SYDNEY: A promise to turn rust-red iron ore into gold for investors has transformed Andrew Forrest from a “penny stock” mining entrepreneur with a dream into the richest person in Australia, worth more than $7 billion.

After a decade promoting everything from Cuban-style nickel mining to underground desert oceans, Forrest appears to have hit pay dirt with iron ore. In December, he passed James Packer, the gambling and media magnate, as the wealthiest person in Australia.

Worldwide, iron ore prices have been rising for the past six years, increasing 65 percent in 2008 alone, thanks to an appetite at Chinese steel mills for imported ore.

Forrest, a former stockbroker, has also become one of Australias most generous philanthropists. He has donated millions of dollars to fighting poverty and alcoholism among Aborigines, many of whom he employs digging mines and laying railroad tracks in the Outback. Forrests one rule, said his spokesman, Paul Downie, is that alcohol must be banished from to an aboriginal community before his money goes there.

Forrest, 47, has said he would rather give his billions away than die rich, and he was reluctant to “burden” his three children with his fortune.

“What all my kids know is that theyre not going to inherit it and theyre happy about that,” Forrest was quoted as saying last year in The West Australian.

Forrest was traveling and unavailable to comment for this article, Downie said.

From just a few pennies in 2003, stock in Forrests company, Fortescue Metals Group, surged to more than 60 Australian dollars, or $55, before splitting 10 for 1 in December to enable a loyal legion of mostly small investors a chance to afford more shares.

Magnitogorsk Iron Steel Works paid about $400 million for a 5.2 percent stake in Fortescue in September. The Forrest family holds 36 percent.

Forrest was nicknamed Silver Tongue in the mid-1990s after persuading a group of U.S. bond holders to put up $420 million in debt financing to build a company making nickel metal in the Outback using modified Cuban technology. He has already sold 45 million tons of ore to some of Chinas biggest steel mills, though Fortescue will not make its first shipments until May.

James Wilson, an analyst with DJ Carmichael in Perth, said: “China cant import enough iron ore. Theyre desperate for the stuff. Forrest is a smart guy and saw this coming before a lot of other people.”

The boom hinges on Chinas willingness to import much of the ore it needs to support its massive industrialization rather than better exploit its own natural resources.

Forrest, who spent summers as a jackeroo, or cowboy, near aboriginal outposts, portrays Fortescue as a David to the international Goliaths Rio Tinto and BHP Billiton, which have long cornered Australias ore reserves but are now struggling to keep pace with demand. He is battling both companies in court to be allowed to ship Fortescues ore on their private rail lines.

“Forrest is the quintessential Aussie bloke, just as happy to say gday to the garbage man as the prime minister,” says Tim Treadgold, an analyst. “He just happens to be the richest Aussie bloke.”

TECHNOLOGY

Judge defers on Google complaint

The judge overseeing Microsoft’s () antitrust settlement deferred to state and federal agencies on whether to extend gov’t oversight of Microsoft, in place since an ‘02 antitrust settlement. That oversight is set to end in Nov. Google () complained that Microsoft’s Vista slows down third-party search software, such as Google’s desktop search, and violates its antitrust agreement. U.S. officials said Microsoft has recently resolved that issue. Google rose 0.5% to 530.26. Microsoft edged up 0.1% to 29.52.

Applied Materials, () a maker of chip manufacturing equipment, said it agreed to buy privately held HCT Shaping Systems, a maker of crystalline silicon substrates for the solar industry, for $475 mil.

MEDIA

Murdoch agrees to editorial matter

Rupert Murdoch and the parent of the Wall Street Journal reached an initial agreement to ensure the editorial independence of the newspaper. Murdoch’s News Corp. () has offered $5 bil for Dow Jones, () but it is still not clear whether the deal will win the approval of Dow Jones’ controlling shareholders, the Bancroft family, who initially rebuffed Murdoch. News Corp. slid 0.8% to 23.31. Dow Jones rose 2.2% to 58.77.

GAMING

MGM up on talk of deal looming

The casino operator rose 1.6% to 83.72 after BMO Capital Markets predicted a significant “transaction” will happen, such as a potential takeover attempt or significant asset sale, that will boost its stock price. BMO also raised its price target by $12 to $95. MGM Mirage () ’s biggest stakeholder, Kirk Kerkorian’s Tracinda, which owns 56% of MGM shares, recently abandoned negotiations to acquire MGM’s Bellagio hotel-casino and CityCenter in Las Vegas.

RETAIL

Nike meets, jumps after hours

The footwear giant’s Q4 earnings climbed 23% to 86 cents a share, excluding 4 cents in stock compensation, matching views. Revenue rose 9% to $4.38 bil, also in line with forecasts. Nike () credited strong sales of its branded footwear and favorable currency exchange rates. It said that orders for delivery of footwear and apparel from June through Nov. rose 12%, with U.S. orders rising 7%, down from 9% a year ago but above analysts’ views. Nike, which reported after hours, jumped 4% in late trading.

Kroger beats, plans $1 bil buyback

The supermarket chain which faces a tense labor situation in Southern Calif. said its Q1 profit 16.7% to 49 cents a share, ex items, beating views by a penny. Sales rose 7% to $20.73 bil, above views. Kroger () ’s same-store sales rose 6%. The company also expects ‘07 EPS of $1.60-$1.65 a share, below views of $1.66. Kroger’s board had approved a new $1 bil stock buyback. The low guidance and concerns about a possible union strike pushed shares down 6.7% to 27.66.

FINANCE

Bear Stearns fund cancels IPO

A Cayman Island-registered hedge fund formed by Bear Stearns () withdrew for a $100 mil IPO plans. Everquest Financial specialized in collateralized debt obligations. Bear Stearns last week had to loan $3.2 bil to one fund it manages after it suffered heavy losses due to a downturn in the subprime mortgage market. Critics also claimed Bear Stearns would improperly direct its investors to the fund in order to curb its own losses. Bear Stearns rose 0.2% to 139.35.

Bear Stearns () needs to invest half of the $3.2 bil it pledged to rescue one of its ailing hedge funds, and does not expect to rescue a second troubled fund, it said.

MEDICAL

Pharmas partner on cancer drugs

Abbott Laboratories () and Genentech () agreed to work together on developing two potential cancer drugs. The Abbott drugs, known as ABT-263 and ABT-869, are designed to restore the body’s natural process of ridding itself of damaged or aberrant cells. Abbott will co-promote the drugs in the U.S. with Genentech, but have exclusive rights overseas. Financial terms of the partnership were not disclosed. Abbott dipped 0.2% to 53.97. Genentech fell 1.8% to 72.60.

U.S. probes bills for dialysis drug

A federal investigator told lawmakers that Medicare pays dialysis centers more for the best-selling Amgen () drug Epogen than the drug costs on the open market. In 2005, the gov’t paid out more than $2 bil to reimburse clinics that use Epogen to treat about 400,000 kidney-failure patients on dialysis. A Health and Human Services inspector told a House panel that dialysis clinics like DaVita () and Fresnius Medical () pay about 5% less for the drug than they are charging the gov’t. Amgen fell 1.4% to 55.10, Fresnius slid 1.1% to 45.04, and DaVita dipped 4 cents to 52.65.

Advanced Medical Optics, () a maker of eye care products, warned of an ‘07 loss due to a recall of its MoisturePlus contact lens solution. It sees a loss of $0.95-$1.15 a share, compared with its previous earnings estimate of $1.40-$1.55. Revenue guidance was cut by $100 mil to $1.05 bil-$1.07 bil, against views of $1.12 bil. Shares were flat.

Cardinal Health, () a provider of products and services to the health care industry, said its ‘07 ex-item earnings will come in at the high end of its range of $3.32-$3.40. Views were for $3.40. Cardinal slid 0.2% to 69.43.

CHEMICAL

Basell buys Huntsman for $5.6 bil

The chemical company said it will buy Huntsman () for $25.25 a share in order to strengthen its global chemical business. The deal is valued at $9.6 bil with debt included. HSBC said it is hard to understand how Basell will justify such a purchase. The companies have a combined revenue of $26 bil and intend to have an extensive geographic footprint. Huntsman rose 28% to 24.21.

TOBACCO

Reynolds American wins lawsuit

A U.S. federal judge ruled that Star Scientific’s () patents related to the curing of tobacco were unenforceable in a suit against Reynolds American’s () R.J. Reynolds Tobacco unit. Star Scientific had sued the maker of Camel and Salem cigarettes, claiming Reynolds’ process to reduce the level of cancer-causing toxins in tobacco violated its patent rights. Reynolds rose 2.7% to 63.67.

Altria’s () Philip Morris unit will close its cigarette plant in North Carolina as it moves cigarette production to foreign markets. Altria rose 1.3% to 69.63.

WASHINGTON: The shaky confidence that has curtailed consumer spending in the United States, Europe and Japan may be spreading to the corporate world.

A troubling U.S. regional factory index released Thursday showed that American manufacturers planned to cut way back on investment over the next six months as they worried about worse to come.

On Friday, Japan downgraded its economic outlook for the first time in 15 months as weakening export demand hurt companies.

This week, reports on the business mood in Germany and across the euro zone will tell whether companies in the region are also feeling gloomier.

With pricey food and fuel taking a bigger bite out of household budgets and tighter credit conditions restricting access to cash, consumers are understandably concerned. If businesses conclude that this is more than just a blip, the risk is that they, too, will rein in spending and cut jobs.

That would all but ensure a U.S. recession and, at the very least, a steep slowdown for the global economy.

There are signs that corporate America is planning to retrench. The Philadelphia Federal Reserve said last week that its gauge of mid-Atlantic factory activity, often a good indicator of national trends, had hit its lowest level since February 2001, one month before the last U.S. recession began.

More alarming was the sense of how business conditions would look six months from now. That gauge dropped to -16.9 from Januarys 5.2 reading, the lowest since September 1990 and one of the weakest levels on record.

“A pullback in the outlook of this magnitude could be extremely corrosive to the economy because it means shuttering production, slashing inventories, deeper job cuts and even canceling capital expenditure plans,” David Rosenberg, a Merrill Lynch economist, wrote in a note to clients.

The gloomy six-month outlook clashes with the view held by many economists - and the U.S. Federal Reserve - that U.S. economic growth should pick up in the second half of the year as interest rate cuts and a $152 billion fiscal stimulus package work their magic.

U.S. companies beyond the manufacturing sector also seem doubtful about a swift recovery. Goldman Sachss analyst index, a survey of how equity analysts view business conditions in the sectors they follow, found that hiring expectations had plummeted in February. Capital spending expectations also drooped.

There is little doubt that the U.S. economy is weakening and perhaps already in the grips of a recession for the first time since 2001. What is less clear is how that affects the rest of the world.

While economists in a Reuters survey last week trimmed their expectations for euro zone growth, recent data show factories there are still expanding, albeit at a slower pace, and the services sector grew more quickly in February than analysts had predicted. The biggest blot was new export orders, which slumped to the lowest level since May 2005, the victim of a strong euro and slowing demand from the United States.

Yet sentiment is fading. In France, business morale plunged in February and retail sales fell sharply. Across the euro zone, even in the fast-growing services sector, business expectations dimmed somewhat this month.

On Tuesday, Germanys Ifo economic research institute releases its business climate survey. It is likely to show a slight dip in both current conditions and expectations in Europes largest economy, after an unexpected gain in January.

Last week, Ifo cut its 2008 growth forecast for Germany to 1.6 percent from 1.8 percent. That would be a significant slowdown from 2007s 2.5 percent growth.

Euro zone business and consumer sentiment reports are due Friday. Analysts expect to see a small decline in the business climate and economic sentiment, while the consumer mood remains unchanged but in negative territory.