Fed will Buy up to $1 Trillion in Securities; Source: IBM Looking to Buy Sun; Record Hedge Funds Collapses in 2008; Stale Earnings at General Mills; World Bank: China Stabilizing; AIG Exec Asks for Bonus Money Back

• The U.S. Federal Reserve said yesterday (Thursday) that it will purchase up to $300 billion of longer-term Treasury securities over the next six months. The Fed will also purchase an additional $750 billion worth of government-guaranteed mortgage-backed securities.  The announcement accompanied its decision to keep interest rates at historically low levels.

• Sources told The New York Times that IBM Corp. (IBM) is in talks to buy Sun Microsystems Inc. (S) for at least $6.5 billion, which would be twice the value of Tuesday’s closing price of Sun’s shares. If a deal if reached, it would be IBM’s largest acquisition and one that would bolster the company’s standing among high-end computer server companies.

• About 1,471 hedge funds shut down last year, exceeding the previous record of 848 by 70%. In the fourth quarter alone, more than half of those hedge funds bellied up. “It’s been a great culling of mediocre managers,” Tammer Kamel, president of Toronto-based Iluka Consulting Group Ltd., which advises clients on hedge-fund investments, told Bloomberg. “Those funds that will be around this year are the ones with the right skill set.”

• Minnesota-based Food maker General Mills Inc. (GIS) posted fiscal third-quarter earnings of $288.9 million, or 85 cents a share. The numbers were below its expectations and caused by the effects of a strong dollar and high costs, Reuters reported.

• The World Bank said that China’s economy is showing “early signs” of stabilization, while forecasted the nation’s economic growth at 6.5%, Bloomberg reported. “The government’s stimulus is working,” said Louis Kuijs, a senior economist at the World Bank in Beijing. “China’s fundamentals are strong enough to ride out this storm.”

• Edward Liddy, chief executive of American International Group Inc. (AIG), has asked employees of the bailed out insurer that took home more than $100,000 in bonuses to return at least half, CNN reported. “It was distasteful to make these payments,” Liddy told members of the House Financial Services subcommittee. “This morning, I’ve asked the employees of AIG Financial Products to step up and do the right thing. Specifically, I’ve asked those who received retention payments in excess of $100,000 or more to return at least half of those payments.”

Source: Global Investment News Briefs Thursday, March 19, 2009