Morning Market Roundup: China Takes Over American Co., EU Stocks Up on G8

Here’s what’s important in the business world this morning:

Trial: The July 29, 2008, phone call between two titans of Wall Street began with the old friends exchanging mild pleasantries, but then quickly turned serious and – by the government’s account – criminal.

Hedge fund manager Raj Rajaratnam asked about a rumor that Goldman Sachs “might look to buy a commercial bank.” On the other end of the phone, then-widely respected Goldman board member Rajat Gupta confided there was a “big discussion” on the subject at a recent meeting.

Prosecutors will try to convince a jury that the intercepted call shows Gupta was providing inside tips that gave Rajaratnam an illegal edge in massive stock maneuvers. Defense lawyers say they’ll argue Gupta was a straight-shooter who only shared public information with the billionaire hedge fund boss, as devoted to raising money for charity as to Goldman’s bottom line.

Jury selection is scheduled to begin Monday in federal court in Manhattan. The trial is scheduled to last up to four weeks.

EU Stocks: European stocks inched up Monday morning in spite of investors’ lingering concerns that the G-8 leaders had failed to provide a concrete plan to solve the European debt crisis.

Traders both in Europe and Asia were kept on edge by worries about the economic future of Greece and whether it would exit the 17-country euro currency union.

Anti-bailout political parties made gains in general elections in Greece earlier this month, but the ballot proved to be inconclusive. A new vote is scheduled for June 17, and the radical left party Syriza is expected to make gains. Without the rescue package, Greece will likely default and leave the eurozone. That would mean a financial disaster for Greece, but it will also send shockwaves throughout Europe.

At stake is a multibillion-euro bailout that Greece urgently needs to stay solvent. International lenders have threatened to cancel the package if Greece fails to follow through on its austerity plans.

China Movie Chain: A Chinese conglomerate announced Monday it will buy a major U.S. cinema chain, AMC Entertainment Holdings, for $2.6 billion in China’s biggest takeover of an American company to date.

Dalian Wanda Group Co.’s purchase reflects the global ambitions of a wave of cash-rich Chinese companies that are using acquisitions to speed their expansion by obtaining foreign skills and brand names.

Wanda said the deal will create the world’s biggest movie theater operator. The Beijing-based company said it will invest an additional $500 million to fund AMC’s development. AMC operates 346 cinemas, mostly in the United States and Canada, and says it has 23 of the 50 highest-grossing U.S. outlets.

Yahoo!: Struggling Internet company Yahoo! Inc. has secured a lifeline after agreeing to sell half of its prized stake in Chinese e-commerce group Alibaba for about $7.1 billion, with most of the cash going to shareholders.

The deal, announced Sunday in the U.S., will see Alibaba Group buying back half of its 40 percent stake from Yahoo Inc. for $6.3 billion cash and up to $800 million of Alibaba preferred shares.

The announcement caps at least a year of rocky on-and-off talks as Yahoo tried to sell the stake as part of efforts to turnaround its business. Money from the sale will give Yahoo the financial firepower to return cash to disgruntled shareholders, many of whom are still upset after it squandered an opportunity to sell itself to Microsoft Corp. in May 2008 for $33 per share, or $47.5 billion. Yahoo’s stock has sagged since then, trading at $15.42 on Friday.

The Associated Press contributed to this report.