Business this week

Hewlett-Packard launched its biggest acquisition since its 2002 takeover of Compaq, when it agreed to buy Electronic Data Systems. The deal is valued at $13.9 billion. HP hopes its new purchase will enable it to compete better with IBM in a broad range of computer services. Investors are not so sure. HP's share price fell by 10% on news of the deal, knocking $12 billion off its stockmarket value. See article

It emerged that General Electric is thinking about selling its appliances division, which has been supplying homes with refrigerators, air conditioners and the like for decades. The conglomerate is under pressure to improve returns to shareholders and the division is now a relatively small part of its business.

Among the week's list of casualties in the subprime-loans crisis, MBIA, the world's largest bond insurer, reported a $2.4 billion quarterly loss and took write-downs of $3.6 billion; Crédit Agricole, a French bank, launched a euro5.9 billion ($9.1 billion) rights issue to offset mounting losses at Calyon, its investment-banking unit; and Freddie Mac, a government-backed housing-finance company, posted its third consecutive quarterly loss and unveiled a plan to raise $5.5 billion in new capital.

Property crash

The slump in American house prices will continue until at least next year, according to HSBC, which holds a sizeable portfolio of subprime loans and is thus seen as a good guide to where the market is heading.

In a deal that creates Australia's largest bank by market value, Westpac agreed to merge with St George, paying A$18.6 billion ($17.5 billion) for its smaller rival.

The decision by Yahoo! to reject Microsoft's takeover offer led to more grumbles from shareholders. But they took heart at the news that Carl Icahn, a veteran activist investor, has bought a stake in Yahoo! and will press the company to return to the negotiating table.

Cablevision, a cable-TV operator, won the bidding for Newsday, a newspaper based in New York's Long Island suburbs, with an offer worth $632m. The sale represents a defeat for Rupert Murdoch's News Corporation, which wanted to combine the distribution operations of its New York Post with Newsday's.

On the road

With the price of oil hurtling towards $130 a barrel, the cost of petrol in America crept ever higher just before the start of the summer driving season, which begins on Memorial Day (the last Monday in May). Meanwhile, the International Energy Agency again cut its forecast for the growth in demand for oil this year, causing analysts to ponder whether rising oil prices would cause global energy consumption to fall. See article

Canada's biggest energy company decided to split into two separately traded enterprises to take advantage of the high oil price. EnCana is hiving off its oilsands and refinery operations, which account for a third of its current assets, from its natural-gas business.

Nissan forecast that its profit for the 12 months ending March 31st 2009 will fall by around 30% because of higher material costs, a stronger yen and the slowdown in America. Other Asian carmakers have produced similar gloomy outlooks.

Airline wait times

A delay to the “ramped-up” production of Airbus's A380 was announced. EADS, Airbus's parent company, confirmed that five super-jumbos would not be ready for delivery as promised this year and next. After previous delays because of manufacturing woes, the A380 finally entered commercial service last year.

China established a state corporation to build commercial jets. With an expanding domestic market, the government wants to lessen its reliance on Airbus and Boeing with Chinese-made aeroplanes, but observers remain sceptical that China can compete globally. See article

Finmeccanica, a defence company in which the Italian state holds a 34% stake, boosted its presence in the American market by agreeing to acquire DRSTechnologies for $5.2 billion. DRS makes night-vision equipment, among other things, and is part of a team led by Boeing working on border security with the Department of Homeland Security.

BAA said that the managing director of Heathrow would step down from his job. Mark Bullock was responsible for the integration of the airport's Terminal 5, which endured a chaotic opening that led to hundreds of flight cancellations. His replacement is Mike Brown, chief operating officer of London Underground, another organisation in which passengers have a few quibbles about the service.

Politics this week

China suffered its biggest natural disaster for 30 years when an earthquake devastated Sichuan province killing some 50,000 people, according to official estimates. President Hu Jintao ordered an all-out rescue effort and the prime minister, Wen Jiabao, flew to the region to supervise it. See article

In contrast, Myanmar's military regime continued to let in only dribbles of aid to the cyclone-ravaged country, where the estimated death toll rose to 130,000. The government resisted pleas from many quarters for it to open up. Meanwhile, the regime said more than 92% of voters had backed a new draft constitution in a referendum. Critics say it is a sham. See article

Several bombs were set off in the Indian city of Jaipur, killing at least 61 people and injuring more than 200. A little-known group, Indian Mujahideen, claimed responsibility. See article

Pakistan's coalition government fell apart, with Nawaz Sharif's party pulling out of its partnership with Asif Zardari's party in Islamabad. See article

Japan's prime minister, Yasuo Fukuda, pushed a controversial road-construction bill through the lower house of parliament, overruling an opposition vote in the upper house. It is the last big piece of legislation in this session of the Diet (parliament). Mr Fukuda is likely to survive as prime minister for the G8 summit this summer, but another clash with the opposition and critics in his own party is expected this autumn.

A shocking war on drugs

Another senior policeman was shot dead by gunmen associated with drug-trafficking gangs in Mexico, bringing the number of high-ranking officers that have been assassinated recently to four. More troops were deployed to fight drug-related violence, which has resulted in more than 1,000 deaths this year. See article

Colombia extradited 14 paramilitary warlords on drug-trafficking charges to the United States, where they could face 30 years or more in prison. President Álvaro Uribe said they had broken the terms of a deal with his government under which they would have received a maximum eight-year sentence. See article

A computer hacker published on the internet confidential records belonging to 6m Chileans, including their ID-card numbers, academic records and telephone numbers. He said his aim was to demonstrate Chile's poor level of data protection.

Bolivia's president, Evo Morales, set August 10th as the date for a referendum that will decide whether he and the country's regional governors should remain in office. He is embroiled in a battle with the governors over his plans for constitutional reform.

Fans of the European Union

Reuters

Pro-European parties did unexpectedly well in Serbia's general election, suggesting that voters may care more about getting into the EU than about losing Kosovo. But coalition-building will take several weeks, and it is possible that the nationalists may yet scrape together a government. See article

A new Russian government was announced by Vladimir Putin, the prime minister. Mr Putin continues to overshadow his successor as president, Dmitry Medvedev. See article

One policeman was killed and four people were injured when a car bomb went off in the Basque country in Spain. The Basque separatist group, ETA, was assumed to be responsible. See article

In a huge U-turn, Gordon Brown, Britain's embattled prime minister, cut income tax for 20m people to fend off a backbench revolt over the scrapping of a lower 10p rate. Mr Brown also set out his legislative programme, but against the backdrop of a weakening economy. See article

The potential for violence

Lebanon was racked by fighting across the country after its beleaguered pro-Western government tried to sack the head of airport security and to dismantle the communications network of Hizbullah, a Shia party-cum-militia. Hizbullah reacted by briefly capturing the centre of Beirut, the capital, and the television station of the main Sunni party. The Saudi foreign minister accused Iran, which helps Hizbullah, of “backing a coup”. See article

A motorised rebel force more than 1,000-strong from Sudan's troubled Darfur region, apparently backed by neighbouring Chad, was fended off after attacking Omdurman, a suburb of Sudan's capital, Khartoum, shocking the government with its audacity. See article

The leader of Zimbabwe's opposition, Morgan Tsvangirai, who was officially acknowledged to have defeated President Robert Mugabe in the first round of a presidential poll in March, agreed to come back from abroad and compete in a run-off, even though he insists that he won the first round outright. The electoral commission said the next round may not be held until the end of July. See article

AFP

George Bush visited Israel to celebrate its 60th anniversary. He said he would not conduct any peace-seeking diplomacy while there, but he praised the prime minister, Ehud Olmert, as “an honest guy”. A few days before, Israeli police renewed an investigation into allegations that Mr Olmert had taken bribes when he was previously mayor of Jerusalem and a minister.

So much for wearing a flag pin

As expected, Hillary Clinton won the Democratic primary in West Virginia by a whopping margin, 67% to 26%, underlining Barack Obama's lack of support among blue-collar voters. But the party began to unite behind Mr Obama and he secured the endorsement of John Edwards, who pulled out of the presidential race in January. See article

John McCain was also out on the trail. He made a big speech on climate change and called for limits on America's greenhouse-gas emissions, putting more distance between himself and George Bush. See article

The Republicans lost another congressional seat in a special election, this time in north Mississippi. The party had made every effort to stop the district from falling to the Democrats, including flying in Dick Cheney to stump for their candidate. The Republicans have lost three seats so far this year to the Democrats in once-solid “red” districts.

America's interior secretary designated the polar bear a threatened species because of the reduction in Arctic sea ice, its primary habitat. The decision might also hamper oil drilling in the Arctic.