JetBlue Airways said it was putting 1 million seats on sale for up to half-off this fall, prompting a fall in the shares of many airlines. Its announcement follows similar moves by other low-fare carriers, including Southwest, which priced one-way fares at $39 to $99 for late summer. This fresh round of airfare cuts poses a continuing problem for older airlines that can't make money at such low prices, analysts say. Tom Parsons, publisher of travel Web site Bestfares.com, said the price war is unusual in its breadth.

Japan Tells Microsoft to Alter Contracts

Japan's anti-monopoly agency told Microsoft to drop a clause from contracts with Japanese electronics makers that it suspects allows the U.S. software giant to unlawfully appropriate patented technology. The clause says companies that sign Windows licensing agreements forgo the right to sue over suspected patent infringements linked to the licensing. Microsoft said it would contest the order.

MORE NEWS

The U.S. trade deficit narrowed by 4.5 percent, to $46 billion, in May after five consecutive months of increases. Exports of goods and services rose to a record $97.1 billion in May, a 2.9 percent increase from April's level. Imports increased by 0.4 percent, to $143.1 billion.

The judge in the fraud trial of former Tyco International general counsel Mark A. Belnick asked jurors to work late today to avoid scheduling problems. Jurors were dismissed after a third day of deliberations without a verdict.

Duke Energy will pay $207.5 million in cash and credits, including about $172 million to California ratepayers, to settle claims that it overcharged during the California energy crisis of 2000-01, the company said.

Regulators plan to increase the number of examiners who conduct risk-based accounting and compliance tests for Fannie Mae and Freddie Mac from 58 to 98 by the end of 2005, the director of the Office of Federal Housing Enterprise Oversight, Armando Falcon Jr., told a House subcommittee.

President Bush signed a bill renewing trade benefits for many sub-Saharan countries for seven years. The African Growth and Opportunity Act, adopted in 2000, sparked $14 billion in U.S. imports from Africa in 2003.

Red Hat expects to restate financial results for fiscal 2002, 2003 and 2004 and the first three months of fiscal 2005 as it changes the way it recognizes revenue from subscription agreements. The software supplier said it will begin to defer recognition of part of a contract's revenue until the contract's final month instead of when the contract begins.

Morgan Stanley, the second-biggest U.S. securities firm, is being investigated by the Securities and Exchange Commission over fees it charges on some index funds, according to an SEC filing.

Martha Stewart's ex-broker, Peter E. Bacanovic, will be sentenced separately from his former client, as he requested, a judge ruled. Stewart will be sentenced Friday morning and Bacanovic in the afternoon.

Bank of America said it is buying bank-card processor National Processing in a $1.4 billion cash deal that would create the nation's second-largest such company, with nearly $250 billion in annual processing volume. Under the terms of the deal, still subject to shareholder and regulatory approval, Bank of America will pay $26.60 per share for the company.

Microsoft released a tool for removing a virus discovered in late June that exploits a vulnerability in the Internet Explorer browser, but the company did not say when it would offer a software patch to prevent the infection from spreading. The software manufacturer also released two patches to correct other vulnerabilities in Windows.

Lucent Technologies has received a contract from Verizon Wireless to supply at least $5 billion of network equipment, software and services.

Burger King named Gregory D. Brenneman chief executive. Brenneman, 42, is chairman and chief executive of a Houston-based private equity firm, TurnWorks, and a former president of Continental Airlines.

Delta said that it will post $1.65 billion in non-cash charges in the second quarter and that it will no longer recognize income tax benefits, which will boost its net losses. Delta's financial performance this year has been significantly hurt by higher fuel costs and lower returns from its U.S. business, its chief financial officer said.

INTERNATIONAL

UFJ Holdings said it may seek a merger with Mitsubishi Tokyo Financial Group, a combination that would surpass Citigroup as the world's biggest bank with about $1.7 trillion of assets. UFJ had 3.95 trillion yen of bad loans as of March 31, the most among Japan's four biggest banks.

Nortel Networks said its 2003 income from continuing operations will be wiped out when it restates its results. The Brampton, Ontario-based telephone equipment manufacturer, which is being investigated by U.S. and Canadian regulators, promised to release its 2003 results in September.

Growth in oil demand will cool somewhat to 2.2 percent annually in 2005, as China and other oil-hungry developing countries approach refining and transportation limits, the International Energy Agency predicted. It expects 2005 demand to average 83.2 million barrels a day.

Europe's top court took European Union governments to task for letting France and Germany off the hook for violating budget rules, saying E.U. finance ministers are responsible for ensuring member states follow budget rules. But the court also said the rules could be effectively suspended if a country garners enough support from fellow finance ministers to block the disciplinary action.

RECALL

Graco is voluntarily recalling about 140,000 Travel Lite portable swings because their carrying handles may drop and hit a child in the head, the Consumer Product Safety Commission said. The recall includes model numbers 1850JJP, 1850JGB and 1870DAL, and serial numbers between 050503 and 121103.

EARNINGS

Merrill Lynch reported a 10.3 percent surge in its second-quarter profit, to $1.08 billion from $977 million in the same quarter a year earlier. In the three months ended June 25, revenue was $5.3 billion, up 0.6 percent.

Johnson & Johnson more than doubled its second-quarter profit, to $2.46 billion from $1.21 billion. For the April-to-June quarter, revenue grew 11.1 percent, to $11.48 billion.

Levi Strauss & Co. earned $5.6 million, compared with a loss of $41.8 million in the same quarter a year earlier. Sales for the three months ended May 30 grew 3 percent, to $959 million.

Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers.

Women work at a textile shop in Beijing. Several countries are expected to call for an emergency meeting of the World Trade Organization to discuss textile import quotas. Textile industries in countries including the United States worry that Chinese competitors will drive them out of business when quotas expire at the end of the year.