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U.S. markets fall on bailout passage

NEW YORK, Oct. 3 (UPI) -- U.S. stock indexes turned counter-intuitive Friday, falling after the U.S. House of Representatives passed a massive bailout package.

President George Bush quickly signed the bill into law, but markets had become inflated early in the day in anticipation of the law and slid, rather than gained, when the bill passed.

By close Friday, the Dow Jones industrial average -- once up 176 points on the day -- was down 1.5 percent to 10,325.38, off 157.47 points. The Standard and Poor's 500 fell 1.48 percent, down 15.05 points, to 1,099.23. The Nasdaq composite index lost 29.33 points, or 1.48 percent, to 1,947.39.

On the New York Stock Exchange,1,095 stocks advanced and 2,044 declined on a volume 7.05 billion shares traded.

The benchmark 10-year U.S. Treasury bond rose 4/32 to yield 3.612 percent.

The euro fell to $1.3792, compared to $1.3794 Thursday. Against the Japanese yen, the U.S. dollar fell to 105.17 yen from 105.22 yen.

In Tokyo, the Nikkei average lost 216.62 points to 10,938.14, down 1.94 percent.

The FTSE 100 index in London rose 2.15 percent, up 104.90 points, to 4,975.20.

Non-manufacturing shows slight growth

TEMPE, Ariz., Oct. 3 (UPI) -- U.S. business activity in the non-manufacturing sector grew in September, sharply contrasting with manufacturing data, a research group said.

The Institute for Supply Management said that the leading manufacturing index in September dropped to 43.5, with numbers below 50 indicating a contraction.

On Friday, ISM said non-manufacturing fared better in the month with the leading index at 50.2, indicating slight growth for the second straight month.

Ten non-manufacturing industries reported growth in September, including mining, education, retail, utilities, agriculture, forestry, healthcare, transportation and warehousing and information, the report said.

Eight industries reported contractions, including art, entertainment and recreation; real estate, rental and leasing; accommodation and food service; public administration; finance and insurance; management; wholesale trade and technical services, the report said.

Federal loan prompts AIG sale

NEW YORK, Oct. 3 (UPI) -- Insurance giant American International Group said Friday much of the business was for sale in order to pay off a huge debt to the U.S. government.

The company said it would keep its U.S. and foreign property and casualty insurance businesses and its foreign life insurance operations, CNNMoney reported Friday.

Everything else was up for grabs, Chief Executive Officer Edward Liddy said in a conference call.

AIG is digging itself out from under an $85 billion two-year federal loan the company accepted in mid-September to shore up its collapsing balance sheets.

"We fully expect to emerge from this with a capital structure that's fit to fight," Liddy said.

AIG's U.S. property and casualty insurance generated $40 billion in revenue in 2007, CNNMoney reported.

Texas gas company challenges city's codes

GRAND PRAIRIE, Texas, Oct. 3 (UPI) -- A natural gas company is challenging a Grand Prairie, Texas, code that regulates construction of compressor stations, saying it is illegal.

Texas Midstream Gas Service, a subsidiary of Chesapeake Energy Marketing, filed a lawsuit in federal court Friday that says "pipelines (and compressors stations) are fundamentally the sort of facilities that depend upon the ability to traverse political subdivisions without interference by local governments."

The company is challenging Grand Prairie's ordinance, that sets setback, fencing and noise-reduction standards, The Dallas Morning News reported.

The city has asked Texas Midstream to apply for a special use permit. But the company says federal and state laws trump the city ordinance, the report said.

The case could set a precedent for other projects expected with the development of gas deposits in the Barnett Shale region of Texas..

Some gas drilling is expected to take place in urban areas, the News reported.

"We're certainly not saying they can't put a compressor station in Grand Prairie. All we ask is they comply with the ordinance," city attorney Don Postell said.