U.S. stocks trade mixed after Chrysler files for bankruptcy

Special Report:Global Financial Crisis

NEW YORK, April 30 (Xinhua) -- Wall Street ended
mixed Thursday after the third largest U.S. automaker Chrysler announced it will
file for Chapter 11 bankruptcy.

Wall Street opened higher in the morning as investors
welcomed a surprise decline in new jobless claims and earnings beating
estimates.

The U.S. Labor Department said initial claims fell
14,000 to 631,000 last week. Economists had predicted a rise. But continuing
claims jumped to a new record.

However, the U.S. Commerce Department reported
Thursday that consumer spending dropped by 0.2 percent in March, worse than the
0.1 percent decline that economists had expected.

In a midday speech, U.S. President Barack Obama
indicated that Chrysler will form an alliance with the Italian carmaker Fiat
Group SpA.

Under the direction of the U.S. Treasury, the
troubled automaker and 24 of its wholly owned U.S. subsidiaries filed voluntary
petitions under Chapter 11 of the Bankruptcy Code in U.S. Bankruptcy Court.

In corporate news, many companies including Dow
Chemical, PG, Exxon Mobil and Newmont Mining reported results topped
analysts' expectations. And Motorola Inc. posted a loss during the first
quarter, but smaller than analysts had predicted.

The Dow Jones industrial average fell 17.61 points, or 0.22 percent, to 8,168.12. The Standard Poor's 500 index dipped 0.83 of a point, or 0.09 percent, to 872.81. The Nasdaq Composite index was up 5.36 points, or 0.31 percent, to 1,717.30.

Chrysler to file for Chapter 11 bankruptcy protection

CHICAGO, April 30 (Xinhua) -- U.S. automaker Chrysler LLC has to file for Chapter 11 bankruptcy protection after talks between the Treasury Department and the company's creditors collapsed early Thursday morning, according to Detroit local reports.

Talks between the Treasury Department and Chrysler's lenders aimed at keeping the troubled automaker out of bankruptcy collapsed after the Obama administration's automotive task force worked into early morning on Thursday and failed to persuade several hedge funds and other lenders to accept a deal to reduce Chrysler's debt, said people involved in the talks.

J.P. Morgan Chase, which leads the creditor group as Chrysler's largest lender, gave the other 45 banks and hedge funds 90 minutes on Wednesday to vote on the deal. However, many funds voted no and refused to budge, meaning a trip to bankruptcy court is unavoidable for Chrysler by the deadline of Thursday.

No new talks are set for Thursday although Chrysler still has more than a dozen of hours before the 11:59 p.m. deadline to get concessions from its lenders, who had loaned the company 6.9 billion dollars. Chrysler officials had no comments on media's bankruptcy report.

U.S. President Barack Obama is scheduled to discuss the 85-yearold carmaker's future Thursday noon, when he is supposed to ask for the historic bankruptcy of Chrysler and announce a signed deal with Chrysler and Italian automaker Fiat.

Analysts said that the filing for bankruptcy will not mean the halt of operations or liquidation for the iconic old automaker, and it is really another kind of restructuring as the administration expects to use the bankruptcy process to join Chrysler with Fiat.

What's more, the United Auto Workers (UAW) union announced late Wednesday night that its membership at Chrysler had overwhelmingly ratified a concession contract reached between the company and union leadership on Sunday night, which means the way to reach a partnership deal has been paved.

President Obama said during a press conference Wednesday night that he was more confident than he was 30 days ago that Chrysler would be able to emerge from the process as a healthy, competitive company.

It is not the first time for the automaker giant to face bankruptcy. Chrysler narrowly avoided bankruptcy in 1980 after winning 1.5 billion dollars of government loans.

Chrysler was sold for 36 billion dollars to Daimler-Benz in 1998, but the deal ended in 2007, when the German automaker sold Chrysler to Cerberus Capital Management LP for 7 billion dollars.

Although Chrysler avoided collapse last December as the previous Bush administration provided 4 billion dollars as bailout loans, the company's sales fell 30 percent in 2008 -- compared with an industry decline of 18 percent. Chrysler's sales declined 46 percent in the first quarter this year.

Chrysler talks break down, bankruptcy looms

Special Report:Global Financial Crisis

A walking stop sign is seen in front of the logo of Chrysler at a car dealership in New York, the United States, April 7, 2009. The U.S. Treasury will provide a further five billion dollars in loans to General Motors and 500 million dollars to Chrysler as the automakers work on their viability plans, officials said Tuesday. (Xinhua/Liu Xin)
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CHICAGO, April 29 (Xinhua) -- Talks between the U.S.
Treasury Department and Chrysler LLC lenders over the automaker's debt broke off
late Wednesday, leaving bankruptcy the automaker's all but certain option, news
agencies reported.

Chrysler will file for bankruptcy after the talks
broke down, since its 80 percent of stocks are controlled by private-equity firm
Cerberus Capital Management LP, Reuters reported, quoting the Wall Street
Journal.

The Associated Press also reported that the talks
"have disintegrated," citing its own sources.

"After allowing talks to continue late into the night
Wednesday, the Treasury Department finally ended negotiations after the hedge
funds were unable to come to an agreement," the AP report said.

The U.S. government had set an April 30 deadline for
Chrysler to strike a deal with Fiat after concluding that the struggling
automaker would not be viable on its own.

The talks between Chrysler LLC's lenders and the
Treasury Department was aimed at reducing the automaker's 6.9 billion dollars in
secured debt and keep it out of bankruptcy protection.

The breakdown also means further emergency government
aid for Chrysler will be withheld.

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