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The Federal Reserve didn’t pull any surprises Wednesday and cut interest rates by a quarter point to give the sputtering U.S. economy a boost.

The Fed announced that it cut its federal funds target rate by 25 basis points to 4.5%. Wall Street had already widely expected such a cut as the U.S. economy struggles from tightened credit markets, a weak housing market, and a hobbled consumer.

The Federal Reserve began cutting interest rates last month as problems in the credit and housing markets reached a fever pitch. In September, it slashed the rate by 50 basis points to 4.75%. (See: “Christmas In September”)

On Wednesday, the Fed also cut its discount rate by 25 basis to 5.00 %. Banks use the so-called discount window to borrow money directly from the Fed, rather than from each other, which is the more common way that they obtain short-term financing. (See: “Everybody Loves A Discount”)

While a rate cut is a win for equities, it isn’t without risks. Lower interest rates spur inflation, which is already running at uncomfortably high levels. The Labor Department’s Consumer Price Index is now up 2.3% year-over-year. The CPI measures the prices of a fixed basket of consumer goods and is a widely used inflation gauge. The Federal Reserve likes to keep inflation under 2% a year.

An interest rate cut also undercuts the already weakened dollar, as lower interest rates boost the availability of dollars, in turn lowering their value. Over the past year, the dollar has fallen 11.6% against the Euro.

Ironically, the cut came on a day of when the outlook on the economy brightened. An analysis of payroll data showed that employment jumped sharply in October and the Labor Department announced that the third-quarter gross domestic product grew at a higher-than-expected rate. (See: “Job Market Picks Up”)

A rate cut could boost the value of gold as the commodity is often used as a hedge against a weak dollar and inflation. Gold miners traded mostly higher Wednesday. Shares of Eldorado Gold (amex: EGO - news - people ) gained 14 cents, or 2.1%, to $6.95; shares of Goldcorp (nyse: GG - news - people ) gained 78 cents, or 2.3%, to $34.55 and shares of Northgate Minerals (amex: NXG - news - people ) gained 14 cents, or 4.4%, to $3.31. (See: “Fed Rate Cut Offers Golden Opportunity”)

Is Las Vegas Sands sitting on a loose foundation?

On Wednesday, shares of Las Vegas Sands (nyse: LVS - news - people ) plunged 3.9%, or $5.43, to $132.60 in midday trading, amid concern that the casino operator’s stock had run ahead of itself. Indeed, the Sands has enjoyed a wild ride in 2007 so far–the stock is up 48.0% for the year to date. The casino empire, owned by billionaire Sheldon Adelson, has impressed investors with its strong project pipeline and its increasing presence in Asia.

However, some analysts believe investors should be cautious at these great heights. On Wednesday, Lehman Brothers (nyse: LEH - news - people ) analyst Felicia Hendrix downgraded the company to “equal weight” from “overweight” and maintained her $100 price target. Calling the Sands a “concept stock,” Hendrix said there was not enough justification to maintain a bullish rating.

“While we understand why the stock trades where it does, we cannot justify a higher valuation at this point in time based on the data points currently at hand,” Hendrix said.

With many potential growth catalysts on the company’s horizon, Hendrix admitted that her target price may not “appropriately value the company.” However, she believes that the known catalysts are already priced into the stock’s current price. Given the intangiblity of the company’s potential and lingering downside risks, Hendrix said she was holding out for more concrete indicators. Hendrix is not the lone skeptic on Wall Street, on Tuesday, a BMO analyst downgraded the casino operator to “neutral,” because it surpassed his price target. He said investors should hold back until the price drifts lower.

Despite the great promise of the Las Vegas Sands, the casino operator is far from a sure bet.

The company has put a lot of its chips in Asia, which is proving to be an expensive gamble. In the first quarter, the company said profits plunged 25% because of higher-than-expected costs related to casino openings in Macau, China. Operating costs have surged in Macau, where increased competition from Wynn Resorts (nasdaq: WYNN - news - people ) and local outfits, has forced the company to raise salaries to keep the staff on board.To finance the expensive roll-out of its anchor Venetian Macau resort, set to open in August, and other resorts in Singapore, the company has borrowed heavily–including a $2.5 billion credit line for Macau and $1.4 billion for Singapore operations. Interest charges related to this pot of loans totaled $34.6 million in the first quarter.

Nevertheless, the company is optimistic that the new Venetian Macau, which the company’s calls Macau’s “first integrated destination resort,” will distinguish itself from the pack with its broad offerings in entertainment, leisure, shopping, and dining.

Its game plan of using heavy financing to achieve growth could trigger more setbacks in the future. “The compilation of exogenous, geopolitical and recession risks as it vies for a larger piece of the Macau pie, combined with stiff competition from Wynn and MGM in both the U.S. and Macau, places a lot of pressure on the company to execute flawlessly,” Robert Maltbie, money manager and chief executive of StockJock.com said in May. (See: ” Three to Sell”)

The company will report its third quarter earnings on Thursday. The Street is expecting profits of 31 cents a share on sales of $211 million, according to Lehman’s Hendrix, both estimates are “too high.”

The global economy may have stumbled on America’s subprime mortgage crisis, but that doesn’t seem to have stopped MAN from making a killing overseas. Investors applauded the German truck maker’s third quarter results on Wednesday afternoon, sending shares up 3.3%, or 3.92 euros ($5.67), to 122.10 euros ($176.48), in Frankfurt. Profit for the three months had risen 32%, largely thanks to strong sales outside of Germany.

About 75% of MAN’s (other-otc: MAGOF - news - people ) sales came from abroad in the third quarter, a percentage point higher than last year. And while sales in Germany rose 7%, overseas they increased 14%, with much of the strengthening demand coming from Eastern Europe.

Most of the growth came from the company’s biggest division, commercial vehicles, where orders were 25% higher than last year. It also became more profitable: income at the unit grew 36% to 646 million euros ($933 million), from 474 million euros ($685 million) last year.

Third-quarter profit came in at 894 million euros ($1.29 billion), a 32% increase from the last year, on sales of 3.5 billion euros ($5.04 billion). Sales narrowly beat analysts’ forecasts of 3.46 billion euros ($5.00 billion).

The company raised its sales forecasts for the year 2007 by 15%, to 15 billion euros ($21.7 billion), from 13 billion euros ($18.8 billion), with commercial vehicles and diesel engines in particular seeing the strongest growth. It now sees a 10% increase in new orders, compared with a previous outlook of around 5%.

MAN said that while the subprime mortgage troubles might dampen the global economy, and the rising euro against the dollar was hurting some European exporters, the economic outlook for Europe and Asia still looked robust.

There was little news from Chief Executive Hakan Samuelsson on MAN’s merger prospects with Scania, though he did say that any tie-up had to be arranged in a “friendly way.” Ironically enough, MAN launched a hostile bid for the Swedish truck maker in October 2006, but it was blocked by key shareholders Volkswagen (other-otc: VLKAF - news - people ) and Sweden’s powerful Wallenberg family. (See: “VW Offers Lukewarm Support For Scania Bid”)

Earlier this month investors believed that Scania (other-otc: SVKFF - news - people ) was now preparing to bid for MAN (See: “Scania A MAN Eater?”), but analysts have since dismissed the prospect as a rumor.

A spokesman for the Wallenberg’s investment vehicle Investor told Forbes.com that the family could see industrial logic in a combination between the two companies, “but it has to be done in the right way.”

MAN and Volkswagen–which wants to bring in its own Brazilian truck business in a three-way truck alliance–have been saying over the last year that all parties need to have a “cooling-off” period before talks can be resumed.

“We want to make our truck business bigger and have more presence abroad. We are now completely occupied with these things,” said Samuelsson. “But we are also open to partnerships.”

Thomson Financial News contributed to this report.

LONDON - Posting results that are ahead of forecasts are a simple way to delight the market, particularly when a lot of your rivals have been doing worse than expected. Shares in Deutsche Bank soared on Wednesday after the company reported results that were comfortably ahead of expectations, as tax and capital gains more than made up for 2.2 billion euro ($3.2 billion) of trading writedowns.

Deutsche Bank (nyse: DB - news - people ), one of the world’s largest investment banks, said net profit had risen by 31.0% to 1.6 billion euros ($2.3 billion), in the quarter ending in September, above 1.2 billion euros ($1.7 billion), in 2006, and ahead of Deutsche Bank’s own guidance issued earlier this month of 1.4 billion euros ($2.0 billion).

Shares in Deutsche Bank closed up 3.49 euros ($3.16), or 3.9%, to 92.50 euros ($131.77), in Frankfurt, well ahead of the German DAX index which ended the day just 0.5% higher.

Strong performances in the wealth management division, which reported a 45% hike in profits, along with 182 million euros ($263.1 million) in tax gains, and 629 million ($908.9 million) in capital gains, more than made up for the losses the company incurred through its investments in the U.S. subprime market. It meant pre-tax profits fell by 19%, to 1.5 billion euros ($2.2 billion), from 1.8 billion euros ($2.6 billion), in 2006.

Chief executive Josef Ackermannwas upbeat about the future, despite the troubles at its investment banking division, which posted a 179 million euro ($258.6 million) loss for the quarter. “We have made a positive start to the fourth quarter, and assuming markets function at normal levels, we re-affirm our commitment to delivering on our 2008 financial targets,” he remarked on Wednesday.

The results sharply contrast with those of a number of leading banks such as Merrill Lynch (nyse: MER - news - people ), whose dire third quarter results forced the resignation of chief executive Stan O’Neil. On Tuesday Swiss investment bank UBS (nyse: UBS - news - people ) also posted earnings that were worse than it had forecast. (See: “UBS Underwhelms”)

Deutsche Bank’s results vindicate its optimism at a banking conference in London earlier this month, when it said that its third quarter earnings would withstand the troubles in its investment banking division. Analysts were skeptical about its cheery attitude at the time, not least because of its substantial dollar revenues that have been hit by the weakening dollar, and the investment writedowns.

 HOW THE FED WORKSThe Federal Open Market Committee: Who votes on setting interest rates?

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By Sue Kirchhoff, USA TODAY WASHINGTON — The Federal Reserve cut a key short-term interest rate by a quarter-point to 4.5% on Wednesday, seeking to support troubled financial markets and shore up the collapsing housing sector.

It was the second time in two months the central bank’s policymaking Federal Open Market Committee reduced rates. The Fed on Sept. 18 slashed the federal funds rate, which is what banks charge each other for overnight loans, by a larger-than-expected half-a-percentage point to 4.75%.

The federal funds rate is a benchmark for many consumer and business loans, such as home equity lines of credit and credit cards. The Fed also cut the discount rate, what the Fed charges banks for short-term loans, to 5%.

STATEMENT: What the Fed said

The committee said in a brief statement explaining its action that the Fed after the second rate cut judges that “the upside risks to inflation roughly balance the downside risks to growth.”

By stating that risks are now roughly balanced, the Fed could be signaling that it judges that further rate cuts will not be necessary.

The Fed’s decision came on a 9-1 vote with Thomas Hoenig, president of the Kansas City regional Fed bank dissenting, arguing that he preferred no change in the funds rate.

Commenting on the economy, the Fed struck a more positive tone than it did last month when it expressed concerns about the toll the August credit crisis would take on housing and the overall economy.

In the current statement, the Fed said, “Economic growth was solid in the third quarter, and strains in financial markets have eased somewhat on balance.”

Financial markets seized up in late summer, as concerns about rising defaults on higher-cost subprime mortgages ballooned into a more widespread global credit crunch, with investors worried about the soundness of a variety of complicated financial products.

The Fed move came despite a report earlier Wednesday that the economy grew at a rapid 3.9% annual pace in the third quarter of the year, fueled by healthy consumer spending and strong exports.

Federal Reserve Chairman Ben Bernanke and central bank officials are basing policy on the outlook for economic growth going forward, however, and have said they expect slower expansion through the end of 2007 and into 2008.

The central bank faces a delicate balancing act: weighing the potential for slower growth against the possibility that rate cuts could help spark higher inflation down the road.

While recent readings on core inflation — which excludes volatile food and energy prices — have been near the Fed’s informal comfort zone of 1%- 2%, oil prices recently hit a record and food prices are spiking. Consumer confidence has also been deteriorating.

The Fed, while determined to do what it takes to protect the broader economy, is also leery of sending a message to financial markets that interest rate policy will be used to bail out investors who made bad bets.

Consumers have benefited from the Fed’s Sept. 18 rate cut, according to Bankrate.com. Interest rates on home equity lines of credit have fallen by half a percentage point, and credit card rates have dipped in four of the five weeks since that move, the firm says.

More broadly, credit markets have perked up since the Fed’s mid-September move, but are not yet fully functioning. The housing freefall has accelerated, and mortgage markets are constricted.

Since the housing market started falling more than two years ago, sales have dropped 20%, construction by 40% and house prices are down 5%, Moody’s Economy.com says in a recent analysis.

Central bank officials worry that the housing and credit problems could have ripple effects dampening consumer and business spending.

Contributing: Associated Press

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To report corrections and clarifications, contact Reader Editor Brent Jones. For publication consideration in the newspaper, send comments to letters@usatoday.com. Include name, phone number, city and state for verification.

LONDON - Technology firm Garmin banged the bidding war drum for Dutch digital map maker Tele Atlas on Wednesday, when it offered 2.3 billion euro ($3.3 billion) to rival a bid from TomTom.

Garmin (nasdaq: GRMN - news - people ) said its offer price was 15% higher than TomTom’s (other-otc: TMOAF - news - people ) 2 billion euro ($2.9 billion) bid for Tele Atlas (other-otc: TLATF - news - people ), announced in July. Garmin said it would formally launch the offer before TomTom’s bid expiry deadline of December 4.

Shares in Garmin fell $7.91, or 6.6%, to $112.57, in morning trading in New York, a sign that it may have a battle on its hands convincing shareholders to stay on board if the bidding war overheats.

TomTom’s investors don’t seem to share that sentiment. They sent shares in the Dutch global positioning systems firm down 17.2%, an 11.68 euro ($16.90) drop, to 56.10 euros ($81.15), during afternoon trading in Amsterdam, suggesting they were keen on the acquisition.

Tele Atlas meanwhile soared 15.8%, or 3.79 euros ($5.48), to 27.80 euros ($40.21), with investors finally getting a taste of an imminent battle for the navigation firm. Garmin’s offer is worth 24.50 euros ($35.44) per share, so in pushing the stock above that price, Tele Atlas investors seem to be hoping for a counter bid from TomTom.

Tele Atlas’s shares, which have risen over 35% in two months, are also now trading at a whopping 30.8% premium to TomTom’s offer of 21.25 euros ($30.74) per share.

Analysts believe that a bidding war between TomTom and Garmin could push up the offer price to 28 euros per share ($40.50), which would value Tele Atlas at 2.6 billion euros ($3.8 billion). Investors will likely get a nosebleed at such prices, but the race to acquire navigation companies has outpaced sound financials ever since Nokia (nyse: NOK - news - people ) offered to buy U.S. firm Navteq (nyse: NVT - news - people ) for $8.1 billion earlier this month. (See “Nokia Redraws The Map”)

Tele Atlas said on Wednesday that it would review the terms and conditions of Garmin’s offer. Up till now the digital map company has backed TomTom’s bid, which was approved by Dutch regulators in September and is awaiting European approval.

The reluctance of tech firms to go map-shopping under the watchful eyes of major competitors like Nokia is partly what is pushing up the value of digital navigation firms, despite Garmin’s promise to keep Tele Atlas running as an entirely separate business. Acquiring Tele Atlas would also allow Garmin to expand its map making division without heavy technological investment.

“A combined company will expand Garmin’s ability to serve more customers in wireless, in-dash automotive, internet, and enterprise markets,” said Garmin on Monday.

There is also no guarantee that TomTom will raise its bid for Tele Atlas, especially if it feels that it has the technological know-how and necessary requirements to make its own maps. The unpredictable route of a bidding war may not be as appealing as a straightforward road to organic growth.

Kraft Foods (nyse: KFT - news - people ) has joined the ranks of food companies suffering from rising commodity costs. The Northfield, IL-based company reported that its third-quarter profit fell to $596 million, or 38 cents per share, down 20.3%, from $748 million, or 45 cents per share, in the third quarter of 2006.

Kraft noted that the results included asset impairments and charges accounting for 6 cents per share, without which the company earned 44 cents per share, beating the Street’s predicted earnings per share of 42 cents. The impairment charges were related to the company’s agreement to sell the Veryfine juice and Fruit2O water brands.

Irene Rosenfeld, Kraft’s chief executive, attributed the company’s losses to rising input costs. Kraft said a 40% rise in dairy prices had a major detrimental affect on profits from its core cheese businesses.

“Although we face a difficult input cost environment, we are making the necessary investments to strengthen our brand equity,” said Rosenfield. “These investments are driving accelerated volume growth, despite having taken significant price increases. I remain confident that we are on track to deliver the volume growth and a product mix that will improve market share performance and profit margins in 2008.”

Kraft, North America’s largest food company, reported a 9.8% increase in net sales, reaching $9.05 million in the quarter ending September 30, compared with $8.24 million in 2006. The company did not alter its forecast for earnings per share to be between $1.80 and $1.82 for 2007.

Banc of America Securities analyst Edgar Roesch said Kraft had been unable to offset commodity inflation by raising prices. But he added that the company, “made more progress than we expected during the third quarter, putting up a good fight in a tough environment.”

Kraft’s stock climbed 61 cents, or 1.9%, to $33.21, on Wednesday morning.

Talk about a growth company.

On Wednesday, Google (nasdaq: GOOG - news - people ) stock passed the $700 milestone for the first time as shares of the Internet firm rose 1.1%, or $7.34, to $702.11. Why? Investors saw the firm prepare to make even more money as it moves into new markets.

Wednesday’s threshold is all the more remarkable because it took less than a month for the stock to make the assent from $600.

The numbers are truly remarkable: Google has risen 23.5% in market capitalization to $218.6 billion from $177.1 billion on Sept. 28, for a total rise of $41.5 billion.

That difference effectively equals the total $41.7 billion market cap of another Internet icon, Yahoo (nasdaq: YHOO - news - people )which had a 4-year head start on Google.

Wednesday’s rise though was driven by news that Verizon Wireless (nyse: VZ - news - people ) and Sprint Nextel (nyse: S - news - people )are in “advanced talks” with Google about carrying a cell phone powered by the Web company’s software.

The news was first reported by The Wall Street Journal’s online edition on Tuesday which cited unnamed sources.

The paper said Google is expected to announce within two weeks a set of software and services that cell phone makers could use. The software would likely allow third parties to add applications, and it would probably be able to take advantage of Google’s advertising network.

In morning trading shares of Sprint were at $17.04 without a gain or loss while share of Verizon were up 1.3%, or 58 cents, to $45.94.

Deals with Verizon and Sprint, the country’s second and third largest carriers, would give Google a wide platform for its software.

Google already has “significant traction” with the fourth largest carrier, T-Mobile USA, the ‘Journal reported.

Rumors have swirlied about Google’s interest in the telecom industry for some time. (See “Google: Friend Or Foe For Telecom?” and “Will Google Crush The iPhone?”)

Investors on Wednesday also reacted to news that Google is setting up a distribution network for social networking applications, adding a new twist in the Internet search leader’s brewing rivalry with rapidly maturing startup Facebook.

Although Google confirmed its plans late Tuesday, its new social networking platform won’t be unveiled until later this week.

Google hopes to build a one-stop shop for software developers who create tools that make it easier to share music, pictures, video and other personal interests on social networking sites like Facebook and News Corp. (nyse: NWS - news - people )’s MySpace.com.

Microsoft (nasdaq: MSFT - news - people ) trumped Google in the bidding for a piece of Facebook (See “Google Loses Face” and “Frienemies Without Facebook”). Google may have passed because it may already have all the pieces it needs to patch together a homegrown social networking site–one that could even trump Facebook eventually. (See “Who Needs Facebook?”).

The Associated Press contributed to this article

The Fed’s expected rate cut was not the only economic treat on tap for Halloween, as the latest gross domestic product numbers were released Wednesday morning and beat expectations.

The United States’ gross domestic product increased at a year-over-year rate of 3.9% for the third quarter, indicating continued growth, as the second-quarter rate was 3.8% higher than 2006. The third-quarter figure also bested the consensus forecast of a 3.1% increase.

The economy’s continued growth, in light of the ongoing credit turmoil, will likely not effect the Fed’s decision of whether to cut rates, but it may impact how they opt to describe the cut.

A 25 basis point cut to the federal funds and the discount rate appears likely when the Fed makes its statement, but Wednesday’s GDP data may embolden Fed Chairman Ben Bernanke to issue a stern warning that October’s cut will be the last one for a while.

Doug Roberts, chief investment strategist at Channel Capital Research, told Forbes.com earlier this week that he expects the quarter point cut, but also expects Bernanke to use pretty harsh language and give a strong caveat that this will be the last cut, largely to placate the bond market and show that the Fed has not been merely to appease Wall Street investors. (See: “Rate Cut Round Two”)

Oil prices are rising ahead of the Fed’s expected cut, after a sell-off Tuesday. Black gold touched a new record of $94 a barrel Wednesday before a slight pullback. Crude was up $3.15, to $93.53 a barrel at midday. While $100 oil has become a distinct possibility, it may not be anything to get worked up about, as the economy appears to be handling oil prices flirting with the mid-$90 range quite well. With an expected rise in oil a likely side effect if the Fed cuts rates, the bulls were carrying the day in the commodities market Wednesday.

In addition to the Fed effect, oil prices were also rising thanks to a weaker dollar, which was slipping against several major currencies. The dollar had been up early in the day after the GDP report, but reversed course at midday and was at slightly over $1.44 to the euro.

The major U.S. averages were rising ahead of the Fed’s afternoon statement, with the Dow Jones industrial average up 45 points, or 0.3%, to 13,837. The Standard & Poor’s 500 and the Nasdaq were both 0.6% higher at midday, with the S&P gaining 10 points, to 1,540, and the Nasdaq rising 17 points, to 2,834.

Wednesday’s gains were coming from all sectors, but the energy space was pacing the day on the rise of oil. Dow component Exxon Mobil (nyse: XOM - news - people ), the largest U.S. energy company, was up 56 cents, or 0.6%, to $91.70, but was outpaced by peers Chevron (nyse: CVX - news - people ) and ConocoPhillips (nyse: COP - news - people ). Chevron shares gained $1.65, or 1.8%, to $91.73, while Conoco climbed $2.19, or 2.7%, to $84.91.

The financial sector, which has been battered in recent weeks by a wave of poor earnings reports related to the subprime collapse, was also posting gains as some of its most battered firms were buoyed by optimism for a rate cut.

Merrill Lynch (nyse: MER - news - people ), which wrote down more than $8 billion in losses for the third quarter related to derivatives and collateralized debt obligations stemming from subprime mortgages, was up 54 cents, or 0.8%, to $65.75. (See: “Merrill Lynch Needs A Plan (And A New Leader)”)

Countrywide Financial (nyse: CFC - news - people ), which was hit hard by the subprime mess over the summer and through the early fall, was up 2.2% Wednesday, despite a $1.2 billion third quarter loss and a recently announced shareholder lawsuit against the company’s management. Countrywide announced a bullish outlook when it reported third-quarter earnings and investors appear to have responded to its forecast over the past several trading days. Shares rose 35 cents, to $16.29.

LONDON - Eni’s efforts to scour for oil in Asia and Africa is not proving easy. The Italian oil and gas company reported a sharp fall in net profits due to a drop in production, lower oil refining margins and higher taxes.

Rome-based Eni (nyse: E - news - people ) said that its net profit fell by 27.7%, to 1.9 billion euros ($2.8 billion), from 2.6 billion euros ($3.8 billion), a year earlier, in line with expectations. Nevertheless, shares in the oil giant slumped by 32 euro cents, or 1.2%, to 24.89 euros, while Europe’s leading indexes were up slightly on expectations of an interest rate cut by the U.S. Federal Reserve.

Eni’s performance was weighed down by a number of problems, the most significant being a slump in production due to troubles with its operations in Nigeria, and a slower than expected ramp up of operations in the Congo. Oil and gas production slipped by 2.9%, to 1.66 million barrels a day, also in line with expectations.

The results were also weighed down by the strong euro, which has been setting new record highs against the dollar. “The third quarter was impacted by the negative effect of the appreciation of the euro against the dollar, which more than offset the benefit of high oil prices, and weaker refining and natural gas margins,” said chief executive Paulo Scaroni, referring to the spiraling price of oil which rose well above $90 a barrel this week.

Eni has had an expensive quarter, with capital expenditure rising 46.0% higher than the third quarter last year, due to new exploration ventures and acquisitions in the U.S., and the Russian oil and gas sector.

In a note to investors, Dresdner Kleinwort analyst Collin Smith noted that the company had maintained its full year guidance. “We do not see any risk to our full year earnings per share forecast of 2.56 euros ($3.70),” he remarked.

Nevertheless, the fourth quarter could have some unpleasant surprises in store, particularly for Eni’s Kazakh venture at the enormous Kashagan field. Costs for the project have been spiraling ever higher, and the Kazakh government has suspended operations and threatened to remove Eni from its coveted position as lead operator of the world’s largest oil discovery in four decades, which it operates along with Exxon Mobil (nyse: XOM - news - people ), Total (nyse: TOT - news - people ), Royal Dutch Shell (nyse: RDSA - news - people ) and ConocoPhillips (nyse: COP - news - people ).

While chief executive Scaroni has made dealing with the situation a top priority, including by holding meetings in Kazakhstan with the country’s president and prime minister, the negotiations have been dragging on beyond the previously established deadline of October 22. Maintaining its position in Kashagan could come at a cost. Eni could be forced to reduce its 18.5% stake or pay significant penalties. (See: ” Kashagan Woes Dim Eni’s Outlook”)