Finance & Business World

The former head of Britain’s civil service says Prime Minister David Cameron’s links with the media were too cozy.

Gus O’Donnell retired in December after serving for six years as Britain’s top civil servant and chief adviser to Prime Minister David Cameron.

In evidence Monday to the country’s media ethics inquiry, he acknowledged Cameron had become too close to sections of the press.

O’Donnell told the hearing that Cameron had “felt his relationships had got too close, and I agree with that.”

The inquiry is investigating the work of Britain’s press in the wake of the tabloid phone hacking scandal.

Cameron set up the ethics inquiry amid public revulsion over the revelations that the News of the World had hacked murdered schoolgirl Milly Dowler’s phone when she disappeared in 2002.

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Italy

Fast-growing Etihad Airways has taken a nearly 3 percent stake of Aer Lingus as part of a strategy to build closer bonds with the Irish carrier, the Abu Dhabi-based airline said Tuesday.

Financial terms of the deal were not disclosed. But it appears part of a wider Etihad effort to seek shares in smaller carriers to gain a possible edge in its rivalries with Gulf carriers Emirates and Qatar Airways.

Etihad said Tuesday the 2.987 percent stake in Aer Lingus reflects a “desire to forge a commercial partnership with the Irish national carrier.”

Etihad in recent months has bought large stakes in Air Berlin and Air Seychelles in a bid to challenge Emirates and Qatar Airways. Etihad operates 10 flights a week from its Abu Dhabi hub to Dublin.

The head of Qatar Airways, however, said the carrier is not currently looking to acquire another airline.

Qatar Airways Chief Executive Officer Akbar al-Baker said the airline is focused on building its own business, and doesn’t want to take on the financial problems of restructuring a weaker carrier. Al-Baker was in Dubai for a travel expo.

State-owned Qatar Airways competes for long-haul international passengers with Dubai-based Emirates airline and Etihad Airways.

Last month, Etihad said its sales jumped 28 percent to $989 million in the first quarter of the year as it pushed ahead with its rapid expansion.

In February, Aer Lingus reported a strong growth in profits for 2011 despite the country’s economic downturn. The Dublin-based carrier says in a statement Tuesday its full-year net profit rose 66 percent to euro71.2 million ($95.6 million). Sales rose 6 percent to euro1.29 billion ($1.73 billion).

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The fear trade picked up steam Tuesday, as investors grew increasingly worried about Europe’s fiscal health. All three indexes closed down more than 1.5%, marking the fifth straight losing day for stocks.

Early in the day investors, traded out of stocks after reading headlines about rising borrowing costs for Spain and Italy. As the day progressed, investors grew increasingly jittery over the health of the global economy, which caused the sell-off to intensify.

"People are starting to get very concerned about the macro picture of both sovereign debt and China’s slowing growth," said Sam Ginzburg, head of trading at First NY. "We’re starting to get very worried about going back to a recession."

The Dow Jones Industrial Average () closed down 214 points, or 1.7%, capping off the worst day since November 2011. The S&P 500 () lost 24 points, or 1.7%. The Nasdaq () fell 56 points, or 1.8%.

The S&P 500 also had the worst day since November 2011, while Nasdaq posted the worst finish since December 2011.

European stocks slumped more than 2%.

First-quarter earnings: They won’t be pretty

Yields on Spain’s 10-year bonds hovered just under 6%, the highest level in more than three months. Borrowing costs have been trending higher as the government struggles to push through budget cuts. In Italy, the yields rose near 5.7%.

Peter Boockvar, chief equity strategist at Miller Tabak, said that while U.S. investors had been largely ignoring sovereign debt questions in Europe, the continent’s problems cannot be ignored now.

As part of a broad retreat from risky assets, investors jumped into U.S. Treasuries, driving the yield on 10-year Treasuries below 2% for the first time in more than a month.

Twenty-nine of the Dow’s 30 components ended in the red, with Bank of America (, Fortune 500) leading the broad retreat. Oil and industrial stocks were also among the biggest decliners. GE (, Fortune 500), Caterpillar (, Fortune 500) and Exxon (, Fortune 500) fell more than 1%.

The so-called fear index, the VIX (), rose nearly 11% Tuesday and is up nearly 33% over the past five days. It’s at 20.5, still far from 30 — a reading that typically signals heightened investor fear.

Investors got one positive surprise after the markets closed. Dow component Alcoa (, Fortune 500) beat earnings estimates when it reported after the closing bell. Alcoa’s earnings unofficially begins the release of first-quarter financial results personal loan for poor credit.

Analysts are forecasting a 0.1% drop in first-quarter earnings for companies in the S&P 500 compared to a year earlier, according to FactSet. While that’s not a major decline, it would mark the end of a nine-quarter winning streak. Stocks were on a tear in the first three months of this year, with the Dow and S&P 500 enjoying their best first quarter in over a decade.

"We’re essentially expecting no growth, but we could see earnings come in worse than that," said Boockvar. "I think we have the potential for some disappointment."

Stocks finished lower Monday, as investors reacted to the disappointing March jobs report released last week.

World markets: European stocks closed down sharply. Britain’s FTSE-100 () slipped 2.2%, the DAX () in Germany dropped 2.5%, and France’s CAC 40 () shed 3.8%.

In Asia, Japan’s Nikkei () slipped 0.1%, while Hong Kong’s Hang Seng () lost 1.2% and the Shanghai Composite () gained 0.9%.

Economy: Wholesale inventories came in higher than expected for February with a 0.9% increase above the 0.5% rise forecast by economists. Inventories rose 0.4% in January.

On Monday, Federal Reserve chairman Ben Bernanke said in a speech in Georgia that banks need to increase their capital buffers in order to ensure stability in the financial system.

Companies: Shares of electronics retailer Best Buy (, Fortune 500) surged then dropped after the company announced that CEO Brian Dunn had resigned and the company would begin a search for a new CEO.

Sony () shares dropped after the electronics maker announced it expects an annual loss of more than double its previous projection. The company said the revision came after recording additional tax expenses, primarily in the United States.

Shares of grocery retailer Supervalu (, Fortune 500) were up 15%, after the company reported earnings that beat expectations and offered strong guidance.

Apple’s (, Fortune 500) shares hit another all-time high Tuesday.

Introducing Wall Street’s new rainmakers

Currencies and commodities: The dollar gained against the euro and the British pound but fell against the Japanese yen.

Oil for May delivery lost $1.32 to $101.14 a barrel.

Gold futures for April delivery gained $16.60 to $1,660.50 an ounce.  

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With gas prices rising, even truck fans are looking to go easier on the stuff. So the latest version of Chrysler Group’s Ram truck, being unveiled at the New York Auto Show, is geared to minimize fuel consumption.

Chrysler boasts that it will be the most fuel-efficient non-hybrid full-sized truck sold in America.

The new Ram — the Dodge name has been dropped — will be the first pickup available with an eight-speed transmission, Chrysler said.

Ram buyers will be able to choose between a 5.7-liter V8 or 3.7-liter V6 engine. The new V6 will produce considerably more power than the Ram’s current V6 engine with 20% better fuel economy, Chrysler said. That would mean the new Ram truck should get combined city and highway fuel economy of better than 19 miles per gallon compared to 16 mpg in the current V6 Ram.

Cool cars from the New York Auto Show

Today, only about 10% of Ram trucks sold are equipped with a V6 engine with the vast majority of buyers opting for the big Hemi V8.

A new eight-speed transmission will also be available with both engines.

Recently, many truck makers have been emphasizing better fuel efficiency. Ford (, Fortune 500), for example, has found major success with its EcoBoost V6. However, the fuel economy benefit of the EcoBoost V6 compared to Ford’s 5.0-liter V8 engine is rather small (only about one mile per gallon).

Ford’s V6 and EcoBoost V6 trucks get 18 and 19 miles gallon in combined city and highway driving, respectively

The new Ram V8 will offer better fuel economy than Ford’s EcoBoost V6, while the Ram V6 will beat Ford’s non-EcoBoost V6, Chrysler spokesman Nick Cappa said.

Chrysler expects more buyers to opt for the V6 engine, especially since it’s now offered in the Crew Cab and 4-wheel-drive models that were previously available only with the big V8.

In addition to the new engine and transmission, the new Ram will have an automatic "start-stop" system that will shut off the engine whenever the truck pauses at a stop light or stop sign.

Also, the new truck has adjustable air suspension. At highway speeds, the suspension automatically lowers the truck one inch for better aerodynamics.

Various parts of the truck have also been redesigned with lighter materials to save weight. For example, the new frame, made with high-strength steel, is 30 pounds lighter, while the new aluminum hood is 26 pounds lighter.

One big change for Ram truck drivers will be the way they use the new transmission. Instead of the usual stick-like gear selector, drivers will switch from Park to Drive or Reverse using a knob in the dashboard. The knob, similar to that used in Jaguar luxury cars, frees up more space inside the cab compared to traditional gear selectors. 

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Charles Wyplosz is betting Greece isn

By May, gas prices in the GTA could ratchet up by anywhere from 5 cents to 20 cents per litre.

Prices at the pump have already climbed by about 7 cents to 128.7 cents per litre in the last month. And while it is normal for gas prices to climb in the spring as motorists drive more and refineries close for maintenance, there are more factors at play this year.

How high can the prices get?

Jason Toews, co-founder of Gasbuddy.com sees prices reaching 150 cents to 155 cents per litre by May. Last year gas prices reached a high of 140.6 cents.

Petroleum analyst Robert McKnight says prices will reach between 143 cents to 147 cents a litre by April. That is a 12 to 15 per cent increase from the pump price you see today, he said.

Michael Ervin, vice-president of Calgary-based Kent Group, has a more conservative prediction of 4 cent to 7 cent per litre increase

Sweden

None of the 29 Chinese workers abducted after an attack in a volatile region of Sudan have been freed, Chinese state media said Tuesday, dismissing reports that some of the workers had been released.

The workers were abducted Saturday by militants in a remote region in the country’s south. Sudanese state media reported Monday that 14 of them had been freed, but the official Xinhua News Agency and China Daily newspaper said all 29 were still being held.

China has close political and economic relations with Sudan, especially in the energy sector.

The Chinese ambassador to Sudan, Luo Xiaoguang, told China Central Television in an interview in Khartoum that anti-government rebels attacked the road project the Chinese were working on.

“There are still Chinese workers missing. Some others are still being held by the anti-government armed forces,” Luo said.

Xinhua said 47 Chinese workers were caught in the attack in the South Kordofan region of Sudan. It said 29 were captured and the other 18 fled, and that one of those who fled remains missing.

The Foreign Ministry in Beijing had no immediate comment Tuesday. A statement from the workers’ company, Sinohydro Corp., said that it and the Chinese Embassy would “spare no effort in ensuring the personal safety of those abducted and rescuing them.”

On Monday, Sudan’s state-run SUNA news agency quoted South Kordofan provincial governor Ahmed Haroun as saying that 14 workers had been released.

SUNA said the attack took place near Abbasiya town, 390 miles (630 kilometers) south of Khartoum.

Sudanese officials have blamed the attack on the Sudan People’s Liberation Movement-North, a branch of a guerrilla movement that has fought various regimes in Khartoum for decades. Its members hail from a minority ethnic group now in control of much of South Sudan, which became the world’s newest country only six months ago in a breakaway from Sudan.

Sudan has accused South Sudan of arming pro-South Sudan groups in South Kordofan. The government of South Sudan says the accusations are a smoke screen intended to justify a future invasion of the South.

China has sent large numbers of workers to potentially unstable regions such as Sudan. Last year it was forced to send ships and planes to help with the emergency evacuation of 30,000 of its citizens from the fighting in Libya.

China has used its diplomatic clout to defend Sudan and its longtime leader, Omar al-Bashir. Recently, it has also sought to build good relations with leaders from the south.

South Sudan and Sudan are in bitter dispute over oil, which is produced primarily in South Sudan but runs through Sudanese pipelines for export.

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China is allowing the nation