Your update of the most important business news from dozens of respected news sources, selected by the editors of BusinessWeek.

Early Edition August 19 2008 at 05:49 AM Chi-Chu Tschang and Harry Maurer

Stocks Tumble on Renewed Mortgage Fears

U.S. stock indexes fell about 1.5% on Aug. 18 as continued concerns over the financial sector spooked investors. Among the hardest hit issues were mortgage giants Fannie Mae and Freddie Mac, which both plunged more than 20% after a news report suggesting the U.S. government may need to bail them out. Shares in financial firms including Bank of America, Citigroup, and Lehman Bros. also fell sharply.

The downward momentum spread Aug. 19 to Asia, where Japan's Nikkei fell 2.7% and exchanges from Singapore to South Korea were down. The Bank of Japan held its key lending rate at 0.5% in a unanimous vote of its governors. Later in the day, European indexes also fell, pressured by financial stocks.

Source: Reuters, BusinessWeek, MarketWatch

Libor Rising Again Amid Financial Stress

The key London Interbank Offered Rate hit a two-month high of 2.81%--well above the Fed's current 2% benchmark--suggesting continued stress in the financial system. The LIBOR, which helps determine the rate at which banks lend to each other, also is used to price millions of U.S. adjustable-rate mortages.

Source: Financial Times

France Calls Emergency Finance Meeting

French government ministers were called back from their vacations for an emergency summit to craft a plan for avoiding recession. The French economy shrank last quarter for the first time in six years.

Source: Times of London

Florida Braces for Tropical Storm Fay

Already pounded by economic woes, Florida is bracing for a further hit as tropical storm Fay crosses the state. But Fay already has missed key oil installations and is currently below hurricane strength, so the damage may be limited.

Source: Wall Street Journal

NATO in Show of Unity over Georgia

Ministers from 26 NATO member states are determined to show a united front in demanding the withdrawal of Russian troops from Georgia, and will continue to hold open the possibility of Georgia's eventual membership in the military alliance.

Source: Financial Times

CME Snags Prize as NYMEX Takeover Approved

The Chicago Mercantile Exchange tightened its grip over the U.S. futures market with the approval of its $7.7 billion acquisition of NYMEX, the energy and metals trading exchange.

Source: Reuters

EA Lets Take-Two Offer Expire, But Deal Still Possible

Videogame giant Electronic Arts has let lapse its proposed $2 billion takeover offer for rival Take-Two Interactive, owner of the Grand Theft Auto franchise. But the companies are still in private talks that could yield a deal.

Source: Los Angeles Times

Chrysler Design Chief to Retire

No. 3 U.S. automaker Chryser said that design chief Trevor Creed, who was responsible for creating the PT Cruiser, Dodge Ram pickup, and Dodge Viper, will retire at the end of the month.

Source: AP/New York Times

BAE Wins Chance to Bid on U.S. Air Force Deal

Britain's BAE--Europe's largest defense contractor--has won the opportunity to be among a dozen bidders for up to $7 billion worth of contracts from the U.S. Air Force.

Source: Times of London

Coke Pins China Hopes on Beijing Blitz

The U.S. beverages giant, which dominates rival PepsiCo in the global cola wars, is making an aggressive pitch at the Beijing Olympics to win over coveted Chinese consumers.

Source: Wall Street Journal

The iPhone Kill-Switch Kerfuffle

Privacy advocates' concern over what Apple will do with iPhone user data may be overblown, industry experts say.

Source: BusinessWeek

Conversation of the Day: What's Eating Gen X

Reader Candace Johnston writes: "There won't be such a clash of generations if the economy continues its downward spiral. It took a long time to recover from the last depression."

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