Janus Capital Group said one of its clients plans to pull approximately $5 billion out of its mutual funds by the end of the year, a sum that represents 3.7 percent of the group's total assets under management. The announcement is the latest blow for Denver-based Janus, which agreed three months ago to a $225 million-plus settlement with federal and state regulators to resolve claims it allowed improper mutual fund trading. Janus did not identify the client, or say why the decision was made.

Bidding War Likely for Japanese Bank

Sumitomo Mitsui Financial Group, Japan's third-biggest bank, will offer to merge with UFJ Holdings to create the world's biggest lender, setting up a bidding contest with Mitsubishi Tokyo Financial Group. Sumitomo Mitsui is working with Sumitomo Trust & Banking, which had earlier agreed to buy UFJ's trust banking unit, to make an offer as early as today, President Yoshifumi Nishikawa told reporters. The offer comes two weeks after Mitsubishi Tokyo agreed to merge with UFJ, which is seeking an alliance after a third loss in as many years depleted its capital. Sumitomo Trust blocked UFJ's plan to merge with Mitsubishi Tokyo this week after a Tokyo court excluded UFJ's trust business from the talks.

MORE NEWS

AT&T's credit rating was reduced to junk by Moody's Investors Service after the company reported an 80 percent drop in profit and its 18th straight quarterly sales decline. Moody's cut its rating on AT&T's long-term debt to Ba1, the highest non-investment grade level, from Baa2. The reduction affects $10.2 billion in debt, Moody's said. AT&T's fall to junk caps a two-decade erosion in the former telephone monopoly's perceived ability to repay borrowings.

Gerard Arpey, chairman and chief executive of AMR, the parent of American Airlines, turned down an annual raise of more than $110,000, telling board members it would send the wrong message to employees. AMR's board voted to give Arpey a 22 percent raise, to $625,000 a year, when he was named company chairman this year. But Arpey has decided to keep his base salary at $513,700, the same amount he earned as president and chief operating officer, spokesman Roger Frizzell said. American's 80,000 employees have given back $1.8 billion in annual pay and benefits to help keep the carrier solvent, and Arpey's predecessor, Donald J. Carty, resigned in April 2003 over executive pay issues.

Morgan Stanley was fined $2.2 million and censured by NASD, the securities dealers' regulatory group, for submitting information about its brokers late more than 1,800 times. Securities firms are required to file information on brokers so investors may check on their career histories, customer complaints, regulatory actions and criminal convictions.

Apple Computer said it will investigate the legality of RealNetworks' iPod-compatible software, calling it the technological equivalent of breaking and entering. RealNetworks' new system gets around iPod's copy protection, which limits the portable music player to songs downloaded from Apple's music store or songs converted into an MP3 format.

U.S. homeownership reached 69.2 percent in the second quarter, the Census Bureau said. There are now 73.4 million homeowners in the United States, the most ever.

Computer Associates International halted payments to ex-chief executive Sanjay Kumar and nominated former Securities and Exchange Commission member Laura Unger to its board. Kumar gave up $7.56 million in restricted shares when he cut his ties with the software manufacturer on June 4. Computer Associates said it would defer his severance payment until the federal government completes an investigation into an alleged $2.2 billion accounting fraud.

Target, the second-largest U.S. discount chain, said it will sell its Mervyn's department store business for $1.65 billion in cash as part of a plan to focus on its faster-growing discount stores. Mervyn's 257 stores in 13 states are being purchased by a group that includes Sun Capital Partners, Cerberus Capital Management, and Lubert-Adler/Klaff Partners. Last month, Target agreed to sell its Marshall Field's stores and nine Mervyn's locations to May Department Stores for $3.24 billion.

Shipping companies and union leaders agreed to add 3,000 new dockworkers to the Los Angeles port complex, the nation's largest, in a bid to stem a growing backlog of cargo traffic caused by a boom in shipping from China.

Intel, the world's largest semiconductor maker, delayed the release of a faster version of its Pentium 4 desktop processor until next year as it struggles to deliver new products on schedule. The delay adds to problems Intel has had releasing computer chips on time. This year, Intel moved back production of two personal computer processors and canceled the development of a third. The rollout of its Grantsdale chipset, which was also late, was marred by a recall. Intel's processors power 85 percent of the world's PCs.

Donald Trump filed plans to build what would be the tallest hotel on the Las Vegas Strip. The 64-story hotel-condominium tower would be built across from the Wynn Las Vegas resort project and next to the Fashion Show Mall, the developer said. Scheduled to begin construction early next year, the $300 million project would feature 1,000 hotel rooms, 50 luxury residential units of up to 10,000 square feet, a spa and restaurants. It would not have a casino, Trump said.

INTERNATIONAL

Parmalat Finanziaria filed a lawsuit against Citigroup, saying the bank may have played a role in its bankruptcy. Citigroup helped the Italian dairy company raise about $300 million from securitizing receivables that turned out to be false and in 1999 set up a unit that allowed Parmalat to raise about $140 million that was passed off as equity, according to court documents.

Royal Ahold, the Dutch food retailer that overstated profit for three years, said second-quarter sales fell 4.8 percent as the euro's gains eroded U.S. revenue. Revenue dropped to 12.3 billion euros ($14.8 billion) from 13 billion euros a year earlier. Ahold owns supermarket chain Giant Food and Columbia-based distributor U.S. Foodservice.

LOCAL BUSINESS

The Treasury has the authority to limit debt sales by Fannie Mae and Freddie Mac, the two-largest mortgage finance companies, the Congressional Research Service said, echoing similar guidance from the Justice Department. Treasury, having failed to persuade Congress to create a stricter regulator for Fannie Mae and Freddie Mac, is considering tightening existing oversight of the government-chartered, shareholder-owned companies as a way to rein in their growth.

EARNINGS

Aetna, the No. 3 U.S. health insurer, said second-quarter profit more than doubled, to $286.3 million.

Bausch & Lomb, helped by a double-digit jump in sales of contact lenses, eye-care drugs and vision-correction surgical products, posted a 46 percent jump in second-quarter profit, to $41.4 million.

Bristol-Myers Squibb said quarterly earnings dropped 42 percent, to $527 million, because of higher legal expenses.

Coca-Cola Enterprises said second-quarter earnings fell 22 percent, to $203 million. Shares of the Atlanta soft drink bottler had their largest decline in four years after the company missed analysts' estimates.

Cox Communications, the fourth-largest U.S. cable-television operator, said second-quarter profit fell 47 percent, to $62.7 million. Revenue rose 12 percent, to $1.6 billion, on higher sales of digital-TV and Web access.

Dow Chemical reported a 74 percent increase in profit in the second quarter, to $685 million. Sales rose to $9.8 billion from $8.2 billion a year ago.

Duke Energy said second-quarter profit rose 1.9 percent, to $432 million, as warmer weather than a year earlier stoked demand for power to run air conditioners. Revenue climbed 4 percent, to $5.36 billion.

European Aeronautic Defence and Space said its earnings more than doubled in the first half, to $466 million, thanks to an increase in Airbus plane deliveries and trimmed losses at its space division.

Georgia-Pacific cited strength in its building products business as the paper and tissue manufacturer reported a second-quarter profit of $220 million, up from $61 million a year ago.

Gillette reported a 26 percent increase in profit, to $426 million, in the second quarter. Sales rose 8 percent, to $2.44 billion.

International Steel Group, the nation's largest integrated steelmaker, said it earned $94 million in the second quarter, compared with a loss of $27.5 million in the same period a year ago. The profit largely reflected ISG's May 2003 acquisition of Bethlehem Steel, which more than doubled the size of the company. Higher steel prices also helped boost results.

Loews, the hotel, tobacco and insurance conglomerate run by New York's Tisch family, said second-quarter profit rose 90 percent, to $407.3 million, after its insurance unit, CNA Financial, raised prices.

Metro-Goldwyn-Mayer lost $19.7 million in the second quarter, compared with a loss of $133.6 million a year ago. Executives would not comment on the company's exploration of a possible sale to Sony or Time Warner.

Northrop Grumman said second-quarter profit rose 44 percent, to $295 million, as it increased work on the Navy's newest destroyer and sold more missile-defense systems and unmanned spy planes.

Raytheon reported a $108 million second-quarter loss after taking a $222 million after-tax charge to settle a class-action lawsuit. The charge stems from a $410 million cash-and-securities settlement that Raytheon disclosed in May.

Waste Management, the nation's largest trash hauler, said second-quarter profit increased 23 percent, to $216 million. The year-ago results included a pre-tax restructuring charge of $23 million from 2003 layoffs.

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

Sport-utility vehicles await buyers at a General Motors new-car dealership in Denver. Analysts indicated that GM may not reach targeted profit for the year because of growing inventory and other problems.