(07-09) 13:42 PDT WASHINGTON (AP) —

Consumer borrowing posted a hefty increase in May, reflecting the biggest jump in credit card debt in six months.

The Federal Reserve reported Monday that consumer credit rose at an annual rate of 6.4 percent in May, far above the small 1.1 percent gain of April.

The increase was propelled by a surge in the category that includes credit cards, which rose at a rate of 9.8 percent in May after having a tiny increase of 0.2 percent in April. The jump in credit card debt was the largest since a 14.5 percent rate of increase in November.

The category of consumer credit that includes auto loans was also up in May, rising at a 4.4 percent rate after a 1.7 percent gain in April.

The size of the increase was nearly double what economists had been forecasting, although they were looking for a rebound from the sluggish performance in May, when the 1.1 percent rise in overall credit was the smallest gain since a 0.1 percent rise in October.

David Wyss, chief economist at Standard & Poor’s in New York, said some of the surge in credit card debt reflects the fact that it is getting harder to get home equity loans with banks tightening up on standards and home values not soaring as they did during the housing boom.

“We think that people who had been refinancing their credit card debt into home equity loans are finding that harder to do now,” Wyss said. That would explain part of the big rise in credit card borrowing in May, he said.

Wyss said another factor was a strong gain in retail sales in May, which shot up by 1.4 percent, the largest jump in more than a year, as consumers brushed off rising gasoline prices to storm the malls.

“April consumer credit surprised us by being weaker than expected, and the May performance was stronger than expected. Probably, the best thing to do is average the two months,” Wyss said.

The overall economy, weighed down by a slump in housing, grew at a lackluster rate of 0.7 percent in the January-to-March quarter, the weakest showing in more than four years.

But economists believe strength in employment and consumer spending will help provide a stronger performance in the April-June quarter, with many looking for the gross domestic product to expand at a rate of 3.5 percent or even better.

The report on consumer borrowing will provide support for the view that consumer spending has held up, despite the weakness in home sales and soaring gasoline prices during the spring.

For May, consumers increased their borrowing by $12.9 billion to a record level of $2.44 trillion. Economists had been forecasting that consumer borrowing would rise by a much smaller $6.5 billion.

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On the Net:

Consumer credit:

«www.federalreserve.gov»

A report on steroid use in US baseball to be released later today is expected to name as many as 80 players as performance enhancing drug users.

A former trainer for New York Yankees pitcher Roger Clemens, considered one of the game’s greatest players of all time, has admitted to the report’s authors that he supplied him with steroids, according to ESPN.com.

The Associated Press reported that former Senate majority leader George Mitchell’s report exposes a “serious drug culture within baseball, from top to bottom” and calls for beefed-up testing by an outside agency to clean up the game.

The report comes at the end of a year when Barry Bonds of the San Francisco Giants broke the career home run record, only to be indicted 100 days later on charges of lying to a federal grand jury about steroid use.

Just last week, Kansas City’s Jose Guillen and Baltimore’s Jay Gibbons were suspended for the first 15 days of next season, and media reports said they had obtained human growth hormone in 2005, after baseball banned it.

Much of the first part of the report will be based on evidence obtained from former New York Mets employee Kirk Radomski, and from information gleaned from the Albany district attorney’s investigation into illegal drug distribution that focused on Signature Pharmacy of Orlando, Florida, the Associated Press reported.

Radomski was required to cooperate with the investigation as a condition of his federal plea agreement last April. Radomski pleaded guilty to illegally distributing steroids, HGH, amphetamines and other drugs to players and is awaiting sentencing. Some professional athletes have been linked to the Signature probe, though none have been charged.

Mitchell was hired by Baseball commissioner Bud Selig in March 2006 after the publication of Game of Shadows, a book by two San Francisco Chronicle reporters about Bonds’ alleged steroid use.

An increase in the prowess of baseball players in the 1990s, which drew national attention when both Mark McGwire and Sammy Sosa chased Roger Maris’ single-season record in 1998, was accompanied by a rise in suspicion.

Maris’ record of 61 home runs had stood since 1961, but McGwire hit 70 that year and Sosa had 66. A bulked-up Bonds then shattered McGwire’s record by hitting 73 home runs in 2001.

(12-13) 05:22 PST LEAWOOD, Kan. (AP) —

Automated teller machine operator Euronet Worldwide Inc. disclosed Thursday it had proposed to pay about $1.65 billion in stock for MoneyGram International Inc., but said the Minneapolis-based money transfer company has rejected its overture.

Euronet, based in Leawood, said it made the proposal in a letter to the board of MoneyGram on Dec. 4. It offered to pay 0.6179 of a common share for each share of MoneyGram in a deal that would give MoneyGram shareholders about a 46 percent stake in the combined company.

Based on the $32.37 closing price of Euronet shares on Dec. 4, the deal is valued at about $20 per share, or $1.65 billion, representing a 43 percent premium to MoneyGram’s $14.01 closing stock price that day.

Moneygram shares closed at $14.90 on Wednesday, while Euronet shares ended at $32.57.

In the letter, Euronet Chairman and Chief Executive Michael J. Brown said he was “disappointed” MoneyGram has rejected its takeover overtures.

“Your refusal to discuss with us the merits of our proposal is not in the best interest of your shareholders,” Brown wrote. “We believe MoneyGram is an attractive business, and a combination with Euronet would create a powerful new player in the international money transfer business that would deliver substantial immediate and long-term value for the shareholders of both companies.”

Brown said Euronet has enhanced its bid to allow MoneyGram’s shareholders to “participate even more substantially in the combined business.” He said Euronet also is willing to make interim financing available to MoneyGram to assist with a cash infusion into its investment portfolio.

“We have more than $250 million of cash in the bank, and additional funds available from our existing financing arrangements, and we are prepared to move quickly to put in place an interim financing arrangement if you so desire,” Brown added.

Under terms of Euronet’s offer, MoneyGram shareholders would own about 46 percent of the combined company, which would include approximately 205,000 money transfer agent locations, 370,000 top-up locations, 10,500 ATMs and more than 80 international banking relationships.

Euronet expects the deal would add to 2008 cash earnings per share on a double-digit basis. The company reported fiscal 2006 earnings of $46.3 million and sales of $629.2 million.

MoneyGram, which sells cash transfers and money orders at more than 100,000 global locations, reported fiscal 2006 net income of $124.1 million and sales of $595.9 million. The stock has fallen from a 52-week high last December of $32.24 to reach a year-low of $13.69 last month.