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Today's top stories from Report on Business :

Dow Jones tops year high

The Dow Jones industrial average surged to its highest level in more than a year as a the falling U.S. dollar juiced prices for commodities, including oil and gold, and investors grew more confident that interest rates will remain low. It was what the G20 finance officials didn't say on the weekend that played out in financial markets as the U.S. dollar sank and gold poked through a fresh high. The Group of 20 finance ministers and central bankers, meeting in Scotland, voiced little concern about the state of the greenback. That left investors with nothing to change the outlook for U.S. interest rates that are at historic lows, sending money instead into other currencies and other assets. According to preliminary calculations, the Dow rose 203.52, or 2 per cent, to 10,226.94, its highest finish since Oct. 3, 2008. The index rose as high as 10,228.23, topping its previous 12-month trading high of 10,119.46 set last month. Investors see the dollar as weaker than other currencies, and so they’re using it for what’s known as “carry trade,” to finance purchases of investments in other countries. That trend takes the dollar down further when those purchases are made. Some analysts question the markets' heights, warning that stocks and other investments could suffer if the greenback rises again. “It feels like it’s on fumes,” said Sean Simko, head of fixed income management at SEI Investments in Oaks, Pa., referring to the market’s advance. “Although fundamentals are catching up, they’re not caught up.”

Kraft seen having to raise Cadbury bid

Analysts believe Kraft Foods Inc. KFT-N will have to boost its $16.4-billion (U.S.) hostile bid for Cadbury PLC CBY-N , which the British candy maker again rejected today. It's shaping up as an interesting fight. Kraft, whose brands include Oreo cookies and Nabisco crackers, had floated the takeover earlier but was required under British regulations to launch a formal bid by today or walk away for at least six months. The official offer unveiled today was similar to its first proposal, but actually lower because the share prices of the food companies have since changed. While investors see Kraft going higher, there appears to be no rush. Other potential bidders had their chance earlier and haven't yet come out of the wings despite much speculation that they would. Cadbury, the 195-year-old British company known for its Dairy Milk chocolate bar, dismissed the offer as not coming “remotely close to reflecting the true value of our company.” Read the story

Google acquires mobile ad company

Google Inc. GOOG-Q is moving ever faster into the market for Internet-enabled cellphones, announcing a takeover key to monetizing mobile Web traffic. Google is paying $750-million (U.S.) in stock for AdMob, a maker of technology for serving display advertisements on mobile phones and tracking their performance. Google is the world's top Internet search engine, and its Android software is increasingly used in smart phones. The deal unveiled today would allow the technology giant to serve advertisers better as they move further into the world of mobile. Said Google's vice-president of product management Susan Wojcicki: “Mobile advertising has enormous potential as a marketing medium, and while this industry is still in the early stages of development, AdMob has already made exceptional progress in a very short time.” Read the story

Mega Brands settles legal fight

Mega Brands said today it settled a bitter legal feud with the former owners of Rose Art Industries Inc., the New Jersey arts-and-crafts company it acquired four years ago. Under the deal, Mega Brands will receive $17.2-million in cash, while the former owners abandon any additional claims, estimated at $54.8-million. The purchase of Rose Art was supposed to be a major boost to Mega Brands after the 2005 acquisition, but turned into a marketing nightmare for the Montreal-based toy maker after reports of magnets coming loose from Rose Art's Magnetix toys. There were a series of recalls and an expensive redesign. While Mega Brands said today that the settlement validated its long-standing claim, the former owners said they agreed to drop their claim because Mega Brands' financial condition did not justify incurring further legal costs. Read the story

Investing: Flu, strong dollar to eat into profits

The H1N1 flu, the strong dollar and higher fuel prices will eat into profits across a range of industries this year, the Conference Board of Canada predicts. The economy is recovering, and profits are expected to resume growing, but the recovery will be shaky in several sectors, the group said in a report compiled in collaboration with the Business Development Bank of Canada. “All industries are grappling with the effects of reduced demand and downward pressure on prices as a result of the recession,” said Michael Burt, the group's associate director responsible for industrial economic trends research. “On the upside, the recession has lowered input prices and limited wage growth, reducing costs pressures.” Sector-by-sector breakdown

Carney sees softer third quarter

Bank of Canada Governor Mark Carney says recent indicators may suggest a softer third quarter than expected. But, he told reporters in Scotland at the G20 meeting on Saturday, there's nothing to indicate that slower-than-anticipated growth will derail the rebound, Bloomberg News reported today. The central bank chief was quoted as saying that recent data suggest “a somewhat softer third quarter, but again the profile of the recovery – with growth strengthening into the fourth quarter and into 2010 – I would say remains in place. We're at a turning point in the economic cycle, is our expectation, and the beginnings of the return to growth. The data is going to be choppy.” Mr. Carney has said Canada returned to growth, although the first two months of the third quarter show an economy that remains stalled.

Central bankers to pull back cautiously

The world's central bankers say they will begin pulling back emergency measures gradually, but they do see improvements in the economy. European Central Bank chief Jean-Claude Trichet, chair of talks on the economy at a Bank for International Settlements meeting in Basel, Switzerland, told reporters that “we see elements that are encouraging, the confirmation of the fact that we avoided the extreme depression, but we have elements that call for common vigilance. For central banks that relied on emergency moves, he said, “there is an element of gradual and timely phasing out of some of these measures.” Australia and Norway have already boosted interest rates, while other major central banks, including the Bank of Canada, have promised to keep rates low for some time.

Other signs today also point to an economy on the mend. Exports from Germany, a bellwether given that it is Europe's biggest economy and the world's largest exporter, rose more than expected in September. While still down sharply from a year ago, the month-to-month change is yet another signal of a rebound. Germany has already come out of recession. Germany's industrial output in September also increased more than expected, in part to meet the growing demand for its exports, another strong sign from the country that it looks to lead Europe out of its slump.

Housing market continues comeback

Economists believe the Canadian housing market will continue its comeback, particularly after another strong showing in construction today, though housing starts will take some time to return to pre-recession levels. Starts rose 5.4 per cent in October, increasing to 157,300 on an annualized basis from 149,300 in September, largely on the gains in condominium construction, Canada Mortgage and Housing Corp. said today. Starts on single homes actually dipped, though they're still at their second highest level since the meltdown began in October, 2008. Some comments from economists:

“Although housing starts remain depressed, with activity below the 175,000 units necessary to keep pace with population growth and attrition, it is clear that the trajectory for the sector is towards recovery.” HSBC Securities (Canada) Inc. economist Stewart Hall

“While home-building activity still has a long recovery ahead and cannot reasonably be expected to revisit boom-type levels (at or above 200,000 units) over the next few years, the recovery seems well engaged.” TD economist Pascal Gauthier

“It adds to the growing list of indicators that have been pointing to a recovery ... though the rebound in residential construction has remain fairly modest.” TD Securities economics strategist Millan Mulraine

China marks ‘renewal' of relations with Africa

China is taking steps to fight suggestions that it is gobbling up Africa's resources. China's commerce minister, Chen Deming, is at a two-day summit, and said today that this year marks “the renewal of China-Africa relations.” China's ties to Africa have boosted trade to more than $100-billion (U.S.), but critics have said China is investing for its own benefit, with no assurances of sustainable benefits to African countries. Mr. Chen saidthat by pushing agriculture and infrastructure, China is helping Africa toward economic independence. Read the story

Bonuses heading for record

An analysis by Bloomberg News suggests the giants of Wall Street – Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co.'s investment bank –are set to pay record bonuses this year. According to analysts' estimates, Bloomberg News says, they will pay almost $30-billion (U.S.) in bonuses, up from the previous record $26.8-billion two years ago. The payout would also mark a 60-per-cent hike from last year. Split among 119,000 people, it would average $250,400 each, the news agency said. The payouts come amid mounting controversy about bankers' pay in the wake of the financial crisis. Paul Hodgson, a senior research associate on compensation for Corporate Library in Portland, Maine, told Bloomberg: “all Street is beginning to resemble Clark Gable as Rhett Butler in the film Gone With the Wind : ‘Quite frankly, my dear, I don't give a damn.'” In an interview with London's Sunday Times, Goldman Sachs chief Lloyd Blankfein said the Wall Street giant has a social purpose in helping companies grow by raising capital, which in turn creates wealth.

From today's Report on Business

GM to spend $100-million on retooling Ontario plant

‘Ambush marketers' fuel Olympic ad concerns

Robert Smith goes where other bond investors fear to tread