(12-28) 07:06 PST ROME, Italy (AP) —

Italy’s economy minister said Friday he backed Air France-KLM as the preferred bidder for the government’s stake in troubled national carrier Alitalia.

Tommaso Padoa-Schioppa, speaking after a Cabinet meeting, said the company would now begin eight weeks of exclusive negotiations with the Franco-Dutch airline. Alitalia shares were suspended from trading on the Milan stock exchange pending a statement from the ministry.

Air France-KLM, the world’s largest carrier by revenue, was seen as a top contender for the Italian airline, which has been losing money for years. Last week, the board of Alitalia also chose Air France-KLM.

“We are convinced that the indication given by Alitalia’s board is the right one,” Padoa-Schioppa said.

Air France had no immediate comment in Paris.

(12-28) 03:43 PST Nashville, Tenn. (AP) —

A judge ruled Thursday that Genesco Inc. executives did not commit fraud during negotiations over a $1.5 billion acquisition and that fellow mall retailer The Finish Line Inc. must complete the purchase.

Nashville Chancellor Ellen Hobbs Lyle dismissed Finish Line’s claims that Genesco withheld key financial information that could have signaled worse-than-expected earnings after the deal closed in June.

Lyle said Indianapolis-based Finish Line and investment bank UBS AG were sophisticated enough to know what they were getting into with the $54.50-per-share purchase.

The buyout was conducted by “teams of lawyers, advisers and handlers being paid enormous sums to orchestrate the procedure for obtaining information” she wrote.

“This milieu is UBS’ home territory,” Lyle said.

UBS has filed a separate federal lawsuit in New York asking that its commitment to finance most of the deal be declared void because the combined entity would go bankrupt and default on its debt payments.

That case is still pending, but Lyle disagreed that the combined company would be doomed.

“The merger has a reasonable chance of succeeding,” she said.

UBS issued a statement saying it disagrees with the court and believes “there are material issues in our client’s and UBS’ favor in this matter.”

“We have consistently stood with our client in its position on this transaction and have been prepared to fund the transaction if the conditions of the financing are met.”

Nashville-based Genesco operates 2,000 retail stores in the United States and Canada under brand names like Journeys, Johnston & Murphy and Hat Shack, and is about twice the size of Finish Line.

Genesco rejected a slightly less generous buyout offer from Foot Locker Inc. in favor of the highly leveraged deal from Finish Line.

Lyle said making Finish Line simply pay damages to Genesco wouldn’t have been enough to repair the harm done by the attempt to get out of the deal.

“Genesco’s business has been irreparably harmed as a result of the stalled merger,” Lyle said in the ruling. “Genesco’s business is in a state of limbo.”

The negative effects of the court battle included dwindling stock prices, damaged vendor relationships and low employee morale, she said.

Genesco’s earnings swung to a loss in the second quarter and dropped 65 percent in the third quarter, but Lyle declined to find that Genesco had suffered a specific financial flaw that prevents it from making money.

“Genesco’s decline in performance in 2007 is do to general economic conditions such as higher gasoline, heating oil and food prices, housing and mortgage issues, and increased consumer debt loads,” she said.

(12-28) 03:44 PST SINGAPORE, (AP) —

Oil prices rose Friday after larger-than-expected declines in U.S. crude inventories, and on heightened geopolitical concerns following the assassination of Pakistani opposition leader Benazir Bhutto.

Pakistani opposition politician Nawaz Sharif vowed to boycott parliamentary elections on Jan. 8 and demanded that President Pervez Musharraf resign immediately.

Bhutto’s assassination “adds another level of uncertainty to the outlook for the region,” said David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney.

Light, sweet crude for February delivery added 15 cents to $96.77 a barrel in Asian electronic trading on the New York Mercantile Exchange by late afternoon in Singapore.

The contract rose 65 cents to settle at $96.62 a barrel on Thursday, a one-month high.

In its weekly inventory report, the U.S. Energy Department’s Energy Information Administration said oil inventories fell by 3.3 million barrels last week, more than double the 1.3 million barrel decline analysts expected.

Inventories of distillates, which include heating oil and diesel fuel, fell by 2.8 million barrels, much more than the expected drop of 800,000 barrels.

Crude and heating oil stockpiles have declined more than expected for several weeks running, exacerbating a perception that supplies may be inadequate to meet winter demand.

Gasoline supplies rose by 700,000 barrels, about half the 1.4 million barrel increase analysts had expected. Refinery activity rose by 0.3 percentage point last week to 88.1 percent of capacity. Analysts had expected an increase of 0.6 percentage point.

Earlier in the week, oil prices rose when attacks by Turkish forces on Kurdish rebels in northern Iraq raised concerns about Iraqi oil exports.

“Oil is concerned that this violence may boil over and is especially worried that somehow this could lead to a disruption of supply from their northern pipelines. Yet despite those fears it hasn’t happened yet,” wrote Phil Flynn, an analyst with Alaron Trading Corp. in Chicago, in a research note.

Heating oil futures added 0.72 cent to $2.6875 a gallon while gasoline prices rose 0.4 cent to $2.5002 a gallon. Natural gas prices dropped 6 cents to $7.14 per 1,000 cubic feet.

In London, Brent crude rose 29 cents to $95.07 a barrel on the ICE Futures exchange.