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America's trade deficit widened to $10.4 billion in August, the worst showing in seven months, as a flood of imported toys and Christmas decorations pushed the deficit with China to an all-time high.

The Commerce Department said the worse-than-expected showing represented a 3.4 percent increase from a revised July deficit of $10 billion.

Exports edged up a tiny 0.2 percent, led by the first gain in sales of American farm products this year. But imports were up 0.6 percent to a record high.

So far this year, the gap between what America sells abroad and what it imports is running at an annual rate of $114 billion, even worse than the eight-year high of $111 billion set last year.

Honda unveils ultraclean gas engine

DETROIT (AP) -- Honda Motor Co. said Monday it has developed a gasoline engine that produces almost no exhaust and surpasses California's stringent standards for ultra-low emissions vehicles.

The invention could "drive a stake through the heart of the electric vehicle," said George Peterson, president of AutoPacific Inc. in Santa Ana, Calif.

The engine cuts emissions with two catalytic converters -- one positioned near the exhaust manifold and another located under the floor.

The devices trap more pollutants in all three steps of engine operation, from cold start through warm-up to normal operation, the company said.

Honda is calling the technology a Zero-Level Emission Vehicle, although it is actually not zero-emission like electric cars.

Fuel-cell breakthrough detailed

WASHINGTON (AP) -- Researchers have developed a chemical process using gasoline that could lead to fuel-efficient and virtually pollution-free electric cars that don't need bulky batteries and can refuel at conventional gas stations.

The technology was announced today by the Energy Department and Arthur D. Little Co., a Boston-based energy consulting firm whose team of researchers achieved the breakthrough over five years of fuel-cell research in conjunction with a government weapons lab.

"The economic and market impact around this new capability is without precedent," said Charles LaMantia, chairman of Arthur D. Little. He said the next step is to attract investors "to bring this new technology to market."

The method used by the researchers is significant because it uses a fuel cell that gets hydrogen from gasoline, said Jeffrey Bentley, leader of the research team. This would allow such vehicles to refuel at existing service stations.

Delay sought in decimal stock pricing

WASHINGTON (AP) -- A few months after hailing the New York Stock Exchange's decision to adopt dollars-and-cents share prices, top securities regulators have told Congress that Wall Street may not be ready in time.

Arthur Levitt Jr., chairman of the Securities and Exchange Commission, and Frank Zarb, head of the National Association of Securities Dealers, have asked lawmakers to approve a delay in the planned switch by the nation's stock exchanges to decimal prices from the use of fractions.

Levitt and Zarb told some members of the House Commerce Committee that the switch would interfere with the securities industry's efforts to deal with year 2000 computer problems.

Yields mixed on Treasury bills

WASHINGTON (AP) -- Interest rates on short-term Treasury securities were mixed in Monday's auction.

The Treasury Department sold $10.7 billion in three-month bills at an average discount rate of 4.96 percent, down from 4.98 percent last week.

Another $10.7 billion was sold in six-month bills at an average rate of 5.15 percent, up from 5.12 percent.

The Federal Reserve said the average yield for one-year Treasury bills rose to 5.52 percent last week from 5.45 percent the previous week.

In other business news

Union Carbide Corp. said it has set a goal to reduce costs by $1.1 billion annually by the year 2000, almost double the target of $637 million for that deadline originally set in 1995.

Banc One Corp., the nation's eighth-largest banking company, is acquiring First Commerce Corp. of New Orleans for approximately $3 billion in stock in a deal that would create the largest bank in Louisiana.

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