FARNBOROUGH, England (AP) – Airbus scrambled to revive its sagging order book and credibility Monday, announcing a costly and ambitious revamp of its troubled A350 program to take on two of Boeing Co.’s best-selling jets.

More than three years after Chicago-based Boeing launched its long-range, fuel-efficient 787 Dreamliner, European rival Airbus increased investment in its own mid-sized plane to close to $10 billion.

The previous version of the planned A350 had been billed as a rival to the 787, but had won just 100 firm orders – compared to 360 for the Dreamliner. Airbus also fell behind on total order value last year as its larger A340 jet lost ground to Boeing’s more efficient 777.

The new A350XWB – for “extra-wide body” – will take on both the Dreamliner and the 777.

CHICAGO (AP) – McDonald’s Corp. said Monday its second-quarter earnings will top analysts’ expectations thanks to a strong showing by its European restaurants and increased U.S. breakfast sales.

The news pushed its stock up 5.2 percent.

The world’s largest restaurant company posted a 5.9 percent increase in worldwide same-store sales last month, including 5.2 percent in the United States and 4.5 percent in Europe, the two markets where the majority of its outlets are located.

The same-stores increase, reflecting restaurants open more than a year, also were an impressive 8.8 percent in the Asia/Pacific, Middle East and Africa segment, led by strong performances in Japan and Australia.

WASHINGTON (AP) – Crude oil prices fell more than 2 percent Monday as world powers stepped up efforts to broker a truce between Israel and militants in Lebanon.

But perhaps the bigger surprise in the energy complex was the sharp decline for natural gas futures, which plunged by almost 9 percent despite a heatwave that drove-up demand for gas-fired power plants.

Even if an immediate Middle East cease-fire is not reached, analysts said the fact that the Israel-Lebanon violence has not spread in the region should help contain, if not sharply reduce, oil prices. The market’s biggest fear is that Iran, a financial backer of Hezbollah and OPEC’s No. 2 supplier, could be drawn into the conflict.

Also pushing prices lower were somewhat conciliatory remarks by Iran over the weekend relating to its nuclear standoff with the West.

WASHINGTON (AP) – Industrial production rose significantly in June, reflecting advances in manufacturing, mining and auto production.

The Federal Reserve reported Monday that output at the nation’s factories, mines and utilities jumped by 0.8 percent last month following a gain of 0.1 percent in May. The latest increase was stronger than expected; analysts had anticipated an increase of 0.4 percent.

The rise in production also marked a 4.5 percent increase over June 2005.

Production of autos and auto parts rose a robust 3.3 percent in June, swinging from a 1.3 percent drop the month before as the industry struggled with soaring gasoline prices that sapped demand for sport utility vehicles.

The positive news followed a series of indications last week of a cooling economy, including continued curtailment of spending in June by American consumers.

LOS ANGELES (AP) – Mattel Inc., the world’s largest toy maker, on Monday reported a second-quarter profit thanks to lower tax expenses. But global sales of its core Barbie and Hot Wheels brands slipped.

The company’s shares soared $1.72, or 11 percent, to close at $17.60 on the New York Stock Exchange.

The El Segundo, California-based company, whose brands also include Fisher-Price, Matchbox and American Girl, posted quarterly earnings of $37.4 million, or 10 cents per share, compared with a loss of $94 million, or 23 cents per share, in the same quarter a year ago.

The latest results include tax benefits of about $6.2 million, or 2 cents per share, related to an audit settlement with a state tax authority. The loss a year ago included a tax expense of $112.9 million, or 28 cents per share, due to the repatriation of foreign earnings.

MILWAUKEE (AP) – Motorcycle maker Harley-Davidson Inc. said Monday it is incorporating a new engine and rumble into some of its bikes as it announced its second-quarter profit grew 3 percent.

It’s the first engine overhaul since 1999, when the company introduced the Twin Cam 88.

Earnings rose to $243.4 million, or 91 cents per share, for the three months that ended June 25 compared to $237.4 million, or 84 cents per share, in the same period last year.

Revenue grew 3 percent to $1.38 billion from $1.33 billion last year.

Analysts predicted a profit of 91 cents on revenue of $1.36 billion, according to a poll by Thomson Financial.

The company said U.S. retail motorcycle sales grew 8.1 percent, while international sales jumped 17.3 percent.

By The Associated Press

The Dow Jones industrial average rose 8.01, or 0.07 percent, to 10,747.36. The Dow slid 3.17 percent last week.

The Standard & Poor’s 500 index lost 1.71, or 0.14 percent, to 1,234.49, and the Nasdaq composite index climbed 0.37, or 0.02 percent, to 2,037.72.

Light sweet crude for August delivery slid $1.73 to settle at $75.30 a barrel on the New York Mercantile Exchange.

Gasoline futures dropped by 3.96 cents to settle at $2.2853 a gallon while heating oil prices fell 5.66 cents to settle at $2.0194 a gallon. Natural gas prices fell 56.4 cents to settle at $5.783 per 1,000 cubic feet.

September Brent crude futures on London’s ICE Futures exchange fell $1.66 to settle at $75.92 a barrel, after hitting a new high at $78.18 earlier Monday.

AP-ES-07-17-06 1859EDT

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