Business digest 03/10/06

U.S. trade deficit hits another record

WASHINGTON -- Rising oil prices and Americans' seemingly insatiable appetite for foreign goods -- from Chinese clothing to French wine and Japanese cars -- sent the U.S. trade deficit to another record. The Commerce Department reported Thursday that the deficit jumped to $68.5 billion in January, 5.3 percent more than in December. Analysts had expected the trade gap to worsen, given the surge in world oil prices, but the increase caught them by surprise. Analysts said that unless demand for imported goods slows, the United States could produce a record annual deficit for the fifth year in a row, topping last year's imbalance of $723.6 billion.

Japan tightening policy on interest rates

TOKYO -- The Bank of Japan on Thursday ditched a five-year policy that has kept domestic borrowing costs next to nothing, marking a milestone in the country's economic comeback and joining a global trend away from easy money. The decision by the central bank, widely anticipated and watched closely around the world, indicates that the world's second-largest economy has finally defeated the cycle of tumbling prices that has shackled growth for years. Stock markets around the world rallied on the news, which relieved weeks of uncertainty and boosted confidence in the Japanese economy.

-- From wire reports