8,000 jobs. The layoffs will cost the company a restructuring charge of up to $1.3-billion pretax in the fourth quarter. Chief executive officer William C. Weldon said the restructuring is based on a broad, global view of the changing health care industry. Read the story

Investing: What is RIM stock worth?

Analysts are looking at the same numbers, but drawing vastly different conclusions about the future of Research In Motion Ltd. RIM-T . In the latest flurry of analysis of the BlackBerry maker, two investment firms today published research notes, one rating RIM a $50 (U.S.) stock and a “sell,” and the other deeming it at $100 stock and a “buy.” Both bulls and bears on the company agree that a wave of new competition is about to hit the wireless handset market, but they differ in the assessment of how RIM will weather it. Read the story

Aeroplan expands into U.S.

Groupe Aeroplan Inc. is expanding its business into the United States with the $188-million purchase of Carlson Marketing, a U.S.-based provider of loyalty marketing services. Aeroplan, the loyalty program company spun off from Air Canada, said the acquisition of the private company from U.S. hotel and travel firm Carlson companies Inc., is another step in its international expansion strategy. Aeroplan says Carlson will be run as a separate division.

Space hotel: The final frontier

A company behind plans to open the first hotel in space says it is on target to accept its first paying guests in 2012 despite critics questioning the investment and time frame for the multibillion-dollar project. The Barcelona-based architects of the Galactic Suite Space Resort say it will cost €3-million ($4.4 million U.S.) for a three-night stay at the hotel, with this price including an eight-week training course on a tropical island. During their stay, guests would see the sun rise 15 times a day and travel around the world every 80 minutes. They would wear Velcro suits so they could crawl around their pod rooms, sticking themselves to the walls like Spiderman. A nascent space tourism industry is beginning to take shape with construction under way in New Mexico of Spaceport America, the world's first facility built specifically for space-bound commercial customers and fee-paying passengers. British tycoon Richard Branson's space tours firm, Virgin Galactic, will use the facility to propel tourists into suborbital space at a cost of $200,000 a ride. More than 200 people have expressed an interest in travelling to the space hotel and at least 43 people have reserved.

Coming Wednesday

The widely watched ADP employment report is released at 8:15 a.m. ET.

The Federal Reserve makes its policy announcement at 2:15 p.m. ET.

Fiat chief Sergio Marchionne unveils a five-year plan for Chrysler Group LLC.

The Institute for Supply Management releases its non-manufacturing index at 10 a.m. ET.

Among corporate reports expected are Molson Coors Brewing Co TAP-N ., Time Warner Inc. TWX-N , Torstar Corp. TS.B-T , Goldcorp Inc. G-T , TransCanada Corp. TRP-T , WestJet Airlines Ltd. WJA-T and Yellow Pages Income Fund YLO.UN-T .

From today's Report on Business

Our 11th annual online broker survey

CanWest-Goldman battle erupts

Manufacturing on the upswing globally

U.S. slump batters auto making in Canada

H1N1 could hamper Canada's economic recovery