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WASHINGTON (AP) -- Rates on 30-year mortgages have dropped to a new low, the eighth time this year that has happened.

Average interest on a fixed-rate 30-year mortgage fell to 5.31 percent this week, the third week in a row this benchmark mortgage hit a record weekly low, Freddie Mac, the mortgage company, reported Thursday in its nationwide survey.

Last week's 5.34 percent had been the previous low in figures going back to 1971. Records that reach back earlier indicate the rate is the lowest in more than four decades, economists said.

For 15-year fixed-rate mortgages, a popular option for refinancing, rates remained unchanged at 4.73 percent this week, the lowest since Freddie Mac began tracking them in 1991.

Rates for one-year adjustable mortgages, however, nudged up this week to 3.63 percent from 3.61 percent.

Microsoft pays AOL $750 million

SEATTLE (AP) -- AOL Time Warner and Microsoft have called a truce in their battle over Internet browsers, with the software giant paying AOL $750 million in a deal heralded as the start of a new era of cooperation between the longtime rivals.

As part of the settlement, Microsoft will license its browsing software to AOL through 2010 at no cost. The companies also will collaborate on new digital media initiatives and ways to make their products mesh more seamlessly.

The deal announced Thursday ends legal fighting over AOL's antitrust suit, which was filed in response to Microsoft's efforts to bolster its Internet Explorer browser -- now the world's dominant tool for navigating the Internet.

The settlement comes less than two months after Microsoft chairman Bill Gates called AOL Time Warner chairman Dick Parsons to discuss ending the lawsuit, Parsons said in a conference call.

The agreement resolves a lawsuit AOL filed against Microsoft in January 2002 on behalf of its subsidiary, Netscape Communications.

Consumer spending dipped in April

WASHINGTON (AP) -- Consumers worried about jobs put a tight grip on their cash and trimmed spending by 0.1 percent in April, the biggest cutback since the beginning of the year.

The dip in spending represented a big pullback by consumers from March, when they ratcheted up spending by 0.8 percent, the Commerce Department reported today.

April's spending figure was weaker than economists were expecting. They were forecasting a tiny rise of 0.1 percent .

Americans' incomes, including wages, interest and government benefits, were flat in April -- compared with a solid 0.4 percent increase in March -- as the weak job market took a bite out of earnings. Even though April's income reading was on target with economists' projections, it is still a bit disheartening because income growth is a fuel to power spending down the road.

Yield hits record low on T-notes

WASHINGTON (AP) -- Yields on two-year Treasury notes fell in Thursday's auction to the lowest level on record.

The yield was 1.305 percent, down from 1.704 percent at the last auction on April 23. It was the lowest rate since the government began selling two-year notes on a regular basis in 1972.

The notes will carry a coupon interest rate of 1 1/4 percent with each $10,000 in face value selling for $9,989.20.

US Airways to sell food on flights

ARLINGTON, Va. (Dow Jones/AP) -- US Airways Group said Thursday it plans to start selling food on most domestic flights of 700 miles or more in July.

US Airways said the In-flight Cafe service will replace its snack service on some flights. First-class passengers will still receive complimentary meals.

US Airways plans to sell breakfast for $7, while lunch and dinner cost $10 each. The menu will offer products from New World Restaurant Group's Einstein Bros. unit. Menus will be rotated each month.

US Airways is the second carrier to try to sell food. America West Airlines was the first, while Northwest Airlines and Delta are testing the concept.

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