EU, U.S. resume Boeing trade dispute

Digging in for a new trade war with Washington, the European Union filed a counter complaint Tuesday at the World Trade Organization claiming that U.S.-based Boeing Co. receives illegal government aid.

The EU’s move came after the Bush administration filed a complain late Monday about EU-member nations committing $1.7 billion to Airbus for developing a new airplane, the A350, which is seen as a direct competitor to Boeing’s new 787 Dreamliner in the market for midsize, long-distance jets.

Analysts said that any WTO-imposed cuts in aid to the two companies could result in higher ticket prices for travelers.

“If there are fewer subsidies for manufacturers, that will transfer into higher costs for carriers and, ultimately, the traveling public,” said Richard Aboulafia, an aviation analyst with Fairfax, Va.-based Teal Group.

Finance

Interest rate set for student loans

Interest rates on federally guaranteed student loans will rise 1.93 percentage points when they reset July 1, Sallie Mae said Tuesday.

The increase will be the first in five years and the largest single-year increase in the student loan program’s 40-year history, Sallie Mae said.

Students, graduates and parents may be able to fix current interest rates by consolidating education loans before June 30.

Federal Stafford Loans issued on or after July 1, 1998, automatically will be reset to an interest rate of 4.7 percent during in-school, grace and deferment periods, and 5.3 percent during repayment, the company said.

Interest rates on Federal Parent Loans for Undergraduate Students (PLUS) issued on or after July 1, 1998 will be reset to 6.1 percent.

The U.S. Department of Education is expected to confirm the new rates later this week.

Economy

Confidence rises, manufacturing dips

Consumer confidence unexpectedly rebounded in May after declining in April, as worries about the economy and jobs eased, a private research group said Tuesday. But another closely watched report that tracks Midwestern manufacturing shows that activity dropped in May, spooking Wall Street.

The Conference Board said that its Consumer Confidence Index rose to 102.2 from a revised 97.5 in April. The reading topped the 96 that analysts had expected, and lifted the index to its highest level since 103 in March.

The Purchasing Management Association of Chicago announced that its index of business activity in the Midwest dropped to 54.1 in May from 65.6 in April and 69.2 in March. A reading above 50 indicates expansion in manufacturing, while a figure below 50 means contraction.