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The dollar resumed its climb against other major currencies for a second day in a row Tuesday as recession fears took center stage.

The U.S. currency also got a boost against the 15-nation euro on bets that the European Central Bank will have to cut rates again before the year ends.

"The markets are actually pricing in a 50 basis point cut in December," said Kathy Lien director of currency research at Global Forex Trading in New York. "The euro-zone economy is still in a lot of trouble," she added.

The ECB, which currently has its key interest rate at 3.25%, is scheduled to meet on Dec. 20 to make a decision on interest rates.

The euro, which initially rallied following some upbeat news about German economic sentiment, fell 2.3 cents to $1.252 by the end of trading in New York Tuesday.

The dollar also rose against the British pound, which fell 2.3 cents to $1.538. But the greenback lost ground against the Japanese yen, falling ¥0.35 to ¥97.65.

"Right now the dollar is not trading on U.S. fundamentals, it’s trading on risk aversion," said Lien.

Over the past several weeks, investors have been looking to the equities markets, which are considered forward-looking indicators, for guidance on the state of the global economy and the possibility of a deep recession.

World markets: Investors sought safety as economic instability continued to rumble through global equities. In the United States, the Dow Jones industrial average fell nearly 3% as U.S. automakers floundered, overshadowed by the possibility of a government intervention short-term cash loans.

Markets in Asia and Europe also weakened, with indexes falling more than 3% in the U.K. and Japan, and more than 4% in France, Germany and Hong Kong.

While an index of German business sentiment showed a modest recovery, the reading is still negative and well below it’s historic norm.

"The oncoming global recession is too large," said John Kicklighter, currency strategist with Forex Capital Markets. "The overall [negative] sentiment is too strong," he added.

Chinese stimulus: Meanwhile enthusiasm over the $586 billion Chinese stimulus package announced Sunday faded as investors began to reassess how quickly the plan will have an impact.

"People are still kind of skeptical over what will happen," said Kicklighter.

Unlike the stimulus plan enacted by the U.S., which focused on tax rebates, the Chinese plan focuses on job creation and building infrastructure such as roads and bridges, which may take longer to implement.

Investors were initially encouraged by the Chinese plan, but then began to re-examine its impact since it will be rolled out gradually till 2010, according to Kicklighter.

"It will have a little effect, but it’s like trying to stop an oncoming train with a car," he said.

The export-driven Chinese economy continued to show weakness as well, as exports slowed, according to a report from Beijing. 

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Sarah Palin gets a lot of credit for standing up to Big Oil in Alaska, but if she and John McCain win the White House, don’t expect some of her more populist policies to survive the move to Washington.

In her two years as Alaska’s governor, Palin is credited with being tough on big oil, to the benefits of her constituents and bucking her own party.

In late 2007 Palin succeeded in raising the tax on oil companies from 22.5 to 25% of net profits. Alaska also added a clause increasing the tax for each dollar oil goes above $52 a barrel - essentially, a windfall profits tax.

Palin also killed a deal struck between Exxon Mobil, BP, and ConocoPhillips and Alaska’s previous governor to build a natural gas pipeline across the state and into Canada.

Analysts said corruption tainted that deal.

Palin renegotiated a new deal with a Canadian company, TransCanada, to build the $26 billion pipeline, which analysts say - if completed - is better financially for the state.

But analysts - and the McCain campaign itself - are quick to note that Palin will toe the line on the energy policies of her potential boss, who unlike Barack Obama does not favor a windfall profits tax.

Christopher Ruppel, an energy analyst at Execution LLC, a broker and research firm for institutional investors like hedge and mutual funds is more concerned with McCain’s energy policy than Palin’s past spats with the oil industry. "We don’t think she will represent a big change from that."

The McCain campaign, which speaks for Palin, confirmed that stance.

"’The governor supports the campaign’s positions," said Doug Holtz-Eakin, a McCain senior advisor.

Palin certainly has experience in dealing with energy issues in Alaska. But despite her drill baby comments, it’s hard to tell if the oil industry will see her as an ally - a la Dick Cheney who ran Haliburton, an oil services company - or whether her previous tax and pipeline decisions will label her a threat (instant payday loans).

‘It’s mixed, I haven’t picked up a consensus view," said Amy Myers Jaffe, a fellow in energy studies at the James A. Baker III Institute for Public Policy.

Exxon Mobil, which currently has an $800 million lawsuit filed against the state over the revoking of a gas field permit, declined to comment on Palin. Calls to Conoco and BP were not returned. The American Petroleum Institute also declined comment.

Jaffe said Palin shouldn’t get too much credit for raising the oil tax, noting that everyone from Hugo Chavez to the Canadian government hiked taxes as oil prices skyrocketed.

"Even the Bush administration raised royalty fees," she said. "She didn’t do anything everyone else didn’t do."

Other analysts echoed that sentiment.

"When people say ‘I stuck it to the oil companies,’ that is misleading," said Fadel Gheit, a senior energy analyst at Oppenheimer. "She is basically doing what is popular."

The tax may have been popular with Alaska’s voters, but it was not popular within Palin’s own party - many Republican state senators voted against the tax.

Holtz-Eakin, the McCain campaign spokesman, also said Palin’s decision to scrap the pipeline deal highlighted her ability to clean up Washington.

"She threw out the whole thing and redid it, which made sense," he said.

As to whether Palin can bring more experience in energy issues to the White House than her rival Joe Biden can, most analysts didn’t see it that way.

"Biden has extensive experience in dealing with energy and geopolitical issues due to his long record in the Senate," said Execution’s Ruppel. 

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Bail out the financial industry, but don’t send me the bill.

That’s what a majority of Americans are saying, according to a CNN poll released Monday. The poll showed that people are concerned about the economy, and a majority favor government action to help bail out the struggling financial institutions. But people are concerned that the proposed industry-wide bailout will burden taxpayers.

Of the more than 1,000 Americans surveyed in a national CNN/Opinion Research Corp. poll, 62% said they think in general the government should step in to try to address the problems facing struggling financial institutions. The margin of error was plus or minus 3 percentage points.

But the poll, conducted Sept. 19-21, showed that Americans think the cost of the $700 billion plan being debated in Congress is too high.

Though 55% said they favor the proposed bailout, 65% said it would probably treat taxpayers unfairly.

The drop off in support for the government’s actions could stem from the fact that taxpayers may have to foot the bill for all these bailouts. The majority of CNNMoney.com readers voiced similar concerns in a Talkback blog over the weekend.

Still, 88% of 518 respondents said they are concerned or even scared by the tumult in the financial markets.

And 55% supported the government’s actions taken so far - such as the $85 billion loan to insurer American International Group (AIG, Fortune 500) and hundreds of billions in backing for mortgage finance giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) and Wall Street brokerage Bear Stearns.

Economists say that the cost to the taxpayer is not yet known - and probably won’t be close to the headline number.

"For the average person, $700 billion sounds like a whole heck of a lot of money," said John Silvia, chief economist for Wachovia guaranteed payday loans. "It’s reasonable to look at that number and be scared about it, but in the end, the Treasury may actually make money from the deal."

That’s because the government is proposing to buy up troubled assets that banks don’t want, with the intention of selling them later when the market is better.

"There’s a chance they could sell them at a decent price," Silvia said.

Furthermore, the cost of doing nothing may be much more severe.

"Because of the hit that capital took, there wasn’t any lending going on, which created a lot of complications with people getting mortgages," said Silvia. "If these companies have to write down loans, they’re going to make even fewer loans in the future."

Since the markets are all circular and related, failing companies can negatively impact people’s ability to get a mortgage, finance a car or even save for retirement.

"A lot of people’s IRAs, 401(k)s and pension plans had Fannie and Freddie in it," Silvia added. "And anyone with an S&P 500 index fund has a huge weighting on the financial sector." 

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Central banks in Japan and Australia pumped some $113 billion into money markets this week, holding down borrowing costs to revive confidence among banks.

The Bank of Japan pumped 2 trillion yen ($19 billion) today, for a total of 10 trillion yen this week, the biggest since at least the start of 2007. The Reserve Bank of Australia added A$1 billion ($824 million) and has injected more than A$12 billion this week, the most in almost 13 months.

“Funding pressures globally have intensified following the turmoil and fear that we could be in for another bout of asset price depreciations,'' said Adam Carr, a senior economist in Sydney at ICAP Australia Ltd., part of the world's largest inter-bank broker. “Financial institutions are hoarding cash and shoring up their balance sheets.''

Central banks injected more than $220 billion globally this week as credit markets seized up after the failure of Lehman Brothers Holdings Inc. and the U.S. government takeover of American International Group. The cost to protect against defaults on Asia-Pacific bonds fell by the most in more than five months and Japanese and Australian funding costs were unchanged.

U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke said they are working on a plan requiring legislation aimed at alleviating market turmoil.

The two regulators are seeking support for a plan to help financial institutions remove from their balance sheets illiquid mortgage-related assets at the root of the credit crisis.

Borrowing Costs Drop

Hong Kong's interbank loan rates declined from the highest in 11 months after the Hong Kong Monetary Authority injected HK$1.556 billion ($200 million) yesterday. The one-month Hong Kong interbank offered rate fell to 3.69 percent from 4.83 percent yesterday when it more than doubled.

The Fed yesterday agreed swap facilities with five other central banks that will increase the amount of U.S. currency available overseas by $180 billion to $247 billion. It doubled the limit of dollars it will provide the European Central Bank and Swiss National Bank to $137 billion, and authorized $110 billion of swap facilities with Japan, the U.K. and Canada.

The cost of borrowing in dollars overnight tumbled after the coordinated action was announced. The London interbank offered rate, or Libor, for overnight loans fell 1.19 percentage points to 3.84 percent yesterday.

Swap Dollars

The Bank of Japan said it will use its $60 billion swap arrangement to supply dollars to local and foreign financial institutions as required by market conditions. It will choose participants tomorrow.

“They will keep liquidity in the system because their goal is to revive the short-term liquidity in the dollar, which is the oil in the global financial system,'' said Sebastien Barbe, a Hong Kong-based strategist at Calyon, the investment banking unit of France's Credit Agricole SA free credit report instantly.

Japan's overnight loan rate fell to 0.4 percent after the BOJ's second injection today at 12:50 p.m. in Tokyo added another 1 trillion yen. The rate was as high as 0.585 percent before today's first injection of 2 trillion yen. The central bank's target overnight lending rate is 0.5 percent.

BOJ Governor Masaaki Shirakawa yesterday said the agreement with the Fed is aimed at providing dollars to foreign banks and brokerages. The Bank of Japan “doesn't have any particular concern'' about Japanese financial institutions' borrowing of dollars, Shirakawa said.

Foreign banks are paying more than Japanese banks to borrow cash because counterparties are less willing to lend to them. Japanese banks borrowed overnight funds at interest rates between 0.4 percent and 0.5 percent today, while foreign banks had to pay between 0.6 percent and 0.7 percent, according to Tokyo Tanshi, a Japanese money market brokerage.

Australia Banks

Australian banks' borrowing costs were stable today, according to a gauge that measures the availability of funds in the market. The difference between the rate banks charge each other for one-month loans and the overnight indexed swap rate was unchanged at 50.5 basis points at 2:12 p.m. in Sydney, after widening 13.5 points yesterday in the biggest jump since July 24, Bloomberg data show. The average spread for the past year was 23 basis points.

New Zealand's central bank will accept bank bills in its daily market operations to ease pressure on liquidity in the financial system.

The difference between the rate New Zealand banks charge each other for one-month loans and the overnight indexed swap rate widened to 59 basis points at 4:21 p.m. in Wellington, from 53.5 points yesterday, Bloomberg data show.

Default protection costs for bonds from Australia and Asia outside Japan declined, according to traders of credit-default swaps.

The Markit iTraxx Australia index fell 34 basis points to 171 as of 1:11 p.m. in Sydney, Citigroup Inc. prices show. The benchmark, tied to the debt of 25 companies including Qantas Airways Ltd. and BHP Billiton Ltd., declines as perceptions of credit quality improve. Japan's benchmark of credit risk stood at 150, down from 175, according to Credit Suisse Group data.

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Central bankers should strengthen regulation to avert a credit-fueled increase in asset prices and forgo raising interest rates in an attempt to reverse a future price surge, Federal Reserve Governor Frederic Mishkin said.

“It falls to regulatory policies and supervisory practices to help strengthen the financial system and reduce its vulnerability to both booms and busts in asset prices,'' Mishkin said yesterday in remarks at the Wharton School at the University of Pennsylvania in Philadelphia.

“Central banks should recognize that trying to prick asset bubbles using monetary policy is likely to do more harm than good,'' the Fed governor said.

The collapse of the U.S. subprime-mortgage market has led to a decline in global credit and the worst housing slump in 25 years. U.S. foreclosure filings increased 65 percent in April from a year earlier, RealtyTrac Inc., an Irvine, California- based seller of default data, reported this week, while financial institutions have reported writedowns and credit losses exceeding $333 billion since the beginning of 2007.

The central bank has aided financial institutions by creating ways to expand liquidity, including opening up loans to investment banks.

Funds provided to banks through the so-called discount window rose by $2.8 billion to a daily average of $14.4 billion in the week to May 14, the Fed said yesterday. Separately, the central bank's loans to Wall Street bond dealers rose by $75 million to $16.6 billion.

Market Turmoil

When expected market turmoil doesn't “happen, it's really tough to unwind monetary policy,'' said Robert Eisenbeis, chief monetary economist at Cumberland Advisors Inc. and former head of research at the Atlanta Fed.

“We are in a new world now,'' Mishkin said in the question and answer period regarding the use of an emergency power to loan to investment banks. “This is going to be an issue that involves a lot of discussion'' about Fed involvement in markets.

Mishkin, reiterating arguments used by former Fed chairman Alan Greenspan, 82, and current chairman Ben S. Bernanke, said central banks that use increases in the benchmark interest rate to deflate asset prices will hurt economic growth.

“Monetary policy should react to asset price bubbles by looking to the effects of asset prices on employment and inflation,'' said Mishkin, 57.

U.S. central bankers, when faced with asset price bubbles in technology stocks and housing during the past decade, chose not to intervene with the federal fund rate no fax payday loans.

Internet Stocks

As investors began pushing Internet stocks higher in 1996, the Fed held the benchmark lending rate at 5.25 percent and raised it only once, by a quarter point, the following year.

The Nasdaq Composite Index from 1996 until 1999 rose almost fourfold. After hitting a record in March 2000, the index fell for almost two years. The U.S. economy slipped into an eight- month recession in March 2001.

“It has been pretty clear for a long period of time that there was a fear of a Japanese-type slowdown and unwanted deflation'' among policy makers, Eisenbeis said in an interview. “That led them to keep interest rates too low for too long.''

Similarly, low short- and long-term rates early this decade helped fuel the biggest mortgage boom in U.S. history. Mortgage lending between 2004 and 2006 totaled $2.9 trillion, and house prices rose 31 percent, according to an index tracked by the Office of Federal Housing Enterprise Oversight.

Market Collapse

After the collapse of the subprime-mortgage market, house prices fell during the final two quarters of 2007, OFHEO data shows. Home values will increase less than 1 percent during the first six months of this year, according to economists.

The Fed's hands-off approach to soaring asset prices is “a dangerous, reckless and irresponsible way to run the world's largest economy,'' Stephen Roach, chairman of Morgan Stanley Asia, said at the World Economic Forum in Davos in January.

Greenspan, Fed chairman from 1987 until January 2006, has defended the monetary policy that coincided with the surge in technology stocks and home prices, saying an increase in borrowing costs would harm employment and growth.

“The notion that a well-timed incremental tightening could have been calibrated to prevent the late 1990s bubble is almost surely an illusion,'' Greenspan said in an August 2002 speech in Jackson Hole, Wyoming.

Bernanke has long opposed using the federal funds rate to prick asset bubbles, said Mark Gertler, an economics professor at New York University who has researched the issue with the Fed Chairman.

“Our view is the best way to deal with this is through prudent regulatory structure,'' Gertler said in an interview.

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German consumer confidence unexpectedly increased to a seven-month high as rising incomes encouraged spending.

GfK AG's index for May, based on a survey of about 2,000 people, increased to 5.9 from 4.8 in April, the Nuremberg-based market-research company said in a statement today. Economists predicted the gauge would fall to 4.5, according to the median of 28 estimates in a Bloomberg News survey.

Rising wages and the lowest unemployment in 16 years are cushioning the impact on consumers of faster inflation and slowing economic growth. While industrial production unexpectedly rose in February and manufacturing growth accelerated last month, business confidence fell more than economists forecast this month amid a global credit squeeze.

“Despite continuing turbulence in international financial markets and higher food and energy prices, German consumers are becoming more optimistic,'' GfK said in the report. “Conditions have improved for consumption to pick up this year,'' it said, citing “the upswing on the job market and recent wage agreements.''

The euro pared gained after the report, rising as high as $1.5682 from $1.5630 on April 26. The currency for 15 European countries traded at $1.5650 as of 9:44 a.m paydayloans. in Frankfurt.

A sub-index measuring income expectations jumped to 10.5 from 1.5 and a gauge of consumers' propensity to spend rose to minus 4.7 from minus 10.2. A measure of economic expectations increased to 23.3 from 15.

The jobless rate fell to 7.8 percent in March, the lowest level since August 1992. Workers are achieving bigger pay settlements. The IG Metall union won a 5.2 percent wage increase for about 85,000 steelworkers and German public-sector workers secured a pay increase that unions say is worth 8.9 percent over two years.

Medion AG, the German electronics distributor, said last week that first-quarter earnings rose 60 percent.

Still, faster inflation is eroding purchasing power. The annual rate of price gains matched a 12-year high in March and oil prices climbed to a record above $119 a barrel this month.

“Inflation must weaken in the next few months if consumer confidence is to continue its positive developments,'' GfK said.

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PepsiCo Inc., the world’s second-largest soft drink maker, said Thursday a big rise in international revenue helped offset higher commodity costs and boost its first-quarter profit by 5%.

For the quarter ended March 22, net income jumped to $1.15 billion, or 70 cents per share, from $1.10 billion, or 65 cents per share, in the prior-year quarter.

The result matched analysts’ profit estimates, according to a poll by Thomson Financial.

The company also affirmed its 2008 profit guidance of at least $3.72 per share - about 1 cent per share shy of analysts’ predictions - but added commodity costs will likely rise more than it initially expected.

PepsiCo (PEP, Fortune 500) said it is now expecting commodity inflation of 9% to 10% in 2008. Earlier this year, the company predicted 6% inflation.

On a conference call with investors, Chief Financial Officer Richard Goodman said the company had expected commodity costs to decline this year, but instead grain prices spiked in the first quarter.

"We were assuming it would reverse," he said. "Clearly that didn’t happen."

Chief Executive Indra K. Nooyi added that the company needed some time to adjust its pricing models to an inflationary environment.

"It’s taken us a quarter or two to catch up," she said.

Nooyi said the company will raise prices on much of its portfolio to try to offset the costs.

Goldman Sachs (GS, Fortune 500) analyst Judy E. Hong said in a note to investors she is concerned that a price hike "could have negative implications for volume growth."

Most food and beverage companies have raised retail prices as part of a struggle to combat far higher commodity costs, which have started eating into margins and profits across the sector.

Goodman said the company has been affected by higher prices for cooking oil, oats, wheat, corn and energy.

Corn and wheat both reached record-high levels in the past year due to overseas demand, bad weather and supply issues freecreditreport. Corn has also skyrocketed due to demand for the alternative fuel ethanol, which is made with the grain.

International Business

So far, Purchase, N.Y.-based PepsiCo has been able to grow its profit despite the higher costs, mainly due to its international business.

Revenue overall climbed 13% to $8.33 billion from $7.35 billion. The revenue beat analysts’ predictions of $7.97 billion.

Revenue in the international division grew the most, rising 27%. Volume, or the number of products sold directly or indirectly to consumers, grew 11% in the beverage unit and 15% in the snacks business.

Volume was particularly strong in China, South Africa, the Middle East and India.

The Americas Beverages unit did not fare as well, with revenue growing 6% and volume declining slightly.

The company said carbonated soft drinks volume fell 3%. PepsiCo, like most soft drink makers, has seen consumers move away from carbonated soft drinks to non-carbonated options like water and juices.

Non-carbonated drinks volume was even with the prior year. New Gatorade drinks, including a lower-calorie version called "G2," offset volume declines in juices and the company’s Aquafina water business.

In the Americas Foods division, which includes Frito Lay, Quaker Oats and the Latin America Foods business, revenue rose 13%, largely due to higher prices. Volume rose 3%, helped by sales of Lays, Cheetos and cereals like Quaker Oatmeal.

PepsiCo it expects volume growth of 3% to 5% in 2008 and high-single-digit revenue growth.

The company said some of that growth will come from the company’s $1.4 billion acquisition of Russia’s biggest juice company, JSC Lebedyansky.

That deal is expected to close in the third quarter.

Shares fell 87 cents to $68.33 in afternoon trading. 

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Taiwan's inflation accelerated for a second month in March, as rising grain costs boosted food prices.

Consumer prices climbed 3.96 percent from a year earlier, the state statistics bureau said today in Taipei. That was less than the 4.3 percent median estimate of 11 economists surveyed by Bloomberg. Prices rose a revised 3.87 percent in February.

Accelerating inflation fueled by higher food costs, which make up about a quarter of the index, may prompt the central bank to raise interest rates at its next policy meeting in June. Policy makers increased borrowing costs for a 15th straight quarter on March 27, citing inflation risks.

“Rising food prices are gradually showing their impact,'' Fang Wenyen, a Taipei-based economist at KGI Securities Co., said before the announcement. “The central bank hasn't given any indication that it will pause from raising rates.''

Food prices rose 9.33 percent from a year earlier, while transportation costs increased 3.86 percent. Housing, which includes rent and utility expenses, climbed 1.12 percent instant payday loan.

Wheat futures reached a record $13.495 a bushel on Feb. 27. The U.S. has forecast global stockpiles will decline to the lowest in 30 years after excessive rain hurt U.S. crops in 2007 and drought curbed yields in Canada and Australia. Taiwan imports almost all its wheat for bread, cakes, and noodles.

Core consumer prices, which exclude vegetables, fruit, fish and energy, rose 3.07 percent in March after gaining a revised 2.62 percent in February.

Import prices increased 11.84 percent from a year earlier, while wholesale prices rose 7.15 percent.

Policy makers in Taipei increased the discount rate on 10- day loans to banks by 12.5 basis points on March 27 to 3.5 percent, the highest in almost seven years. Inflation may top a government target of 2 percent this year, the central bank said.

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French liquor group Pernod Ricard SA outbid three other companies to buy Sweden’s state-owned Vin & Sprit, the maker of Absolut vodka, for $8.89 billion, the government said Monday.

The deal ends months of speculation over who would take over one of the world’s biggest vodka brands, which was put on the auction bloc as part of a sell-off of state-owned companies.

Managing Director Pierre Pringuet said the acquisition will fill a strategy gap for Pernod Ricard, which didn’t previously have any premium vodka brands in its portfolio.

"We wanted to bolster our presence in the U.S. and Absolut, with its 5 million cases will definitely do that," Pringuet told reporters in Stockholm, referring to Absolut’s yearly sales of 9-liter cases of vodka in the U.S.

"We intend to develop the brand and if possible accelerate its strengths," he said.

The government said it selected Pernod Ricard’s bid on Sunday over three other offers, by liquor groups Fortune Brands (FO, Fortune 500) and Bacardi Ltd. and an investment group controlled by Sweden’s Wallenberg family.

"Pernod Ricard submitted an offer that on an overall assessment is the most attractive," the government said in a statement. "Pernod Ricard will be an excellent home for V&S. The board of V&S has expressed that they see significant industrial logic in the transaction."

The government said the French company - owner of brands such as Chivas Regal whisky, Mumm champagne and Beefeater gin - intends to keep Vin & Sprit and Absolut vodka based in Sweden.

"There is no written contract about that but the value of the brand is because it is Swedish," Pernod Ricard Chairman Patrick Ricard said. "A Swedish brand must be produced in Sweden."

The government said the deal includes the whole company, except for Vin & Sprit’s 10% share in U.S paydayloan. spirits company Beam Global Spirits & Wine, which would be sold under a previous agreement with Beam shareholders.

The deal will be completed during the summer.

With its range of flavors from peach to blackcurrant, Absolut is the premium brand in Vin & Sprit’s product range. Its other brands include Cruzan rum, Plymouth gin, a handful of Scandinavian aquavits and bitters and hundreds of wines.

Absolut is believed to represent roughly half of the company’s sales of $1.48 billion in 2006.

Pernod Ricard said the deal would generate synergies, estimated at $197-$237 million annually before taxes, partly by integrating distribution networks.

"These synergies should be put into place in between two-four years after the finalization of this acquisition, depending on the timeline of distribution accords," the company said in a statement.

As a result of the deal, Pernod Ricard said it would end its distribution agreement with another vodka brand, Stolichnaya.

The French company said it will buy Vin & Sprit for $6.05 billion plus €1.45 billion and assume outstanding debt of €346 million, giving the deal an enterprise value of $8.89 billion, using Friday’s exchange rate.

The Swedish government, using an average exchange rate over the past 30 days, said the deal was worth $9.24 billion.

The government said last year it would sell Vin & Sprit as part of a broader sale of state assets in a move to pay off the country’s debt.

The state sellout also includes assets in banking group Nordea AB, telecom TeliaSonera AB, Nordic bourse operator OMX AB, real estate company Vasakronan AB and mortgage lender SBAB. 

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EADS wants to identify up to two acquisitions in the United States this year, according to an internal memo obtained by Reuters as the European aerospace group battles opposition in Congress to a U.S. Air Force deal.

Chief Executive Louis Gallois told staff that one of the group’s top 10 objectives for 2008 was to “propose two acquisition projects in the field of defense, security or services to the board, at least one of which is in the United States.”

The aim is part of a call to action for 2008 distributed days before EADS is expected to unveil annual losses triggered by industrial problems in its European plants and a weak dollar.

In the memo, Gallois makes delivering on EADS’s financial promises and beefing up its industrial performance the group’s No. 1 priorities for 2008, as its Airbus civil planemaker unit reels from costly delays to its A380 superjumbo.

Also high on the list is completing the full or partial sale of half a dozen Airbus factories, opposed by French and German unions, and ensuring A380 output increases sharply as planned.

The goals for 2008 are designed to kick-start a plan called Vision 2020, which aims to reshape Europe’s top aerospace company as a global player over the next 12 years.

“This will be an action year in which we start turning Vision 2020 into reality,” Gallois said in the memo.

The written pep talk was distributed in the past week and its existence was confirmed by two sources who asked not to be named because the list has not been released outside the group payday advance. A spokesman for EADS declined to comment. 

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