Qwest Communications is close to an agreement to buy local phone company US West for $40.5 billion, a person familiar with the negotiations said. Global Crossing, a rival bidder for US West, is expected to buy long-distance carrier Frontier for $12.9 billion, the person said. The transactions would end a month-long bidding contest between Qwest and Global Crossing for the two companies.

Potomac Electric Power's plan to sell its power plants may move forward in hearings conducted by the District's utility regulators, D.C. Council member Sharon Ambrose (D-Ward 6) said. Ambrose had initially asked the Public Service Commission to hold off while her Consumer and Regulatory Affairs Committee worked on legislation to bring competition to electric power markets.

CSX Transportation is to get $7 million in cash or tax-break incentives from Jacksonville, Fla., to ensure it doesn't move away. In exchange, CSX Transportation agrees to maintain a work force comparable to current levels of 4,000, keep its headquarters in Jacksonville and complete a $13 million renovation to its 15-story downtown office building. CSX Transportation, a subsidiary of Richmond-based CSX Corp., is one of Jacksonville's biggest employers.

DirecTV, the nation's biggest satellite TV broadcaster, and SBC Communications announced a marketing and distribution deal that could help SBC reach its goal of becoming a one-stop provider of telephone, Internet and TV services. The deal boosts SBC's ability to compete with AT&T and other big phone companies that want to bundle TV, Internet and phone services into a single package for customers.

Two copper producers, Cyprus-Amax Minerals and Asarco, have agreed to merge in a stock swap worth $764.2 million that creates the world's largest publicly traded copper company. The new company will be called Asarco Cyprus. The merger is expected to be completed by the end of the year.

Venator Group's management, struggling to transform the former Woolworth retail chain into a sporting goods titan, received a vote of confidence after its shareholders turned down a slate of candidates for the board from Greenway Partners, which owns more than 14 percent of Venator's stock. Also rejected was a Greenway bid to return to the Woolworth name. Despite the victory, Venator's shares, sales and profits are down, and the sporting goods industry remains in a slump.

EARNINGS

Charles Schwab Corp. said second-quarter profit rose 98 percent, to $151 million, on record revenue of $982.1 million, but warned that margins could shrink as the largest Internet broker spends more on computers and staff to satisfy demand.

Caterpillar, the world's largest maker of construction equipment, said second-quarter profit dropped 37 percent, to $283 million, and warned that earnings this year will be as much as 25 percent below last year's levels. Despite cutting jobs and spending, lower orders in North and South America from farming, mining and oil customers grappling with low commodity prices led to the lower-than-expected earnings forecast.

Tribune Co., the parent company of the Chicago Tribune and the Chicago Cubs, said its second-quarter profit from operations rose nearly 13 percent, to $118 million. The company attributed the strong earnings report to its television business, where syndication revenue was higher.

RECALLS

Reebok Classic Leather Zip sneakers for toddlers and children have been recalled because a decorative zipper on the side of the shoe may come off and pose a choking hazard to young children. Reebok notified the Consumer Product Safety Commission of the defect two weeks ago, although no injuries have been reported. The shoes may be returned to the store where they were purchased for a refund or an exchange.

Beef tips and gravy, sold in three-pound cartons under the brand names Haugin's Pride Beef Tips and Gravy, and Schwan's Beef Tips and Gravy were recalled because the food may have been undercooked. No illnesses were reported from the products, which are sold by Gorges/Quick-to-Fix Foods through mail order deliveries, restaurants and food service outlets. The affected product was marked with the Agriculture Department inspection seal "EST 7261A."

LOCAL BUSINESS

General Dynamics of Falls Church will be paid $169 million to help supply 100 tanks and other weapons to Egypt as part of a $564 million contract, the federal government announced.