Financial life in a big town

Apollo Global Management LLC is seeking an investment in Ralcorp Holdings Inc. and plans to meet with the cereal maker’s management to discuss options, said a source familiar with the discussions.

Apollo has already made an initial approach to Ralcorp management, said the source, who declined to be identified because the matter is private. Discussions may not result in a deal, said the person. Ralcorp was forged in a spinoff from Ralston Purina Co. almost 20 years ago. The company currently makes a wide variety of store-brand items such as peanut butter, cookies and cereals. Ralcorp, based in St. Louis, also added to its private-label pasta business with the $1.2 billion purchase of American Italian Pasta Co. last year.

ConAgra Foods Inc., based in Omaha, Neb., made an unsolicited bid for Ralcorp, CNBC reported Friday. There are no current talks between the two companies, the broadcaster said.

Reporter Kayla Tausche said on CNBC, “Both companies have been plagued, as we know, by commodity prices. … Remember, after the failed buyout of Sara Lee earlier this year, there have been questions surrounding the fate of both Conagra and Ralcorp. This is potentially a move to circumvent that speculation.”

Matt Pudlowski, a representative for Ralcorp, did not respond to a voicemail seeking comment cash advance today. Spokeswomen for ConAgra and Apollo declined to comment.

New York-based Apollo, led by Leon Black, bid for Sara Lee Corp. this year before being rebuffed by the Downers Grove, Ill., maker of Ball Park hot dogs. Apollo has been working with former consumer executive C. Dean Metropoulos to find investment opportunities in the industry.

Like other food companies, Ralcorp is facing increasing prices for ingredients such as milk and wheat, forcing it to pass those costs onto consumers.

Ralcorp, which also makes Post brand cereal, rose $6.38, or 8.9 percent, to $77.80 at 4:01 p.m. in New York Stock Exchange composite trading. Investors are now buying Ralcorps shares at a 4 percent premium over the S&P 500. Three years ago the premium was 52 percent. The company had a market value of $4 billion.

ConAgra, the maker of Chef Boyardee pasta and Healthy Choice frozen meals, has done a single acquisition in the past 12 months, the June purchase of American Pie LLC. Purchasing Ralcorp would give ConAgra Chief Executive Officer Gary Rodkin the biggest maker of store-brand pasta and cereal in the U.S.

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U.K. consumer confidence slumped to its weakest level since the depth of the recession in February 2009 as the government’s budget cuts began in earnest, a report by GfK NOP Ltd. showed.

The index of sentiment fell to minus 31 in April from minus 28 in March, the London-based research group said in an e-mailed statement today. The reading is down from minus 16 a year earlier and each of the five measures that make up the gauge declined on the month.

Household finances are under pressure from inflation that’s double the Bank of England’s 2 percent target and the tightest fiscal squeeze since World War II. The economy’s 0.5 percent expansion in the first quarter was just enough to recover the production lost during in the previous three months, when freezing weather disrupted business across the country.

“Coming after six months of stagnant economic growth, this is a significant drop, one that is bad news for the government and bad news for the economy” GfK Social Research Managing Director Nick Moon said in the statement. “These figures must make the possibility of a double-dip recession increasingly real.”

A measure of consumers’ assessment of their personal financial situation over the last 12 months dropped 4 points to minus 23, and the index on the next 12 months declined the same amount to minus 14. A gauge of their willingness to make major purchases fell 2 points to minus 31.

GfK’s index covering consumers’ views on the general economic situation over the past 12 months dropped 3 points to minus 57, while a measure of sentiment on the general economic situation in the coming 12 months fell 1 point to minus 30.

Interest-Rate Bets

The report may reinforce investor expectations that the Bank of England will maintain its benchmark interest rate at a record low of 0.5 percent to support the economy.

The rate will rise by 25 basis points by November, according to forward contracts on the sterling overnight interbank average, or Sonia, compiled by Tullett Prebon Ltd. On March 30, Sonia contracts showed investors expected a rate increase in July.

Associated British Foods Plc (ABF), the owner of Primark clothes stores, reduced its full-year earnings forecast yesterday as it anticipated weak consumer confidence and rising cotton prices will cut profitability at its clothing unit.

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Wael Ghonim, a Google executive who shot to international prominence after being detained for 10 days in Egypt, is leaving the search company to start his own venture.

Ghonim tweeted on Saturday: "Decided to take a long term sabbatical from @Google & start a technology focused NGO to help fight poverty & foster education in #Egypt"

As protests broke out in January on the Egyptian streets over the rule of then-president Hosni Mubarak, Ghonim fired off a steady stream of messages to Twitter and Facebook about the uprising. He also worked behind the scenes to galvanize the uprising.

"The plan was to get everyone on the street," he told CNN’s Ivan Watson in an interview after his release. "This is the Internet revolution. I’ll call it revolution 2.0."

Ghonim’s sudden disappearance had his friends and family — and, soon, the whole world — fearing for his safety. Google (GOOG, Fortune 500) posted many tweets in his support, and assured Ghonim that his job with the company would be there when we was ready to return.

Soon after his release, Ghonim tweeted a "thank you" to Google for its aid: "Thanks @Google for all the efforts you did in ’searching’ for me. Today ‘I’m feeling lucky’ that I work for this company."

Though he tweeted "Please don’t make me the face of this revolution," Ghonim became a symbol of the uprising after his disappearance. He was named last week to Time magazine’s 100 most influential people of the year. 

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An officer in Ivory Coast’s new army says hundreds of combatants who fought to install President Alassane Ouattara have returned to barracks.

Col. Gaoussou Soumahourou said they had been returning even before Ouattara’s order Friday for former rebels to return to their bases. Ouattara said the war had ended with the April 11 arrest of Laurent Gbagbo, whose refusal to accept electoral defeat led to prolonged fighting that killed hundreds.

A few dozen fighters were at Soumahourou’s temporary base on the outskirts of the commercial capital of Abidjan on Monday. A week ago it was teeming with thousands of fighters and looted vehicles.

Soumahourou said other combatants still are fighting die-hard Gbagbo militiamen in one Abidjan suburb.

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The Bank of Thailand is willing to let the baht appreciate to help contain inflation, and only plans to intervene if the currency rises at a faster pace than its regional peers, Deputy Governor Atchana Waiquamdee signaled.

The baht has advanced 7.7 percent in the past year against the dollar, the third-best performance among Asia’s 10 major currencies excluding the yen, as overseas investors purchased shares and government bonds to benefit from economic expansion. It pared earlier losses after Atchana’s remarks today.

“A strong baht helps decrease inflation, especially imported inflation,” Atchana said in an interview at her office in Bangkok. “We didn’t resist the trend” of Asian currency appreciation, she said.

Asian central banks from China to Singapore and Thailand are raising interest rates or allowing their currencies to gain as growth and oil at more than $100 a barrel spur inflation. The International Monetary Fund said this month regional authorities must quickly tighten monetary and fiscal policies to reduce the risk that their economies will boom and then bust.

“That will be the trend for most Asian central banks, to let their exchange rate strengthen to help tame inflation,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Singapore. “Thailand will continue to tighten monetary policy and we will continue to see capital inflows.”

Central Bank Intervention

The baht reached 29.88 per dollar today, the strongest level since Dec. 6, as the central bank raised borrowing costs for a sixth time since June this week and signaled further increases. The currency pared earlier losses of as much as 0.2 percent, trading 0.1 percent lower from yesterday at 29.94 per dollar as of 3:03 p.m. in Bangkok, taking the weekly gain to 0.7 percent, according to data compiled by Bloomberg.

Thailand’s central bank has no target level for the baht, and intervenes “only when the baht overshoots or undershoots or doesn’t move in line with fundamentals,” Atchana said.

Overseas investors bought $798.3 million more Thai equities than they sold this month through yesterday and $3.6 billion more local government debt, according to data from the stock exchange and the Thai Bond Market Association. Southeast Asia’s second-largest economy may expand as much as 5 percent this year, after growing 7.8 percent in 2010, the fastest pace since 1995, Prime Minister Abhisit Vejjajiva said this month.

The central bank lifted the one-day bond repurchase rate by a quarter of a percentage point to 2.75 percent on April 20, and Thailand’s benchmark is higher than a maximum rate of 0.25 percent in Japan and the U.S.

Oil Costs Soar

Thailand, China, India, South Korea, Indonesia, the Philippines and Taiwan all raised interest rates in 2011 to curb inflation. Crude oil has climbed 23 percent this year and reached $113.46 a barrel last week, the highest since September 2008. A stronger currency makes imports of oil cheaper.

Chinese Premier Wen Jiabao said April 9 that stabilizing consumer prices is the top priority and policy tools including the exchange rate will be used to “eliminate the monetary basis for inflation,” while Bank Indonesia Governor Darmin Nasution said last month the bank will allow the rupiah to appreciate to help manage imported inflation. The Monetary Authority of Singapore said last week it will allow the currency to strengthen, sending the local dollar to the strongest level since at least 1981, when Bloomberg began tracking the data.

“If one country intervenes in their foreign-exchange market, others have to do it as well,” Atchana said. “If you look at our increase in the international reserves, you see it is obvious that we intervened in the market.”

Thailand’s foreign reserves have increased by $13.6 billion this year to a record $185.8 billion as of April 15, compared with a gain of $34.3 billion last year. The reserves climbed 0.6 percent last week, according to central bank data released today.

Singapore Dollar Advances

The Singapore dollar has advanced more than 11 percent in the past 12 months against the greenback. Taiwan’s dollar gained 8.5 percent, Malaysia’s ringgit rose 6.8 percent and the Chinese yuan added 4.8 percent in the same period.

“If your currency appreciates, I don’t see any reason why we have to resist that because it helps to reduce the inflation rate of countries in the region,” Atchana said. “We will not lose competitiveness because of the exchange rate.”

Thailand’s inflation rate rose to a seven-month high of 3.14 percent in March while core inflation, which excludes fresh food and fuel prices, rose 1.62 percent, official data show. The central bank uses the core measure to guide its monetary policy and aims to keep the pace between 0.5 percent and 3 percent.

Abhisit has added price controls, kept oil subsidies and pledged higher wages to ease the impact of rising costs ahead of a general election he may hold as soon as June. Bank of Thailand Governor Prasarn Trairatvorakul said last week inflation may climb as much as one percentage point once the government removes oil subsidies.

The onshore one-year interest-rate swaps, the fixed cost needed to receive a floating payment, has increased 115 basis points this year and reached the highest level since December 2008 on April 7, suggesting growing expectations for higher rates. A basis point is 0.01 percentage point.

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SHANGHAI

Spain sold 3.4 billion euros ($4.9 billion) of bonds and demand rose even as its borrowing costs increased amid expectations Greece may restructure its debt.

The Treasury said it sold 2.49 billion euros of 10-year bonds at an average yield of 5.472 percent, compared with 5.162 percent at the previous auction on March 17. It also sold 885 million euros of bonds maturing Jan. 31, 2024 at 5.667 percent.

Demand for the 10-year benchmark bonds was 2.1 times the amount sold, compared with 1.81 last month, and the bid-to-cover ratio for the 2024 debt was 2.27. The Treasury aimed to sell a maximum of 3.5 billion euros.

Spain is trying to distance itself from other so-called peripheral economies as investors increase bets that Greece will be forced to restructure its debt. Finance Minister Elena Salgado played down yesterday the surge in Spain’s borrowing costs to three-month highs, saying economic “fundamentals” are unchanged from last week and the government will press ahead with cutting the deficit and forcing struggling savings banks to bolster capital.

“It’s somewhat a relief, they cleared it quite comfortably,” Orlando Green, a strategist at Credit Agricole Corporate & Investment Bank in London, said. “The authorities are doing what they can to at least try to convince the market that they are on the path to a more sustainable position.”

Spread Narrows

The 10-year debt was sold at a lower yield than the 5.516 percent on the secondary market before the auction payday advance. That yield fell to 5.464 percent after the sale, and the euro strengthened 1.2 percent to 1.4501 against the dollar.

The gap between Spanish and German 10-year yields narrowed to 215 basis points from 223 basis points yesterday. That compares with a euro-era record of 298 basis points on Nov. 30, after Ireland became the second euro nation following Greece to seek a European Union bailout, and an average of 15 basis points in the first decade of monetary union.

Spain is implementing the deepest budget cuts in at least three decades and overhauling laws on labor, wages and pensions as it seeks to rein in the region’s third-largest budget deficit and steer the economy back to growth after a three-year slump.

While Greek Finance Minister George Papaconstantinou said on April 16 that his nation has no plans to restructure its debt and French Finance Minister Christine Lagarde also ruled out a restructuring yesterday, German officials have openly discussed the possibility. Greece will probably have to restructure its debt, and bond buybacks are a possible solution, Lars Feld, a member of German Chancellor Angela Merkel’s council of economic advisers, told Deutschlandfunk radio today.

Greece paid 4.1 percent to sell 13-week Treasury bills yesterday, as its two-year yields rose above 20 percent to a euro-era record.

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Global stocks sank Monday after a leading credit ratings agency warned of a deteriorating U.S. financial position and investors fretted over a debt default by bailed-out Greece.

Though Standard & Poor’s reaffirmed its triple A rating on the U.S., it downgraded its credit outlook to negative from stable, citing a “material risk” that policymakers won’t be able to agree on a plan to deal with the “very large” budget deficit.

“While it has been widely recognized that the U.S. credit rating may have been at some risk of a downgrade for years, S&P’s action still comes as a major wake-up call for policymakers, and investors,” said Douglas Porter, deputy chief economist at BMO Capital Markets. “This may well prompt more forceful action on the deficit in the next two years, which in turn will act as a more forceful drag on the economic recovery.”

The markets were certainly shocked by the announcement and stocks fell sharply.

In Europe, the FTSE 100 index of leading British shares closed down 2.1 percent to 5,870.08 while Germany’s DAX slid 2.1 percent to 7,026.85. The CAC-40 in France ended 2.4 percent lower at 3,881.24.

On Wall Street, the Dow Jones industrial average was down 1.7 percent at 12,132 around midday New York time while the broader Standard & Poor’s 500 index fell 1.5 percent to 1,299.59.

Stocks in Europe had already been trading lower amid mounting concerns over a possible Greek debt default. In addition, huge election gains for a nationalist euroskeptic party in Finland added to the tensions over Europe’s debt crisis. Portugal also began discussions on a financial bailout and Spain had to pay much higher interest rates to borrow in the markets.

The renewed focus on Greece’s debts came after suggestions the country would be better off looking for a way to renegotiate its debts

A restructuring would reduce Greece’s debt pile and possibly bring a quicker end to the painful austerity measures, but it would entail huge costs to Greece’s future ability to borrow money. It also would risk a massive blow to the country’s banks, which are big holders of Greek bonds, and hurt many German and French banks too.

There’s also fear that a Greek default would motivate Ireland and Portugal to seek a similar way out from their debt stranglehold.

As Greek officials continued to deny that restructuring was an option, Portugal began its quest for its own financial assistance Monday, with the finance minister meeting delegations from the European Commission, the European Central Bank and the International Monetary Fund. A key topic will center on the interest rate charged for Portugal’s expected euro80 billion ($114 billion) bailout.

Investors’ debt concerns swelled following the news that a euroskeptic party in Finland had made big gains in Sunday’s election.

“The victory of the True Finns party in yesterday’s general election in Finland will make further bailouts much more difficult to achieve,” said Gabriel Stein, an analyst at Lombard Street Research. “Conversely, it makes sovereign defaults far more likely.”

The raft of debt crisis news hit the euro hard, though the S&P warning _ perhaps counterintuitively _ helped the dollar post gains. The U.S. currency is often considered a safe haven in times of uncertainty.

By late afternoon London time, the euro was down 1.4 percent at $1.4215, a little above its earlier low of $1.4157.

Earlier in Asia, the main focus was on China’s latest monetary tightening in response to figures Friday showing inflation running at a 32-month high in March. On Sunday, the People’s Bank of China announced that the deposit reserve ratio for most banks would be raised _ the fourth reserve increase this year.

Beijing’s failure to cool prices and growth have frustrated communist leaders who also face mounting foreign pressure to allow China’s yuan to rise in value and narrow its swollen trade surplus. Premier Wen Jiabao last week called for authorities to step up the anti-inflation fight.

China’s weekend moves weighed on markets across the region.

Japan’s Nikkei 225 index fell 0.4 percent to close at 9,556.65, while Hong Kong’s Hang Seng dropped 0.7 percent to 23,830.31, and South Korea’s Kospi slipped 0.1 percent to 2,137.72.

However, mainland China’s Composite Index rose _ 0.2 percent to 3,057.33, its highest close in five months. The smaller Shenzhen Composite Index was up marginally to 1,281.99.

Benchmark crude for May delivery was down $2.80 to $106.87 a barrel in electronic trading on the New York Mercantile Exchange.

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Confidence among U.S. consumers climbed in April from a 16-month low, indicating job gains are helping Americans cope with rising fuel costs.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 69.6, higher than forecast, from March’s 67.5 reading that was the lowest since November 2009. The gauge was projected to rise to 68.8, according to the median forecast of 66 economists surveyed by Bloomberg News.

The economy has added jobs for six straight months and the unemployment rate fell in March to a two-year low, helping buttress consumer spending, which accounts for about 70 percent of the economy. At the same time, households may find it harder to cope with higher gasoline and food costs that are straining paychecks.

“It’s encouraging to see sentiment creep up,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “Consumers are taking the increase in gas prices relatively well. As long as the labor market continues to heal, consumers will continue to spend.”

Forecasts in the Bloomberg survey ranged from 62 to 72. The index averaged 89 in the five years leading up to the recession that began in December 2007.

Consumer Prices

Other reports today showed consumer prices rose in March for a ninth consecutive month on increases in food and fuel costs, while expenses for other goods and services cooled, and manufacturing continued to drive the expansion.

Stocks climbed as the better-than-expected data on confidence and manufacturing bolstered optimism on the economy. The Standard & Poor’s 500 Index rose 0.2 percent to 1,317.24 at 10:24 a.m. in New York. Treasury securities climbed, sending the yield on the benchmark 10-year note down to 3.42 percent from 3.50 percent late yesterday.

The gain in sentiment was foreshadowed by the Bloomberg Consumer Comfort Index, which rose to minus 43 in the week to April 10, the third consecutive increase, as improving job prospects made Americans less pessimistic about the economy and their finances.

The Michigan survey’s index of current conditions, which reflects Americans’ perceptions of their financial situation and whether it is a good time to buy big-ticket items like cars, rose to 82.7 from 82.5 the prior month.

Expectations Improve

The index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, climbed to 61.2 from 57.9.

Consumers in today’s confidence report said they expect an inflation rate of 4.6 percent over the next 12 months, the same as in the March survey and the highest since August 2008.

Over the next five years, the figures tracked by Federal Reserve policy makers, Americans expected a 2.9 percent rate of inflation, down from 3.2 percent the prior month.

The drop in perceptions of future inflation occurred even as fuel costs increased. The average price of regular fuel climbed to $3.82 a gallon yesterday, the highest level since September 2008, according to AAA, the nation’s biggest motoring organization.

A strengthening job market may be helping ease the pain. The economy created 216,000 jobs in March, the most since May 2010, while the jobless rate fell for a fourth straight month to a two-year low of 8.8 percent, Labor Department data showed on April 1.

Consumer Spending

Commerce Department figures this week showed retail sales increased in March for a ninth straight month.

Cincinnati-based Macy’s Inc. (M), the second-largest U.S. department store chain, and luxury retailers Saks Inc. (SKS) and Nordstrom Inc. (JWN) were among companies that reported higher March sales at stores open at least a year, according to company data. Auto demand has also lifted from last year.

“We continue to see good, solid signs of progress despite some of the challenges,” Don Johnson, General Motors Co. (GM)’s vice president of U.S. sales operations, said on an April 1 conference call. “A recovering job market is going to be the most important factor for the U.S. economy at this stage, and we do anticipate that this is going to continue to improve.”

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Shaw Communications, the dominant cable company in Western Canada, said its quarterly net profit rose 20 per cent as it cut costs while pausing to reassess its planned entry into the booming wireless telecoms market.

Shaw, which bought wireless spectrum in 2008 but has lagged others in entering the market, said earnings for the quarter ended Feb. 28 were $167.3 million, or 37 cents a share, on revenue of $1.2 billion.

Both were in line with analyst estimates.

Shaw said it cut 550 jobs in the quarter, including 150 managers, in a restructuring that cost between $25 million and $30 million but should save more than $50 million a year.

The Western Canada-focused company is fighting telecom rival Telus