Target: Glitch caused delays at checkout registers

MINNEAPOLIS — Target Corp. said a glitch in its system caused delays at checkout registers at some of its U.S. stores but it wasn't due to a data security issue or a hacker.

Customers across the country took to social media to report long check-out lines Sunday night due to registers not working.

The Star Tribune newspaper reported that Target employees tried to placate waiting shoppers by handing out $3 coupons in some stores that bore an apology for the delays. At a store in downtown Minneapolis, a security guard warned entering shoppers that some of the registers were down. Employees handed out free cookies and bottled water along with the coupons to customers as they waited.

The Minneapolis-based discount retailer did not elaborate on the nature of the problem, and it wasn't immediately clear how many stores were affected.

"Target has identified an issue impacting checkout at some of our U.S. stores," the company said in a statement Sunday night. "The glitch is causing delays at some checkouts, but is not in any way related to a security issue. We apologize to anyone impacted, and we are working with guests in stores where the issue has not yet been resolved to accommodate their needs."

In an update later Sunday night, the company said it had been able "able to restore our check-out process."

Target is still trying to regain customers' and investors' trust following a data theft late last year that led to the breach of millions of debit and credit card accounts, as well as a botched expansion into Canada. Shareholders at the company's annual meeting last week elected all 10 nominees to the company's board, but a rise in dissenting votes against several key directors showed that Target still has a lot of work ahead to shore up confidence in the investor community. Target is overhauling its security and technology departments and systems.

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Siemens, Mitsubishi look to derail GE-Alstom deal

BERLIN — Engineering giants Siemens of Germany and Mitsubishi Heavy Industries of Japan on Monday jointly offered to buy parts of France's Alstom and start a long-term partnership, a move that could derail a competing bid by General Electric.

Siemens AG said it is offering 3.9 billion euros ($5.3 billion) to acquire Alstom's gas business entirely, including related service contracts. Mitsubishi would purchase a 10 percent stake of Alstom and inject 3.1 billion euros into the company.

Struggling Alstom already has a $17 billion offer on the table from General Electric Co. for its energy operations, but the French government has been cool to the idea of a buyout of a company that pioneered TGV high-speed trains, later exporting them around the world, and builds nuclear turbines.

Siemens and Mitsubishi promised their proposal would "preserve Alstom's current perimeter in almost all its activities, enhance its industrial sustainability, strengthen its position as a diversified global player in energy and transport, and strengthen its financial structure, while remaining a major French listed group."

French President Francois Hollande, who has said GE's offer is not good enough, said he would meet with the CEOs of both Siemens and Mitsubishi on Tuesday to discuss their proposal.

While the French government finds GE appealing because of its longtime presence in France, it has tried to have other potential suitors, like Siemens and Mitsubishi, make more appealing offers.

A ranking French official said in April that the French priority in all matters is jobs, energy independence and keeping companies on French soil.

In addition to the cash transaction, Siemens said it would offer job guarantees for three years in France and Germany for the transferred business, and would establish its European headquarters for the combined gas service business in France.

Siemens also indicated that following the closing of the deal, it would eventually "be prepared to become a long-term anchor shareholder in a combined transport business."

Siemens is a huge company with 359,000 employees worldwide that makes everything from gas- and wind-powered turbines to trains, medical imaging devices, factory machines and security equipment.

Mitsubishi Heavy is Japan's largest heavy machinery maker with $32 billion in annual revenue. It produces ships, engines, nuclear power plants and arms for Japan's defense ministry.

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Sylvie Corbet in Paris contributed to this report.

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US factory output rebounded in May after April dip

WASHINGTON — U.S. manufacturing output rose in May at a solid pace, boosting hopes that the economy is expanding briskly after a dismal first three months of the year.

Americans, buoyed by steady job gains, are buying more cars, while businesses are ordering more machinery and other equipment. Those trends are fueling factory production and driving growth.

Factory output rose 0.6 percent in May after dipping 0.1 percent the previous month, the Federal Reserve said Monday. April's figure was revised upward from an initial estimate of a 0.4 percent decline.

Overall industrial production, which includes manufacturing, mining and utilities, also rose 0.6 percent in May. It had fallen 0.3 percent in April.

Mining output, which includes oil and gas production, jumped 1.3 percent, while utility output declined 0.8 percent, its fourth straight drop.

Industrial production grew 4.3 percent in the past 12 months, the fastest annual pace in nearly two years.

"With manufacturing accelerating, there is every good reason to believe that the economy is beginning to hit its stride," Joel Naroff, president of Naroff Economic Advisors, said in a note to clients.

Last month, factories produced more autos, furniture, industrial machinery, computers and appliances, a sign of healthy consumer and business demand.

The nation's factories are running at 77 percent capacity, the most in six years, though still 1.7 percentage points below the long-run average. As factories move closer to full capacity, factory owners will face pressure to invest in plants and equipment, a trend that could boost the economy.

The data follows other recent reports that also point to steady increases in factory production. Auto sales reached a nine-year high in May as Americans ramped up purchases of SUVs and pickup trucks.

A survey this month by the Institute for Supply Management, a trade group of purchasing managers, found that manufacturing expanded faster in May than in April. Growth was broad based across nearly all the 18 sectors the survey covers.

And the ISM survey's measure of orders rose, a sign that output should remain healthy in the months ahead.

Manufacturers are hiring more to keep up with demand. Factories added 10,000 positions in May, and the average work week for manufacturing employees grew.

Greater factory output would help drive growth after the U.S. economy shrank at a 1 percent annual rate in the first quarter, though recent reports indicate that the contraction was probably larger. Many economists now think the government will say the economy shrank at a 2 percent pace when it revises its estimate next week.

Still, most analysts expect the economy to rebound and grow at a roughly 3.5 percent annual pace in the second quarter and at a 3 percent rate in the second half of the year.

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Contact Chris Rugaber on Twitter at http://Twitter.com/ChrisRugaber

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New version of Boeing 787 gets regulatory OK

EVERETT, Wash. — Boeing says that U.S. and European regulators have approved its newest and larger version of the 787 passenger jet for commercial flying.

The company says that the first Boeing 787-9 Dreamliner is undergoing final preparation before being delivered to Air New Zealand.

The new plane is 20 feet longer and able to carry more passengers than the original 787-8. Boeing says the planes use 20 percent less fuel and produce 20 percent less emissions than other planes of the same size.

Boeing says 26 customers around the world have ordered 413 787-9 jets.

Dreamliners were grounded worldwide last year after batteries on two of the planes overheated. The planes were allowed to fly again after regulators approved a fix by Boeing.

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World stock market subdued as investors await Fed

LONDON — World stock markets were subdued on Monday as the turmoil in Iraq dampened sentiment and investors held back ahead of the Federal Reserve's monthly policy meeting later in the week.

Oil prices hovered at a nine-month high as fears grew that the violence in Iraq could escalate into a broader regional conflict, unsettling global financial markets.

Iraq's prime minister vowed on Sunday to "liberate every inch" of territory captured by the Islamic militants who posted photos that appeared to show their gunmen massacring scores of captured Iraqi soldiers.

"Reports that Iraq has entered a full blown sectarian conflict is ensuring a thread of anxiety is running through markets," analysts at Rabobank wrote in a research note.

Adding to uncertainty was Russia's decision to halt gas supplies to Ukraine after the sides were unable to agree on a new price for deliveries. Though the move does not affect supplies to the rest of Europe and Ukraine has reserves to last months, it raises the stakes in the countries' standoff.

In Europe, France's CAC 40 fell 0.7 percent to close at 4,511.34 while Germany's DAX shed 0.2 percent to 9,898.29. The FTSE 100 index of leading British companies slipped 0.2 percent to 6,761.87.

On Wall Street, the Dow was down 0.1 percent to 16,762.28 and the S&P 500 was flat 0.2 percent to 1,936.11.

Investors were also preparing for the regular meeting of the Federal Reserve Board's policy setting Open Market Committee, scheduled for midweek. While policymakers are widely expected to announce that the Fed will cut its bond-purchase program by another $10 billion, investors will be examining their comments on the outlook for raising interest rates, economic growth and inflation.

"The FOMC statement in the early hours of Thursday morning is undoubtedly the primary focus for all global markets this week," said Niall King, a sales trader at CMC Markets in Sydney.

In Asia, most benchmarks were lackluster but stocks in the region's two biggest economies moved strongly — in opposite directions.

Japan's benchmark Nikkei 225 sank 1.1 percent to close at 14,933.29 as the yen strengthened 0.2 percent to 101.86 against the dollar. A stronger yen means the cars and electronics produced by Japan's export giants are more costly when sold overseas.

In mainland China, the Shanghai Composite Index rose 0.7 percent to end at 2,085.98 after Chinese Premier Li Keqiang, writing in The Times newspaper ahead of a visit to Britain, said that he expects the world's No. 2 economy to grow "around 7.5 percent this year," in line with the government's target.

Hinting that the government is prepared to roll out more mini-stimulus measures, Li said, "Despite considerable downward pressure, China's economy is moving on a steady course. We will continue to make anticipatory and moderate adjustments when necessary."

South Korea's Kospi edged 0.1 percent higher while Hong Kong's Hang Seng slipped less than 0.1 percent and Australia's S&P/ASX 200 rose 0.1 percent.

In energy trading, benchmark crude oil for July delivery rose 3 cents to $106.95 in electronic trading on the New York Mercantile Exchange. The contract rose 38 cents on Friday.

The euro rose 0.2 percent to $1.3568.

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Dutch government encourages self-driving car tests

AMSTERDAM — The Dutch government says it wants to encourage large-scale tests of self-driving cars in the Netherlands by next year, and supports a plan to allow tests of self-driving trucks by 2019.

The country's infrastructure minister, Melanie Schultz van Haegen, said Monday she is investigating legal changes needed to allow self-driving cars to use public roads in the Netherlands, and plans to submit a law by early 2015. This fall she will indicate likely conditions and roads earmarked for testing.

In addition, the Port of Rotterdam, DAF trucks and the Netherlands' Organisation for Applied Scientific Research have applied to test a system to transport goods caravan-style on public roads using self-driving trucks.

Spokeswoman Marianne Wuite said the government believes self-driving cars will lead to greater efficiency and safety, and reduce pollution.

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Russia cuts gas supply to Ukraine as tensions soar

MOSCOW — Russia halted natural gas deliveries to Ukraine on Monday, spurning Ukraine's offer to pay some of its multibillion-dollar gas debt and demanding upfront payments for future supplies.

The decision, coming amid deep tensions over eastern Ukraine, provoked strong words from both sides but does not immediately affect the crucial flow of Russian gas to Europe. Ukraine has enough reserves to last until December, according to the head of its state gas company Naftogaz.

Still, the Russian move could disrupt Europe's long-term energy supplies if the issue is not resolved, analysts said. Previous gas disputes left Ukraine and some Balkan nations shivering for nearly two weeks in the dead of winter.

The gas conflict is part of a wider dispute over whether Ukraine aligns itself with Russia or with the 28-nation European Union and comes amid a crisis in relations following Russia's annexation of Ukraine's Crimean Peninsula in March. Ukraine accuses Russia of supporting an armed separatist insurgency in its eastern regions, which Russia denies.

Ukraine's new president, meanwhile, said Monday that he will propose a detailed peace plan this week that includes a cease-fire with the separatist rebels. President Petro Poroshenko spoke as he opened a meeting of the national security council after a bloody weekend in which the rebels shot down a military transport plane, killing 49 crew and troops. There was no immediate response from the rebels.

Ukraine, one of the most energy inefficient countries in Europe, has been chronically behind on payments for the Russian natural gas needed to heat its homes and fuel its industries. In addition, Russia had been giving its neighbor cut-rate sweetheart deals on gas for various political reasons, a practice that came to a halt April 1.

Russia had demanded $1.95 billion by Monday for past-due bills. At talks over the weekend in Kiev, Ukraine was ready to accept a compromise of paying $1 billion now and more later, but Russia rejected the offer, the European Commission said.

Sergei Kupriyanov, spokesman for the Russian gas giant Gazprom, said since Ukraine missed the deadline, from now on it had to pay in advance for energy. Yet that's a nearly impossible demand for the cash-strapped nation, which is fighting an insurgency and investigating possibly billions lost to corruption under its former pro-Russian president, Viktor Yanukovych.

Europe gets about 30 percent of its gas from Russia, and about half of that goes through the pipelines across Ukraine. In 2013, Ukraine imported nearly 26 billion cubic meters of gas from Russia, just over half of its annual consumption.

Kupriyanov said Russian gas supplies for Europe will continue through Ukrainian pipelines as planned and warned Ukraine to make sure they reach European customers.

Analyst Tim Ash at Standard Bank PLC said Ukraine could in theory simply take what it wants, since gas deliveries in the pipelines are intermingled. That would result in a shortage in gas to Europe that could hinder building up enough stored gas ahead of the critical winter heating season.

"This is unlikely to bring a short-term hit to gas supply in Europe, but it will build up problems for the winter unless a deal is reached quickly," he said in an email.

Bulgaria, Slovakia and Hungary get 80 percent or more of their gas from Russia, while Poland, Austria and Slovenia get around 60 percent.

At a news conference in Moscow, Alexei Miller, the CEO of Gazprom, berated the Ukrainian government, saying it scoffed at compromise and was deliberately turning commercial negotiations into a political discourse.

"Ukraine will get as much gas as it pays for," Miller said Monday. "The risks to the (gas) transit are there and they're significant."

He said in order to prevent serious disruptions to energy supplies in winter, Ukraine needs to pump in gas to its underground storages before mid-October. The current amount of gas in storage is not enough for Europe to last through the winter, he said.

In Kiev, Ukrainian Prime Minister Arseniy Yatsenyuk angrily rejected the Russian position, putting Gazprom's move on par with the annexation of Crimea and the pro-Russia insurgency in eastern Ukraine.

"We won't subsidize Gazprom," he said. "Ukrainians will not take $5 billion per year (out of their pockets) to let Russia spend this money on weapons, tanks and planes to bomb Ukrainian territory."

Gazprom had tolerated the late payments but now says Ukraine owes a total of $4.458 billion for gas from last year and this year.

In December, Russia offered Yanukovych a discounted price of $268.50 per thousand cubic meters after he backed out of an economic and political agreement with the EU. But Russia annulled all price discounts after Yanukovych was chased from power in February following months of protests, raising the gas price to $485 per thousand cubic meters starting April 1.

Russia has offered a future price of $385, the price that Ukraine was paying until December, but Kiev has insisted on a lower price. Miller scoffed at that demand, saying it was significantly below European market prices.

In Moscow, Russian Prime Minister Dmitry Medvedev, at a meeting with the Gazprom chief and other officials, called the Ukrainian position "absurd" and said it amounted to blackmail over the pipelines.

Ukraine's energy minister, Yuriy Prodan, said Ukraine was prepared for the Russian cutoff.

"We are providing reliable transit of gas and supplies to domestic consumers," he said, adding that Ukraine could do that because of lower seasonal demand and previously stored gas.

In a related case, Gazprom announced Monday that it is suing Ukraine's Naftogaz in an international court for the $4.5 billion. Naftogaz said it has also filed a suit against Gazprom, seeking a "fair and market-based price" for gas, as well as a $6 billion repayment for what it said were overpayments for gas from 2010.

EU spokeswoman Sabine Berger said EU energy commissioner Guenther Oettinger remained committed to helping broker a deal between Kiev and Moscow.

One reason for EU involvement is the current state of Ukrainian gas reserves. Berger said they now stand at around 13.5 billion cubic meters but need to be at 18-20 billion cubic meters at the end of the summer for Europe to have enough gas this winter.

Berger said the EU was working toward a deal that could allow shipments of gas to Ukraine via Slovakia.

Ukrainian consumers, however, will be facing higher prices no matter what Russia does. Previous governments had sold gas to consumers at about a fifth of what Naftogaz pays for it — leaving little incentive to conserve and saddling the government with huge deficits.

Ukraine's new government is in the process of raising domestic gas prices, a condition of its $17 billion bailout loan from the International Monetary Fund.

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McHugh reported from Kiev, Ukraine. Vladimir Isachenkov in Moscow and John-Thor Dahlburg in Brussels contributed to this report.

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DreamWorks mixing faves, newbies in YouTube debut

LOS ANGELES — When AwesomenessTV launched as a YouTube channel two years ago, it was a bet by veteran TV and movie producer Brian Robbins on the ability of teen and tween audiences to find videos they love to watch online.

On Monday, Robbins kicks off DreamWorks TV, another YouTube channel that represents one of the first attempts by Hollywood to mesh the polished look of movies with the chaos of content on the Internet.

The channel is aimed at 6 to 11 year olds and will have a mix of videos featuring characters familiar to DreamWorks Animation audiences — like "Shrek" and Po from "Kung Fu Panda" — alongside those who haven't yet made it big — like cardboard cut-out news anchors from "The Report Card."

The hope is that kids who come to watch their favorite characters will get interested in new ones that might one day become just as valuable.

Robbins compared his channel to cable TV networks such as MTV and ESPN in the 1970s and '80s. What were once fledgling networks that no one watched have now become multibillion-dollar enterprises that are the bedrocks of major media companies.

"This is really about building the cable channel of tomorrow," Robbins said in an interview. "What we think is happening digitally is that the next generation of those brands will be born out of this digital revolution that's going on."

AwesomenessTV was one of the startup channels that received a small piece of the $100 million in seed funding that YouTube doled out to some 100 creators two years ago to develop original content for the online video platform.

Today, it is one of the few to have amassed an audience large enough to attract the attention of a major studio. DreamWorks Animation SKG Inc. bought AwesomenessTV in May 2013 for what could exceed $100 million if the channel operator continues to hit its earnings targets. This March, The Walt Disney Co. said it would pay up to $950 million for rival YouTube channel operator Maker Studios, a price that makes the AwesomenessTV deal seem like a bargain.

The online platform will be a relatively inexpensive way to develop hits and to forget failures.

Birk Rawlings, head of animation at DreamWorks TV, said the network will debut more than a dozen new shows in the first few weeks, including "Jimmy Blue Shorts" and "Fifi Cat Therapist." One live-action show will re-imagine the comic book character "Richie Rich," one of the hundreds of characters DreamWorks acquired when it bought Classic Media in June 2012.

Executives will tweak the lineup based on audience feedback in the form of "likes," repeat viewings and the amount of time people stick around.

The venture represents a great way for DreamWorks to try out new content and keep audiences engaged with their biggest franchises, said Peter Csathy, chief executive of Manatt Digital Media Ventures, an investor in YouTube channel network DanceOn. He said it's fine if some quickly made programming doesn't live up to the luscious imagery and vibrant animation of the DreamWorks brand.

"You don't have to wait to see if you succeed after you put hundreds of millions of dollars into 'Shrek,'" he said. "Now you can put in a fraction of that and throw spaghetti against the wall and see what sticks."

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Online:

"The Report Card" Episode 1: http://bit.ly/1mTnfUG

Behind the scenes of "The Report Card": http://bit.ly/1p3h0jM

"Jimmy Blue Shorts" Episode 1: http://bit.ly/1xWzpoD

"Record Setter Kids," Episode 1: http://bit.ly/1jpwZ7Z

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IMF lowers estimate of US economic growth in 2014

WASHINGTON — The U.S. economy is poised to accelerate after a dismal start to the year even though the job market won't return to full employment until 2017.

That was the forecast offered Monday in a report by the International Monetary Fund.

The IMF noted that steady job gains and other recent data suggest that the economy is rebounding. Employers have added 200,000-plus jobs for four straight months, and the unemployment rate has fallen to 6.3 percent. Auto sales and factory activity are increasing.

Yet growth in 2014 won't likely top last year's lackluster performance, the IMF says. The Washington-based organization foresees the economy growing a modest 2 percent in 2014, below its previous estimate of 2.7 percent. That would be nearly identical to the 1.9 percent growth in 2013.

The IMF blames the lingering aftermath of the brutal winters and a sluggish recovery in home sales. Years of disappointing growth mean the economy might not reach full employment — which many economists say is when the unemployment rate is between 5 and 5.5 percent — for three more years.

Christine Lagarde, the IMF's managing director, suggested at a news conference that the past winter shows that another wild card might be holding back the economy and could make predictions more difficult: climate change.

"Extreme weather occurrences have repeated much more frequently in the past 20 years than the previous century," she stressed. "That's a reason to wonder about climate change and how to deal with it."

Yet the IMF is optimistic that a "renewed dynamism" will propel growth for the rest of 2014, partly offsetting what many analysts think was a contraction of up to 2 percent last quarter.

The unemployment rate has tumbled to 6.3 percent from 7.5 percent in 12 months, evidence of that momentum.

But the IMF cautions that U.S. wages remain stagnant and the rate of long-term unemployment high. As a result, it urged lawmakers to lift the minimum wage and increase the Earned Income Tax Credit for those with low wages.

The IMF's projections match many recent private forecasts.

"The monthly economic numbers have generally been pretty good recently, but the weakness of GDP growth in the first quarter suggest that full-year GDP growth is likely to be close to 2 percent," said Ryan Wang, an economist at HSBC Bank.

The IMF also highlighted the challenge for the Federal Reserve to properly time the unwinding of its policies to spur borrowing, investment and spending. Investors appear to be acting with a sense of certainty about Fed policies, even though central banks must respond to uncertainties about the economy, Lagarde said.

Lagarde also suggested that Fed Chair Janet Yellen should increase the number of news conferences she holds to up to six a year from the current four. Yellen is scheduled to hold one of her quarterly news conferences on Wednesday.

The Fed has kept short-term interest rates near zero to bolster the economy. It has also bought U.S. Treasury and mortgage bonds to keep longer-term rates low, a program the Fed has been unwinding since the start of the year.

Because the IMF projects that the United States won't reach full employment until 2017 and that inflation pressures will stay tame, it thinks the Fed might consider keeping rates near historic lows longer than some market analysts expect.

Raising rates too fast could "constrict the recovery momentum that we have observed," Lagarde said. She added that that would have spillover effects around the world and hurt growth in emerging economies.

Lagarde declined to take a stance on the dispute over payments for natural gas that Ukraine owes Russia. The two countries, embroiled in a broader territorial struggle, missed a Monday deadline to reach an agreement on payments. As a result, the Russian company Gazprom has cut off gas supplies to Ukraine.

"We don't intervene in commercial transactions," Lagarde said. "We certainly hope for the stability of that part of the world and for the stability of the supply of gas that the situation can be addressed promptly and satisfactorily."

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