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The European Union and Mexico initialed a free trade agreement Wednesday, laying the foundation for closer political and economic ties.

Officials said a formal agreement may require several more years of negotiations.

Mexico's ambassador to the EU, Manuel Armendariz, said his country will gain immediate benefits from the interim accord. "Entrepreneurs make investment decisions based on clear decisions like today's," he said.

Officials said negotiations between the two sides probably will resume early next year after the Mexican Senate and the European Parliament have approved the initial accord.

A full-scale EU-Mexican trade agreement would remove export tariffs, and cover political, economic and cultural areas.

Jobless claims plunge by 42,000
WASHINGTON (AP) -- The number of American workers filing first-time claims for jobless benefits plunged by 42,000 last week to the lowest level in nearly a year.

Much of the huge decrease may have been due to auto plants reopening after their annual new-model retooling and the end of auto strikes.

New applications for unemployment insurance totaled a seasonally adjusted 299,000 during the week ended July 19, the lowest since the week ended July 27, 1996.

The weekly jobless claims are quite volatile, but if they were to persist at around 300,000, it likely would be a sign of tightening labor markets, which would raise inflation fears.

Survey predicts 4.2% pay raises
NEW YORK (AP) -- Workers can expect pay raises this year and next of 4.2 percent, roughly equal to annual pay hikes they've been getting, according to a new survey.

Their bosses can expect raises this year of 4.4 percent and next year of 4.3 percent. That's according to preliminary results of a compensation planning survey conducted by William M. Mercer Inc. of 900 mid-size to large companies.

Salary increases in recent years have been running about 4 percent, the consulting company said.

Those salaries are far above inflation, running at 1.4 percent for the first half of 1997.

Maidenform files Chapter 11
NEW YORK (AP) -- A household name and a line of designer lingerie was not enough support for Maidenform Worldwide Inc., which filed for Bankruptcy Court protection from its creditors.

The privately owned manufacturer of women's intimate apparel, including the Oscar de la Renta and Subtract lines, filed under Chapter 11 of the U.S. Bankruptcy Code. It will attempt to reorganize its finances under court supervision.

Maidenform's troubles stem from poor management of recent acquisitions, such as the 92 percent purchase of NCC Industries Inc., another intimate-apparel company, in 1995, company officials said.

NASD bars 20 broker-exam cheats
WASHINGTON (Bloomberg) -- The National Association of Securities Dealers barred 20 brokers from the securities industry and slapped them with $1.8 million in total penalties for paying an impostor to take their licensing exams.

The brokers, nearly all from penny-stock firms in New York, are the third wave connected to the most widespread brokerage test-taking fraud in recent years. A total of 41 brokers have been barred and fined by the NASD since last August for paying stand-ins to take the Series 7 licensing exams.

Slick 50 ads were too slick
WASHINGTON (Bloomberg) -- Quaker State Corp. agreed to avoid some advertising pitches for its Slick 50 engine treatment, settling Federal Trade Commission charges that the company made false or unsubstantiated claims for the product.

Quaker State's Blue Coral-Slick 50 Inc. subsidiary said it will provide at least $10 million in rebates, coupons or other incentives to consumers who've bought Slick 50.

Five-year T-note yields fall
WASHINGTON (AP) -- Yields on five-year Treasury notes fell in Wednesday's auction.

The high yield was 6.024 percent, down from 6.298 percent at the last auction on June 25. It was the lowest rate since five-year notes sold for 5.950 percent on Nov. 20.

The notes will carry a coupon interest rate of 6 percent with each $10,000 in face value selling for $9,989.80.

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