Microsoft and the Justice Department tentatively agreed to settle the historic 1998 anti-trust case. But attorneys general from 18 states had not yet signed off on the deal, the terms of which were closely guarded. The new trial judge in the case, Colleen Kollar-Kotelly, had set a deadline of today for a settlement. States were weighing whether to accept penalties Microsoft would face for at least five years, sources said. A federal appeals court this summer agreed that Microsoft violated antitrust laws when it sought to maintain a monopoly over computer operating system software, but reversed an order to break up the company. Absent a settlement, the next stage of the trial would decide how to punish Microsoft.

Consumers jolted by the Sept. 11 attacks and rising layoffs cut back on spending in September by the largest amount in more than 14 years, the Commerce Department reported. Spending plunged 1.8 percent, following a modest 0.3 percent gain in August. Spending accounts for two-thirds of economic activity.

The Pentagon told White House officials it wants to mobilize more than the 50,000 military reservists initially planned for the war on terrorism. The Pentagon didn't offer a new projected total but said it has received new requests for security at nuclear power plants and other key installations. More than 42,000 military reservists have been called to date.

Reversing course, the Bush administration said it will accept a tougher new arsenic standard for drinking water than was issued in the final days of the Clinton presidency. The decision will reduce the maximum of arsenic from 50 parts per billion, a level first set in 1942, to 10 parts per billion by 2006. The White House initially suspended Clinton's action, citing costs to local communities and questions over the scientific basis behind the new standard.

Traces of anthrax were found in a Kansas City, Mo., postal facility, and about 200 workers were told to take antibiotics to ward off possible infection. Anthrax was discovered on equipment sent from a contaminated mail center in Trenton, N.J., but officials said there was no risk to the public. Traces of anthrax also were found at an Indianapolis mail facility and four mailrooms at Food and Drug Administration buildings in Maryland.

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