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Auto shares up as bargaining resumes

DETROIT - Contract talks between the United Auto Workers and General Motors Corp. stretched into Monday evening amid optimism that the two sides were closer to a critical agreement that could take billions in retiree health care costs off GM's books.

The optimism pushed auto stocks higher on Wall Street, but at the factories, workers were less certain as they spent a third day without a new contract.

Negotiations resumed about 11 a.m. Monday after bargainers stopped to rest about 3 p.m., and talks were continuing into the evening, GM spokesman Tom Wickham said.

Bargainers were making progress but still had a lot of work to do, according to a person who was briefed on the talks. The person spoke on condition of anonymity because the talks are private.

GM shares, which rose 15 percent last week, continued to rise throughout the day Monday, bucking a downward trend in the markets. GM shares were up $1.01, or nearly 3 percent, to close at $35.23. Ford Motor Co. shares, which rose at a more modest pace last week, also were up after Bear Stearns upgraded Ford and said a deal on health care could be even better news for the No. 2 automaker than for rival GM. Ford shares were up 25 cents, or 3 percent, to close at $8.28.

Chrysler shares no longer trade on the NYSE since the company was taken over by private equity firm Cerberus Capital Management last month.

Pete Hastings, an auto industry analyst with Morgan Keegan & Co., said investors should be confident because the two sides appear to be moving closer to a settlement. The UAW is negotiating an agreement with GM first and will try to persuade Ford and Chrysler to accept the same terms. "This labor agreement is monumentally important and would be a big step towards completing the turnaround for GM," Hastings said.

[Last modified September 18, 2007, 00:48:19]