(02-06) 06:46 PST NEW YORK, (AP) —

Treasury prices fell Wednesday after a report showed workers producing at a stronger-than-forecast pace and labor costs in check at the end of 2007.

The Labor Department said productivity grew by an annual rate of 1.8 percent in the fourth quarter. The result was down significantly from the 6 percent advance seen in the third quarter, but well above the 0.5 percent gain projected in a Thomson/IFR analysts poll.

Unit labor costs, a key inflation gauge monitored by the Federal Reserve, advanced 2.1 percent in the final quarter, below the 3 percent rise projected by Thomson IFR.

Productivity usually drops off when the economy slows down because companies are left with too many workers for the amount of work on hand. Some economists will use the news to support a case that the economy has entered a recession.

Although Wall Street suffered a case of fright due to recession fears on Tuesday that caused a massive stock selloff, the latest report did not deter investors from trying to send stocks higher at Wednesday’s opening.

The expected gains for stocks put pressure on Treasurys as the two markets often trade in opposite directions.

The benchmark 10-year Treasury note fell 11/32 to 105 9/32 with a yield of 3.60 percent, up from 3.56 percent late Tuesday.

The 30-year long bond declined 20/32 to 110 16/32 with a 4.36 percent yield, up from 4.33 percent late Tuesday.

The 2-year note lost 3/32 to 100 11/32 with a yield of 1.95 percent, up from 1.92 percent late Tuesday.

Selling pressure on bonds Wednesday was compounded by the fact the Treasury Department will auction $13 billion in new 10-year Treasury notes in the afternoon. Institutional investors often lighten their Treasury holdings ahead of an auction to make room in their portfolios for new supply.

The Federal Reserve will hold its next regular monetary policy meeting on March 18, but many investors expect the central bank to order another rate cut before then.

The Fed in January cut rates by an unusually large 1.25 percentage points late last month, but many investors think additional easing is needed and the bank has indicated it is willing to reduce the fed funds target down further.

Trading of fed funds futures contracts Wednesday indicated investors think there is a 50 percent chance for a 0.25 percentage point reduction in February.

(02-06) 06:46 PST NEW YORK, (AP) —

Treasury prices fell Wednesday after a report showed workers producing at a stronger-than-forecast pace and labor costs in check at the end of 2007.

The Labor Department said productivity grew by an annual rate of 1.8 percent in the fourth quarter. The result was down significantly from the 6 percent advance seen in the third quarter, but well above the 0.5 percent gain projected in a Thomson/IFR analysts poll.

Unit labor costs, a key inflation gauge monitored by the Federal Reserve, advanced 2.1 percent in the final quarter, below the 3 percent rise projected by Thomson IFR.

Productivity usually drops off when the economy slows down because companies are left with too many workers for the amount of work on hand. Some economists will use the news to support a case that the economy has entered a recession.

Although Wall Street suffered a case of fright due to recession fears on Tuesday that caused a massive stock selloff, the latest report did not deter investors from trying to send stocks higher at Wednesday’s opening.

The expected gains for stocks put pressure on Treasurys as the two markets often trade in opposite directions.

The benchmark 10-year Treasury note fell 11/32 to 105 9/32 with a yield of 3.60 percent, up from 3.56 percent late Tuesday.

The 30-year long bond declined 20/32 to 110 16/32 with a 4.36 percent yield, up from 4.33 percent late Tuesday.

The 2-year note lost 3/32 to 100 11/32 with a yield of 1.95 percent, up from 1.92 percent late Tuesday.

Selling pressure on bonds Wednesday was compounded by the fact the Treasury Department will auction $13 billion in new 10-year Treasury notes in the afternoon. Institutional investors often lighten their Treasury holdings ahead of an auction to make room in their portfolios for new supply.

The Federal Reserve will hold its next regular monetary policy meeting on March 18, but many investors expect the central bank to order another rate cut before then.

The Fed in January cut rates by an unusually large 1.25 percentage points late last month, but many investors think additional easing is needed and the bank has indicated it is willing to reduce the fed funds target down further.

Trading of fed funds futures contracts Wednesday indicated investors think there is a 50 percent chance for a 0.25 percentage point reduction in February.

In what could be a key move in its nascent wireless strategy, Google ( ) has quietly acquired startup Android Inc., BusinessWeek Online has learned. The 22-month-old startup, based in Palo Alto, Calif., brings to Google a wealth of talent, including co-founder Andy Rubin, who previously started mobile-device maker Danger Inc.

Android («www.android.com») has operated under a cloak of secrecy, so little is known about its work. Rubin & Co. have sparingly described the outfit as making software for mobile phones, providing little more detail than that. One source familiar with the company says Android had at one point been working on a software operating system for cell phones.

SEEKING A MOBILE EDGE. In a 2003 interview with BusinessWeek, just two months before incorporating Android, Rubin said there was tremendous potential in developing smarter mobile devices that are more aware of its owner’s location and preferences. “If people are smart, that information starts getting aggregated into consumer products,” said Rubin.

Rubin declined to comment on Android or its sale to Google. A spokesperson for the search giant would not elaborate on the deal, only stating: “We acquired Android because of the talented engineers and great technology. We’re thrilled to have them here.”

Google has been toiling to make its services more appealing to people who access the Net over cell phones and other mobile devices. In April, the company uncorked local-flavored search for mobile users. Also in April, it announced Google Short Message Service (SMS), which sends text-based information to mobile users seeking everything from driving directions to weather forecasts.

WELL-KNOWN TALENT. In May, Google acquired Dodgeball, a mobile social-networking service. Using a wireless device, users can send a text message to their circle of friends, announcing that they will be at a certain coffee shop or hangout. In addition, users can be notified if friends-of-friends are within a certain vicinity. Google has not disclosed how it will incorporate the Dodgeball offering into its services.

Google bought Android in July for an undisclosed sum. The upstart adds to Google’s collection of talent and technology that it hopes to apply to this critical segment. “Wireless is the next frontier in search,” says Scott Ellison, analyst at research outfit IDC.

Rubin isn’t the only well-known Silicon Valley veteran joining Google via Android. Others coming over include Andy McFadden, who worked with Rubin at WebTV before helping develop the all-in-one set-top box for Moxi Digital; Richard Miner, former vice-president of technology and innovation at telecom outfit Orange before joining Android; and Chris White, who spearheaded the design and interface for WebTV in the late 1990s, before helping to found Android.

YOUTH APPEAL. Danger, Rubin’s previous company, launched the mobile Hiptop device to considerable buzz in 2002. Shortly afterwards, he handed over the CEO title, staying on as president and chief strategy officer. The company’s devices continue to be popular among the younger demographic, particularly for text messaging, but it has struggled to extend its reach beyond key partner T-Mobile, a wireless service provider.

With Google’s acquisition of Android, it will be interesting to see what new wireless products emerge from the joining.